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Entrepreneurial experience and firm exit over the business cycle
Author(s) -
McGuire Erin
Publication year - 2021
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/jems.12403
Subject(s) - business cycle , unemployment , unemployment rate , dynamics (music) , business , economics , entrepreneurship , labour economics , finance , macroeconomics , physics , acoustics
In this paper, I explore business cycle‐related dynamics in differences in exit decisions between serial and novice entrepreneurs. Using time series geographic variation in economic conditions, I examine how businesses founded by serial and novice entrepreneurs differentially respond to changes on average state personal income, alternative employment options, and home values. Weibull survival model estimates indicate that serial entrepreneurs are more likely to endure declines in aggregate income and credit availability, but are relatively more likely to go out of business as slack increases in the labor market (increases in unemployment rate). In the second part of the paper, I provide evidence that these dynamics are driven by differences in business strategies and the use of financial resources.