Transition to Entrepreneurship from the Public Sector: Predispositional and Contextual Effects

Abstract

Studies of career dynamics implicitly claim that government employees are not entrepreneurial. Utilizing longitudinal data from the U.S. Panel Study for Income Dynamics, we investigate the reasons for the low rate of entrepreneurship from the public sector. We conjecture that it is due to labor market matching processes and the bureaucratic nature of public organizations and bureaucratization of individuals. Our life-course analysis identifies labor market matching as a major determinant: nonentrepreneurial types choose public sector employment. We also uncover tenure and context effects, which decrease and increase the hazard rate of entrepreneurial exit, respectively. Whereas the former effect points toward adaptation and internal labor market sorting, the latter draws attention to exits due to frustration.entrepreneurship, public sector, bureaucracy, endogeneity, tenure, sorting

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

“…Hess, 2004;Brown et al, 2006). Since entry into self-employment implies facing such risks more directly (Ozcan & Reichstein 2009), marriage may provide individuals with greater flexibility for job or career changes because they believe that they can trust their spouses' earning potential, whether they are in the labor market or not (Blau et al, 2002). Although sharing non-financial resources might occur equally in cohabitation and marriage, cohabitation, with its unstable nature, can hardly be considered a risk-reducing institution.…”

“…Major theoretical arguments have, for the most part, attributed the decision to a wide range of personality traits, motivational attributes (e.g. Ozcan & Reichstein, 2009) and socio-cultural backgrounds (e.g. Aldrich & Waldinger, 1990;Nee & Sanders, 1996).…”

Studying Entrepreneurship as an Institution

“…Kacperczyk's (2012) study of the career paths of employees in U.S. mutual fund organizations corroborates this argument by showing that individuals who founded new firms in this industry often came from smaller fund organizations. Similarly, another study by Özcan and Reichstein (2009) found that individuals employed in public sector firms in the United States were less likely to enter into self-employment than similar individuals employed in private sector firms.…”

Mobility and Entrepreneurship: Evaluating the Scope of Knowledge–Based Theories of Entrepreneurship

“…These are imperfect measures since entrepreneurs often choose to 6. A somewhat similar approach is taken by papers investigating related issues using generalizable longitudinal data on the U.S. ( € Ozcan & Reichstein, 2009) or Danish labor markets (Nanda & Sørensen, 2010).…”

“…We measure immigration with a dummy that takes the value 0 for Nordic (i.e., Scandinavian) and 15 other. Wage as employee is measured in logarithmic form to control for the opportunity costs of employment ( € Ozcan & Reichstein, 2009). Spouse wage is measured in logarithmic form to control for the fact that household resources are often pooled in entrepreneurial firms (Folta et al, 2010).…”