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Entry into Entrepreneurship, Endogenous Adaption of Risk Attitudes and Entrepreneurial Survival

SOEPpapers 701, 28 S.

Matthias Brachert, Walter Hyll, Mirko Titze


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Empirical studies use the assumption of stability in individual risk attitudes when searching for a relationship between attitude to risk and the decision to become and survive as an entrepreneur. We show that risk attitudes do not remain stable but face endogenous adaption when starting a new business. This adaption is associated with entrepreneurial survival. The results show that entrepreneurs with low risk tolerance before entering self-employment and increased risk tolerance when self-employed have a higher probability of survival than similar entrepreneurs experiencing a decrease in the willingness to take risks. We find the opposite results for entrepreneurs who express a higher willingness to take risks before becoming self-employed: in this case, a decrease in tolerance of risk is correlated with an increasing survival probability.

JEL-Classification: D03;D81;M13
Keywords: Endogenous attitudes, Risk attitudes, Entrepreneurial survival, SOEP
Frei zugängliche Version: (econstor)