The impact of risk attitudes on entrepreneurial survival

Marco Caliendo (1) , Frank Fossen (2) , Alexander Kritikos (3)

1 Director of Research at the Institute for the Study of Labor (IZA) in Bonn and affiliated with DIW Berlin and IAB
2 Senior Research Associate at the German Institute for Economic Research
3 Head of the Department Innovation

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.

Mots clés: Entrepreneurship; Risk Attitudes; Survival; D81; J23; M13

Domaines: Économie et finance quantitative [q-fin]

Marco Caliendo, Frank Fossen, Alexander Kritikos. The impact of risk attitudes on entrepreneurial survival. Journal of Economic Behavior and Organization, 2010, 76 (1), pp.45. ⟨10.1016/j.jebo.2010.02.012⟩. ⟨hal-00856606⟩