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The impact of risk attitudes on entrepreneurial survival

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  • Marco Caliendo

    (Director of Research at the Institute for the Study of Labor (IZA) in Bonn and affiliated with DIW Berlin and IAB - Director of Research at the Institute for the Study of Labor (IZA) in Bonn and affiliated with DIW Berlin and IAB)

  • Frank Fossen

    (Senior Research Associate at the German Institute for Economic Research - Senior Research Associate at the German Institute for Economic Research)

  • Alexander Kritikos

    (Head of the Department Innovation - Vice President of the German Institute for Economic Research)

Abstract

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.

Suggested Citation

  • Marco Caliendo & Frank Fossen & Alexander Kritikos, 2010. "The impact of risk attitudes on entrepreneurial survival," Post-Print hal-00856606, HAL.
    • Handle: RePEc:hal:journl:hal-00856606
    DOI: 10.1016/j.jebo.2010.02.012
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    More about this item

    Keywords

    Entrepreneurship; Risk Attitudes; Survival; D81; J23; M13;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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