IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Entrepreneurial exit in real and imagined markets

  • Erik Stam
  • Roy Thurik
  • Peter van der Zwan

Entrepreneurs exit their businesses due to selection pressures they experience in the market place. In addition to this well-known ex-post decision to exit, entrepreneurs select ex-ante whether they are willing to pursue an entrepreneurial career at all, or to give up their entrepreneurial intentions. Hardly anything is known about the latter selection process in imagined markets that precedes the creation of variation and selection process in real markets. This article explores these two selection processes using survey data on 20,000 individuals in 27 European countries and the United States in 2007. We distinguish business failure from exit by sell-off. Individuals in the United States are less likely to exit imagined markets and are more likely to exit the real market than are Europeans. Individuals in a corporatist welfare state regime have relatively high chances to exit imagined markets but low chances to exit real markets (due to failure). Business owners in metropolitan and urban environments are more likely to fail than their rural counterparts, while individuals with a high risk tolerance and individuals with a self-employed parent are less likely to exit imagined or real markets (via business failure). In short, this study shows that exit in real and in imagined markets is differently affected by individual characteristics as well as by the competitive and institutional environment. Copyright 2010 The Author 2010. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

If you experience problems downloading a file, check if you have the proper application to view it first. 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.

File URL: http://hdl.handle.net/10.1093/icc/dtp047
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Oxford University Press in its journal Industrial and Corporate Change.

Volume (Year): 19 (2010)
Issue (Month): 4 (August)
Pages: 1109-1139

as
in new window

Handle: RePEc:oup:indcch:v:19:y:2010:i:4:p:1109-1139
Contact details of provider: Postal:
Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK

Fax: 01865 267 985
Web page: http://icc.oupjournals.org/
Email:

