Personal Experience: A Most Vicious and Limited Circle!?
more than half of the recorded firms are very small firms, i.e. are firms of sole
entrepreneurs without employees.
The data contains general information about the firms like name and address,
date of foundation, industry affiliation, or the number of employees. Further-
more, it reports dates of occurrences related to closure, like bankruptcies or reg-
ister deletions. While bankruptcies have to be made public and thus will cer-
tainly be recognized, by no means all voluntary firm closures can be identified
from register deletions. However, Creditreform provide information about how
up-to-date the data available in each wave are. From this information, it is possi-
ble to draw conclusions about the firms’ survival status, i.e. if business activities
have been terminated between two waves, and to approximate the date of a vol-
untary firm closure accordingly.1 Beside the information about the firms, the
data also contains details about the entrepreneurs involved in these ventures. The
entrepreneurial activities of these entrepreneurs have been observed longitudi-
nally, which allows for the identification of those persons who have established
one or more companies. Due to the belief that the influence of single entrepre-
neurs is strongest in smaller enterprises, the analysis concentrates on firms of a
start-up size of less than 10 employees. Following data preparation, the sample
comprises about 345,000 firms founded since 1995. Eleven founding cohorts, i.e.
from 1995 up to 2005, are involved in the survival analysis, which considers the
survival of the firms from the year of foundation up to the end of 2005.
In order to give an impression of the firms included in the sample some mean
characteristics are shown in Table 2. At least one restarter was initially involved
in about 5 percent of all firms. Most of these experiences, i.e. 43 percent of all
cases, come from entrepreneurs who restarted after a sale of shareholdings. A
further 21 percent of the experience supply can be attributed to restarters who
closed their sound firms voluntarily. The remaining experience consists of busi-
ness failure, and thus of voluntarily closure of financially distressed firms (12
percent) or previous bankruptcy (25 percent). Within-industry experience is pre-
sent in about 16 percent of the experienced firms, and 19 percent of them are
provided with multiple experiences, in that at least one of the founders previ-
ously had an ownership share in more than one firm.
The initial economic situation seems to be slightly in favor of novice firms.
Fourteen percent of the firms founded by novice entrepreneurs pay their bills
within the payment terms or exceed them only marginally. This is a better pay-
ment practice than experienced entrepreneurs show: only 10 percent of them
keep their terms. Besides, Creditreform advises caution with regard to business
dealings with about 7 percent of start-ups from novice entrepreneurs and with 15
percent of the experienced firms. Furthermore, about 7 percent of the novice
firms are backed with university knowledge, which is 11 percentage points less
than in the case of the experienced firms. That is, graduate entrepreneurs seem to
be more prone to reestablish than others. In terms of age structure, a higher share