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Entrepreneurship Dynamics: Entry Routes, Business-Owner's Persistence and Exit Modes

  • Vera Rocha

    ()

    (Universidade do Porto, cef.up and CIPES)

  • Anabela Carneiro

    ()

    (Universidade do Porto and cef.up)

  • Celeste Amorim Varum

    ()

    (Universidade de Aveiro, DEGEI and GOVCOPP)

This paper conducts a comprehensive study on entrepreneurship dynamics using a large longitudinal matched employer-employee dataset. We identify the transition of over 200,000 nascent business-owners and follow their survival patterns in the respective businesses using discrete time competing risks models. Different profiles of new business-owners are identified, taking into account their entry routes and how such entry choices impact on their persistence in the firm. Exits by dissolution are distinguished from exits by ownership transfer. We also analyze how previous labor market experiences and macroeconomic environment shape the individuals' decision to become and persist as business-owners. Controlling for a set of individual and previous job characteristics, we found that those experiencing a recent displacement are more likely to become entrepreneurs and to persist longer in the business. Concerning macroeconomic conditions, nascent entrepreneurs entering via start-up enter counter-cyclically, while all other nascent business-owners behave in line with the "prosperity-pull" hypothesis. Business-owners' entry choices significantly affect their post-entry persistence and exit modes. Particular experiences in the labor market while paid employees are also found to significantly influence the way individuals enter into and exit from entrepreneurship.

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Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series CEF.UP Working Papers with number 1310.

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Length: 37 pages
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:por:cetedp:1310
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