Iqbal, Mohammad (2015) Business exit contemplation: a study of SME owners in Indonesia. Other Degree thesis, Victoria University.

Abstract

A business exit is an important stage in entrepreneurship activities. This stage is an integral part of the entrepreneurial process because it is through this stage that entrepreneurs leave the business they own and remove themselves from the ownership and decision structure of their business (DeTienne 2010). Understanding business exits is important because it provides a foundation from which entrepreneurs can begin in order to maximise the value of their investment (Petty 1997). Further, it can explain the overall picture of the entrepreneurship activities by providing knowledge of various processes, behaviours and trigger factors that may be involved. Based on an extensive literature review and the collection of empirical evidence, this study investigates the extent to which a Small and Medium Enterprise (SME) owner’s human capital, entrepreneurial orientation (EO), firm performance and psychological ownership are related to one’s contemplation to exit his or her business. In addition, this current study of business exit explores whether these factors influence an individual’s intention to exit the business through a process of contemplation. Much of the literature on business exits have highlighted this phenomenon from the perspective of exit planning and timing, types of exit strategies or options, and behavioural aspects of business exits through intentions. However, no studies to date have highlighted or explicitly discussed what factors may trigger the contemplation of an SME owner to exit his or her business. Although previous studies have highlighted that certain factors could influence an owner’s intention to exit (DeTienne & Cardon 2010; Leroy et al. 2007), these studies have not explicitly examined whether there is a prior stage of an exit intention. It is important that the contemplation of business owners to exit their business be examined because business exits can be problematic for some entrepreneurs in understanding the effort and time that they have provided to the business. Further, it is also important to investigate whether an owner’s contemplation to exit influences one’s intention to exit the business since no studies to date have provided a justification to this behavioural aspect. Therefore, in order to expand the perspective of the business exit literature, this study investigates the exit contemplation of SME owners in an Indonesian context.

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