Entrepreneurship Dynamics: Entry Routes, Business-Owner's Persistence and Exit Modes

Vera Rocha, Anabela Carneiro and Celeste Varum

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

Abstract: This paper conducts a comprehensive study on entrepreneurship dynamics using a large longitudinal matched employer-employee dataset. We identify the transition of over 200,000 nascent business-owners and follow their survival patterns in the respective businesses using discrete time competing risks models. Different profiles of new business-owners are identified, taking into account their entry routes and how such entry choices impact on their persistence in the firm. Exits by dissolution are distinguished from exits by ownership transfer. We also analyze how previous labor market experiences and macroeconomic environment shape the individuals' decision to become and persist as business-owners. Controlling for a set of individual and previous job characteristics, we found that those experiencing a recent displacement are more likely to become entrepreneurs and to persist longer in the business. Concerning macroeconomic conditions, nascent entrepreneurs entering via start-up enter counter-cyclically, while all other nascent business-owners behave in line with the "prosperity-pull" hypothesis. Business-owners' entry choices significantly affect their post-entry persistence and exit modes. Particular experiences in the labor market while paid employees are also found to significantly influence the way individuals enter into and exit from entrepreneurship.

Keywords: Entrepreneurship; Business Ownership; Entry; Exit (search for similar items in EconPapers)
JEL-codes: J24 L26 M13 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2013-06
New Economics Papers: this item is included in nep-ent, nep-lab and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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