Founder exits and firm performance: An exploratory study

In this exploratory work, we examine the relation between founder exits and firm performance in new and emerging ventures using data (N = 3120) from the Kaufmann Firm Survey (KFS) database which tracked firms over a seven-year period. We find that founder exits have an inverted-U shaped relationship to firm performance. Furthermore, the relationship between exits and performance is weakened when ownership is consolidated and governed by formal ownership agreements, and strengthened when owners are actively engaged in management of the firm. Overall, our results suggest that new and emerging firms' organizational development influences the relationship between exits and performance. We discuss the theory-based and practical implications of this work as well as multiple lines of future research that can build on our findings.