Entrepreneurship after displacement

Kristina Nyström

Small Business Economics, 2020, vol. 54, issue 2, No 7, 475-494

Abstract: Abstract According to Hoetker and Agarwal (Academy of Management Journal, 50(2), 446–469, 2007), research on knowledge transfers related to business closures is scarce. This paper intends to fill the knowledge gap on the transition to entrepreneurship after a business closure. This paper studies which employees are most likely to start an entrepreneurial venture after being affected by a displacement. Furthermore, following, e.g., Hyttinen and Maliranta (Scandinavian Journal of Economics, 110(1), 1–21, 2008) and Sørensen (Administrative Science Quarterly, 52, 387–412, 2007), this study investigates the link between former workplace characteristics, such as the size and age of the former workplace, and the transition into entrepreneurship. In the second part of the analysis, the performance of the entrepreneurial ventures started by employees after displacement is explored as it relates to survival, employment, and profitability. The empirical setting employs an employer-employee-matched dataset coving all displaced employees in Sweden during 2001–2010. The empirical findings suggest that employees displaced from smaller firms are more likely to transition to entrepreneurship. Employing a Cox proportional hazard model to study the survival of these companies shows that new firms generated by displaced employees from small establishments are more viable. Furthermore, individuals who took part in labor market polices have a higher probability of becoming entrepreneurs, although these firms tend to show lower survival rates, which indicates that these transitions are necessity-based. As for the performance of the business, the empirical findings suggest modest growth in terms of employment, turnover, and operating profit for the vast majority of entrepreneurial ventures started after displacement.

Keywords: Displacements; Exit; Entrepreneurship; Labor mobility; J63; L26 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11187-018-0045-1 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:54:y:2020:i:2:d:10.1007_s11187-018-0045-1

Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/11187/PS2

DOI: 10.1007/s11187-018-0045-1

Access Statistics for this article

Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch

More articles in Small Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().