Chapter 7: Interpreting Performance in Research on Independent Entrepreneurship
* INTRODUCTION For obvious reasons, researchers and policy-makers alike have an interest in assessing the performance of new and independent ﬁrms as well as in understanding the factors that contribute to it. Attaining such knowledge is not a trivial undertaking. Researchers have pointed out that the performance of the type of ﬁrms that entrepreneurship researchers study can be diﬃcult to assess (Brush & Vanderwerf, 1992) and also diﬃcult to predict (Cooper, 1995). In this chapter I will discuss the equally important and diﬃcult issue of how research results regarding the performance of independent (and often small) businesses and the predictors of its performance can or should be interpreted. In particular, I will discuss whether commonly used performance indicators such as survival versus non-survival and growth versus non-growth really reﬂect ‘good’ versus ‘bad’ performance, as is commonly assumed. Although theory and other researchers’ ﬁndings will also be used to some extent, my exposition will rely heavily on experiences and illustrations from a number of research projects I have been directly involved in during the last 20 years. The chapter proceeds as follows. I will ﬁrst question the assumption that business dissolution – often called ‘failure’ – is a ‘bad’ outcome that is best avoided from the aggregate perspective of the economic system. I will then continue to discuss ‘failure’ from more of a micro-perspective, arguing that most instances of dissolution of new or emerging ﬁrms are not associated with substantial ﬁnancial losses and do not necessarily represent eﬀorts that should...
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