Abstract
Because entrepreneurship entails uncertainty, business failure is a common outcome for entrepreneurs. When entrepreneurs encounter business failure, they carry a financial, social, and emotional burden associated with the failure. However, the magnitude of this burden differs by institutions, influencing entrepreneurial decisions and behaviors. Although institutions governing the rules of business failure are a topic for a rapidly growing field of research, research on this topic is highly fragmented. Therefore, the purpose of this systematic review is to unpack the relationships between institutions—governing the rules of business failure—and entrepreneurial decisions/behaviors. The paper provides a fine-grained and comprehensive review of the relevant literature and develops an agenda to guide future research.
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Notes
Short-term changes are based on some joint historical experience that leads to shared shift in norms in formative years or adolescence of a given generation. (See Zhang & Acs, 2018).
Entrepreneurial exit can occur at any stage of the business life cycle. The exit can have two paths either successful entrepreneurial exit or failure (See Wennberg et al., 2010).
Regarding empirical issues, most previous studies have used GEM (Global Entrepreneurship Monitor) data to capture the fear of failure while assuming it links to psychological traits, which may not be the case. Shaper survey instruments would be helpful to improve our understanding of the source and the role of the fear of failure.
We acknowledge that our framing of institutions was simplified for practicality.
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The authors are grateful to Dr. J. Hessels and two anonymous reviewers for their kind support during the four revision periods in 2.5 years.
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Lee, C.K., Wiklund, J., Amezcua, A. et al. Business failure and institutions in entrepreneurship: a systematic review and research agenda. Small Bus Econ 58, 1997–2023 (2022). https://doi.org/10.1007/s11187-021-00495-4
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Issue Date:
DOI: https://doi.org/10.1007/s11187-021-00495-4