Identity and entrepreneurship: do school peers shape entrepreneurial intentions?

We incorporate the concept of social identity into entrepreneurship and analyze the determinants of having entrepreneurial intentions. We argue that an entrepreneurial identity results from an individual’s socialization. This could be parental influence but, as argued in this paper, also peer influence. Based on Programme for International Student Assessment (PISA) 2006 data in which students report their entrepreneurial intentions at the age of 15, we find that having an entrepreneurial peer group has a positive effect on an individual’s entrepreneurial intentions. We find that the strength of the peer effect in a country is moderated by prevailing values, namely individualism.     

Tax policy and entrepreneurship: empirical evidence from Sweden

This paper examines the relationship between income taxes and the decision to become self-employed using data from Sweden. By making it possible to track a large number of individuals over extended time periods and across a number of tax rate changes while controlling for important additional determinants, available tax-return information from Sweden allows for statistical estimation of the influence that income taxes have on the probability of becoming self-employed. The changing tax rate structure combined with the fact that the Swedish tax system does not provide additional tax benefits to small-business entrepreneurs compared with those who work as employees provides a powerful setting through which to examine the tax rate structure’s influence on individuals’ choice to become self-employed. Contrary to many earlier studies based on US data, this paper finds that both average and marginal taxes have a negative impact on the decision to become self-employed.     

Size matters: entrepreneurial entry and government

We explore the country-specific institutional characteristics likely to influence an individual’s decision to become an entrepreneur. We focus on the size of the government, on freedom from corruption and on “market freedom” defined as a cluster of variables related to protection of property rights and regulation. We test these relationships by combining country-level institutional indicators for 47 countries with working-age population survey data taken from the Global Entrepreneurship Monitor. Our results indicate that entrepreneurial entry is inversely related to the size of the government, and more weakly to the extent of corruption. A cluster of institutional indicators representing “market freedom” is only significant in some specifications. Freedom from corruption is significantly related to entrepreneurial entry, especially when the richest countries are removed from the sample, but unlike the size of government, the results on corruption are not confirmed by country-level fixed-effects models.     

Intergenerational ethnic enclave influences on the likelihood of being self-employed

How does the experience of living in an ethnic enclave during formative years influence the propensity to be self-employed? This study examines the intergenerational influence of exposure to self-employed, co-ethnic neighbors on the likelihood that racial or ethnic minorities will become self-employed. The paper develops a model of factors that influence self-employment likelihood, including intergenerational co-ethnic predictors, and tests them through an analysis of respondents to the 2000 U.S. Census long-form survey (i.e., IPUMS). Results show that higher levels of exposure to entrepreneurial co-ethnics in the parent's generation have a strong impact on self-employment likelihood.     

Gender Discrimination,Entrepreneurial Talent and Self-Employment

The trend of female self-employment in Italy is stable, with a low level of participation which confirms the prediction of economic theory on discrimination. We contend that gender discrimination alters the distribution of entrepreneurial talent between employees and self-employed workers. This gives rise to the prediction that the self-employed women are less likely to survive when self-employed than men because the lesser entrepreneurial talent of women will increase their risk of failure. Applying Markovian analysis to ISTAT’s labor market transition matrices we verify this prediction: Many women try to set up on their own, but they fail to remain self-employed both because their lesser entrepreneurial talent and because they try to become entrepreneurs without any previous experience of work. ‘If you think you’re so discriminated against, why don’t you set up on your own?’     

Only the lonely? The influence of the spouse on the transition to self-employment

Previous research showed that married individuals are overrepresented among the self-employed. Few studies proposed skill-spillover between the spouses within the marriage as an explanation. This paper deviates from the previous research by exploring different relationship contexts (e.g., cohabitation, being married or divorced, a widow(er) or single) and the role of partner influences under these contexts. It argues that the interaction between gender and relationship status implies variation in not only resources but also constraints, and hence sorts individuals into two different types of self-employment: entrepreneurial self-employment (i.e., incorporated business) and unincorporated self-employment. Using “Panel Study of Income Dynamics (PSID) 1965–2005” data, results of the competing risk models show that marital status contributes to both types of self-employment transitions, especially for men, but also for women. Cohabitation is a less supportive context for entrepreneurship and a partner’s self-employment experience increases only women’s likelihood of entering into entrepreneurship. These results suggest that skill-spillover between partners might be context dependent and only in one direction (from men to women).     

