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Illegal Entrepreneurship Experience

Listed author(s):
  • Ruta Aidis

    ()

    (University College London)

  • Mirjam van Praag

    ()

    (Faculty of Economics, Universiteit van Amsterdam)

Existing studies show a positive relationship between entrepreneurs' business performance and their conventional human capital as measured by previous business experience and formal education. In this paper, we explore whether illegal entrepreneurship experience (IEE), an unconventional form of human capital, is related to the performance and motivation of entrepreneurs operating legal businesses in a transition context. Using regression techniques on a sample of 399 private business owners in Lithuania, we find that, in general, IEE is significantly and positively associated with subjective measures of business motivation. Moreover, younger entrepreneurs benefit from their IEE in terms of business performance, indicating that they have been more successful than older entrepreneurs in transferring their IEE to a market oriented setting. In addition, IEE and business performance are positively related for entrepreneurs who started completely new legal businesses. Thus, our research partially supports the notion that prior experience in the black or gray market may signal and provide valuable human capital for legal enterprising. This discussion paper has resulted in a publication in the Journal of Business Venturing , 2007, 22(2), 283-310.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-105/3.

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Date of creation: 23 Sep 2004
Handle: RePEc:tin:wpaper:20040105
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