Entrepreneurial Exit in Real and Imagined Markets

Entrepreneurs exit their business due to selection mechanisms experienced in the market place. Next to this well known ex-post decision to exit, entrepreneurs select ex-ante whether they are willing to pursue an entrepreneurial career at all, or to give up these entrepreneurial intentions. This paper compares the role of personal and ecological factors as determinants of these two types of selection: exit in real and in imagined markets. Entrepreneurs in imagined markets are more likely to exit in strong welfare state regimes, while real entrepreneurs are more likely to exit when they have low levels of human capital and when they are located in metropolitan areas.