What makes a die-hard entrepreneur? Beyond the ‘employee or entrepreneur’ dichotomy

The article makes three contributions to the economics literature on entrepreneurship. We offer a new measure of entrepreneurship which accounts for variations in persistence in self-employment and as a result avoids the weakness of approaches which categorise an individual as an entrepreneur by observing their occupation at just one point in their career. We outline an econometric methodology to account for this approach and find, via a statistical test of model selection, that it is superior to probit/logit models, which have dominated the literature. While our results indicate that this existing literature is good at explaining an individual’s propensity to try self-employment, we find that entrepreneurial persistence is determined by a different model and unearth some new insights. Early self-employment encourages entrepreneurial persistence. For men, inheritance encourages persistence, and facilitates initial self-employment. Having a self-employed father as a role model makes sons persist longer. However, somewhat surprisingly, early experience of unemployment does not affect the probability of self-employment, while reducing persistence. The popular ‘unemployment push effect’ is thus rejected in our sample.

Entrepreneurship and survival over the business cycle: how do new technology-based firms differ?

We investigate the survival performance of new technology-based firms (NTBFs) over the business cycle and compare them against other entrepreneurial firms. Our data comprise the entire population of entrepreneurial firms entering the Swedish economy from 1991 to 2002, which we follow until 2007. Discrete-time duration models are employed to investigate whether the business cycle impacts differently on the survival likelihood of NTBFs vis-à-vis other entrepreneurial firms. Our main findings are three. First, NTBFs generally experience a lower hazard rate compared to other entrepreneurial firms, which is interpreted as a sign of their high ‘quality.’ Second, all entrepreneurial firms are sensitive to and follow a pro-cyclical pattern of survival likelihood over the business cycle. Three, when comparing NTBFs with the broader group of other entrepreneurial firms, we find that NTBFs are more sensitive to business cycle fluctuations. The above results come with a qualification, though. The sensitivity during the business cycle mainly pertains to self-employed NTBFs. Also, NTBFs’ higher survivability is only linked to not being characterized as self-employed.     

Passion for entrepreneurship or passion for the product? A conjoint analysis of angel and VC decision-making

Passion is important to venture investors, but what specifically do they want entrepreneurs to be passionate about? This study theorizes that angel investors and venture capitalists consider both entrepreneurs' passion for activities related to the product or service the venture provides (i.e., product passion) and passion for founding and developing new ventures (i.e., entrepreneurial passion). We demonstrate that both types of passion become more appealing when the investor perceives that the entrepreneur is highly open and receptive to feedback, suggesting that openness to feedback mitigates potential concerns associated with passion in its extremes. We further find that venture investors differ in their consideration of passion; angel investors and venture capitalists with more investing experience place greater emphasis on the combination of product passion and openness to feedback, whereas those with more entrepreneurial experience emphasize the combination of entrepreneurial passion and openness to feedback.     

Job satisfaction and self-employment: autonomy or personality?

Most studies in the economics discourse argue that the impact of self-employment on job satisfaction is mediated by greater procedural freedom and autonomy. Values and personality traits are considered less likely to explain the utility difference between self-employed and salaried workers. Psychology scholars suggest that entrepreneurial satisfaction also depends, at least in part, on specific values and personality traits. Utilising a large dataset derived from the 2006 European Social Survey, this study performs a complementary analysis by taking personality traits, personal values and indicators for workers’ autonomy explicitly into account. The empirical findings add further strength to economists’ argument that, net of values and personality traits, autonomy and independence are the mechanisms by which self-employment leads to higher levels of job satisfaction. These results hold true for both male and female sub-samples even when a multitude of socio-demographic characteristics, personal values and personality traits are controlled for.     

Labour market institutions,learning and self-employment

We develop a dynamic partial-equilibrium model to analyse how labour market institutions (wage compression, minimum wages, unemployment benefits, mobility costs and fixed-costs of self-employment) and learning affect who and when people become self-employed. We find that certain ability groups of workers become self-employed for both “carrot” and “stick” reasons: Some prefer self-employment to the low institutionalised wage, while others are not productive enough to qualify for a job at the institutionalised wage. Furthermore, wage compression and learning may give rise to a class of switchers who start in wage employment and later switch to self-employment. Several predictions of the model are consistent with observed empirical regularities, such as the existence of a group of low-skilled self-employed workers, the increasing propensity for self-employment over age groups and the larger spread in earnings among self-employed.     

