Latent and actual entrepreneurship in Europe and the US: some recent developments

This paper uses 2004 survey data from the 15 old EU member states and the US to explain country differences in latent and actual entrepreneurship. Other than demographic variables such as gender, age and education, the set of covariates includes the perception by respondents of administrative complexities, of availability of financial support and of risk tolerance as well as country-specific effects. A comparison is made with results using a similar survey in 2000. While a majority of the surveyed population identifies lack of financial support as an obstacle to starting a new business, the role of this variable in both latent and actual entrepreneurship appears to be even more counterintuitive in 2004 than in 2000: it has no impact on actual entrepreneurship and is positively related to latent entrepreneurship. Administrative complexities, also perceived as an obstacle by a large majority of the population, have the expected negative impact both for latent and actual entrepreneurship in both years. Country-specific effects are important both for latent and actual entrepreneurship and the comparison of 2000 and 2004 results suggests that, once all other factors are controlled for, an improvement in actual entrepreneurship in the EU relative to the US has taken place in the last four years. However, in terms of unweighted averages actual entrepreneurship remained about the same. Latent entrepreneurship dropped while this drop seems to have occurred evenly in the US and the EU member states

Determinants of Entrepreneurial Engagement Levels in Europe and the US

Determinants from different streams of literature and spanning different disciplines are used to explain entrepreneurial decisions. A multinomial logit model and survey data from the old 15 EU member states, Norway, Iceland, Liechtenstein and the US are used to establish the effect of demographic and other variables on various entrepreneurial engagement levels. These engagement levels range from “never thought about starting a business” to “thinking about it”, “taking steps for starting up”, “having a young business”, “having an older business” and “no longer being an entrepreneur”. Data of two Entrepreneurship Flash Eurobarometer surveys (2002 and 2003) containing over 20,000 observations are used. Other than demographic variables, the set of explanatory variables used includes the perception by respondents of ad-ministrative complexities, of availability of financial support and of risk tolerance, the respondents’ prefer-ence for self-employment and country specific effects. The most striking result is that the perception of lack of financial support has no discriminative effect across the various levels of entrepreneurial engagement

Entrepreneurship in the old en new Europe

Developing a dynamic SME sector is essential for countries transforming their centrally planned economy into a market oriented one. New firm formation is the major driver of this transition. Obviously, entrepreneurial energy is a necessary condition for new firm formation. This paper uses 2004 survey data from the 25 EU member states and the US to explain country differences in entrepreneurial energy. This energy is captured as latent and actual entrepreneurship. Latent entrepreneurship is measured by the probability of a declared preference for self-employment over employment. Next to demographic variables such as gender, age, education level and whether parents are self-employed, the set of explanatory variables used includes country specific effects, measures of risk tolerance, internal and external locus of control and four perceptions of obstacles . The obstacle variables include the perception by respondents of administrative complexities, of availability of financial support, of accessibility of information for start-up and whether the current economic climate is favorable. Specific attention is devoted to differences between the eight former communist member states and the 17 other EU member states. The most striking result is the higher influence of risk tolerance in shaping both latent and actual entrepreneurship in transition economies relative to market economies

Determinants Of Entrepreneurship In Europe

This paper uses an Eclectic Framework explaining entrepreneurship incorporating different streams of literature and spanning different disciplines. The Eclectic Framework integrates factors shaping the demand for entrepreneurship on the one hand, with those influencing the supply of entrepreneurs on the other hand. It also creates insight into the role of public policy identifying the channels through which the demand or the supply of entrepreneurship can be shifted. In its empirical part the present paper estimates a multinomial logit using survey data from the 15 EU member states, Norway, Iceland, Liechtenstein and the US to establish the effect of demographic and other variables on various entrepreneurial engagement levels. Data of two Entrepreneurship Flash Eurobarometer surveys (2003 and 2004) containing over 20,000 observations are used. Other than demographic variables, the set of explanatory variables used includes the perception by respondents of administrative complexities, of availability of financial support, a rough measure of risk tolerance, the respondents’ preference for self-employment and country specific effects. The most striking result is that the perception of lack of financial support has no discriminative effect across the various levels of entrepreneurial engagement

Entrepreneurial Engagement Levels in the European Union

A multinomial logit model and survey data from the 25 EU member states and the US are used to establish the effect of demographic and other variables on various entrepreneurial engagement levels. These engagement levels range from “never thought about starting a business” to “thinking about it”, “taking steps for starting up”, “having a young business”, “having an older business” and “no longer being an entrepreneur”. Data of the 2004 Entrepreneurship Flash Eurobarometer survey containing over 13,500 observations is used. Other than demographic variables such as gender, age, education level and whether parents are self-employed, the set of explanatory variables used includes country specific effects, measures of risk tolerance, internal and external locus of control and four perceptions of ’obstacles’. The ‘obstacle’ variables include the perception by respondents of administrative complexities, of availability of financial support, of accessibility of information for start-up and whether the current economic climate is favorable. Among the four perception variables only administrative complexities displays an unambiguous obstacle profile in that its presence has a significant negative impact on higher entrepreneurial engagement levels. Country effects suggest a clear underperformance of Europe relative to the US in less mature entrepreneurial phases

