Successful Entrepreneurship
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Successful Entrepreneurship

Confronting Economic Theory with Empirical Practice

C. Mirjam van Praag

Mirjam van Praag compares and contrasts the economic theory of entrepreneurship with determinants of successful entrepreneurship derived from empirical evidence, in an attempt to discover what makes for an accomplished entrepreneur. The author’s state-of-the-art historical, theoretical and empirical research on successful entrepreneurship – all from an explicit economic perspective – comprehensively addresses questions such as: ‘What are the factors that influence individuals’ decisions to start a business venture as opposed to working as an employee?’ and ‘What are the individual characteristics that make one successful as an entrepreneur?’ thereby supporting or dispelling various existing myths. Individual factors contributing to the success of entrepreneurs that are considered include, amongst others, human capital, financial capital and psychological traits. The importance of such factors for the various phases of entrepreneurship, including start-up, delivery and performance is also measured.
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Chapter 6: Survival and Success of Entrepreneurs

C. Mirjam van Praag


The requisite capacity and talent limit the number of competitors for the business of entrepreneurs. Nor is this all: there is always a degree of risk attending such undertakings; however well they may be conducted, there is a chance of failure; the entrepreneur may, without any fault of his own, sink his fortune, and in some measure his character. (Say [1803] 1971, p. 331) Introduction An effective government policy to decrease unemployment is to stimulate the number of new businesses. A well-known problem with new businesses is their high dissolution rate. Of every 100 start-ups, only 50 firms survive the first three years. Hence, authorities should not only stimulate business start-ups, but also strive to minimize the number of business dissolutions. It is therefore highly relevant to investigate and understand the individual determinants of business survival. Business survival determinants are not only interesting to authorities. Commercially oriented institutions involved in new businesses, for example banks, might benefit from understanding these determinants as well when the determinants are used for the decision as to which starting enterprises should be supported with a loan. The objective of this chapter is to quantify the person-specific determinants of survival duration and of success in business. I focus on the personrather than on the business-specific determinants because I presume that it is the man who makes the difference: he sets the conditions, the boundaries, the characteristics and, ultimately the value-creating ability of the newly founded firm. Chandler and Hanks (1994)...

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