Seven factors associated with technology company failure (or death) are described along with features that distinguish each factor. A company is commonly defined to have failed when it passes through a stage of insolvency and then an asset sale or a merger. It is well known that several critical factors can lead to a successful launch of a company – market timing, management experience, product differentiation, product quality, financing, sales execution, team compatibility, etc. High tech companies deal with additional risks at launch such as commercialization difficulties, team formation and technology lifespan. Little research has been done on identifying major factors that can lead to company failure once the company is launched and has reached the first stage of sustainability, for example, operational income is positive. While some business factors that are important at launch are also important during later stages of the company there are other forces, both internal and external, that can lead to company death. This paper proposes that there are at least seven basic factors associated with business failure that manifest themselves in technology based companies and an illustration is drawn for each type. The study herein can be useful to investors of technology and the entrepreneurs they employ in their never ending quest for profitable innovation.
European Journal of Management
Business Failure; Management of Technology; Insolvency of Technology Firms
Salazar, Andres C..
"Seven Deadly Factors Associated with Technology Company Failure."