Do entrepreneurs really learn? Or do they just tell us that they do?

Abstract

This paper examines the theory and evidence in support of entrepreneurial leaning (EL). Under this theory entrepreneurial performance is argued to be enhanced by EL which itself is enhanced by business experience. However, if business performance is strongly influenced by chance then evidence of EL will be difficult to identify. We test for EL using a large scale data set comprising 6671 new firms. We choose business survival over three years as our performance measure and then formulate three tests for EL. None of the three tests provide compelling evidence in support of EL.

Muppets and Gazelles: Political and Methodological Biases in Entrepreneurship Research

“…Like lottery players they are psychologically happier, which may be related to them being more optimistic and overconfident (Camerer and Lovallo, 1999;Parker, 2004). As with lottery players, it is not clear that unsuccessful entrepreneurs should be encouraged or subsidized to try again, given that the evidence on entrepreneurial learning from large-scale studies of unsuccessful entrepreneurs is generally weak (Metzger, 2006;Frankish et al, 2013). And lastly, as with lottery players, a tiny minority of "winners" is very visible in the popular press, while the large number of losers is overlooked.…”

If You Don't Succeed, Should You Try Again? The Role of Entrepreneurial Experience in Venture Survival

“…Nonetheless, findings such as these are typically based on small-scale qualitative studies. Quantitative evidence contradicts the assertion that failure leads to subsequent venture survival (Frankish, Roberts, Coad, Spears and Storey, 2012;Neilsen and Sarasvathy, 2011;Ucbasaran et al, 2006). The aim of this paper is to investigate the impact of prior entrepreneurial experience on venture survival outcomes.…”

“…Essentially, the key advantage of prior experience is that the repetition of opportunity seeking activities reduces the costs of start-up, thereby increasing the likelihood of better survival outcomes (Plehn-Dujowich, 2010). In contrast, the alternative argument is that learning either reflects underlying human capital abilities or is made more difficult to achieve by the idiosyncratic nature of opportunities (Frankish et al, 2012) and, as attribution theory suggests, the difficulties that individuals have in correctly interpreting past instances of entrepreneurial failure and success. One key advantage of our panel data is that we can control for a range of factors that are commonly associated with venture survival.…”

“…over-optimism) (Hayward et al, 2006), because it is difficult to apply prior experience to novel entrepreneurial situations (Frankish et al, 2012) or because they attribute failure to external situational factors rather than underlying issues in terms of effort or ability (Diwas et al, 2013). A more pessimistic view of experience, however, is that what actually matters more than experience is the underlying entrepreneurial talent of the entrepreneur to venture outcomes (Rocha et al, 2013;Chen, 2013).…”

“…In contrast, a range of studies have identified reasons why experience may be a poor guide to future venture survival. Frankish et al (2012) argue that, because uncertainty is endemic in entrepreneurial settings no two business situations are identical, implying that experience has limited efficacy for the entrepreneur in their new focal venture. Learning theorists (e.g.…”