Abstract
Prior research provides conflicting evidence on whether entrepreneurial orientation (EO) has a positive or negative effect on firm failure. In this study, we hypothesize that the sign of the effect of EO on firm failure is not constant over the life cycle of a firm, but changes as young firms evolve into mature firms. Moreover, we show that to better understand the age-varying effects of EO on firm failure, it is essential to examine the effects of each EO dimension, i.e., risk-taking, innovativeness, and proactiveness, on firm failure, as they differ in terms of mechanisms and intertemporal patterns. Our empirical analysis is based on a panel data set of 8,518 startups tracked over several years. We find that risk-taking and innovativeness hinder the survival of very young firms, while proactiveness favors survival. However, the sign of the effects of the EO dimensions of risk-taking and innovativeness becomes positive as firms mature.