Abstract:
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Purpose: The purpose of this paper is to analyse the impact of business exits on future
dimensions of entrepreneurial activity at the macroeconomic level.
Design/methodology/approach: This research uses the Global Entrepreneurship
Monitor (GEM) data for 41 countries and the Generalized Method of Moments (GMM)
to carry out the analysis. The paper differentiates the effect of the two components of total
entrepreneurial activity, and the two motivations for it – opportunity and necessity
entrepreneurship.
Findings: The results presented here show a positive and significant effect of the
coefficient associated with exits in all models. This means that the levels of
entrepreneurial activity exceed business exits. The robustness of the models are tested,
including other variables such as the fear of failure, the Gross Domestic Product, role
models, entrepreneurial skills and the unemployment variables. The main hypothesis
which stated that at national level business exits imply greater rates of opportunity-driven
entrepreneurship is corroborated.
Originality/value: One would expect that unemployment rates would imply higher levels
of necessity entrepreneurship. However, results show that unemployment rates do in fact
favour opportunity entrepreneurship levels. This could be due to those government
policies that are aimed at promoting entrepreneurship through the capitalization of
unemployment to be totally invested in a new start-up. To the best of our knowledge, this
is the first panel data study to link previous exit rates to future dimensions of
entrepreneurial activity.
Keywords: Entrepreneurship, business exits, social values, industrial organization
Paper type: Research paper |