The demography of entrepreneurs and enterprises

Abstract

Industrial dynamics is increasingly studied from a demographic perspective. Demography of firms is one of the research methods to describe and analyse the evolution of industries. Although this is a very useful and promising interdisciplinary field of study, there are a number of conceptual problems when dealing with the formal demography of firms, and especially in the demographic component of firm start-ups. Fertility or parenthood is not clearly defined here, and occurrence-exposure rates or probabilities of giving birth to a firm are difficult to define. An alternative way of looking at the process of firm start-ups is to view the process as essentially driven by decisions of entrepreneurs within a labour market setting. A worker may decide to be an employee, to be self-employed or an entrepreneur. Although there is not a one-to-one correspondence between entrepreneurs and enterprises, the behaviour of more than 90 percent of firms can be studied from an individual entrepreneurial point of view. There is a large methodological advantage when taking the labour market point of view. Standard demographic tools may be used for describing, analysing and even conditional forecasting of the process. This paper shows how multidimensional demographic models may be used in describing and analysing the process of firm start-ups from an entrepreneurial perspective.