Entrepreneurial Entropy: A Resource Exhaustion Theory of Firm Failure From Entrepreneurial Orientation

Entrepreneurial orientation (EO) can generate substantial gains and losses, exhausting firm resources straining a firm’s ability to sustain its activities. We develop test resource exhaustion theory of failure, conceptualizing conditions under which EO increases the risk failure by generating unsustainable amounts entrepreneurial entropy. Using panel data on 804 large U.S. high-technology firms over 18 years, we find that is mediated lack organizational slack. An abrupt change in especially among underperforming firms.