Exits, entrances and entrepreneurship : an exploration of economic theories of entrepreneurship through new independent entry and infant exit
The thesis began as a study of new firm formation. Preliminary research suggested that infant death rate was considered to be a closely related problem and the search was for a theory of new firm formation which would explain both. The thesis finds theories of exit and entry inadequate in this respect and focusses instead on theories of entrepreneurship, particularly those which concentrate on entrepreneurship as an agent of change. The role of information is found to be fundamental to economic change and an understanding of information generation and dissemination and the nature and direction of information flows is postulated to lead coterminously to an understanding of entrepreneurhsip and economic change. The economics of information is applied to theories of entrepreneurhsip and some testable hypotheses are derived. The testing relies on etablishing and measuring the information bases of the founders of new firms and then testing for certain hypothesised differences between the information bases of survivors and non-survivors. No theory of entrepreneurship is likely to be straightforwardly testable and many postulates have to be established to bring the theory to a testable stage. A questionnaire is used to gather information from a sample of firms taken from a new micro-data set established as part of the work of the thesis. Discriminant Analysis establishes the variables which best distinguish between survivors and non-survivors. The variables which emerge as important discriminators are consistent with the theory which the analysis is testing. While there are alternative interpretations of the important variables, collective consistency with the theory under test is established. The thesis concludes with an examination of the implications of the theory for policy towards stimulating new firm formation.