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.
|Place of Publication||Frederiksberg|
|Publisher||Department of Economics. Copenhagen Business School|
|Number of pages||43|
|Publication status||Published - 2012|
|Series||Working Paper / Department of Economics. Copenhagen Business School|
Andersen, S., & Meisner Nielsen, K. (2012). Ability or Finances as Constraints on Entrepreneurship? Evidence from Survival Rates in a Natural Experiment. Department of Economics. Copenhagen Business School. Working Paper / Department of Economics. Copenhagen Business School, No. 3-2012