Entrepreneurs, Jacks of all trades or Hobos?

Abstract

Lazear (2005) suggests that entrepreneurs should be generalists, while those who work for others should be specialists. Many prospective entrepreneurs will develop varied skills by engaging in a variety of employment activities prior to become an entrepreneur, and incomes are higher for those that do so. An alternative view predicts that those with greater taste for variety are more likely to become entrepreneurs. Varied employment prior to becoming an entrepreneur is simply an expression of this taste, and is associated with lower earnings. Data from a survey of 830 independent inventors and 300 individuals from the general population are used to discriminate between these two theories. The results show that inventor-entrepreneurs typically have a more varied labor market experience, and that varied work experience is associated with lower household income. JEL Classification Codes: J24, L26.

Do entrepreneurial goals matter? Resource allocation in new owner-managed firms

“…This means that owner-managers are modeled as utility-maximizers rather than profit-maximizers with utility functions whose arguments include both accounting profit and variables representing sources of non-market costs and benefits that may result from firm ownership and control-most commonly input quantities (or their opposite in the case of labor inputs, leisure). 8 Third, it assumes that different owners can have different "tastes" with regard to the relative importance of the elements in their 7 Some indirect evidence for the significance of nonmonetary goals in the decision to be one's own boss can be found in the self-employment literature (Åstebro and Thompson, 2011;Hamilton, 2000;Moskowitz and Vissing-Jorgensen, 2002). 8 All models in this literature assume the marginal utility of leisure is always positive, implying the marginal utility of work effort is always negative.…”

Economic growth through entrepreneurship: Determinants of self‐employed income across regional economies

“…In addition, a number of studies have found that the entrepreneur's lifestyle goals are a major determinant in the decision to pursue self-employment. Entrepreneurs are often willing to trade income for non-pecuniary outcomes such as greater independence, the ability to "be one's own boss" (Benz & Frey, 2008;Blanchflower, 2000;Blanchflower & Oswald, 1998;Blanchflower, Oswald, & Stutzer, 2001), or a greater variety in work activities (Astebro & Thompson, 2011). In a survey of 290 small Western Australia business owners, Walker and Brown (2004) found non-financial objectives were often the primary motive for many small business start-ups.…”

Habitual entrepreneurs in the making: how labour market rigidity and employment affects entrepreneurial re-entry

“…Individuals will choose entrepreneurship if the expected utility of self-employment exceeds that of other options Shepherd 2000, 2002;PlehnDujowich 2010). This decision has also been shown to be affected by factors such as individuals' psychological attributes and skills (Lazear 2004;Parker 2009;Åstebro and Thompson 2011), social networks (Katz 1992), and human capital (Shane 2003). The movement between entrepreneurship and paid employment has, furthermore, been proven quite common.…”

“…The relevance and consistency of their work experiences can therefore sometimes be called into question when they try to make a shift from selfemployed to wage earners. Entrepreneurs tend to be characterised as 'jacks-of-all-trades' with a balanced skill set (Lazear 2004), a feature that potential employers may, however, equate with a lack of specialisation and expertise (Åstebro and Thompson 2011). Employers may also shun individuals with entrepreneurial experiences as potentially difficult to retain, effectively deterring them from hiring ex-entrepreneurs in the first place.…”