Business Takeover or New Venture? Individual and Environmental Determinants from a Cross-Country Study

Whereas the determinants of entrepreneurial choice have been thoroughly analyzed in the literature, little is known about the preferred mode of entry into entrepreneurship, such as taking over an existing business or starting a new venture. Using a large international dataset, this study reports considerable differences in takeover preferences across 33 countries. Hierarchical (multi-level) regressions are performed to explore individual-level and country-level determinants of the preferred mode of entry. At the individual level, a person’s human capital, risk attitude, and inventiveness influence the preference for starting a new venture versus taking over an existing business. At the country level, the culture-inherent level of risk tolerance, the country’s level of innovation output, and the administrative difficulty of starting a new business are found to explain the between-country variation in the preferred mode of entry. Implications of our findings for research and practice are also discussed.entrepreneurship;occupational choice;business takeover;entry mode;new venture start;multi-level analysis

Education and Entrepreneurial Choice: An Instrumental Variables Analysis

Education is argued to be an important driver of the decision to start a business. The measurement of its influence, however, is difficult since it is considered to be an endogenous variable. This study is the first to account for this endogeneity by using an instrumental variables approach. The effect of education on the decision to become self-employed is found to be strongly positive, much higher than the estimated effect in case no instrumental variables are used. That is, the higher the respondent's level of education, the greater the likelihood that he or she starts a business. Implications for method and practice are discussed

Are Education and Entrepreneurial Income Endogenous and do Family Background Variables make Sense as Instruments? A Bayesian Analysis

Education is a well-known driver of (entrepreneurial) income. The measurement of its influence, however, suffers from endogeneity suspicion. For instance, ability and occupational choice are mentioned as driving both the level of (entrepreneurial) income and of education. Using instrumental variables can provide a way out. However, three questions remain: whether endogeneity is really present, whether it matters and whether the selected instruments make sense. Using Bayesian methods, we find that the relationship between education and entrepreneurial income is indeed endogenous and that the impact of endogeneity on the estimated relationship between educa-tion and income is sizeable. We do so using family background variables and show that relaxing the strict validity assumption of these instruments does not lead to strongly different results. This is an important finding because family background variables are generally strongly correlated with education and are available in most datasets. Our approach is applicable beyond the field of returns to education for income. It applies wherever endogeneity suspicion arises and the three questions become relevant

What Turns Knowledge into Innovative Products? The Role of Entrepreneurship and Knowledge Spillovers

The knowledge spillover theory of entrepreneurship seeks to explain the fundamentals and consequences of entrepreneurship with respect to economic performance. This paper uses the knowledge spillover theory to explain different innovation outcomes. We hypothesize that a high rate of entrepreneurship facilitates the process of turning knowledge into new-to-the-market innovation but has no effect on the relationship between knowledge and new-to-the-firm innovation. Our results using European country-level and pooled OLS, fixed- and random-effects regressions show that a high rate of entrepreneurship increases the chances that knowledge will become new-to-the-market innovation. The findings highlight the importance of Schumpeterian entrepreneurship in the process of the commercialization of knowledge. We discuss the implications for entrepreneurship and innovation policy

Family Background Variables as Instruments for Education in Income Regressions: A Bayesian Analysis

The validity of family background variables instrumenting education in income regressions has been much criticized. In this paper, we use data of the 2004 German Socio-Economic Panel and Bayesian analysis in order to analyze to what degree violations of the strong validity assumption affect the estimation results. We show that, in case of moderate direct effects of the instrument on the dependent variable, the results do not deviate much from the benchmark case of no such effect (perfect validity of the instrument). The size of the bias is in many cases smaller than the standard error of education’s estimated coefficient. Thus, the violation of the strict validity assumption does not necessarily lead to strongly different results when compared to the strict validity case. This provides confidence in the use of family background variables as instruments in income regressions

Business Takeover or New Venture? Individual and Environmental Determinants from a Cross-Country Study

Whereas the determinants of entrepreneurial choice have been thoroughly analyzed in the literature, little is known about the preferred mode of entry into entrepreneurship, such as taking over an existing business or starting a new venture. Using a large international dataset, this study reports considerable differences in takeover preferences across 33 countries. Hierarchical (multi-level) regressions are performed to explore individual-level and country-level determinants of the preferred mode of entry. At the individual level, a person’s human capital, risk attitude, and inventiveness influence the preference for starting a new venture versus taking over an existing business. At the country level, the culture-inherent level of risk tolerance, the country’s level of innovation output, and the administrative difficulty of starting a new business are found to explain the between-country variation in the preferred mode of entry. Implications of our findings for research and practice are also discussed

The association between attention-deficit/hyperactivity (ADHD) symptoms and self-employment

Attention-deficit/hyperactivity (ADHD) symptoms have been associated with the decision to become self-employed. Although these symptoms are generally regarded as disadvantageous, there may also be a bright side. To our knowledge, however, there has been no systematic, epidemiological evidence to support this claim. This paper examines the association between ADHD symptoms and self-employment in a population-based sample from the STAGE cohort of the Swedish Twin Registry (N = 7208). For replication, we used a sample of Dutch students who participated in the Global University Entrepreneurial Spirit Students’ Survey (N = 13,112). In the Swedish sample, we found a positive association with self-employment for both general ADHD symptoms [odds ratio (OR) 1.13; 95 % confidence intervals (CI) 1.04–1.23] and hyperactivity symptoms [OR 1.19; 95 % CI 1.08–1.32], whereas no association was found for attention-deficit symptoms [OR 0.99; 95 % CI 0.89–1.10]. The positive association between hyperactivity and self-employment was replicated in the Dutch student sample [OR 1.09; 95 % CI 1.03–1.15]. Our results show that certain aspects of ADHD, in particular hyperactivity, can have a bright side, as they are positively associated with self-employment

ADHD-like behavior and entrepreneurial intentions

Little is known about the relation between entrepreneurship and the extent of psychiatric symptoms. Validated psychiatric symptom scores are seldom used for non-clinical reasons. One prevalent symptom that deserves our interest is Attention Deficit and Hyperactivity Disorder (ADHD). ADHD is a developmental disorder characterized by inattentiveness and hyperactivity that has been linked to occupational choice and performance. Building on the person–environment fit literature, we hypothesize that individuals who exhibit behavior associated with ADHD are more likely to have entrepreneurial intentions. Using a sample of 10,104 students enrolled in higher education, we can confirm our prediction that students with a higher level of ADHD-like behavior are more likely to have entrepreneurial intentions. Additionally, we show that risk taking propensity is a mediator that partly explains this positive effect. Our study points to the importance of behavioral tendencies associated with developmental disorders, when making entrepreneurship decisions. Our study contributes to the literature on the determinants of entrepreneurship, which so far has largely neglected the effects of psychiatric symptoms on entrepreneurship

ADHD-like behavior and entrepreneurial intentions

Little is known about the relation between validated psychiatric symptoms scores and the entrepreneurial decision. Building on the Person-Environment (P-E) fit literature and using data of over 10,000 students, we test whether individuals with higher levels of attention deficit and hyperactivity (ADHD) have higher entrepreneurial career intentions compared to others. We find that students reporting higher levels of ADHD-like behavior (assessed with a symptom score on an ADHD screening scale) are more likely than their peers to display entrepreneurial intentions and become student entrepreneurs. This can be partly explained by their high need for independence and their risk tolerance