Entrepreneurs and entrepreneurship

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This chapter presents how the research is conducted. It gives necessary detailed information to allow a verification of the consistency of the paper. It makes possible replications of the work, which would lead to the same results.
In order to do so, we clearly outline in succession the steps of the research, the choices made, the limitations given to this work in order to deliver a focused and scientific contribution.
This paper comprehend an exposition of the relevant literature concerning failure and career theories, which allowed to formulate hypotheses on career decisions that are subsequently empirically tested on a sample of entrepreneurs who experienced failure.
This chapter will illustrate the methods used for the literature review, the research design and data collection, and the data analysis

Literature review

The author conducted a systematic literature review, with the aim of organizing the relevant body of knowledge resulting from previous research, and provide the reader with the necessary means to evaluate this paper.
The literature review has been conducted through a detailed research, on the Scopus database, of the terms “failure”, “bankruptcy”, “entrepreneur”, “portfolio entrepreneur”, “serial entrepreneur”, “re-entry”, “entrepreneurial career”, “career construction theory”.
The author found to be particularly relevant, and a starting point for further research, the recent review made by Ucbasaran, Shepherd, Lockett & John Lyon (2013), which extensively organized much of the existing literature on the theme of failure, and proved to be very relevant for our topic, as well as the conceptualization of career by Savickas (2002 & 2006).
The analysis of this literature allowed to conceptualize hypotheses that are empirically tested and exposed in the relative chapters.

Research design

The main approaches for research are quantitative and qualitative. Quantitative analysis usually dominates the major business journals, while qualitative investigation is the preferred method for exploratory studies (Hohenthal, 2006). However, quantitative studies are usually used for testing, despite some criticism it receives for being supposedly lacking in depth and understanding (Hohenthal, 2006).
The presence of a strong theoretical framework allows us to use a deductive approach to propose hypotheses to test. By testing them, we can empirically find support for relationships between different variables, and for our hypotheses.
This research relies on a previous research conducted by Anna Jenkins (PhD graduate from JIBS and supervisor for this paper) on the same topic. That work availed of the Human Capital Theory to understand self-employment decisions, and analyzed a Swedish sample of failed entrepreneurs. Some information collected then has been used for this paper, as detailed below. However, the author gathered necessary additional data in order to have a dataset suitable for our research purpose. The steps taken in collecting this data will be explained fully in the data collection section below.
The author was motivated to choose this data set because Jenkin´s (2012) data collection was done scientifically, with a clear definition of failure which is in line with the one here proposed, and included necessary information related to the failure event.

Data collection

To test our hypotheses, there is a need to collect information on businesses started by entrepreneurs after an adequate period of time from their failure.
As stated and explained above, this paper relied on the definition of bankruptcy, and on the definition of entrepreneur as owner-manager.
To proceed, an existing database prepared for a previous academic research on the same subject (Jenkins, 2012) was used. This database contains information on businesses that filed for bankruptcy in Sweden from September to November 2008, precisely 1,000 firms.
Out of the interviews there performed, variables from 380 responses were included in this study. Seven individuals were excluded due to the impossibility to obtain updated information on their current business engagements.
In the mentioned research, the respondents (who were both owners and managers, specifically seating on the board of directors) were telephonically interviewed approximately six months after the filing for bankruptcy.
Further information on that dataset can be found in the cited work.
The information in that database comprehends the age of the entrepreneur, his or her marital status, the presence and number of children under 18 years cohabiting at least 50% of the time, the gender, the involvement in other businesses (portfolio entrepreneurship), the involvement in the startup of other businesses before failure, the number of years of ownership of the failed business, the number of hours worked per week for the failed business, etc. This information, obtained separately in an anonymous form, allowed to test the hypotheses formulated.
Considering the time lapse from the filing for bankruptcy by this firms, and the time this thesis research is done (approximately 4,5 years), the author deems that some long-term career decisions should have been made by the failed entrepreneurs.
Therefore, the author proceeded, in the months of April and May 2013, to gather financial information on these entrepreneurs, that would allow to determine whether they continued on their entrepreneurial path, or opted for other career decisions like being employee. Furthermore, the presence of multiple ownership (portfolio entrepreneurs) has been registered. This financial information has been found through inquiries of public accessible databases (Ratsit, 121.nu and Allabolag) as secondary data sources. Specifically, the author checked whether the failed individuals were running a business, the form chosen (e.g. Aktiebolag), whether they were managing the firms by themselves or with the support of others, and the financial result of the last available accounting year for active businesses. Given the information available, that did not comprehend ownership information for the Aktiebolag (AB) businesses, it was presumed that board membership in ABs was related to an entrepreneurial activity. All the information has thus being gathered from secondary data sources.

