Folklore has it that the comparatively low proportion of self-employed in Germany is in part due to a habit that might be termed 'stigmatisation of failure': taking a second chance to build one's own firm after failing as a self-employed is said to be much more difficult here than in other countries. This paper uses data from a large recent survey in ten German planning regions to document that 18 percent of today’s firm owners founded a firm in the past that went out of business in between, and that 8 percent of people who went out of business with their former firm are actively engaged in starting a new business today. The determinants of such a restart are investigated econometrically. It turns out that both individual and regional factors are important for the probability of taking a second chance: This probability is negatively related to age, attitude towards risk, and the share of persons in the region who failed in the past, while it is positively related to personal contacts with a young entrepreneur and the regional share of nascent entrepreneurs.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
417.