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ICC Advance Access originally published online on May 17, 2007
Industrial and Corporate Change 2007 16(3):455-488; doi:10.1093/icc/dtm010
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© The Author 2007. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved.

Entrepreneurship and the process of firms’ entry, survival and growth

Enrico Santarelli and Marco Vivarelli

Correspondence: Marco Vivarelli, Università Cattolica del Sacro Cuore; Max Planck Institute of Economics (Jena); Centre for the Study of Globalisation and Regionalisation (Warwick); and Institute for the Study of Labour (Bonn). e-mail: marco.vivrelli{at}unicatt.it

Correspondence: Enrico Santarelli, Università di Bologna, Dipartimento di Scienze Economiche; Max Planck Institute of Economics (Jena); and Encore (Amsterdam).

This survey article aims at critically discussing the recent literature on firm formation and survival and the growth of new-born firms. The basic purpose is to single out the microeconomic entrepreneurial foundations of industrial dynamics (entry and exit) and to characterise the founder's ex-ante features in terms of likely ex-post business performance. The main conclusion is that entry of new firms is heterogeneous with innovative entrepreneurs being found together with passive followers, over-optimist gamblers and even escapees from unemployment. Since founders are heterogeneous and may make "entry mistakes," policy incentives should be highly selective, favouring nascent entrepreneurs endowed with progressive motivation and promising predictors of better business performance. This would lead to the least distortion in the post-entry market selection of efficient entrepreneurs.


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