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Why do Employees Leave Their Jobs for Self-Employment? – The Impact of Entrepreneurial Working Conditions in Small Firms

  • Werner, Arndt
  • Moog, Petra
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    Based on the finding that entrepreneurs who found new firms tend to work as employees of small rather than large firms prior to start-up, we test how different working conditions, which enhance entrepreneurial learning, affect their decision to become entrepreneurs when moderated by firm size. Based on data of the German Socio-Economic Panel (SOEP), we find a significant relationship between entrepreneurial learning (extracted in an orthogonal factor analysis based on twelve working conditions as proxy for entrepreneurial human capital and work experience) and firm size when predicting the probability of leaving paid employment for self-employment. We think, that this is a special kind of knowledge spillover. We also control for other aspects such as gender, age, wage, etc. – factors that may potentially influence the decision to become self-employed. Thus, our analysis sheds new light onto the black box of SMEs as a hotbed of new start-ups.

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    File URL: http://mpra.ub.uni-muenchen.de/18826/1/MPRA_paper_18826.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18826.

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    Date of creation: 01 Nov 2009
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    Handle: RePEc:pra:mprapa:18826
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    1. Parker, Simon C, 2009. "Why do small firms produce the entrepreneurs?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(3), pages 484-494, June.
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