The Characteristics Of Small Firms That Serve As Owners’ Primary Employment

Our objective in this study is to examine the relation between firm characteristics and entrepreneurship as “primary employment”. What type of small firms are organized in a way to promote “primary employment”? In order to achieve that objective, we compare firm characteristics in high “primary employment” U.S. st ates versus in low “primary employment” states. We use the “United States Small Business Friendliness Survey” done by Kauffman Foundation and Thumptack.com in 2013. Our nonparametric tests show that in the states where relatively high percentage of owners have their business as “primary employment” (i.e. “high primary employment states”), firms tend to be limited in their operational area (i.e. operate only in that state) although their sales are less local (meaning that they focus on other areas in their state rather than their own locale). In these states, while more firms are in the “home maintenance and repair” industry, fewer firms operate in the “events” industry. We also find that there is no significant difference between high- and low-primary employment states in terms of firm age and firm size. We advise policymakers to use these findings when formulating policies that support entrepreneurship as “primary employment”.