Publication Type
Working Paper
Version
publishedVersion
Publication Date
1-2015
Abstract
In China, many entrepreneurs receive strong supports each time their business fails. This contradicts existing literature and differs from rare revival elsewhere. The major explanation lies in China’s unfriendly and unstable policy environments, due to which business failure per se cannot discern competence. Therefore, entrepreneurs failing because of policy shocks have the incentive for extra efforts to build reputation of competence and trustworthiness. This mechanism prepares a pool of seasoned entrepreneurs who can help alleviate damages of not only policy shocks, but also such system shocks as business cycle and sector upgrading, and therefore makes the economy more adaptable.
Keywords
Reputation Building, Entrepreneurs, Failure, Shock, Revival, China
Discipline
Asian Studies | Behavioral Economics | Entrepreneurial and Small Business Operations | Industrial Organization
Research Areas
Applied Microeconomics
First Page
1
Last Page
16
Citation
WANG, Huan and ZHANG, Yi.
Reputation Building through Failure. (2015). 1-16.
Available at: https://ink.library.smu.edu.sg/soe_research/1684
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Included in
Asian Studies Commons, Behavioral Economics Commons, Entrepreneurial and Small Business Operations Commons, Industrial Organization Commons