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

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Listed author(s):
  • Marco Caliendo
  • Alexander S. Kritikos

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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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.345801.de/dp966.pdf
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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 966.

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Length: 33 p.
Date of creation: 2009
Handle: RePEc:diw:diwwpp:dp966
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Keywords: Entrepreneurship; Push and pull motives; survival and failure; job creation;

Other versions of this item:

Find related papers by JEL classification:
  • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
  • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
  • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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Cited by:

  1. Andrew T. Young & Matthew J. Higgins & Donald J. Lacombe & Briana Sell, 2014. "The Direct and Indirect Effects of Small Business Administration Lending on Growth: Evidence from U.S. County-Level Data," NBER Working Papers 20543, National Bureau of Economic Research, Inc.
  2. Marco Caliendo & Jens Hogenacker & Steffen Künn & Frank Wießner, 2015. "Subsidized start-ups out of unemployment: a comparison to regular business start-ups," Small Business Economics, Springer, vol. 45(1), pages 165-190, June.
  3. Peter Thompson, 2011. "Necessity and Opportunity Entrepreneurs through the Business Cycle," Working Papers 1102, Florida International University, Department of Economics.
  4. Konon, Alexander, 2015. "Personality traits, subjective learning, and entrepreneurial decision making," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112805, Verein für Socialpolitik / German Economic Association.
  5. 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.
  6. Lucio Fuentelsaz & Consuelo González-Gil & Juan P. Maicas, 2015. "What determines entepreneurial failure: taking advantage of the institutional context," Documentos de Trabajo dt2015-05, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  7. 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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