Panel Paper: Life Expectancy and Success of Entrepreneurship in Costa Rica

Friday, March 9, 2018
Room 16 (Burkle Family Building at Claremont Graduate University)

*Names in bold indicate Presenter

Jairo S. Mena Arce, Cornell University, Marcos Adamson Badilla, University of Costa Rica and Luis Fernando Varela Montero, Queen’s University

Studying nascent entrepreneurship is highly relevant to modern society. However, it is not helpful for the economy if such entrepreneurship dies fast in the market. For this reason, it is pertinent to analyze the factors that affect the life expectancy of the entrepreneurship. This work evaluates the success of the entrepreneurships in Costa Rica using data from The Global Entrepreneurship Monitor (GEM) for the following years: 2010, 2012 and 2014.

A Probit model was used for the estimation, which defines the age of the company as a dependent variable, and the characteristics of the entrepreneurs as explanatory variables.

It was found that successful entrepreneurs displayed the following statistically significant characteristics: men of mature age, with fear of failure, whose companies use updated technology, whose clients consider their products as non-novel, and located far from the Central region of the country.

Additionally, the results showed factors that affect nascent entrepreneurs are not decisive for its success. The above suggests that the entrepreneurship success requires two phases. First, an initial stage, in which the factors of its birth do not ensure its survival. Second, a long-term phase for the entrepreneurship consolidation, in which deeper capacities as technology, clientele, and experience are required.