As typically occurs in new venture creation, founders’ biases play a crucial role not only in entrepreneurial founding, but also in the context of entrepreneurial exit. In this paper, we build an interpretive framework that offers an explanation for pursuing exit strategies administrated by hubristic founders. First, we posit that hubris affects founders’ intentions and the performance threshold associated with entrepreneurial exit. Then, we claim that, when the firm shows performance below the expected threshold, hubristic founders are prone to escalate firm investments and insist on following strategic choices that have previously resulted in inadequate performance. This hubristic behavior is likely to lead to an entrepreneurial exit that falls into bankruptcy. Additionally, we argue that when a firm shows a performance above the expected threshold, hubristic founders prefer to walk out of the business by means of a financial harvesting strategy, thereby excluding stewardship behavior option in such conditions. However, in these conditions, founders’ hubris becomes as well the key hurdle to close the financial harvest deal. Implications for entrepreneurial exit inquiry, hubris theory of entrepreneurship, and for practicing entrepreneurs are eventually presented and discussed. We conclude by mentioning the paper’s limitations and suggesting some avenues for future inquiry.
