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Stanford Graduate School of Business


Failure is an Option: Institutional Reform, Bankruptcy, and New Firm Performance

Working Paper

Robert Eberhart - Researcher at SPRIE, Stanford University
Charles Eesley - Assistant Professor at Department of Management Science and Engineering, Stanford University


How does bankruptcy reform influence the entry and performance of ventures in Japan?
Entrepreneurship is now at the center of many policy questions related to economic growth, employment opportunity, advancement of science and the alleviation of poverty (Ahlstrom, 2010). There is a growing consensus that fostering an appropriate institutional environment is important and affects the dynamic of job growth through new company formation and competition. The question we seek to understand is if institutional changes have the intended effect of creating new and flourishing firms and what are the mechanisms that drive changes in performance of new firms as a result of altering the institutional environment.