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Why Do Individuals Choose Self-Employment?

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Author Info

  • Dawson, Christopher

    (University of the West of England, Bristol)

  • Henley, Andrew

    ()
    (Aberystwyth University)

  • Latreille, Paul L.

    ()
    (University of Sheffield)

Abstract

This paper undertakes an analysis of the motivating factors cited by the self-employed in the UK as reasons for choosing self-employment. Very limited previous research has addressed the question of why individuals report that they have chosen self-employment. Two questions are addressed using large scale labour force survey data for the UK. The first concerns the extent to which the self-employed are self-employed out of necessity, opportunity, lifestyle decision or occupational choice. The second concerns the extent to which there is heterogeneity amongst the self-employed on the basis of the motivations that they report for choosing self-employment. Factor analysis reveals a number of different dimensions of entrepreneurship on the basis of stated motivation, but with no evidence that being 'forced' into entrepreneurship through economic necessity is a significant factor. Motivation towards entrepreneurship is therefore highly multidimensional. Multivariate regression analysis is employed using a method to control for self-selection into self-employment. This reveals significant differences between men and women, with women concerned more with lifestyle factors and less with financial gain. Market-directed 'opportunity' entrepreneurship is more strongly associated with higher educational attainment. Those joining family businesses appear not to value prior educational attainment. Public policy to promote entrepreneurship therefore needs to be tailored carefully to different groups.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3974.

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Length: 42 pages
Date of creation: Jan 2009
Date of revision:
Publication status: published as 'Individual Motives for Choosing Self-employment in the UK: Does Region Matter?' in: Regional Studies, 2012, [Online First]
Handle: RePEc:iza:izadps:dp3974

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Related research

Keywords: entrepreneurship; motivation; occupational choice; self-employment;

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Cited by:
  1. Caliendo, Marco & Kritikos, Alexander S. & Künn, Steffen & Loersch, Christian & Schröder, Helmut & Schütz, Holger, 2014. "Report No. 61: Evaluation der Programme "Gründercoaching Deutschland" und "Gründercoaching Deutschland – Gründungen aus der Arbeitslosigkeit"," IZA Research Reports 61, Institute for the Study of Labor (IZA).
  2. Brink, Siegrun & Kriwoluzky, Silke & Bijedic, Teita & Ettl, Kerstin & Welter, Friederike, 2014. "Gender, Innovation und Unternehmensentwicklung," IfM-Materialien 228, Institut für Mittelstandsforschung (IfM) Bonn.
  3. Vicente Salas-Fumás & J. Sanchez-Asin & David Storey, 2014. "Occupational choice, number of entrepreneurs and output: theory and empirical evidence with Spanish data," SERIEs, Spanish Economic Association, vol. 5(1), pages 1-24, March.
  4. Diana, TANASE & Suzana, DEMYEN, 2013. "Prospects Regarding The Development Of Entrepreneurship And The Contribution Of Sme'S To Regionally Economic Growth," Management Strategies Journal, Constantin Brancoveanu University, vol. 23(Special), pages 368-375.
  5. Sven-Olov Daunfeldt & Niklas Elert & Niklas Rudholm, 2013. "Start-ups and firm in-migration: evidence from the Swedish wholesale industry," The Annals of Regional Science, Springer, vol. 51(2), pages 479-494, October.
  6. Frijters, Paul & Kong, Tao & Meng, Xin, 2011. "Migrant Entrepreneurs and Credit Constraints under Labour Market Discrimination," IZA Discussion Papers 5967, Institute for the Study of Labor (IZA).
  7. Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.

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