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Failing firms and successful entrepreneurs: serial entrepreneurship as a temporal portfolio

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  • Saras Sarasvathy

    ()

  • Anil Menon
  • Graciela Kuechle

    ()

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    Abstract

    Entrepreneurial performance is almost always confounded with firm performance. In this paper we argue for an instrumental view of the firm by formally showing that entrepreneurs can amplify their expected success rates by designing their careers as temporal portfolios that exploit contagion processes embedded in serial entrepreneurship. The advantages to holding concurrent portfolios that exploit heterogeneity are well known. The same advantages may be achieved in the serial context through contagion. Our model exploits an observation due to William Feller on the near equivalence of the two, statistically speaking. It also leads to empirically plausible implications about the size distribution of firms in the economy and illustrates the relevance of considering firms and entrepreneurs as distinct loci of analysis. Copyright Springer Science+Business Media, LLC. 2013

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    File URL: http://hdl.handle.net/10.1007/s11187-011-9412-x
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    Bibliographic Info

    Article provided by Springer in its journal Small Business Economics.

    Volume (Year): 40 (2013)
    Issue (Month): 2 (February)
    Pages: 417-434

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    Handle: RePEc:kap:sbusec:v:40:y:2013:i:2:p:417-434

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    Web page: http://www.springerlink.com/link.asp?id=100338

    Related research

    Keywords: Serial entrepreneurship; Firm performance; Industrial organization; Population ecology; Labor economics; Financial economics; G11; G24; J24; L25; L26;

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    References

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    Cited by:
    1. Matthias Brachert & Walter Hyll, 2014. "On the Stability of Preferences: Repercussions of Entrepreneurship on Risk Attitudes," IWH Discussion Papers 5, Halle Institute for Economic Research.

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