Who are User Entrepreneurs? Findings on Innovation, Founder Characteristics, and Firm Characteristics (The Kauffman Firm Survey)

24 Pages Posted: 9 Mar 2012  

Sonali K. Shah

University of Washington

Sheryl Winston Smith

Temple University - Fox School of Business

E. J. Reedy

Kauffman Foundation

Date Written: February 2012

Abstract

Little is known about the paths individuals traverse prior to founding firms and the ramifications of these different paths on entrepreneurial outcomes. We investigate one particular path and its effects: user entrepreneurship. User entrepreneurship describes entrepreneurship by individuals who create innovative products or services because they need them for their own use and subsequently found firms to commercialize their innovations. A small number of industry-level studies suggest that many important innovative products and services are first introduced to the commercial marketplace by user entrepreneurs. Detailed data support this idea and describe user entrepreneurs and their firms. Specifically, we distinguish between three types of user-founded firms and contrast these firms with both the full sample of firms and firms engaged in R&D activities with respect to founder demographics, firm characteristics, and patterns of revenue growth, job creation, R&D investment, and intellectual property creation. In addition, we provide the first documentation of the prevalence of user entrepreneurship in the United States: 10.7 percent of all startups and 46.6 percent of innovative startups founded in the United States that survive to age five are founded by users.

Keywords: kfs, kauffman firm survey, entrepreneur, entrepreneurship, user entrepreneur, user, firm, firm formation

Suggested Citation

Shah, Sonali K. and Winston Smith, Sheryl and Reedy, E. J., Who are User Entrepreneurs? Findings on Innovation, Founder Characteristics, and Firm Characteristics (The Kauffman Firm Survey) (February 2012). Available at SSRN: https://ssrn.com/abstract=2018517 or http://dx.doi.org/10.2139/ssrn.2018517

Sonali K. Shah

University of Washington ( email )

Box 353200
Seattle, WA 98195-3200
United States

Sheryl Winston Smith

Temple University - Fox School of Business ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States

HOME PAGE: http://astro.temple.edu/~swsmith/Sheryl_Winston_Smith/Welcome.html

E. J. Reedy (Contact Author)

Kauffman Foundation ( email )

4801 Rockhill Road
Kansas City, MO 64110-2046
United States
8169321078 (Phone)

HOME PAGE: http://www.kauffman.org/research

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