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What determines entepreneurial failure: taking advantage of the institutional context

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Listed:
  • Lucio Fuentelsaz

    () (Faculty of Economics and Business Studies, Universidad de Zaragoza)

  • Consuelo González-Gil

    () (Faculty of Economics and Business Studies, Universidad de Zaragoza)

  • Juan P. Maicas

    () (Faculty of Economics and Business Studies, Universidad de Zaragoza)

Abstract

Most management literature has been devoted to explaining business success. However, empirical evidence shows that one of the main problems of new ventures is precisely failure. A simple Google search for “business success” provides 986 million results, while “business failure” finds approximately ten times fewer. The same is found in the academic literature, which has been less interested in explaining the determinants of entrepreneurial failure. In this paper, we contribute to the entrepreneurship literature by offering new theoretical insights into and empirical evidence on the determinants of entrepreneurial failure. Our results confirm that both the quality of formal institutions and high-impact entrepreneurship reduce failure and, more importantly, that these two variables reinforce each other. As a consequence, a greater development of formal institutions strengthens the negative relationship between high-impact entrepreneurship and failure.

Suggested Citation

  • Lucio Fuentelsaz & Consuelo González-Gil & Juan P. Maicas, 2015. "What determines entepreneurial failure: taking advantage of the institutional context," Documentos de Trabajo dt2015-05, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  • Handle: RePEc:zar:wpaper:dt2015-05
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    Cited by:

    1. Pilar Bernal & Juan P. Maicas & Pilar Vargas, 2016. "Exploration, exploitation and innovation performance: Disentangling environmental dynamism," Documentos de Trabajo dt2016-03, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.

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    Keywords

    Entrepreneurship; failure; institutions; GEM;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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