Liability of newness

Definition (1):

Liability of newness refers to the fact that companies often falter because the people who start them aren’t able to adjust quickly enough to their new roles and because the firm lacks a “track record” with outside buyers and suppliers.

Assembling a talented and experienced new-venture team is one path firms can take to overcome these limitations.

Definition (2):

“The liability of newness phenomenon describes the different risks of dying of an organization during its life course. “ It denotes that at this point in starting an organization this risk of dying is the highest and it decreases as the organization grows with time.

Definition (3):

The liability of newness indicates that new companies experience different types of problems related to their newly established status. It is a company’s early failure threat.

New companies can minimize these liabilities in the following ways:

•          Taking their doubts seriously.

•          Finding the required business support.

•          Learning from other entrepreneurs.

•          The owners of the new companies can join in other companies to experience the tactics of founding a business.

•          They should surround themselves with a specialized ecosystem. It includes selecting an optimal location, hiring professional and right consultants, and the like.

•          Advancing the scientific assets before starting.

•          Bonding with their co-founders.

•          Establishing the involved true costs both financially and emotionally.

•          Learning about their city’s, state’s or country’s laws.


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