Ability or Finances as Constraints on Entrepreneurship?

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Ability or Finances as Constraints on Entrepreneurship?

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Title: Ability or Finances as Constraints on Entrepreneurship?
Evidence from Survival Rates in a Natural Experiment
Author: Andersen, Steffen; Meisner Nielsen, Kasper
Abstract: We use a natural experiment in Denmark to test the hypothesis that aspiring entrepreneurs face financial constraints because of low entrepreneurial quality. We identify 304 constrained entrepreneurs who start a business after receiving windfall wealth and examine the performance of these marginal entrepreneurs. We find that constrained entrepreneurs have significantly lower survival rates and lower profits when compared with a matched sample of unconstrained entrepreneurs. These results are consistent with the hypothesis that the marginal entrepreneur is of low quality.
URI: http://hdl.handle.net/10398/8499
Date: 2012-08-21

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