What a Difference a Y makes-Female and Male Nascent Entrepreneurs in Germany

In western industrialized countries men are on average more than twice as active in entrepreneurship as women. Based on data from a recent representative survey of the adult population in Germany this paper uses an empirical model for the decision to become self-employed to test for differences between women and men in the ceteris paribus impact of several characteristics and attitudes, taking the rare events nature of becoming an entrepreneur into account. Furthermore, a non-parametric approach using Mahalanobis- distance matching of man and woman which are as similar as possible in all characteristics and attitudes but the “small difference” is used to investigate the difference in the propensity to become self-employed by sex. A core finding is that the difference between men and women in both the extent and the effect of considering fear of failure to be a reason not to start one’s own business is important for the explanation of the gap in entrepreneurship by sex.     

Financing, Regulatory Costs and Entrepreneurial Propensity

In this paper, we compared the availability of different types of financing sources to address the issue of capital availability to entrepreneurial propensity and we scrutinise the influence of business costs by utilising a new composite index using data from the World Bank’s Doing Business Database. The availability of three types of financing sources was analysed: traditional debt financing, venture capital financing, and informal investments. The study’s findings show that only informal investments have statistically significant influence on entrepreneurial propensity. Regulatory business costs were found to deter opportunity driven entrepreneurship, but had no impact on necessity entrepreneurship. Final version accepted on October 2006.     

Networks and self-employed migrants

This paper examines the immigrant’s decision to become self-employed. Personal characteristics and attitudes are crucial to this decision, but recent literature also highlights the importance of social networks as providers of information and financial support. To date, empirical research dealing with the network effect has considered self-employed migrants as a homogeneous group. In contrast, our paper examines the impact of the size and the composition of geographic concentration of co-nationals on the propensity to be self-employed among the foreign-born workers taking into account two possible choices: own-account workers and entrepreneurs. Using micro-level data of migrant workers in Spain over the period 2000–2009, the results show that networks affect positively the probability of becoming self-employed. However, they do not affect the likelihood of becoming an entrepreneur, which is determined by individual characteristics such as education and number of years of residence. Thus, our results suggest policies that enable immigrant assimilation can play a significant role in generating entrepreneurial activity.     

Self-employment Wealth and Job Creation: The Roles of Gender,Non-pecuniary Motivation and Entrepreneurial Ability

This paper uses National Child Development Study data for a large cohort of British individuals, to explore the influence of education, inheritance and other background characteristics on the propensity to become self-employed; and also on subsequent success, as measured by job and wealth creation. For the first time, we study the effects of our regressor variables on our success measures via disaggregation of our sample by gender – and, in this way, reveal striking differences between the determinants of male and female entrepreneurial performance.     

Risk attitudes of nascent entrepreneurs–new evidence from an experimentally validated survey

The influence of risk aversion on the decision to become self-employed is a much discussed topic in the entrepreneurial literature. Conventional wisdom asserts that being an entrepreneur means making risky decisions; hence more risk-averse individuals are less likely to become entrepreneurs. In contrast to previous research, we are able to examine empirically whether the decision of starting a business is influenced by objectively measurable risk attitudes at the time when this decision is made. Our results show that in general, individuals with lower risk aversion are more likely to become self-employed. Sensitivity analysis reveals, however, that this is true only for people coming out of regular employment, whereas for individuals coming out of unemployment or inactivity, risk attitudes do not seem to play a role in the decision process.

Firm Networking and Bribery in China: Assessing Some Potential Negative Consequences of Firm Openness

Economic openness, both in terms of increased international trade exposure and enhanced inter-firm networking, has been a key element of China’s economic emergence since the implementation of market reforms and the “opening-up policy” over 30 years ago. Unfortunately, these changes have also coincided with the increased incidence of bribery and corruption. Both in general, and in the specific context of China, research on the relationship between a firm’s tendency toward openness and its propensity to engage in bribery is scarce. This study seeks to fill this gap based on empirical evidence provided by a large sample of Chinese firms. The findings of the study reveal that firms’ increased networking and openness tend to occur contemporaneously with greater bribery and corruption. We suggest that this may be due to the misuse of guanxi-based networks that coincide with the presence of firms’ open network strategies, heightened by the potential loss of resource and capability heterogeneity (and hence reduced competitive advantages) in the context of openness. We further find that firms paying bribes do so as an attempt to overcome unnecessary bureaucratic processes and ineffective institutional support that might tend to hinder their development.     

