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

Entrepreneurial exit in real and imagined markets

  • Roy Thurik
  • F. Stam
  • Peter van der Zwan

Entrepreneurs exit their business due to selection pressures experienced in the market place, i.e. business failure. Next to this well known ex-post decision to exit, entrepreneurs select exantewhether they are willing to pursue an entrepreneurial career at all, or to give up theseentrepreneurial intentions. Hardly anything is known about the latter selection process in imagined markets that precedes the variety creation and selection process in real markets. This paper explores and explains the prevalence of these two selection processes using survey data on 20,000 individuals in 27 European countries and the US in 2007. We distinguish business failures from exit by sell-off. Results indicate that individuals in the US are less likely to exit imagined markets, and are more likely to have exited the real market (especially by selling their business) than Europeans. Individuals in a Corporatist welfare state regime have relatively high chances to exit imagined markets. Business owners in urban environments are more likely to fail, while individuals with a high risk tolerance, a high education and self-employed parents are less likely to exit in imagined as well as in real markets (via business failure). This study shows that exit in real and in imagined markets is differently affected by competition and institutions. These selection environments have differential effects on entrepreneurial aspirations and actions of individuals, and provide evidence for the dissimilar nature of exit in real and exit in imagined markets.

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://www.entrepreneurship-sme.eu/pdf-ez/H200720.pdf
Download Restriction: no

Paper provided by EIM Business and Policy Research in its series Scales Research Reports with number H200720.

as
in new window

Length: 23 pages
Date of creation: 21 Dec 2007
Date of revision:
Handle: RePEc:eim:papers:h200720
Contact details of provider: Postal: P.O. Box 7001, 2701 AA Zoetermeer
Phone: (+31) 79 341 36 34
Fax: (+31) 79 341 50 24
Web page: http://www.entrepreneurship-sme.eu/
Email:


More information through EDIRC

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. 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.
  3. D. McFadden & J. Hausman, 1981. "Specification Tests for the Multinominal Logit Model," Working papers 292, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Cooper, Arnold C., 1993. "Challenges in predicting new firm performance," Journal of Business Venturing, Elsevier, vol. 8(3), pages 241-253, May.
  5. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. Levesque, Moren & Minniti, Maria, 2006. "The effect of aging on entrepreneurial behavior," Journal of Business Venturing, Elsevier, vol. 21(2), pages 177-194, March.
  11. Andreas Freytag & Roy Thurik, 2007. "Entrepreneurship and its determinants in a cross-country setting," Journal of Evolutionary Economics, Springer, vol. 17(2), pages 117-131, April.
  12. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555.
  13. 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.
  14. Audretsch, David B, 1998. "Agglomeration and the Location of Innovative Activity," CEPR Discussion Papers 1974, C.E.P.R. Discussion Papers.
  15. Flora Bellone & Patrick Musso & Lionel Nesta & Michel Qu�r�, 2008. "Market selection along the firm life cycle," Industrial and Corporate Change, Oxford University Press, vol. 17(4), pages 753-777, August.
  16. 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).
  17. 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.
  18. 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.
  19. 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, November.
  20. Elena Cefis & Orietta Marsili, 2005. "A matter of life and death: innovation and firm survival," Industrial and Corporate Change, Oxford University Press, vol. 14(6), pages 1167-1192, December.
  21. Marco van Gelderen & Niels Bosma & Roy Thurik, 2003. "Success and risk factors in the pre-startup phase," Scales Research Reports N200314, EIM Business and Policy Research.
  22. André van Stel & Kashifa Suddle, 2006. "The Impact of New Firm Formation on Regional Development in the Netherlands," Scales Research Reports H200604, EIM Business and Policy Research.
  23. Winter, Sidney G, 1971. "Satisficing, Selection, and the Innovating Remnant," The Quarterly Journal of Economics, MIT Press, vol. 85(2), pages 237-61, May.
  24. Ari Hyytinen & Pekka Ilmakunnas, 2007. "What distinguishes a serial entrepreneur?," Industrial and Corporate Change, Oxford University Press, vol. 16(5), pages 793-821, October.
  25. 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.
  26. Caliendo, Marco & Fossen, Frank M. & Kritikos, Alexander S., 2006. "Risk Attitudes of Nascent Entrepreneurs: New Evidence from an Experimentally Validated Survey," Discussion Papers 252, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
  27. 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.
  28. 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.
  29. Peter van der Zwan & Roy Thurik & Isabel Grilo, 2010. "The entrepreneurial ladder and its determinants," Applied Economics, Taylor & Francis Journals, vol. 42(17), pages 2183-2191.
  30. C. Mirjam van Praag, 2003. "Business Survival and Success of Young Small Business Owners," Tinbergen Institute Discussion Papers 03-050/3, Tinbergen Institute.
  31. 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.
  32. Forbes, Daniel P., 2005. "Are some entrepreneurs more overconfident than others?," Journal of Business Venturing, Elsevier, vol. 20(5), pages 623-640, September.
  33. Esping-Andersen, Gosta, 1999. "Social Foundations of Postindustrial Economies," OUP Catalogue, Oxford University Press, number 9780198742005, March.
  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. 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.
  36. 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.
  37. Geroski, P A, 2001. "Exploring the Niche Overlaps between Organizational Ecology and Industrial Economics," Industrial and Corporate Change, Oxford University Press, vol. 10(2), pages 507-40, June.
  38. Pekka Ilmakunnas & Jukka Topi, 1999. "Microeconomic and Macroeconomic Influences on Entry and Exit of Firms," Review of Industrial Organization, Springer, vol. 15(3), pages 283-301, November.
  39. Dorothea Schäfer & Oleksandr Talavera, 2009. "Small business survival and inheritance: evidence from Germany," Small Business Economics, Springer, vol. 32(1), pages 95-109, January.
  40. 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.
  41. Baldwin, John R. & Raffiquzzaman, Mohammed, 1995. "Selection Versus Evolutionary Adaptation: Learning and Post-entry Performance," Analytical Studies Branch Research Paper Series 1994072e, Statistics Canada, Analytical Studies Branch.
  42. 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.
  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. 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.
  45. 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).
  46. 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.
  47. Amit, Raphael & Muller, Eitan & Cockburn, Iain, 1995. "Opportunity costs and entrepreneurial activity," Journal of Business Venturing, Elsevier, vol. 10(2), pages 95-106, March.
  48. 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.
  49. 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.
  50. 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.
  51. 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.
  52. Minniti, Maria, 2005. "Entrepreneurship and network externalities," Journal of Economic Behavior & Organization, Elsevier, vol. 57(1), pages 1-27, May.
  53. 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.
  54. 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.
  55. 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.
  56. 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.
  57. 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.
  58. 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.
  59. 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.
  60. 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.
  61. 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.
  62. Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 227-45, September.
  63. 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.
  64. 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.
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:eim:papers:h200720. 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: (Webmaster EIM)

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.