The Entrepreneurship Research Challenge
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The Entrepreneurship Research Challenge

Per Davidsson

Entrepreneurship is an emerging, dynamic and to a considerable extent, unpredictable phenomenon. Thus, it makes for a challenging research subject. In this book, one of the most experienced empiricists in this field has collected some of his most important ideas on how improved conceptualization and research design can make this challenge more manageable.
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Chapter 7: Interpreting Performance in Research on Independent Entrepreneurship

Per Davidsson


* 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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