When to “pull the plug” and when to “take the plunge”: the timing of strategic decisions towards new ventures

Firms face opposing incentives regarding when to take strategic decisions towards their exploration ventures. On the one hand, postponing can reduce uncertainty, but on the other, moving quickly allows capitalizing on a potential competitive advantage. Drawing on theories of entrepreneurship and real options reasoning, we suggest that firms resolve the competing tensions for acceleration and deceleration through an assessment of their venture portfolio and environment. An empirical study of the timing of termination and exploitation decisions taken with regard to 3,272 exploration ventures in Australia’s mining industry over the years 2002-2011 provides an insight into the drivers of decision timing. We find that venture portfolio composition is an important driver of timing— but only with regard to exploitation decisions. Higher levels of market uncertainty increase the time to venture termination but not exploitation, and a positive market trajectory increases the time to venture termination, yet decreases the time to exploitation. Finally, we find support for interaction effects between the portfolio and market. The overall pattern of findings sheds new light on the tension between deceleration and acceleration in entrepreneurial strategic decision making and highlights the importance of distinguishing between the timing of different types of decisions.