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"I Want to, But I Also Need to": Start-Ups Resulting from Opportunity and Necessity

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Author Info

  • Caliendo, Marco

    ()
    (University of Potsdam)

  • Kritikos, Alexander S.

    ()
    (University of Potsdam, DIW Berlin)

Abstract

When unemployed persons go into business, they often are characterized as necessity entrepreneurs, because push factors, namely their unemployment, likely prompted their decision. In contrast to this, business founders who have been previously employed represent opportunity entrepreneurs because pull factors provide the rationale for their decision. However, a data set of nearly 1,900 business start-ups by unemployed persons reveals that both kind of motivation can be observed among these start-ups. Moreover, a new type of entrepreneur emerges, motivated by both push and pull variables simultaneously. An analysis of the development of the businesses reflecting three different motivational types indicates a strong relationship between motives, survival rates and entrepreneurial development. We find in particular that start-ups out of opportunity and necessity have higher survival rates than do start-ups out of necessity, even if both types face the same duration of previous unemployment.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4661.

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Length: 35 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4661

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Keywords: entrepreneurship; push and pull motives; survival and failure; job creation;

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Citations

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Cited by:
  1. Peter Thompson, 2011. "Necessity and Opportunity Entrepreneurs through the Business Cycle," Working Papers 1102, Florida International University, Department of Economics.
  2. May-Strobl, Eva, 2010. "Nachhaltigkeit und Erfolg von Gründungen aus der Arbeitslosigkeit: Ergebnisse einer Nachbefragung bei aus den Gründungs- und Begleitzirkeln der G.I.B. hervorgegangenen Gründungen," IfM-Materialien 196, Institut für Mittelstandsforschung (IfM) Bonn.
  3. Baumann, Florian & Brändle, Tobias, 2012. "Self-employment, educational attainment and employment protection legislation," Labour Economics, Elsevier, vol. 19(6), pages 846-859.

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