I Can't Get No Satisfaction: Necessity Entrepreneurship and Procedural Utility
Kyklos, Vol. 62, No. 2, pp. 191-209, April 2009
26 Pages Posted: 21 Aug 2008 Last revised: 6 Sep 2010
Date Written: August 20, 2008
We study a unique sample of 1,547 nascent entrepreneurs in Germany and analyze which factors are associated with their self-reported satisfaction regarding their start-up. Our study identifies a new facet of procedural utility and offers new insights about the motivations and goals of nascent entrepreneurs. Most importantly, we identify a group of nascent entrepreneurs that cannot get satisfaction with their start-up, not because their start-up fails to deliver financial returns, but because they did not choose to become entrepreneurs in the first place. This group of unsatisfied entrepreneurs includes individuals starting a business after a period of long-term unemployment and those individuals with a lack of better employment alternatives (necessity entrepreneurs). In addition, we provide additional evidence for the importance of both financial and non-financial incentives of entrepreneurs. While financial success is the most important determinant of start-up satisfaction, achievement of independence and creativity is also highly important. Our results emphasize the relevance of procedural utility for understanding economic behavior.
Keywords: Entrepreneurship, Satisfaction, Procedural Utility, Unemployment, Necessity Entrepreneurship
JEL Classification: J24, J17, L26
Suggested Citation: Suggested Citation