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

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Author Info

  • 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.

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File URL: http://dx.doi.org/10.1287/mnsc.1080.0954
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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 55 (2009)
Issue (Month): 4 (April)
Pages: 604-618

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Handle: RePEc:inm:ormnsc:v:55:y:2009:i:4:p:604-618

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Related research

Keywords: entrepreneurship; public sector; bureaucracy; endogeneity; tenure; sorting;

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Cited by:
  1. 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.
  2. van Praag, Mirjam & 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 for the Study of Labor (IZA).
  3. 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.
  4. Alina Sorgner & Michael Fritsch, 2013. "Occupational Choice and Self-Employment: Are They Related?," SOEPpapers on Multidisciplinary Panel Data Research 533, DIW Berlin, The German Socio-Economic Panel (SOEP).
  5. repec:dgr:uvatin:2009111 is not listed on IDEAS
  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.

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