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Transitions to Entrepreneurship and Industry-Specific Barriers

Author

Listed:
  • Lofstrom, Magnus

    (Public Policy Institute of California)

  • Bates, Timothy

    (Wayne State University, Detroit)

  • Parker, Simon C.

    (Western University, Canada)

Abstract

Drivers of entrepreneurial entry are investigated in this study by examining how entry into small-business ownership is shaped by industry-specific constraints. The human- and financial-capital endowments of potential entrepreneurs entering firms in various industries are shown to differ profoundly, depending on the type of venture entered. The educational credentials of highly educated potential entrepreneurs, in particular, predict avoidance of small-firm ownership in some industries as well as attraction to others. Recognizing that individuals choose an industry sector jointly with their decision to enter entrepreneurship, we find that the conventional practice of conflating different industry types in empirical analyses of transitions to entrepreneurship generates misleading findings about the determinants of entrepreneurship.

Suggested Citation

  • Lofstrom, Magnus & Bates, Timothy & Parker, Simon C., 2011. "Transitions to Entrepreneurship and Industry-Specific Barriers," IZA Discussion Papers 6103, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6103
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    References listed on IDEAS

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    More about this item

    Keywords

    entry barriers; transitions; capital constraints; self-employment; entrepreneurship; business start-ups;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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