The National Bureau for Economic Research (NBER) has published a study that verifies much of what Dr. Hisrich taught way back then and reiterates one particular idea that surprised The Motley Monk: Most entrepreneurs fail on their first and second and, perhaps, third tries. But, they learn from those lessons and, if they don't give up, when they finally are successful, they are wildly successful. (One caveat: Along the road, many entrepreneurs risk and lose everything, including their marriages, families, and everything they own.)
With that as background, here's what the NBER study found about entrepreneurs in Texas who started businesses anytime between 1990 and 2011 (analyzing 2.3M new establishments run by 1.7M different retail and small service busines owners) and the duration of the business as a measure of success:
- of 2M business owners, 25% started more than one retail establishment;
- once an individaul becomes an entrepreneur for a second time, that person is more likely to become an entrepreneur for a third time, and so on;
- serial entrepreneurs are more successful than one-time entrepreneurs; the probability of exiting a business is 7% lower for entrepreneurs with prior businesses; and,
- a serial entrepreneur's second business is also more likely to survive if his previous business has closed.
"Serial entrepreneurs"? That's a term The Motley Monk hasn't heard. Brings to mind "serial murderers."
Why is serial entrepreneurship associated with success? The study offers two explanations:
- Serial entrepreneurship may increase the likelihood of success because of the transfer of skills from the first business to the next. (That's what used to be called the "Hisrichian Theory.")
- The serial entrepreneur has the skills that make a business successful and when the right opportunity comes along at the right time, the entrepreneur succeeds. (If true, the study notes, entrepreneurship is a learned skill. That would explain why Dr. Hisrich taught a course in entrepreneurship.)
No matter what the explanation, it seems that entrepreneurs are highly-motivated risk takers who have passion (some might say, "obsession") to succeed (some might say, "prove themselves" for whatever the psychological reason may be).
Who's to know? But the study did bring back to mind an excellent professor and course the content of which continues to be relevant 30+ years later.
Let the discussion begin...
To read the NBER study click on the following link:
"Serial Entrepreneurship: Learning by Doing?"