The effect of partner exits on survival chances of SMEs

Purpose – The purpose of this paper is to study the effect partner exits have on the survival chances of small and medium‐sized enterprises (SMEs). Moreover, the study aims at analyzing the influence of firm size, legal form, industry, type of change, and prior change on the effect of partner exits on the survival chances of SMEs. Design/methodology/approach – An organizational ecology perspective to analyze the case of partner exits on the survival chances of SMEs is applied. Using event history models, the effect of such ownership changes is studied by the analysis of the life history of 19,629 SMEs in Germany between 1990 and 2005. Findings – Results show that partner exits increase the mortality risk of organizations. This effect is moderated by specific organizational characteristics such as size, legal form and industry affiliation. Moreover, the harmful effect of partner exits increases if the partner was involved in the founding process of the organization. Finally, the results show that SMEs are not able to develop routines that reduce the effect of partner exits, on the contrary, the disruptive effect of partner exits increases with an increasing number of partner exits. Originality/value – This paper shows how partner exits influence the survival chances of SMEs and how this negative effect is moderated by different firm characteristics. Moreover, the paper emphasizes the role of founders by showing that the exit of partners who were involved in the founding process of SMEs is especially harmful. Finally, focusing on multiple partner exits, the paper contributes to the question whether or not organizations learn how to manage fundamental change successfully.