A lot of research has been done that focuses on the start-up and success of businesses. But what if you for some reason want to close your business? That is the focus of Karin Hellerstedt’s research.
On 25 November, Karin Hellerstedt held her docent lecture "Firm exit - Financial and non-financial aspects" at Jönköping International Business School.
“Even those who run a successful business must, sooner or later, make an "exit" in one way or another, says Karin, who has looked at the issue from various perspectives.
Among other things, she has by an experiment demonstrated how the world reacts differently to a person who becomes unemployed, compared a person whose business fails. The world’s perception of a "failed" entrepreneur is much tougher. And that of course affects how that person deals with the failure emotionally.
The support given to start-ups must also involve these issues, says Karin. Many entrepreneurs have little knowledge of what rules to follow and what to think about. Even as you start your business, you need to consider things as how long you should continue if you make a loss.
But business failure is just one form of "exit". All companies have to face ownership transfer, and Karin Hellerstedt research involves this as well.
“In a family business, the ownership transfer is very much affected by how emotionally involved the family is”, she says. “The economic models usually omit the psychological aspect; but there is so much more to consider than just the financial side. An emotionally involved family are for example much more keen to save as much as possible if the company is unsuccessful, and when it is time for a change of ownership, they will try to find a new owner within the family.”
Research shows that when a company gets a new external owner, the financial performance is better. But there is a higher survival rate and longer durability when ownership stays within the family.
Karin Hellerstedt is currently working with two different projects. One deals with family business and closure, and the second, funded by the Swedish Retail and Wholesale Development Council, about the closure of retail businesses.
“As a store owner, how are you affected when many shops around you are closing down? Many in the trade are unhappy and feel that they are alone in their situation.”
Karin Hellerstedt got her PhD from JIBS in 2009 and has previously done research on entrepreneurial teams, transfers of ownership in family businesses and business failure.