Growth expectations, new venture continuation and the role of ownership stakes

Purpose This study aims to examine how entrepreneurs’ perceptions of venture growth relative to their prior expectations influence new venture continuation versus exit. It further investigates whether entrepreneurs’ ownership proportions moderate the relationship between perceived growth performance and strategic persistence. Design/methodology/approach Using longitudinal data from the Kauffman Firm Survey, the study tracks a representative cohort of US ventures founded in 2004 over seven years. Entrepreneurs reported whether venture growth exceeded, met or fell short of their expectations after four years of operation. Discrete-time event history models are used to estimate the likelihood of venture continuation versus exit, controlling for financial performance, founder and team characteristics, firm size, industry context and research intensity. Findings The results reveal an inverted U-shaped relationship between growth perceptions and venture continuation. Ventures whose performance meets entrepreneurs’ expectations are more likely to continue than those that either exceed or fall short of expectations. Entrepreneurs’ ownership proportions moderate this relationship: a higher ownership proportion increases the likelihood of continuation even when expectations are missed or exceeded, suggesting that ownership proportion shapes how founders respond to early performance feedback. Originality/value This study advances research on entrepreneurial exit and performance feedback by highlighting subjective growth perceptions, rather than objective performance alone, as a key driver of continuation and exit decisions. It further extends work on escalation of commitment by showing that ownership influences persistence following both underperformance and unexpected success.