The Outcome of Past Entrepreneurial Experience and its Effect on Future BusinessOwnership

Abstract

Individuals who have been business owners in the past, irrespective of their success, are found to have gained entrepreneurial specific human capital, which gives them greater new business venturing capabilities. In such an environment, the self confidence of recent entrepreneurs is greatly influenced by the success of their prior venture. However, recent studies show that the self confidence of individuals in their entrepreneurial skills has a greater impact over their propensity to become a business owner than their actual entrepreneurial specific human capital. The objective of this paper is to analyse the effect of past business experience (success and failure) on the current entrepreneurial self confidence of individuals and their propensity towards new business activity. In order to perform this analysis, individual cross sectional data from the Spanish GEM survey for the year 2010 was used. The results point for several implications that directly serve to improve entrepreneurship support policies and programmes by highlighting the need for greater attention to those individuals with a negative entrepreneurial history.