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Save for a rainy day? How regional household savings constrain entrepreneurship after a natural disaster

Author

Listed:
  • Jiabin Zhang

    (Vrije Universiteit Amsterdam)

  • Joeri Hugten

    (Vrije Universiteit Amsterdam)

  • Wouter Stam

    (Vrije Universiteit Amsterdam)

Abstract

Why do some entrepreneurial ecosystems successfully adjust amid adversity while others languish? By integrating prospect theory into the entrepreneurial ecosystem literature and using a quasi-natural experimental design with a difference-in-difference-in-differences model, our theory and findings reveal that earthquakes reduce entrepreneurship in regions with high household savings, but increase entrepreneurship in regions with low savings, and these between-area differences increase over time. Reconceptualizing the meaning of savings from a resource into a key driver of loss aversion, we thus identify the surprising constraining influence of financial capital in times of adversity, yielding important implications for entrepreneurship research and policymakers.

Suggested Citation

  • Jiabin Zhang & Joeri Hugten & Wouter Stam, 2025. "Save for a rainy day? How regional household savings constrain entrepreneurship after a natural disaster," Small Business Economics, Springer, vol. 64(4), pages 2013-2033, April.
    • Handle: RePEc:kap:sbusec:v:64:y:2025:i:4:d:10.1007_s11187-024-00973-5
    DOI: 10.1007/s11187-024-00973-5
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    More about this item

    Keywords

    Natural disaster; Start-up; Entrepreneurial ecosystem; Savings; Time/temporal aspects; Prospect theory;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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