Small business survival and inheritance: evidence from Germany

Dorothea Schäfer, Oleksandr Talavera

Research output: Contribution to journalArticlepeer-review

20 Citations (Scopus)

Abstract

This paper investigates whether small businesses face financial constraints that affect their survival. A model of moral hazard is developed in which financial constraints arise endogenously. The model predicts that higher private assets relax financial constraints and have a positive effect on the firm’s probability of survival. The empirical analysis confirms that the entrepreneur has a higher propensity to stay in business when she inherits capital. This effect is particularly strong for entrepreneurs who switch from self-employment into wage employment.
Original languageEnglish
Pages (from-to)95-109
Number of pages15
JournalSmall Business Economics
Volume32
Issue number1
Early online date7 Aug 2007
DOIs
Publication statusPublished - Jan 2009

Keywords

  • Entrepreneurship
  • Survival
  • Financial constraints

Cite this