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Starting Anew: Entrepreneurial Intentions and Realizations Subsequent to Business Closure

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Author Info
Schutjens, V.
Stam, F.C. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)

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Abstract

We know that most businesses fail. But what is not known is to what extent failed ex-entrepreneurs set up in business again. The objective of this article is to explore potential and realized serial entrepreneurship. Based on three disciplines – psychology, labour economics, and the sociology of careers – we formulated propositions to explain (potential) serial entrepreneurship. We tested these propositions empirically with a longitudinal database of 79 businesses that had closed within 5 years after start-up. A large majority of the ex-entrepreneurs maintained entrepreneurial intentions subsequent to business closure, while almost one in four business closures were followed by a new business (serial entrepreneurship). Our results show that the determinants of restart intention (potential serial entrepreneurship) and actual restart realization (realized serial entrepreneurship) are different. Ex-entrepreneurs who are young, who worked full-time in their prior business, and who recall their business management experience positively are likely to harbour restart intentions. Only ‘being located in an urban region’ transpired to have a significant effect on the start of a new business. Although entrepreneurial intentions are a necessary condition for the start of a new business, this study shows that the explanation of entrepreneurial intentions is distinct from the explanation of new business formation subsequent to business closure.

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Publisher Info
Paper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number ERS-2006-015-ORG Revision_Date: 2009-07-29.

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Date of creation: 29 Mar 2006
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Handle: RePEc:dgr:eureri:30008466

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Related research
Keywords: Serial Entrepreneurship; Business Closure; Entrepreneurial Intentions; New Business Formation; The Netherlands;

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  7. Marco Gelderen & Roy Thurik & Niels Bosma, 2005. "Success and Risk Factors in the Pre-Startup Phase," Small Business Economics, Springer, vol. 24(4), pages 365-380, 05. [Downloadable!] (restricted)
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  8. Garnsey, Elizabeth, 1998. "A Theory of the Early Growth of the Firm," Industrial and Corporate Change, Oxford University Press, vol. 7(3), pages 523-56, September.
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  21. van Praag, C M & Cramer, J S, 2001. "The Roots of Entrepreneurship and Labour Demand: Individual Ability and Low Risk Aversion," Economica, London School of Economics and Political Science, vol. 68(269), pages 45-62, February. [Downloadable!] (restricted)
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