The Entrepreneur's Mode of Entry: Business Takeover or New Venture Start?

Simon Parker () and Mirjam Praag

No 06-089/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We analyse the decision to become an entrepreneur by either taking over an established business or starting a new venture from scratch. A model is developed which predicts how several individual- and firm-specific characteristics influence entrepreneurs' entry mode. The new venture creation mode is associated with higher levels of schooling and wealth, whereas managerial experience, new venture start-up capital requirements and risk promote the takeover mode. Entrepreneurs whose parents run a family firm are predicted to invest the least in schooling, since schooling reduces search costs and these individuals have the lowest probability of needing to search for a business opportunity outside their family. A sample of data on entrepreneurs from the Netherlands provides broad support for the theory; implications for policy-makers concerned about the survival of family firms lacking within-family successors are discussed.

This discussion paper was published in the Journal of Business Venturing (2012, 27(1) 31-46.

Keywords: entrepreneurship; human capital; business takeover; venture start up; family firm (search for similar items in EconPapers)
JEL-codes: J24 L26 M13 (search for similar items in EconPapers)
Date: 2006-10-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://papers.tinbergen.nl/06089.pdf (application/pdf)

Related works:
Working Paper: The entrepreneur’s mode of entry: Business takeover or new venture start? (2006)
Working Paper: The Entrepreneur's Mode of Entry: Business Takeover or New Venture Start (2006)
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:tin:wpaper:20060089

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().