The Relevance of Business Exit for Future Entrepreneurial Activity

Abstract

T erritories can capitalize on knowledge resulting from business exit by designing policies that distinguish first-time entrepreneurs who need specific support and information from individuals with an entrepreneurial background whose experience might help enhance the quality of future entrepreneurial activity.

How Institutions Matter in the Context of Business Exit: A Country Comparison Using GEM Data and fsQCA

“…Second, we contribute to the BE literature, identifying distinct recipes leading to BE associated with the presence or absence of high BE rates across countries. The findings not only confirm that BE rates across countries differ (Albiol‐Sanchez, 2016; Kelley, Singer and Herrington, 2016), but also suggest that institutional conditions leading to exit determine whether such exits are more or less desirable for the economy in which they occur. This responds to calls for more systematic approaches (see Stenholm, Acs and Wuebker, 2013), defining and measuring rates and types of entrepreneurial activity across different economies.…”

“…This suggests that exit of lower‐productivity businesses related to necessity‐driven contexts might have different effects compared to exit of higher‐productivity businesses in opportunity‐driven contexts, as entrepreneurs engage differently in entrepreneurial activities depending on context (Busenitz, Gomez and Spencer, 2000; Stenholm, Acs and Wuebker, 2013). Recent research calls for more country‐level investigations of BE (Albiol‐Sanchez, 2016). Systematic exploration of potential causal configurations, through fsQCA, is important to identify where BE may be regarded as more or less beneficial for the economy, and which institutional contexts are most relevant in influencing such exit types.…”

“…Jenkins, Wiklund and Brundin, 2014). It forms an important part of overall business dynamics, positively impacting on future entrepreneurial activity (Albiol‐Sanchez, 2016; Hessels et al ., 2011), competitiveness and employment growth (Fritsch and Mueller, 2004), revitalizing an economy's business stock (Sutaria and Hicks, 2004).…”

“…Whilst impacts of institutional dimensions on entrepreneurial entry rates across countries increasingly gain attention (De Clercq, Danis and Dakhli, 2010; Stenholm, Acs and Wuebker, 2013; Urbano and Alvarez, 2014), only two studies examining BE from cross‐country perspectives (Albiol‐Sanchez, 2016; Hessels et al ., 2011) were identified, both using GEM data, from 24 and 41 countries, respectively, both focusing on effects of BE on future entrepreneurial activity. Institutional conditions leading to BE, however, remain unexplored.…”

“…This study makes several contributions. First, contributing to institutional theory in an emerging research stream exploring how institutional context shapes entrepreneurial activity across countries (Albiol‐Sanchez, 2016; Urbano, Aparicio and Audretsch, 2019), it identifies how underlying causal complexities of institutions provide in‐depth understanding of relevant regulatory, normative and cultural‐cognitive institutional combinations, in BE contexts. Results illustrate regulatory institutional conditions in the form of entrepreneurial framework conditions having differential effects on BE rates depending on the presence or absence of normative as well as cultural‐cognitive conditions and economic development stage of countries.…”