Entrepreneurship during economic crisis: Success factors and paths to failure

Abstract

This paper identifies the combinations of fundamental entrepreneurial factors that drive the growth of new businesses under different economic conditions. Using data from the Global Entrepreneurship Monitor (GEM) survey, the study focuses on two moments in Spain's recent economic cycle: the 2008 economic crisis and the economic boom prior to this downturn. The study presents an application of fuzzy-set qualitative comparative analysis (fsQCA) to identify the basic entrepreneurial characteristics (opportunity recognition and innovation) and drivers of entrepreneurship (necessity vs. opportunity) that increase the likelihood of success for new businesses during these two periods in the economic cycle. Results reveal that necessity-driven entrepreneurship is ineffective during recessions and that innovation and opportunity recognition are more relevant as success factors during periods of recession than during periods of prosperity. Results also show that the entrepreneur's perception of opportunities may be misleading in strong economies.