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Starting anew: Entrepreneurial intentions and realizations subsequent to business closure

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  • Erik Stam

    ()

  • Veronique Schutjens

    ()

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

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Citations

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Cited by:
  1. Roy Thurik & Jolanda Hessels & Isabel Grilo & Peter van der Zwan, 2009. "Entrepreneurial exit and entrepreneurial engagement," Scales Research Reports H200910, EIM Business and Policy Research.
  2. Welch, Catherine L. & Welch, Lawrence S., 2009. "Re-internationalisation: Exploration and conceptualisation," International Business Review, Elsevier, vol. 18(6), pages 567-577, December.
  3. Shepherd, Dean A. & Wiklund, Johan & Haynie, J. Michael, 2009. "Moving forward: Balancing the financial and emotional costs of business failure," Journal of Business Venturing, Elsevier, vol. 24(2), pages 134-148, March.
  4. Cope, Jason, 2011. "Entrepreneurial learning from failure: An interpretative phenomenological analysis," Journal of Business Venturing, Elsevier, vol. 26(6), pages 604-623.

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