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Starting anew: Entrepreneurial intentions and realizations subsequent to business closure

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Author Info
Erik Stam ()
Veronique Schutjens ()

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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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File URL: http://econ.geo.uu.nl/peeg/peeg0605.pdf
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Publisher Info
Paper provided by Utrecht University, Section of Economic Geography in its series Papers in Evolutionary Economic Geography (PEEG) with number 0605.

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Length: 23 pages
Date of creation: Mar 2006
Date of revision: Mar 2006
Handle: RePEc:egu:wpaper:0605

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Related research
Keywords: serial entrepreneurship; business closure; entrepreneurial intentions; new business formation; The Netherlands;

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  3. Gatewood, Elizabeth J. & Shaver, Kelly G. & Gartner, William B., 1995. "A longitudinal study of cognitive factors influencing start-up behaviors and success at venture creation," Journal of Business Venturing, Elsevier, vol. 10(5), pages 371-391, September. [Downloadable!] (restricted)
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  6. 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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  7. 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.
  8. David Audretsch & Patrick Houweling & A. Thurik, 2000. "Firm Survival in the Netherlands," Review of Industrial Organization, Springer, vol. 16(1), pages 1-11, February. [Downloadable!] (restricted)
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  15. Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 60-85, March. [Downloadable!] (restricted)
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  18. Headd, Brian, 2003. " Redefining Business Success: Distinguishing between Closure and Failure," Small Business Economics, Springer, vol. 21(1), pages 51-61, August. [Downloadable!] (restricted)
  19. Paul Westhead & Deniz Ucbasaran & Mike Wright & Martin Binks, 2005. "Novice, Serial and Portfolio Entrepreneur Behaviour and Contributions," Small Business Economics, Springer, vol. 25(2), pages 109-132, 09. [Downloadable!] (restricted)
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