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Why Do Individuals Choose Self-Employment?

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  • Dawson, Christopher

    () (University of Bath)

  • Henley, Andrew

    () (Cardiff University)

  • Latreille, Paul L.

    () (University of Sheffield)

Abstract

This paper undertakes an analysis of the motivating factors cited by the self-employed in the UK as reasons for choosing self-employment. Very limited previous research has addressed the question of why individuals report that they have chosen self-employment. Two questions are addressed using large scale labour force survey data for the UK. The first concerns the extent to which the self-employed are self-employed out of necessity, opportunity, lifestyle decision or occupational choice. The second concerns the extent to which there is heterogeneity amongst the self-employed on the basis of the motivations that they report for choosing self-employment. Factor analysis reveals a number of different dimensions of entrepreneurship on the basis of stated motivation, but with no evidence that being 'forced' into entrepreneurship through economic necessity is a significant factor. Motivation towards entrepreneurship is therefore highly multidimensional. Multivariate regression analysis is employed using a method to control for self-selection into self-employment. This reveals significant differences between men and women, with women concerned more with lifestyle factors and less with financial gain. Market-directed 'opportunity' entrepreneurship is more strongly associated with higher educational attainment. Those joining family businesses appear not to value prior educational attainment. Public policy to promote entrepreneurship therefore needs to be tailored carefully to different groups.

Suggested Citation

  • Dawson, Christopher & Henley, Andrew & Latreille, Paul L., 2009. "Why Do Individuals Choose Self-Employment?," IZA Discussion Papers 3974, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3974
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    References listed on IDEAS

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    Cited by:

    1. Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.
    2. Brink, Siegrun & Kriwoluzky, Silke & Bijedic, Teita & Ettl, Kerstin & Welter, Friederike, 2014. "Gender, Innovation und Unternehmensentwicklung," IfM-Materialien 228, Institut für Mittelstandsforschung (IfM) Bonn.
    3. Burchell, Brendan. & Coutts, Adam. & Hall, Edward. & Pye, Nick., 2015. "Self-employment programmes for young people : a review of the context, policies and evidence," ILO Working Papers 994898993402676, International Labour Organization.
    4. Pamela Lenton, 2017. "Being your own boss: the many faces of self-employment," Working Papers 2017003, The University of Sheffield, Department of Economics.
    5. Vicente Salas-Fumás & J. Sanchez-Asin & David Storey, 2014. "Occupational choice, number of entrepreneurs and output: theory and empirical evidence with Spanish data," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(1), pages 1-24, March.
    6. Frijters, Paul & Kong, Tao Sherry & Meng, Xin, 2011. "Migrant Entrepreneurs and Credit Constraints under Labour Market Discrimination," IZA Discussion Papers 5967, Institute for the Study of Labor (IZA).
    7. Caliendo, Marco & Kritikos, Alexander S. & Künn, Steffen & Loersch, Christian & Schröder, Helmut & Schütz, Holger, 2014. "Report No. 61: Evaluation der Programme „Gründercoaching Deutschland“ und „Gründercoaching Deutschland – Gründungen aus der Arbeitslosigkeit“," IZA Research Reports 61, Institute for the Study of Labor (IZA).
    8. L. Behrenz & L. Delander & J. Månsson, 2016. "Is Starting a Business a Sustainable way out of Unemployment? Treatment Effects of the Swedish Start-up Subsidy," Journal of Labor Research, Springer, vol. 37(4), pages 389-411, December.
    9. JuraÄ ak, Josip & Tica, Marko, 2016. "Graduate Students’ Opinions about Entrepreneurship as an Employment Opportunity," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 10(1).
    10. Karen Leppel, 2016. "The incidence of self-employment by sexual orientation," Small Business Economics, Springer, vol. 46(3), pages 347-363, March.
    11. Sven-Olov Daunfeldt & Niklas Elert & Niklas Rudholm, 2013. "Start-ups and firm in-migration: evidence from the Swedish wholesale industry," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(2), pages 479-494, October.
    12. Arndt Werner & Johanna Gast & Sascha Kraus, 2014. "The effect of working time preferences and fair wage perceptions on entrepreneurial intentions among employees," Small Business Economics, Springer, vol. 43(1), pages 137-160, June.
    13. Juan Carlos, Campaña & J. Ignacio, Giménez-Nadal & Jose Alberto, Molina, 2017. "Differences between self-employed and employed mothers in balancing family and work responsibilities: Evidence from Latin American countries," MPRA Paper 77964, University Library of Munich, Germany.
    14. Charalampos Botsaris & Vasiliki Vamvaka, 2016. "Attitude Toward Entrepreneurship: Structure, Prediction from Behavioral Beliefs, and Relation to Entrepreneurial Intention," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 7(2), pages 433-460, June.
    15. Dawson, C G, 2014. "Optimism, Job Satisfaction and Self-Employment," Department of Economics Working Papers 39313, University of Bath, Department of Economics.
    16. Diana, TANASE & Suzana, DEMYEN, 2013. "Prospects Regarding The Development Of Entrepreneurship And The Contribution Of Sme'S To Regionally Economic Growth," Management Strategies Journal, Constantin Brancoveanu University, vol. 22(Special), pages 368-375.
    17. Horemans, Jeroen & Marx, Ive, 2017. "Poverty and Material Deprivation among the Self-Employed in Europe: An Exploration of a Relatively Uncharted Landscape," IZA Discussion Papers 11007, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    occupational choice; motivation; entrepreneurship; self-employment;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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