Entry into Entrepreneurship, Endogenous Adaption of Risk Attitudes and Entrepreneurial Survival

Matthias Brachert (matthias.brachert@iwh-halle.de), Walter Hyll and Mirko Titze

No 701, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

Abstract: Empirical studies use the assumption of stability in individual risk attitudes when searching for a relationship between attitude to risk and the decision to become and survive as an entrepreneur. We show that risk attitudes do not remain stable but face endogenous adaption when starting a new business. This adaption is associated with entrepreneurial survival. The results show that entrepreneurs with low risk tolerance before entering self-employment and increased risk tolerance when self-employed have a higher probability of survival than similar entrepreneurs experiencing a decrease in the willingness to take risks. We find the opposite results for entrepreneurs who express a higher willingness to take risks before becoming self-employed: in this case, a decrease in tolerance of risk is correlated with an increasing survival probability.

Keywords: Endogenous attitudes; Risk attitudes; Entrepreneurial survival; SOEP (search for similar items in EconPapers)
JEL-codes: D03 D81 M13 (search for similar items in EconPapers)
Pages: 28 p.
Date: 2014
New Economics Papers: this item is included in nep-ent, nep-sbm and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwsop:diw_sp701

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