What You Value or What You Know? Which Mechanism Explains the Intergenerational Transmission of Business Ownership Expectations?

in Henrich R. Greve, Marc-David L. Seidel (ed.) Adolescent Experiences and Adult Work Outcomes: Connections and Causes (Research in the Sociology of Work, Volume 25), Emerald Pub. Ltd., pp. 85-126.

Posted: 17 Jul 2014 Last revised: 19 Jul 2014

See all articles by Jason Greenberg

Jason Greenberg

New York University (NYU) - Leonard N. Stern School of Business

Date Written: July 15, 2014

Abstract

Research has consistently shown that the children of business owners are more likely to become business owners themselves. However, what mechanism(s) underlies this intergenerational correlation is still not clear. In this research I assess the importance of several mechanisms proposed to drive the children of business owners to expect to become business owners.

Quantitative analyses of representative data from the 1988 to 1992 National Education Longitudinal Study are employed.

Results are inconsistent with arguments asserting that the children of business owners expect to become business owners because of: the transmission of human capital or financial capital; the expectation of inheriting a business; a heightened awareness of the viability of business ownership; or preferences for having lots of money, leisure time, being successful in work, or steady employment. Findings are consistent with the notion that the intergenerational correlation in business ownership is a result of shared preferences and/or traits, and this effect is particularly strong when accompanied by awareness of paternal business ownership.

Identifying which mechanism underlies the intergenerational transmission may inform how to increase rates of business ownership, particularly among underrepresented groups, which is a matter of increasing policy interest. However, our understanding is limited because: the intergenerational transfer is consistent with numerous mechanisms; and employment outcomes are often used to make inferences about preceding processes. This chapter focuses on expectations that precede outcomes to clarify which mechanism operates in one stage of the transmission process.

Keywords: Self-employment, business ownership, entrepreneurship, family, intergenerational

JEL Classification: M13, P36, J11, J16, J60

Suggested Citation

Greenberg, Jason, What You Value or What You Know? Which Mechanism Explains the Intergenerational Transmission of Business Ownership Expectations? (July 15, 2014). in Henrich R. Greve, Marc-David L. Seidel (ed.) Adolescent Experiences and Adult Work Outcomes: Connections and Causes (Research in the Sociology of Work, Volume 25), Emerald Pub. Ltd., pp. 85-126.. Available at SSRN: https://ssrn.com/abstract=2466467

Jason Greenberg (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

40 West 4th Street, Suite 706
New York, NY NY 10012
United States
212-998-0229 (Phone)

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