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

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  • Serden Özcan

    (Department of Innovation and Organizational Economics, Copenhagen Business School, 2000 Frederiksberg, Denmark)

  • Toke Reichstein

    (Department of Innovation and Organizational Economics, Copenhagen Business School, 2000 Frederiksberg, Denmark)

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.

Suggested Citation

  • Serden Özcan & Toke Reichstein, 2009. "Transition to Entrepreneurship from the Public Sector: Predispositional and Contextual Effects," Management Science, INFORMS, vol. 55(4), pages 604-618, April.
    • Handle: RePEc:inm:ormnsc:v:55:y:2009:i:4:p:604-618
    DOI: 10.1287/mnsc.1080.0954
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    3. Mirjam van Praag & Arjen van Witteloostuijn & Justin van der Sluis, 2009. "Returns for Entrepreneurs versus Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vis-a-vis Wage Employees," Tinbergen Institute Discussion Papers 09-111/3, Tinbergen Institute.
    4. Vladasel, Theodor & Lindquist, Matthew J. & Sol, Joeri & van Praag, Mirjam, 2021. "On the origins of entrepreneurship: Evidence from sibling correlations," Journal of Business Venturing, Elsevier, vol. 36(5).
    5. Failla, Virgilio & Melillo, Francesca & Reichstein, Toke, 2017. "Entrepreneurship and employment stability — Job matching, labour market value, and personal commitment," Journal of Business Venturing, Elsevier, vol. 32(2), pages 162-177.
    6. Berkay Özcan, 2011. "Only the lonely? The influence of the spouse on the transition to self-employment," Small Business Economics, Springer, vol. 37(4), pages 465-492, November.
    7. Doering, Laura & Wry, Tyler, 2022. "The challenges of supporting necessity entrepreneurs: Understanding loan officer exit in microfinance," Journal of Business Venturing, Elsevier, vol. 37(2).
    8. Alina Sorgner & Michael Fritsch, 2018. "Entrepreneurial career paths: occupational context and the propensity to become self-employed," Small Business Economics, Springer, vol. 51(1), pages 129-152, June.
    9. Lars Frederiksen & Karl Wennberg & Chanchal Balachandran, 2016. "Mobility and Entrepreneurship: Evaluating the Scope of Knowledge–Based Theories of Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 40(2), pages 359-380, March.
    10. Fredriksen, Lars & Wennberg, Karl & Balachandran, Chanchal, 2015. "Mobility and Entrepreneurship: Evaluating the scope of knowledge-based theories of entrepreneurship," Ratio Working Papers 266, The Ratio Institute.
    11. Ruba Kutieshat & Panteha Farmanesh, 2022. "The Impact of New Human Resource Management Practices on Innovation Performance during the COVID 19 Crisis: A New Perception on Enhancing the Educational Sector," Sustainability, MDPI, vol. 14(5), pages 1-21, March.
    12. Mirjam Praag & Arjen van Witteloostuijn & Justin van der Sluis, 2013. "The higher returns to formal education for entrepreneurs versus employees," Small Business Economics, Springer, vol. 40(2), pages 375-396, February.
    13. Kristina Nyström, 2021. "Working for an entrepreneur: heaven or hell?," Small Business Economics, Springer, vol. 56(2), pages 919-931, February.
    14. Mehmet Akif Demircioglu & Farzana Chowdhury, 2021. "Entrepreneurship in public organizations: the role of leadership behavior," Small Business Economics, Springer, vol. 57(3), pages 1107-1123, October.
    15. Maryann P. Feldman & Serden Ozcan & Toke Reichstein, 2019. "Falling Not Far from the Tree: Entrepreneurs and Organizational Heritage," Organization Science, INFORMS, vol. 30(2), pages 337-360, March.
    16. Colombo, Massimo G. & Piva, Evila, 2020. "Start-ups launched by recent STEM university graduates: The impact of university education on entrepreneurial entry," Research Policy, Elsevier, vol. 49(6).
    17. Evila Piva & Paola Rovelli, 2022. "Mind the gender gap: the impact of university education on the entrepreneurial entry of female and male STEM graduates," Small Business Economics, Springer, vol. 59(1), pages 143-161, June.
    18. Jeroen Mahieu & Francesca Melillo & Peter Thompson, 2022. "The long‐term consequences of entrepreneurship: Earnings trajectories of former entrepreneurs," Strategic Management Journal, Wiley Blackwell, vol. 43(2), pages 213-236, February.
    19. van Praag, Mirjam C. & van Witteloostuijn, Arjen & van der Sluis, Justin, 2009. "Returns for Entrepreneurs vs. Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vs. Wage Employees," IZA Discussion Papers 4628, Institute of Labor Economics (IZA).
    20. Maryann P. Feldman & Serden Ozcan & Toke Reichstein, 2021. "Variation in organizational practices: are startups really different?," Journal of Evolutionary Economics, Springer, vol. 31(1), pages 1-31, January.
    21. Robert P. Garrett & Chao Miao & Shanshan Qian & Tae Jun Bae, 2017. "Entrepreneurial spawning and knowledge-based perspective: a meta-analysis," Small Business Economics, Springer, vol. 49(2), pages 355-378, August.
    22. Alina Sorgner & Michael Fritsch, 2013. "Occupational Choice and Self-Employment - Are They Related?," Jena Economics Research Papers 2013-001, Friedrich-Schiller-University Jena.
    23. Sanguineti, Francesca & Majocchi, Antonio & Cavusgil, S. Tamer, 2022. "Founding entrepreneur’s dilemma: Stay or exit the firm following an acquisition? An international comparison," International Business Review, Elsevier, vol. 31(1).
    24. Zhao, Mengli & Sheng, Shibin & Yang, Xiangyu, 2023. "Are government employees more or less likely to venture? Evidence from China," Journal of Business Research, Elsevier, vol. 157(C).

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