Save for a rainy day? How regional household savings constrain entrepreneurship after a natural disaster

Jiabin Zhang (), Joeri Hugten () and Wouter Stam ()
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Jiabin Zhang: Vrije Universiteit Amsterdam
Joeri Hugten: Vrije Universiteit Amsterdam
Wouter Stam: Vrije Universiteit Amsterdam

Small Business Economics, 2025, vol. 64, issue 4, No 18, 2013-2033

Abstract: Abstract Why do some entrepreneurial ecosystems successfully adjust amid adversity while others languish? By integrating prospect theory into the entrepreneurial ecosystem literature and using a quasi-natural experimental design with a difference-in-difference-in-differences model, our theory and findings reveal that earthquakes reduce entrepreneurship in regions with high household savings, but increase entrepreneurship in regions with low savings, and these between-area differences increase over time. Reconceptualizing the meaning of savings from a resource into a key driver of loss aversion, we thus identify the surprising constraining influence of financial capital in times of adversity, yielding important implications for entrepreneurship research and policymakers.

Keywords: Natural disaster; Start-up; Entrepreneurial ecosystem; Savings; Time/temporal aspects; Prospect theory (search for similar items in EconPapers)
JEL-codes: E21 L26 M13 Q57 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11187-024-00973-5

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