The Liability of volatility and how it changes over time among new ventures

Erik Lundmark, Alex Coad, Julian S. Frankish, David Storey

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)
18 Downloads (Pure)


This article theorizes how short-term revenue volatility affects new venture viability and how such volatility develops over time. Tracking the bank accounts of 6,578 new ventures over a 10-year period, we find that, even after controlling for a range of other factors, short-term revenue volatility is a strong predictor of venture exit. Although short-term revenue volatility is associated with the depletion of buffer resources and financial default, surviving ventures do not, on average, decrease their short-term revenue volatility over time. However, short-term revenue volatility decreases at the cohort level due to higher exit rates of volatile ventures.
Original languageEnglish
Pages (from-to)933-963
Number of pages31
JournalEntrepreneurship: Theory and Practice
Issue number5
Early online date9 Sept 2019
Publication statusPublished - 2020


  • liability of newness
  • adaptation
  • selection
  • evolutionary theory
  • liability of smallness


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