Essays on entrepreneurship

This dissertation consists of three essays on entrepreneurship. How prior firm- founding experience affects subsequent venture performance is the common theme in the first two essays. The third essay examines the relationship between bankruptcy law and entrepreneurial activity.;I examine the effect of a founder's prior firm-founding experience on the survival rate of subsequent ventures in the first essay, and on the annualized rate of return on investment in subsequent ventures in the second essay. Estimates of this relationship take into account selection effect of serial entrepreneurs and two roles of venture capitalists (VCs): (i) evaluating venture quality by screening deals and (ii) adding value to the portfolio company through mentoring. An analysis of U.S. VC-financed semiconductor firms that entered the market during 1995-1999 shows that prior firm-founding experience helps entrepreneurs acquire skills that are conducive to the survival of early- stage firms, but not necessarily conducive to the financial success of a venture as measured by the annualized rate of return on investment. In addition, I find that the mentoring role of VCs helps the portfolio company survive through the early stages of a venture and earn a higher rate of return. These findings add to our understanding of how founders acquire entrepreneurial skills and the usefulness of these skills in entrepreneurial activities. These findings also shed light on the potential deadweight loss that may be imposed on the economy if serial entrepreneurs are not been funded because of past failure. Given the low success rate of entrepreneurship, this has implications for countries where failed entrepreneurs rarely get a second chance.;The third chapter investigates the effect of the U.S. bankruptcy reform act of 2005, which made bankruptcy more costly for debtors, on entrepreneurial activity as measured by the likelihood of switching into self-employment. I find that the bankruptcy reform act of 2005 reduced entrepreneurial activity for unincorporated firms and for small incorporated firms but not for medium- or large-size incorporated firms. This implies that evaluation of a country's bankruptcy law, which structures the monetary consequences of failure, should include analysis of the estimated impact of the law on entrepreneurial activity.