Initial Capital Constraints hinder Entrepreneurial
نویسندگان
چکیده
This paper investigates empirically whether and to what extent initial capital constraints hinder entrepreneurial performance once the venture has been started. As discussed in the paper, prior empirical research in this area could investigate this issue only indirectly by lack of data and adequate empirical identification strategies. The key contribution of this paper is that – due to our comprehensive data set we are able to measure more directly the influence of capital constraints. We find that initial capital constraints during the start-up phase of business have a quite substantial negative influence on performance: the chance of survival of capital constrained entrepreneurs appears to be about 50% less, while those surviving earn on average about 50% less. These results appear quite robust: they do not change very much when specifications are changed. JEL Codes: G32, J23, L25, M13
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