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Transitions to Entrepreneurship and Industry-Specific Barriers

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Author Info

  • Lofstrom, Magnus

    ()
    (Public Policy Institute of California)

  • Bates, Timothy

    ()
    (Wayne State University, Detroit)

  • Parker, Simon C.

    ()
    (Western University, Canada)

Abstract

Drivers of entrepreneurial entry are investigated in this study by examining how entry into small-business ownership is shaped by industry-specific constraints. The human- and financial-capital endowments of potential entrepreneurs entering firms in various industries are shown to differ profoundly, depending on the type of venture entered. The educational credentials of highly educated potential entrepreneurs, in particular, predict avoidance of small-firm ownership in some industries as well as attraction to others. Recognizing that individuals choose an industry sector jointly with their decision to enter entrepreneurship, we find that the conventional practice of conflating different industry types in empirical analyses of transitions to entrepreneurship generates misleading findings about the determinants of entrepreneurship.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6103.

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Length: 46 pages
Date of creation: Nov 2011
Date of revision:
Publication status: published as 'Why are some people more likely to become small-businesses owners than others: Entrepreneurship entry and industry-specific barriers' in: Journal of Business Venturing, 2013, [Online First]
Handle: RePEc:iza:izadps:dp6103

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Related research

Keywords: business start-ups; entrepreneurship; self-employment; capital constraints; transitions; entry barriers;

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References

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  1. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Bates, Timothy, 1995. "Self-employment entry across industry groups," Journal of Business Venturing, Elsevier, vol. 10(2), pages 143-156, March.
  3. Arauzo Carod, Josep Maria & Segarra Blasco, Agustí, 2004. "The Determinants of Entry are not Independent of Start-up Size: Some evidence from Spanish manufacturing," Working Papers 2072/1775, Universitat Rovira i Virgili, Department of Economics.
  4. Richard E. Caves, 1998. "Industrial Organization and New Findings on the Turnover and Mobility of Firms," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 1947-1982, December.
  5. Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 551-59, November.
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