Order Information: Web: http://www.oup.co.uk/journals

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December.
  2. 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.
  3. Mata, Jose & Portugal, Pedro & Guimaraes, Paulo, 1995. "The survival of new plants: Start-up conditions and post-entry evolution," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 459-481, December.
  4. Cramer, J. S. & Hartog, J. & Jonker, N. & Van Praag, C. M., 2002. "Low risk aversion encourages the choice for entrepreneurship: an empirical test of a truism," Journal of Economic Behavior & Organization, Elsevier, vol. 48(1), pages 29-36, May.
  5. Audretsch, David B, 1998. "Agglomeration and the Location of Innovative Activity," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 18-29, Summer.
  6. Erik Stam & David Audretsch & Joris Meijaard, 2008. "Renascent entrepreneurship," Journal of Evolutionary Economics, Springer, vol. 18(3), pages 493-507, August.
    • Stam, F.C. & Audretsch, D.B. & Meijaard, J., 2006. "Renascent Entrepreneurship," ERIM Report Series Research in Management ERS-2006-017-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
  7. Taylor, Mark P, 1999. "Survival of the Fittest? An Analysis of Self-Employment Duration in Britain," Economic Journal, Royal Economic Society, vol. 109(454), pages C140-55, March.
  8. Marco Caliendo & Frank M. Fossen & Alexander S. Kritikos, 2006. "Risk Attitudes of Nascent Entrepreneurs: New Evidence from an Experimentally-Validated Survey," Discussion Papers of DIW Berlin 600, DIW Berlin, German Institute for Economic Research.
  9. van Stel, A.J. & Suddle, K., 2005. "The Impact of New Firm Formation on Regional Development in the Netherlands," ERIM Report Series Research in Management ERS-2005-075-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
  10. William P. Barnett & Aimee-Noelle Swanson & Olav Sorenson, 2003. "Asymmetric selection among organizations," Industrial and Corporate Change, Oxford University Press, vol. 12(4), pages 673-695, August.
  11. Baldwin, John R. & Rafiquzzaman, Mohammed, 1995. "Selection versus evolutionary adaptation: Learning and post-entry performance," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 501-522, December.
  12. J. Scott Long & Jeremy Freese, 2006. "Regression Models for Categorical Dependent Variables using Stata, 2nd Edition," Stata Press books, StataCorp LP, edition 2, number long2.
  13. Roy Thurik & Isabel Grilo, 2005. "Latent and actual entrepreneurship in Europe and the US: some recent developments," Papers on Entrepreneurship, Growth and Public Policy 2005-24, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  14. Ilmakunnas, Pekka & Topi, Jukka, 1996. "Microeconomic and Macroeconomic Influences on Entry and Exit of Firms," Research Discussion Papers 6/1996, Bank of Finland.
  15. Elena Cefis & Orietta Marsili, 2005. "A Matter of Life and Death: Innovation and Firm Survival," LEM Papers Series 2005/01, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  16. Minniti, Maria, 2005. "Entrepreneurship and network externalities," Journal of Economic Behavior & Organization, Elsevier, vol. 57(1), pages 1-27, May.
  17. Michael Fritsch & Pamela Mueller, 2004. "Effects of New Business Formation on Regional Development over Time," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 961-975.
  18. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-35, June.
  19. Peter van der Zwan & Roy Thurik & Isabel Grilo, 2006. "The Entrepreneurial Ladder and its Determinants," Tinbergen Institute Discussion Papers 06-103/3, Tinbergen Institute, revised 14 Nov 2007.
  20. Simon Cheng & J. Scott Long, 2007. "Testing for IIA in the Multinomial Logit Model," Sociological Methods & Research, , vol. 35(4), pages 583-600, May.
  21. Levesque, Moren & Minniti, Maria, 2006. "The effect of aging on entrepreneurial behavior," Journal of Business Venturing, Elsevier, vol. 21(2), pages 177-194, March.
  22. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-48, August.
  23. D. McFadden & J. Hausman, 1981. "Specification Tests for the Multinominal Logit Model," Working papers 292, Massachusetts Institute of Technology (MIT), Department of Economics.
  24. Santarelli, Enrico & Vivarelli, Marco, 2006. "Entrepreneurship and the Process of Firms’ Entry, Survival and Growth," IZA Discussion Papers 2475, Institute for the Study of Labor (IZA).
  25. Bruce, Donald, 2002. "Taxes and Entrepreneurial Endurance: Evidence from the Self-Employed," National Tax Journal, National Tax Association, vol. 55(N. 1), pages 5-24, March.
  26. Bianchi, Milo & Henrekson, Magnus, 2005. "Is Neoclassical Economics still Entrepreneurless?," SSE/EFI Working Paper Series in Economics and Finance 584, Stockholm School of Economics, revised 02 Feb 2005.
  27. Ciavarella, Mark A. & Buchholtz, Ann K. & Riordan, Christine M. & Gatewood, Robert D. & Stokes, Garnett S., 2004. "The Big Five and venture survival: Is there a linkage?," Journal of Business Venturing, Elsevier, vol. 19(4), pages 465-483, July.
  28. Burke, Andrew & FitzRoy, Felix & Nolan, Michael A., 2006. "What Makes a Die-Hard Entrepreneur? Beyond the ‘Employee or Entrepreneur’ Dichotomy," IZA Discussion Papers 2307, Institute for the Study of Labor (IZA).
  29. Flora Bellone & Patrick Musso & Lionel Nesta & Michel Quere, 2010. "Market Selection Along the Firm Life Cycle," Chapters, in: Innovation, Economic Growth and the Firm, chapter 5 Edward Elgar Publishing.
  30. Geroski, Paul A, 2000. "Exploring the Niche Overlaps Between Organizational Ecology and Industrial Economics," CEPR Discussion Papers 2649, C.E.P.R. Discussion Papers.
  31. Holtz-Eakin, Douglas & Joulfaian, David & Rosen, Harvey S, 1994. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 53-75, February.
  32. repec:att:wimass:8827 is not listed on IDEAS
  33. Scott Shane & Rakesh Khurana, 2003. "Bringing individuals back in: the effects of career experience on new firm founding," Industrial and Corporate Change, Oxford University Press, vol. 12(3), pages 519-543, June.
