The impact of risk attitudes on entrepreneurial survival

Risk attitudes influence the complete life cycle of entrepreneurs. Whereas recent research underpins the theoretical proposition of a positive correlation between risk attitudes and the decision to become self-employed, the effects on survival are not as straightforward. Psychological research posit...

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Bibliographic Details
Published in:Journal of economic behavior & organization 2010-10, Vol.76 (1), p.45-63
Main Authors: Caliendo, Marco, Fossen, Frank, Kritikos, Alexander
Format: Article
Language:English
Subjects:
Attitudes
Business management
Company insolvency
Economic theory
Entrepreneurs
Entrepreneurship
Entrepreneurship Risk attitudes Survival
Germany
High risk
Quantitative Finance
Risk
Risk attitudes
Risk management
Self employment
Selfemployed
Socioeconomic factors
Studies
Survival
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Summary:Risk attitudes influence the complete life cycle of entrepreneurs. Whereas recent research underpins the theoretical proposition of a positive correlation between risk attitudes and the decision to become self-employed, the effects on survival are not as straightforward. Psychological research posits an inverse U-shaped relationship between risk attitudes and entrepreneurial survival. On the basis of experimentally validated data of the German Socio-Economic Panel (SOEP), we examine the extent to which risk attitudes influence survival rates in self-employment in Germany. The empirical results confirm that persons whose risk attitudes are in the medium range survive significantly longer as entrepreneurs than do persons with particularly low or high risk attitudes.
ISSN:0167-2681
1879-1751
0167-2681
DOI:10.1016/j.jebo.2010.02.012