Small Business Economics

, Volume 26, Issue 4, pp 319–335 | Cite as

Success and Risk Factors in the Pre-Startup Phase

Article

Abstract

Why does one person actually succeed in starting a business, while a second person gives up? In order to answer this question, a sample of 517 nascent entrepreneurs (people in the process of setting up a business) was followed over a 3-year period. After this period, it was established that 195 efforts were successful and that 115 start up efforts were abandoned. Our research focuses on estimating the relative importance of a variety of approaches and variables in explaining pre-start-up success. These influences are organized in terms of Gartner’s (1985) framework of new venture creation. This framework suggests that start-up efforts differ in terms of the characteristics of the individual(s) who start the venture, the organization that they create, the environment surrounding the new venture, and the process by which the new venture is started. Logistic regression analyses are run for the sample as a whole as well as for subgroups within the sample, namely for those with high ambition versus low ambition and for those with substantial versus limited experience. The results point to the importance of perceived risk of the market as a predictor of getting started versus abandoning the start up effort.

Keywords

performance survival nascent entrepreneurs start-ups 

JEL Code

M13 

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Copyright information

© Springer 2006

Authors and Affiliations

  1. 1.Department of Management and International BusinessMassey UniversityAucklandNew Zealand
  2. 2.Rotterdam School of EconomicsErasmus University RotterdamRotterdamThe Netherlands
  3. 3.EIM Business and Policy ResearchZoetermeer and Max Planck Institute for Research into Economic SystemsJena
  4. 4.EIM Business and Policy ResearchZoetermeerThe Netherlands

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