Too Sick To Start: Health of the Entrepreneur and Business Entry in Townships around Durban, South Africa

Li-Wei Chao (), Helena Szrek (), Nuno Sousa Pereira and Mark V. Pauly ()
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Li-Wei Chao: Population Studies Department, University of Pennsylvania
Helena Szrek: CETE, Faculdade de Economia, Universidade do Porto
Mark V. Pauly: Health Care Systems Department, The Wharton School, University of Pennsylvania

CEF.UP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: Small businesses contribute a substantial share of economic activity in all countries, and may be an engine for job creation in developing economies. Unlike large firms with management teams, small businesses are usually run by one key person, the owner-entrepreneur, who bears almost all of the risks and who makes almost all of the decisions related to the business. Because the owner-entrepreneur also embodies most of the firm-specific knowledge capital, health of the owner-entrepreneur is an important factor contributing to the production process. Following a cohort of respondents with and without small businesses around Durban, South Africa, over a three-year period, our prior study found that poor baseline health and deteriorations in the health of the owner-entrepreneur were strongly associated with subsequent business exit. In the current study, we examined the relationship between an individual’s physical health and the decision to start a business. Our results suggest that respondents who were recent business entrants were in better health than respondents who did not start new businesses. Moreover, respondents without a business at the beginning of the study but who later opened businesses during the three-year study interval were significantly more likely to have better health before business entry than those respondents who never started a new business. Hence, good health among entrepreneurs seems to be an important prerequisite to both small business survival and small business entry.

Keywords: South Africa; small businesses; business entry; health; entrepreneur (search for similar items in EconPapers)
JEL-codes: I12 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2008-09
New Economics Papers: this item is included in nep-afr, nep-dev, nep-ent and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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