'I Want to, But I Also Need to' - Start-Ups Resulting from Opportunity and Necessity

35 Pages Posted: 23 Apr 2010

See all articles by Marco Caliendo

Marco Caliendo

University of Potsdam; Institute for the Study of Labor (IZA)

Alexander Kritikos

Europa-Universitaet Viadrina - Fakultat fur Wirtschaftswissenschaften; German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Date Written: December 1, 2009

Abstract

When unemployed persons go into business, they often are characterized as necessity entrepreneurs, because push factors, namely their unemployment, likely prompted their decision. In contrast to this, business founders who have been previously employed represent opportunity entrepreneurs because pull factors provide the rationale for their decision. However, a data set of nearly 1,900 business start-ups by unemployed persons reveals that both kind of motivation can be observed among these start-ups. Moreover, a new type of entrepreneur emerges, motivated by both push and pull variables simultaneously. An analysis of the development of the businesses reflecting three different motivational types indicates a strong relationship between motives, survival rates and entrepreneurial development. We find in particular that start-ups out of opportunity and necessity have higher survival rates than do start-ups out of necessity, even if both types face the same duration of previous unemployment.

Keywords: Entrepreneurship, Push and Pull Motives, Survival and Failure, Job Creation

JEL Classification: D81, J23, M13

Suggested Citation

Caliendo, Marco and Kritikos, Alexander S., 'I Want to, But I Also Need to' - Start-Ups Resulting from Opportunity and Necessity (December 1, 2009). DIW Berlin Discussion Paper No. 966, Available at SSRN: https://ssrn.com/abstract=1592904 or http://dx.doi.org/10.2139/ssrn.1592904

Marco Caliendo

University of Potsdam ( email )

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Potsdam, 14482
Germany
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HOME PAGE: http://www.uni-potsdam.de/en/empwifo/news.html

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Alexander S. Kritikos (Contact Author)

Europa-Universitaet Viadrina - Fakultat fur Wirtschaftswissenschaften ( email )

15230 Frankfurt (Oder)
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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