Entrepreneurship as a utility maximizing response

Research on entrepreneurship has investigated what entrepreneurs do, what happens when they act as entrepreneurs, and why they act as entrepreneurs. This paper contributes to the latter investigation, and specifically asks why some people choose to be entrepreneurs, while others choose to be employees. Responding to prior literature recognizing the lack of a coherent theory of entrepreneurship and calling for a rigorous examination of the decision to become an entrepreneur, this paper presents an economic model of the career decision. We postulate that the individual chooses an entrepreneurial career path, or a career as an employee, or some combination of the two, according to which career path promises maximal utility (or psychic satisfaction).We assume that the individual's utility from any particular occupation, whether self-employed or employed, depends on income (which depends in turn on ability), as well as working conditions such as decision-making control, risk exposure, work effort required, and other working conditions (net perquisites) associated with that occupation. Individuals will exhibit either preference or aversion towards each of the specified working conditions, and it is the degree of that preference or aversion, in conjunction with the quantum of each working condition, which determines the total utility that the individual will derive from each particular occupation.We show that all employees will have an incentive to be self-employed (if they could assemble the same resources as their employer). Also, the greater their managerial and entrepreneurial ability, the greater will be their incentive to be self-employed, other things being equal. Next, we show that a more positive attitude to work (i.e., a lesser aversion to work effort required) provides a greater incentive to be self-employed.The individual's degree of risk aversion also influences the choice to be an entrepreneur. The more tolerant one is of risk bearing, the greater the incentive to be self-employed. Similarly, the greater the preference for independence, or decision-making control, the greater the incentive to be self-employed. Finally, it is noted that perquisites (and avoidance of irksome elements) can potentially be controlled to a greater degree when self-employed, so the individual will consider the differences in these other working conditions when contemplating a career choice.But it is the sum of the utility and disutility from these sources which determines the career decision. Thus, we demonstrate that positive attitudes toward risk, work, and independence are neither necessary nor sufficient conditions for a person to want to be an entrepreneur. Entrepreneurial abilities and attitudes are desirable in employment situations, therefore, an employer may choose to bribe an entrepreneurial individual to be an employee by offering more income and greater independence, for example.We demonstrate that firms recruiting employees, or venture capitalists considering funding an entrepreneur, should in their own best interests investigate the person's attitudes toward income, risk, work, and independence as well as their abilities, as these attitudes underpin the person's worth as an employee and their incentive to be self-employed. Management educators should design programs which enhance the entrepreneurial abilities and attitudes of individuals, and the individuals themselves should consider their `attitudinal' make-up before committing to entrepreneurship.     

Evolution of entrepreneurship and organizational configurations at Zildjian, 1623�C2010

This work uses a case-based research approach and Siggelkow’s (Acad Manag J 47:125–159, 2002) four-phase organizational configuration model to analyze Zildjian’s evolutionary growth and entrepreneurial initiatives in the global music industry. Zildjian is a unique and well-respected cymbal manufacturer that originated out of Turkey in 1623 and continues to be a major force in the music instruments sector. Turkey was a growing market during the periods of 1700 and 1800 that helped Zildjian to become an increasingly successful company. This also led to creating 13 generations of a successful family business. The work discusses Zildjian’s 387-year family genealogy and its growth within the domains of entrepreneurship, organizational configurations, and strategic inertia. The work finds that behind Zildjian’s marvelous expansion and well-known cymbals, there is a tightly knit family firm that continues to operate like an entrepreneurial venture, dealing with thousands of artists, musicians, educators, orchestras, and bands worldwide. As of 2011, the company may not be a large multinational corporation but its business model is a classic addition to the international entrepreneurship literature. Staunchly traditional in its family business, Zildjian thrives as a privately held company and protects its closely guarded metallurgical formula. The significance of this work lies in its unique methodology within the evolution of Zildjian’s entrepreneurial growth and organizational configurations.     

An Essay on the Origins of Entrepreneurial Opportunity

In this article, we apply a process of logical inference to draw conclusions about the origins of entrepreneurial opportunity from existing conversations in the field of strategic management. We equate the execution of a competitive strategy – as described in the strategic management literature – to the exploitation of an entrepreneurial opportunity – as described in the entrepreneurship literature. Given this assumption, we survey five extant theories of strategy in an attempt to categorize and describe the circumstances that define how and with what consequence entrepreneurial opportunity exploitation results in future opportunity. Given this review, we characterize the `outcomes’ of strategy execution as a function of the ‹match’ between strategy and environment in an effort to extend and refine Holcombe’s [Holcombe, Randall, 2003, Review of Austrian Economics 16(1), 25–43] position that entrepreneurial opportunity is born of prior entrepreneurial action.

‘Let your hook always be cast; in the pool where you least expect it, there will be a fish.’ Ovid, A.D. 17