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Necessity and Opportunity Entrepreneurs in Germany: Characteristics and Earning s Differentials

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  • Joern H. Block
  • Marcus Wagner

Abstract

In this paper we discuss necessity and opportunity entrepreneurship. We use panel data to analyze how these two types of entrepreneurs differ in general, and in their ability to discover and exploit entrepreneurial opportunities. We find that the opportunities exploited by opportunity entrepreneurs are generally more profitable than are those exploited by necessity entrepreneurs. We also find that the determinants of success differ to a strong degree. Standard wage equations seem to work better for opportunity than for necessity entrepreneurs. Our findings indicate a need to distinguish between the two groups in entrepreneurship theory and practice.

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Bibliographic Info

Article provided by LMU Munich School of Management in its journal Schmalenbach Business Review.

Volume (Year): 62 (2010)
Issue (Month): 2 (April)
Pages: 154-174

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Handle: RePEc:sbr:abstra:v:62:y:2010:i:2:p:154-174

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Keywords: Earnings Equation; Necessity Entrepreneurship; Opportunity Discovery; Opportunity Entrepreneurship; Opportunity Exploitation.;

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  1. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
  2. Joachim Wagner, 2005. "Nascent Necessity and Opportunity Entrepreneurs in Germany. Evidence from the Regional Entrepreneurship Monitor (REM)," Labor and Demography 0506004, EconWPA.
  3. Matthias Benz & Bruno S. Frey, 2008. "Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy," Economica, London School of Economics and Political Science, vol. 75(298), pages 362-383, 05.
  4. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-35, June.
  5. Devine, T.J. & Kiefer, N.M., 1990. "The Empirical Status Of Job Search Theory," Papers 4-90-1, Pennsylvania State - Department of Economics.
  6. Brown, Sarah & Sessions, John G, 1998. "Education, Employment Status and Earnings: A Comparative Test of the Strong Screening Hypothesis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(5), pages 586-91, November.
  7. Parker,Simon C., 2006. "The Economics of Self-Employment and Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521030632, December.
  8. Justin van der Sluis & Mirjam van Praag & Wim Vijverberg, 2003. "Entrepreneurship Selection and Performance," Tinbergen Institute Discussion Papers 03-046/3, Tinbergen Institute, revised 24 Sep 2004.
  9. Reize, Frank, 2000. "Leaving unemployment for self-employment: a discrete duration analysis of determinants and stability of self-employment among former unemployed," ZEW Discussion Papers 00-26, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Strauch, Rolf & von Hagen, Jürgen, 2000. "East Germany: Transition With Unification - Experiments and Experiences," CEPR Discussion Papers 2386, C.E.P.R. Discussion Papers.
  11. van der Sluis, Justin & van Praag, Mirjam & van Witteloostuijn, Arjen, 2007. "Why Are the Returns to Education Higher for Entrepreneurs than for Employees?," IZA Discussion Papers 3058, Institute for the Study of Labor (IZA).
  12. repec:iza:izadps:dp624 is not listed on IDEAS
  13. Pfeiffer, Friedhelm & Reize, Frank, 2000. "Business start-ups by the unemployed -- an econometric analysis based on firm data," Labour Economics, Elsevier, vol. 7(5), pages 629-663, September.
  14. Zoltan J. Acs & Attila Varga, 2004. "Entrepreneurship, Agglomeration and Technological Change," Papers on Entrepreneurship, Growth and Public Policy 2004-06, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
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