Determinants of self-employment preference and realization among women and men in Europe and the United States

Female self-employment rates are consistently lower than those of men. This untapped female potential has drawn the attention of policy makers. In the present paper the determinants of selfemployment rates of both men and women are investigated in the context of a two-equation model explaining both actual self-employment and the preference for self-employment. A systematic distinction is made between different ways in which gender can exert influence on (preference for) self-employment, including moderation, mediation and direct effects. Using Flash Eurobarometer data of about 8,000 individuals from 29 countries (including the 15 old EU member states, 10 new EU member states and the United States) probit equations are estimated explaining the (preference for) self-employment. Next to gender, explanatory variables include age, education, social capital, risk attitude, locus of control and perceptions of the entrepreneurial environment. Findings show that at least part of the explanation of the lower female self-employment rate is caused by a lower preference for women to become self-employed. We do not find evidence for a moderating effect of gender on the relationship between self-employment and the preference for self-employment, indicating that other things equal women and men who have a preference to become self-employed do not differ with respect to the impact of this preference on its materialization. Entrepreneurship and its determinants in a cross-country setting

Explaining Preferences and Actual Involvement in Self-Employment: New Insights into the Role of Gender

This paper investigates why women’s self-employment rates are consistently lower than those of men. It has three focal points. It discriminates between the preference for self-employment and actual involvement in self-employment using a two (probit) equation model. It makes a systematic distinction between different ways in which gender influences the preference for and actual involvement in self-employment (mediation and moderation). It includes perceived ability as a potential driver of self-employment next to risk attitude, self-employed parents and other socio-demographic drivers. A representative data set of more than 8,000 individuals from 29 countries (25 EU member states, US, Norway, Iceland and Liechtenstein) is used (the 2004 Flash Eurobarometer survey). The findings show that women’s lower preference for becoming self-employed plays an important role in explaining their lower involvement in self-employment and that a gender effect remains that may point at gender-based obstacles to entrepreneurship

Explaining engagement levels of opportunity and necessity entrepreneurs

This paper investigates differences between opportunity and necessity entrepreneurs in terms of socio-demographics, attitudes and perception of obstacles . We use the 2004 Flash Eurobarometer Survey data. Explanatory variables include gender, age, education level and self-employed parents, risk tolerance, locus of control, perceptions of four obstacles and country effects. The obstacle variables include the perception of availibility of financial support; administrative complexity; of access to information on new venture creation and an unfavorable economic climate. Using probit equations we investigate differences in the preference for self-employment of opportunity and necessity entrepreneurs. A probit equation is estimated relating the explanatory variables to opportunity versus necessity entrepreneurship. Moreover, differences in the entrepreneurial engagement of opportunity and necessity entrepreneurs are investigated on the basis of a (ordered) multinomial logit model. Findings indicate that opportunity entrepreneurs have a higher preference for self-employment because of family encouragement. Also, opportunity entrepreneurs are found to perceive of administrative complexity and an unfavorable economic climate, negatively influencing their entrepreneurial involvement, while this is not the case for necessity entrepreneurs

The Entrepreneurial Ladder and its Determinants

We test a new model where the entrepreneurial decision is described as a process of successive engagement levels, i.e., as an entrepreneurial ladder. Five levels are distinguished using nearly 12,000 observations from the 2004 “Flash Eurobarometer survey on Entrepreneurship” covering the 25 European Union member states and the United States. The most surprising of the many results is that perception of lack of financial support is no obstacle for moving to a higher entrepreneurial engagement level whereas perceived administrative complexity is a significant obstacle. We also show that the effect of age on the probability of moving forward in the entrepreneurial process becomes negative after a certain age implying that if entrepreneurial engagements are not taken early enough in life they may well never be taken

Entrepreneurial Progress: Climbing The Entrepreneurial Ladder in Europe and The US

We investigate which countries have the highest potential to achieve entrepreneurial progress. This progress is defined using an entrepreneurial ladder with five successive steps: “never thought about starting a business”, “thinking about starting a business”, “taking steps to start a business”, “running a business for less than three years”, and “running a business for more than three years”. We assess the influence of individual-level and country-level variables on progression through these stages. Data are used from the 2007 “Flash Eurobarometer Survey on Entrepreneurship”, covering 27 European countries and the United States. We find that countries display large variation in the ease with which businesses come into existence and survive. In the US many people think about setting up a business whereas Europeans are better at achieving higher levels of engagement. Particularly in Austria, France and Lithuania there appear to be low probabilities to advance in the process. Our analysis suggests that country differences can be explained by the level of economic development and risk tolerance while the administrative and financial climate play a role for some steps. The paper also provides results on the influence of individual-level demographic and obstacle perception variables