  34. Small, Kenneth A & Hsiao, Cheng, 1985. "Multinomial Logit Specification Tests," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 619-27, October.
  35. Forbes, Daniel P., 2005. "Are some entrepreneurs more overconfident than others?," Journal of Business Venturing, Elsevier, vol. 20(5), pages 623-640, September.
  36. Ekelund, Jesper & Johansson, Edvard & Jarvelin, Marjo-Riitta & Lichtermann, Dirk, 2005. "Self-employment and risk aversion--evidence from psychological test data," Labour Economics, Elsevier, vol. 12(5), pages 649-659, October.
  37. Magnus Henrekson, 2005. "Entrepreneurship: a weak link in the welfare state?," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 437-467, June.
  38. Dan Lovallo & Colin Camerer, 1999. "Overconfidence and Excess Entry: An Experimental Approach," American Economic Review, American Economic Association, vol. 89(1), pages 306-318, March.
  39. Esping-Andersen, Gosta, 1999. "Social Foundations of Postindustrial Economies," OUP Catalogue, Oxford University Press, number 9780198742005, May.
  40. Bernard F. Lentz & David N. Laband, 1990. "Entrepreneurial Success and Occupational Inheritance among Proprietors," Canadian Journal of Economics, Canadian Economics Association, vol. 23(3), pages 563-79, August.
  41. J. A. Hausman & D. A. Wise, 1976. "A Conditional Profit Model for Qualitative Choice: Discrete Decisions Recognizing Interdependence and Heterogeneous Preferences," Working papers 173, Massachusetts Institute of Technology (MIT), Department of Economics.
  42. Westhead, Paul & Wright, Mike, 1998. "Novice, portfolio, and serial founders: are they different?," Journal of Business Venturing, Elsevier, vol. 13(3), pages 173-204, May.
  43. C. Mirjam van Praag, 2003. "Business Survival and Success of Young Small Business Owners," Tinbergen Institute Discussion Papers 03-050/3, Tinbergen Institute.
  44. Isabel Grilo & Jesus-Maria Irigoyen, 2006. "Entrepreneurship in the EU: To Wish and not to be," Small Business Economics, Springer, vol. 26(4), pages 305-318, 05.
  45. Cooper, Arnold C., 1993. "Challenges in predicting new firm performance," Journal of Business Venturing, Elsevier, vol. 8(3), pages 241-253, May.
  46. Paul Reynolds & Niels Bosma & Erkko Autio & Steve Hunt & Natalie De Bono & Isabel Servais & Paloma Lopez-Garcia & Nancy Chin, 2005. "Global Entrepreneurship Monitor: Data Collection Design and Implementation 1998–2003," Small Business Economics, Springer, vol. 24(3), pages 205-231, 02.
  47. Sidney G. Winter, 1971. "Satisficing, Selection, and the Innovating Remnant," The Quarterly Journal of Economics, Oxford University Press, vol. 85(2), pages 237-261.
  48. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
  49. Blanchflower, David G & Meyer, Bruce D, 1994. "A Longitudinal Analysis of the Young Self-Employed in Australia and the United States," Small Business Economics, Springer, vol. 6(1), pages 1-19, February.
  50. Marcus Box, 2008. "The death of firms: exploring the effects of environment and birth cohort on firm survival in Sweden," Small Business Economics, Springer, vol. 31(4), pages 379-393, December.
  51. Daniel Kahneman & Dan Lovallo, 1993. "Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk Taking," Management Science, INFORMS, vol. 39(1), pages 17-31, January.
  52. Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 227-45, September.
  53. Stuart, Toby & Sorenson, Olav, 2003. "The geography of opportunity: spatial heterogeneity in founding rates and the performance of biotechnology firms," Research Policy, Elsevier, vol. 32(2), pages 229-253, February.
  54. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May.
  55. Dorothea Schäfer & Oleksandr Talavera, 2009. "Small business survival and inheritance: evidence from Germany," Small Business Economics, Springer, vol. 32(1), pages 95-109, January.
  56. Simon C. Parker & Yacine Belghitar, 2006. "What Happens to Nascent Entrepreneurs? An Econometric Analysis of the PSED," Small Business Economics, Springer, vol. 27(1), pages 81-101, August.
  57. Casper, Steven & Whitley, Richard, 2004. "Managing competences in entrepreneurial technology firms: a comparative institutional analysis of Germany, Sweden and the UK," Research Policy, Elsevier, vol. 33(1), pages 89-106, January.
  58. Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 551-59, November.
  59. Fry, Tim R. L. & Harris, Mark N., 1996. "A Monte Carlo study of tests for the independence of irrelevant alternatives property," Transportation Research Part B: Methodological, Elsevier, vol. 30(1), pages 19-30, February.
  60. Holmes, Thomas J & Schmitz, James A, Jr, 1990. "A Theory of Entrepreneurship and Its Application to the Study of Business Transfers," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 265-94, April.
  61. Cramer, J. S. & Ridder, G., 1991. "Pooling states in the multinomial logit model," Journal of Econometrics, Elsevier, vol. 47(2-3), pages 267-272, February.
  62. Roy Thurik & Andreas Freytag, 2006. "Entrepreneurship and its determinants in a cross-country setting," Scales Research Reports H200616, EIM Business and Policy Research.
  63. Ari Hyytinen & Pekka Ilmakunnas, 2007. "What distinguishes a serial entrepreneur?," Industrial and Corporate Change, Oxford University Press, vol. 16(5), pages 793-821, October.
  64. van Praag, C M & Cramer, J S, 2001. "The Roots of Entrepreneurship and Labour Demand: Individual Ability and Low Risk Aversion," Economica, London School of Economics and Political Science, vol. 68(269), pages 45-62, February.
  65. Amit, Raphael & Muller, Eitan & Cockburn, Iain, 1995. "Opportunity costs and entrepreneurial activity," Journal of Business Venturing, Elsevier, vol. 10(2), pages 95-106, March.
  66. Jean-Pierre Huiban, 2011. "The spatial demography of new plants: urban creation and rural survival," Small Business Economics, Springer, vol. 37(1), pages 73-86, July.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:oup:indcch:v:19:y:2010:i:4:p:1109-1139. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.