Table 1: Definition of variables
|
Variable |
Definition |
Hypothesis |
Expected |
|
Main covariates I: |
Closure reasons a | ||
|
DEBTS |
= 1 if closure due to excessive debts |
H1 |
- |
|
NOTWORTH |
= 1 if closure because business didn’t meet entrepreneur’s target |
? | |
|
performance threshold | |||
|
ILLIQUIDITY |
= 1 if closure due to liquidity problems |
H1 |
- |
|
WAGEEMPL |
= 1 if closure because entrepreneur transitioned to workforce |
- | |
|
RETIRE |
= 1 if closure because entrepreneur went into retirement |
- | |
|
PRIVATE |
= 1 if closure because of private reasons |
? | |
|
OTHERREAS |
= 1 if closure because of other reasons |
? | |
|
QUARREL |
= 1 if closure due to differences within the entrepreneur team |
? | |
|
(the effect of this variable has to be interpreted jointly with | |||
|
the TEAM indicator) | |||
|
Main covariates II |
: Bearer of financial losses a | ||
|
Sharehol |
= 1 if entrepreneurs incurred financial losses due to the business |
H2 |
- |
|
closure | |||
|
BANKS |
= 1 if banks or public institutions incurred financial losses due to |
H3 |
- |
|
the business closure | |||
|
OTHERSTAKE |
= 1 if other stakeholders (like suppliers) incurred financial losses |
? | |
|
due to the business closure | |||
|
Control variables | |||
|
capital |
= Amount of start-up capital utilized in the closed firm (in ‘000 €) |
? | |
|
CAPITALM |
= 1 if the amount of capital is not available | ||
|
TEAM |
= 1 if firm was ruled by an entrepreneur team |
+ | |
|
TEAMM |
= 1 if the TEAM indicator is missing | ||
|
LIMITED |
= 1 if the firm’s legal status was liability limiting |
0 | |
|
SIZE |
= # of employees at firm closure |
+ | |
|
SIZEM |
= 1 if firm size is not available | ||
|
AGE |
= Age of the closed firm (in years) |
? | |
|
AGEM |
= 1 if firm age is not available | ||
|
EAST |
= 1 if the firm was located in East Germany |
0 | |
|
HTIND |
= 1 if the firms was affiliated in a high-tech industry sector |
0 | |
|
OTHERIND |
= 1 if the firms was affiliated in a non-high-tech industry sector |
+ | |
|
TECHSERV |
= 1 if the firms was affiliated in a high-tech service sector |
+ | |
|
OTHERSERV |
= 1 if the firms was affiliated in a non-high-tech service sector |
+ | |
|
CONSTRUCT |
= 1 if the firms was affiliated in construction |
+ | |
|
TRADE________ |
= 1 if the firms was affiliated in trade services |
+ | |
|
a Multiple statements were possible. | |||
|
Note: The expected signs of the control variables’ effects are suggested by the findings of Metzger (2008). | |||
There are different closure reasons that could be developed from the interviewees an-
swers, which led to eight indicators. The indicator DEBTS refers to closures due to exces-
sive debts. It is a closure reason that suggests business failure and which is thus an ap-
propriate indicator to test hypothesis H1 owing to which negative effects are expected.
NOTWORTH is a further closure reason variable. It refers to closures that occur because
they do not meet the entrepreneurs’ target threshold of performance. However, no ex-
pectation about the effect of this measure is derived. At the one hand, entrepreneurs
who close a business because they recognize that a going concern is not worth it, might
regard themselves as being failed preventing them from restart. At the other hand, they
may hold the opinion that this experience improved their entrepreneurial talent confirm-
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