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Ability or Finances as Constraints on Entrepreneurship? Evidence from Survival Rates in a Natural Experiment

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  • Andersen, Steffen

    ()
    (Department of Economics, Copenhagen Business School)

  • Nielsen, Kasper Meisner

    ()
    (Department of Finance, Hong Kong University of Science and Technology)

Abstract

We use a natural experiment in Denmark to test the hypothesis that aspiring entrepreneurs face financial constraints because of low entrepreneurial quality. We identify 304 constrained entrepreneurs who start a business after receiving windfall wealth and examine the performance of these marginal entrepreneurs. We find that constrained entrepreneurs have significantly lower survival rates and lower profits when compared with a matched sample of unconstrained entrepreneurs. These results are consistent with the hypothesis that the marginal entrepreneur is of low quality

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File URL: http://hdl.handle.net/10398/8499
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Bibliographic Info

Paper provided by Copenhagen Business School, Department of Economics in its series Working Papers with number 03-2012.

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Length: 44 pages
Date of creation: 01 Aug 2012
Date of revision:
Handle: RePEc:hhs:cbsnow:2012_003

Contact details of provider:
Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
Phone: 38 15 25 75
Fax: 38 15 34 99
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Web page: http://www.cbs.dk/departments/econ/
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Keywords: entrepreneurship; natural experiments;

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References

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Cited by:
  1. Becker, Sascha & Hvide, Hans V, 2013. "Do entrepreneurs matter?," CAGE Online Working Paper Series 109, Competitive Advantage in the Global Economy (CAGE).
  2. Hvide, Hans K. & Panos, Georgios A., 2013. "Risk Tolerance and Entrepreneurship," IZA Discussion Papers 7206, Institute for the Study of Labor (IZA).
  3. repec:cge:warwcg:108 is not listed on IDEAS

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