Entrepreneurship and the Process of Firms Entry, Survival and Growth

Posted: 22 Jun 2008

See all articles by Enrico Santarelli

Enrico Santarelli

University of Bologna - Department of Economics

Marco Vivarelli

Universita Cattolica del Sacro Cuore, Milano; IZA Institute of Labor Economics

Date Written: June 2007

Abstract

This survey article aims at critically discussing the recent literature on firm formation and survival and the growth of new-born firms. The basic purpose is to single out the microeconomic entrepreneurial foundations of industrial dynamics (entry and exit) and to characterise the founder's ex-ante features in terms of likely ex-post business performance. The main conclusion is that entry of new firms is heterogeneous with innovative entrepreneurs being found together with passive followers, over-optimist gamblers and even escapees from unemployment. Since founders are heterogeneous and may make entry mistakes, policy incentives should be highly selective, favouring nascent entrepreneurs endowed with progressive motivation and promising predictors of better business performance. This would lead to the least distortion in the post-entry market selection of efficient entrepreneurs.

Suggested Citation

Santarelli, Enrico and Vivarelli, Marco, Entrepreneurship and the Process of Firms Entry, Survival and Growth (June 2007). Industrial and Corporate Change, Vol. 16, Issue 3, pp. 455-488, 2007. Available at SSRN: https://ssrn.com/abstract=1149220 or http://dx.doi.org/10.1093/icc/dtm010

Enrico Santarelli (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli, 2
I-40126 Bologna
Italy
+39 051 2098487 (Phone)

HOME PAGE: http://www2.dse.unibo.it/santarel

Marco Vivarelli

Universita Cattolica del Sacro Cuore, Milano ( email )

Largo Gemelli 1
Milano, 20123
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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