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Start-up motivation and (in)voluntary exit

  • Jolanda Hessels
  • Peter van der Zwan
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    We investigate the role of an entrepreneur’s start-up motivation in determining the mode of entrepreneurial exit. A distinction is made between involuntary exit through business failure and voluntary exit through business sell-out or transfer. Regarding an entrepreneur’s start-up motivation, we include two measures distinguishing between opportunity and necessity motivated business owners. Internationally comparable data from 2009 for 35 countries containing more than 2,600 former business owners are used. We find some evidence that necessity business owners are more likely to exit through failure than opportunity business owners or business owners that are driven by a combination of opportunity and necessity reasons. We argue that necessity business owners have lower entrepreneurial ability than opportunity business owners and run lower quality businesses which increases their probability of failure versus sell-out. Entrepreneurial ability seems to play a role beyond the human capital aspects that are included in the model.

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    File URL: http://www.entrepreneurship-sme.eu/pdf-ez/H201309.pdf
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    Paper provided by EIM Business and Policy Research in its series Scales Research Reports with number H201309.

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    Length: 21 pages
    Date of creation: 04 Jun 2013
    Date of revision:
    Handle: RePEc:eim:papers:h201309
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    1. Taylor, Mark P, 1999. "Survival of the Fittest? An Analysis of Self-Employment Duration in Britain," Economic Journal, Royal Economic Society, vol. 109(454), pages C140-55, March.
    2. Roy Thurik & Ingrid Verheul & Jolanda Hessels & Peter van der Zwan, 2010. "Factors Influencing the Entrepreneurial Engagement of Opportunity and Necessity Entrepreneurs," Scales Research Reports H201011, EIM Business and Policy Research.
    3. José Millán & Emilio Congregado & Concepción Román, 2012. "Erratum to: Determinants of self-employment survival in Europe," Small Business Economics, Springer, vol. 38(2), pages 259-263, February.
    4. Jolanda Hessels & Isabel Grilo & Roy Thurik & Peter Zwan, 2011. "Entrepreneurial exit and entrepreneurial engagement," Journal of Evolutionary Economics, Springer, vol. 21(3), pages 447-471, August.
    5. Sander Wennekers & André van Stel & Roy Thurik & Paul Reynolds, 2005. "Nascent entrepreneurship and the level of economic development," Papers on Entrepreneurship, Growth and Public Policy 2005-14, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    6. Block, Joern & Wagner, Marcus, 2006. "Necessity and Opportunity Entrepreneurs in Germany: Characteristics and Earnings Differentials," MPRA Paper 610, University Library of Munich, Germany.
    7. Holmes, Thomas J & Schmitz, James A, Jr, 1996. "Managerial Tenure, Business Age, and Small Business Turnover," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 79-99, January.
    8. Wennberg, Karl & Wiklund, Johan & DeTienne, Dawn & Cardon, Melissa, 2009. "Reconceptualizing Entrepreneurial Exit: Divergent Exit Routes and Their Drivers," SSE/EFI Working Paper Series in Business Administration 2009:10, Stockholm School of Economics.
    9. Markus Poschke, 2013. "‘Entrepreneurs out of necessity’: a snapshot," Applied Economics Letters, Taylor & Francis Journals, vol. 20(7), pages 658-663, May.
    10. Block, Jörn H. & Sandner, Philipp G., 2007. "Necessity and Opportunity Entrepreneurs and their Duration in Self-employment: Evidence from German Micro Data," Discussion Papers in Business Administration 2082, University of Munich, Munich School of Management.
    11. Simeon Djankov & Yingyi Qian & Gerard Roland & Ekaterina Zhuravskaya, 2005. "Who Are China’s Entrepreneurs?," Working Papers w0047, Center for Economic and Financial Research (CEFIR).
    12. Block, J.H. & Koellinger, Ph.D., 2008. "I Can’t Get No Satisfaction - Necessity Entrepreneurship and Procedural Utility," ERIM Report Series Research in Management ERS-2008-051-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    13. Holmes, Thomas J & Schmitz, James A, Jr, 1990. "A Theory of Entrepreneurship and Its Application to the Study of Business Transfers," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 265-94, April.
    14. José Millán & Emilio Congregado & Concepción Román, 2012. "Determinants of self-employment survival in Europe," Small Business Economics, Springer, vol. 38(2), pages 231-258, February.
    15. André van Stel & Werner Liebregts & Nardo de Vries, 2013. "Explaining entrepreneurial performance of solo self-employed from a motivational perspective," Scales Research Reports H201308, EIM Business and Policy Research.
    16. Dirk Oberschachtsiek, 2012. "The experience of the founder and self-employment duration: a comparative advantage approach," Small Business Economics, Springer, vol. 39(1), pages 1-17, July.
    17. Zoltan Acs, 2006. "How Is Entrepreneurship Good for Economic Growth?," Innovations: Technology, Governance, Globalization, MIT Press, vol. 1(1), pages 97-107, March.
    18. Roy Thurik & F. Stam & Peter van der Zwan, 2007. "Entrepreneurial exit in real and imagined markets," Scales Research Reports H200720, EIM Business and Policy Research.
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