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

Abstract

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.

Usage of Information and Communication Technology in Micro Enterprises in the Last Decade

“…In the research (Burke et al, 2008) we can also find results that confirm personal characteristic of the owner (father) as important for die-hard entrepreneur. For men, inheritance encourages persistence, and facilitates initial selfemployment.…”

“…Several studies (e. g. Burke et al, 2008;Wiklund et al, 2009;Lee et al, 2009;Koellinger, 2008;Jeon, 2006) emphasized that this group plays a dominant role in decision-making in small enterprises. The duration of an interview was approximately half an hour.…”

Who Starts a Business and Who is Self-Employed in Germany

“…About 24.3 percent were unemployed the year before start-up and 11.4 percent were otherwise non-employed. Most importantly, about 18 percent of the business founders were already self-employed one year before they launched their new venture (Table 1), 23 which comes closest to the definition of "die-hard-entrepreneurs" (see Burke, et al, 2008). It is also remarkable that only a minority of individuals starts a business directly after finishing their education.…”

Entrepreneurship and the process of firms' entry, survival and growth

“…Among the personal characteristics of the founder, family background is also singled out as a key factor by econometric estimates which explain new firm formation as an act of self-employment (see Evans and Leighton, 1989;De Wit and Van Winden, 1989;Blanchflower and Oswald, 1998;Hout and Rosen, 2000;Reynolds et al, 2001). For instance, in a very recent paper Burke, FitzRoy and Nolan (2006) studied a cohort of British individuals born in March 1958, discovering that selfemployed fathers -as well as fathers who are managers of small firms -tend to encourage entrepreneurship among their sons and daughters. 14 Vivarelli and Audretsch (1998) studied 100 new firms in the Emilia region on the basis of a questionnaire survey conducted in 1993; Arrighetti and Vivarelli (1999) used a database of 147 new manufacturing firms originating from spin-offs in the Milano province on the basis of returned questionnaires collected in 1996; Vivarelli (2004) examined 365 potential founders in the Milano province through a questionnaire survey developed in the year 1999.…”