Personal Experience: A Most
Vicious and Limited Circle!?
On the Role of Entrepreneurial
Experience for Firm Survival
Georg Metzger
Center for European Economic Research (ZEW), Mannheim,
P.O. Box 103443 D-68034 Mannheim, [email protected]
September 2007
Abstract: The analysis in this paper gives attention to
effects on firm survival which come from entrepreneu-
rial experience. It is likely that different kinds of experi-
ence result in different firm developments and therefore
in different types of firm exit. Particular emphasis is
placed upon the effects of failure experience. The results
provide evidence that both the kind of experience and
the type of exit matter. Negative experience, namely the
experience of failure, is found to heighten the risk of
failing again. This finding indicates that business failures
are largely not exceptions, but rather a sign of the entre-
preneurs’ lack of ability.
Keywords: Entrepreneurial Experience; Business Failure; Firm Survival.
JEL Classification: G33; L25; L26; M13.
Acknowledgements
The author would like to thank Dirk Czarnitzki, Michael Fritsch and Elisabeth Müller for their
valuable remarks. I would also like to thank Francesca Lotti for her helpful comments at the
ESSID Summer School 2006. The paper was partly written during a research stay at the Katho-
lieke Universiteit Leuven, Belgium.