Bankruptcy Regulation and Self-Employment Entry: The Moderating Roles of Income Share, Parenthood, and Hybrid Entrepreneurship

Matthias Schulz*, Christian Schwens, Christian Fisch

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

8 Citations (Scopus)
272 Downloads (Pure)

Abstract

We investigate how individual factors moderate the impact of bankruptcy exemption levels—that is, the amount of wealth individuals can keep in case of bankruptcy—on entry into self-employment. Conceptually, we combine Prospect Theory’s axiom of diminishing sensitivity with insights from research on entrepreneurial failure. We hypothesize that individuals who face higher financial, social, or psychological costs because of bankruptcy will be less sensitive to higher exemption levels than will those who face lower costs across these dimensions. Our empirical results, which are based on a quasi-natural experiment in the United States, support our theoretical predictions.

Original languageEnglish
Pages (from-to)1522-1549
Number of pages28
JournalEntrepreneurship: Theory and Practice
Volume45
Issue number6
DOIs
Publication statusPublished - Nov 2021

Bibliographical note

Funding Information:
We would like to thank the editor Karl Wennberg and the anonymus reviewers for their highly constructive comments throughout the review process. We also thank Jörn Block, Katrin Burmeister-Lamp, Sandra Gottschalk, and Vera Rocha for their valuable comments and suggestions on earlier versions of the manuscript. The author(s) received no financial support for the research, authorship, and/or publication of this article.

Publisher Copyright:
© The Author(s) 2021.

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