Personal Experience: A Most Vicious and Limited Circle!?
of older entrepreneurs is found in the group of experienced firms compared to
novice firms. This is not surprising - even if a higher share of entrepreneurs
whose age is unclear biases the structure of the latter. Novice entrepreneurs tend
to establish firms alone rather than in an entrepreneurial team, as the compara-
tively low share of team foundations suggests. About 15 percent of these firms
are multi-owned, compared to 24 percent of the experienced firms.
Table 2: Mean values of start-up characteristics
|
Start-up characteristics |
All firms |
Firms founded |
Firms founded |
|
Exit experience | |||
|
Sale of shareholdings |
2.2 |
- |
42.7 |
|
Voluntary closure of sound firm |
1.1 |
- |
21.1 |
|
Voluntary closure of distressed firm |
0.6 |
- |
11.5 |
|
Bankruptcy |
1.3 |
- |
25.4 |
|
Entrepreneurial within industry experience |
0.8 |
- |
16.0 |
|
Multiple entrepreneurial experiences |
0.9 |
- |
18.6 |
|
Initial economic situation b | |||
|
Payment behavior (indicator: good) |
13.7 |
13.9 |
10.4 |
|
Financial standing (indicator: care is advisable) |
7.4 |
7.0 |
14.8 |
|
University degree |
7.3 |
6.7 |
17.4 |
|
Education unknown |
68.2 |
69.5 |
43.9 |
|
Age of entrepreneur(s) a | |||
|
Younger than 30 |
19.2 |
19.7 |
10.3 |
|
30 to 39 years |
33.4 |
33.4 |
33.5 |
|
40 to 49 years |
18.9 |
18.4 |
27.9 |
|
50 to 59 years |
6.9 |
6.6 |
12.8 |
|
60 and older |
1.7 |
1.6 |
3.8 |
|
Age unknown |
26.4 |
26.6 |
22.7 |
|
Team foundation |
15.3 |
14.8 |
23.5 |
|
Number of employees at start-up (median) |
1.9 (1) |
1.8 (1) |
2.2 (1) |
|
Legal form (limited liability) |
22.9 |
22.0 |
40.8 |
|
Closure of financially sound firm |
7.3 |
7.4 |
4.8 |
|
Failure 1 (bankruptcy) |
10.3 |
10.2 |
11.9 |
|
Failure 2 (financially forced ‘voluntary’ closure) |
9.0 |
9.2 |
6.3 |
a There can be more than one indication per firm.
b Appraisal provided by Creditreform.
c T-tests on mean differences between firms founded by novices and firms founded by experienced entrepreneurs show
significant differences at p < 0.1 for the share of all characteristics apart from being in the thirties.
Source: ZEW Foundation Panel.
Half of the firms employ only the entrepreneur at foundation, as indicated by
median of the start-up size. Although the median is the same for experienced
firms, they provide a workplace for one additional person on average when they
found a firm. Twenty-two percent of the novice firms choose legal forms with
unlimited liability, which is almost 20 percentage points less than for firms
founded by experienced entrepreneurs. Without looking at any specific entry
year, 26 percent of the firms close during the observation period. More than a
third of these closures are bankruptcies, i.e. less than two thirds are voluntary
firm closures. Of the firm exits regarded as business failures, there is an almost
equal number of financially forced voluntary closures and bankruptcies. While
this pattern is similar in the group of novice firms, there is a distinctive differ-