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

Matthias Brachert (), 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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