Reasons for the Failure of New Technology-Based Firms: A Longitudinal Empirical Study for Germany

We analyzed the determinants for the business failure of German New Technology-Based Firms (NTBF) in different financial stages. This included a literature review and creation of a set of propositions for the determinants within the individual stages. On the basis of an empirical and longitudinal dataset including data of 82 NTBFs, we tested a subset of our assumptions. With this, we could prove that the technology, the market, the financing and the management competencies comprise important factors as identified in previous studies. Further, we proved that the factors differ in each investment stage as shown by the significance and the connotation of the correlations. The area of technology was not significant in the first investment stage but in the second. While the determinants proved to be the same in the market area, the connotations of the variables differ in the financial and human resource variables. We showed that the different financial states should be analyzed separately when determining factors of business failure.