Reputation Building through Failure

Reputation Building through Failure

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 com...

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Bibliographic Details
Main Authors: WANG, Huan, ZHANG, Yi
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2015
Subjects:
Reputation Building
Entrepreneurs
Failure
Shock
Revival
China
Asian Studies
Behavioral Economics
Entrepreneurial and Small Business Operations
Industrial Organization
Online Access:https://ink.library.smu.edu.sg/soe_research/1684
https://ink.library.smu.edu.sg/context/soe_research/article/2683/viewcontent/ReputationBuilding.pdf
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Institution: Singapore Management University
Language: English
Description
Summary: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.

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