Luck and Entrepreneurial Success

Diego Liechti, Claudio Loderer and Urs Peyer
Additional contact information
Diego Liechti: University of Bern
Claudio Loderer: University of Bern and Swiss Finance Institute
Urs Peyer: INSEAD

No 14-51, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: How much of entrepreneurial performance is sheer luck compared to talent, experience, education, and hard work? We define luck as unexpected performance and look for an answer in a large survey of entrepreneurs. Accordingly, luck ranks last in importance among various success factors and accounts for less than one third of performance variation. This ranking is unaffected by past performance and many personality traits, including self-attribution and illusion of control. Luck matters, however, in activities such as finding the appropriate business idea or choosing the right moment to enter a market. More important, luck perceptions shape decisions. For example, individuals who believe luck is important are reluctant to become entrepreneurs. Consistent with the definition, what entrepreneurs believe is luck correlates with the unexplained variation in a standard econometric model of performance. Estimates of that model also show that hard work does affect performance. So do talent, education, and, especially, experience.

Keywords: luck; start-ups; entrepreneur; factors of success; performance (search for similar items in EconPapers)
JEL-codes: G02 G3 M13 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2014-08
New Economics Papers: this item is included in nep-ino
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp1451

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