Necessity and Opportunity Entrepreneurs and Their Duration in Self-Employment: Evidence from German Micro Data

Block, Jorn H.; Sandner, Philipp G.

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Necessity and Opportunity Entrepreneurs and Their Duration in Self-Employment: Evidence from German Micro Data

Journal of Industry, Competition and Trade, Vol. 9, No. 2, pp. 117-137, 2009

35 Pages Posted: 4 Oct 2006 Last revised: 17 Apr 2010

See all articles by Jorn H. Block

Jorn H. Block

University of Trier - Faculty of Management; Erasmus University Rotterdam (EUR) - Institute of Management (ERIM)

Philipp G. Sandner

Frankfurt School of Finance & Management

Date Written: October 1, 2007

Abstract

Using data from the German Socio-Economic Panel Study (GSOEP), we analyze whether necessity entrepreneurs differ from opportunity entrepreneurs in terms of self-employment duration. Using univariate statistics, we find that opportunity entrepreneurs remain in self-employment longer than necessity entrepreneurs. However, after controlling for the entrepreneurs' education in the professional area where they start their venture, this effect is no longer significant. We therefore conclude that the difference observed is not an original effect but rather is due to selection. We then go on to discuss the implications of our findings for entre-preneurship-policy making, and give suggestions to improve governmental start-up programs.

Keywords: Self-employment, Firm survival, Necessity entrepreneurs, Opportunity entrepreneurs, Hazard rates, GSOEP, Entrepreneurship

JEL Classification: J23, J24, M13, C41

Suggested Citation: Suggested Citation

Block, Jorn Hendrich and Sandner, Philipp, Necessity and Opportunity Entrepreneurs and Their Duration in Self-Employment: Evidence from German Micro Data (October 1, 2007). Journal of Industry, Competition and Trade, Vol. 9, No. 2, pp. 117-137, 2009, Available at SSRN: https://ssrn.com/abstract=934722