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Data analysis

The author analyzed the data collected to infer statistically significant relationships between the relevant variables. The presence or absence of those ties allows to find support for the hypothesis or reject them.
The author therefore employed the statistics software application SPSS (“Statistical Product and Service Solutions”, formerly known as “Statistical Package for the Social Sciences”) by IBM.
The author performed a review of descriptive statistics, highlighting some characteristics of the sample that may be valuable for the interpretation of the data.
The paper reports then the correlation between the studied variables, and the correlations when controlling for the control variables.
Given that some information is presented as dichotomous variables, for example, re-entry into business, marital status, presence of children, gender, the Spearman Rank (rho) correlation coefficient is employed, as suggested by Foster (1998), additionally to the Pearson product moment correlation coefficient. As no significant differences were found when employing these two coefficient, only the results obtained using the common Pearson coefficient are reported.
Logistic (or logit) regression analysis is performed to infer relationships between selected variables and re-entry into self-employment. Tolerance, VIF, and Eigenvalue has been checked to exclude collinearity.
Linear regression analysis has been employed to look for relationships between independent variables, and the financial performance upon re-entry. Financial performance has been calculated as the percentage of profitable businesses run (precisely, the percentage of ABs reporting a profit in the last year, over the total number of ABs reporting either a profit or a loss). As individuals could run more than one business with opposite outcomes, it is not possible to determine successful financial performance as a dichotomous variable. Moreover, it was not possible to retrieve, from the data sources employed, information on the financial performance of businesses with legal form different than AB.
In this paper, the independent variables are the hours worked per week at the failed business, the presence of other companies run at the time of failure (portfolio entrepreneurs), the acquisition of the failed business by inheritance, the marital status, the number of children under 18 living with the entrepreneur at least 50% of the time. The inclusion of other peers in the businesses is an independent variable entered only in the study of the financial performance. This involvement has been calculated as the percentage of ABs run with others, with profit or loss, over the total ABs managed. The use of a dichotomous variable has not been possible for the same reasons stated above.
Dependent variables are the number of businesses in which the failed entrepreneurs are involved in (re-entry), and the financial performance of these ventures.
Control variables are used, specifically the years of ownership of the failed venture (proxy to their human capital), sex and age.
The analysis employs dummy variables, such as for gender, re -entry, parental status and marital status, portfolio entrepreneurship, and inheritance of the failed business.


The data collection relied on secondary data sources; thus, the reliability of this work depends on their quality. This is assured by the data collection method employed by Jenkins (2012), and by the cross-check of updated financial data between three different suppliers of financial information (Ratsit, 121.nu, and Allabolag). Further checks were performed to test the mathematical accuracy of this collection.
As mentioned above, test were executed to control against collinearity.

Descriptive statistics

The author performed a review of descriptive statistics before proceeding with the analysis. As reported in the table below, males made up the vast majority of the sample (83,9%). Most of the individuals were married or cohabitants (72,6%), and the percentage of those who had children under 18 living with them is almost identical to the percentage of individuals without (48,9% and 48,4%). Most of the sample (55,0%) belongs to the age range 45-64, described by Savickas (2002) as characterized by the career stage of “maintenance or management”, where individuals question themselves with midlife dilemmas, potentially leading to changes in their vocational self-concepts. The second most populated range is between age 25-44 (27,6%), usually the “establishment” stage, whereas a significant portion (17,1%) is afferent to the late “disengagement” period at 65 years and above (Savickas, 2002).
Moreover, a majority of entrepreneurs had been involved in the start-up of other companies before failure (60,0%), and almost one quarter of the failed entrepreneurs were portfolio entrepreneurs (24,7%). As we can note, only a very small portion (2,4% percent) had inherited the failed company.
At the time this research was conducted, more than 40% were self-employed, meaning that they continued on the entrepreneurial path. A significant percentage (14,7%) was running more than one business.
Almost three-quarters of the businesses run are Aktiebolag (limited company) (74,8%), and the businesses run with this legal form alone are almost double those run with others. Ventures characterized by other legal forms (Enskild näringsidkare – sole trader, Handelsbolag – partnership, Kommanditbolag – limited partnership) are, in the overwhelming majority, run alone.
It was not possible to obtain, from the utilized sources, data on the financial performance of businesses with legal forms different than Aktiebolag.

Table of Contents
1.1 Background
1.2 Problem
1.3 Purpose
2.1 Entrepreneurs and entrepreneurship
2.2 Entrepreneurial career and traditional career
2.3 Entrepreneurial failure
2.4 Career Construction Theory (CCT)
2.5 Conclusion
3.1 Literature review
3.2 Research design
3.3 Data collection
3.4 Data analysis
3.5 Reliability
4.1 Descriptive statistics
4.2 Analysis
6.1 Practical implications
6.2 Future research
Enduring the entrepreneurial path after failure Insights from the Career Construction Theory

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