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Luck and Entrepreneurial Success

Author

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  • Diego LIECHTI

    (University of Bern)

  • Claudio LODERER

    (University of Bern and Swiss Finance Institute)

  • Urs PEYER

    (INSEAD)

Abstract

How much of entrepreneurial performance is sheer luck compared to talent, experience, education, and hard work? We define luck as unexpected performance and look for an answer in a large survey of entrepreneurs. Accordingly, luck ranks last in importance among various success factors and accounts for less than one third of performance variation. This ranking is unaffected by past performance and many personality traits, including self-attribution and illusion of control. Luck matters, however, in activities such as finding the appropriate business idea or choosing the right moment to enter a market. More important, luck perceptions shape decisions. For example, individuals who believe luck is important are reluctant to become entrepreneurs. Consistent with the definition, what entrepreneurs believe is luck correlates with the unexplained variation in a standard econometric model of performance. Estimates of that model also show that hard work does affect performance. So do talent, education, and, especially, experience.

Suggested Citation

  • Diego LIECHTI & Claudio LODERER & Urs PEYER, 2014. "Luck and Entrepreneurial Success," Swiss Finance Institute Research Paper Series 14-51, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp1451
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    File URL: http://ssrn.com/abstract=2476839
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    Cited by:

    1. Santos, Susana C. & Caetano, António & Brochado, Ana, 2023. "Why am I so successful? Self-presentation and deliberative attributions of success in entrepreneurship," Journal of Business Venturing Insights, Elsevier, vol. 19(C).

    More about this item

    Keywords

    luck; start-ups; entrepreneur; factors of success; performance;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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