The Entrepreneur's Mode of Entry: Business Takeover or New Venture Start?
16 Pages Posted: 14 Oct 2006 Last revised: 8 Nov 2014
Date Written: October 1, 2006
We extend the well-known occupational choice model of entrepreneurship by analyzing the mode of entry. Individuals can become entrepreneurs by taking over established businesses or starting up new ventures from scratch. We argue that the new venture creation mode is associated with higher levels of schooling whereas managerial experience, new venture startup capital requirements and industry level risk promote the takeover mode. A sample of data on entrepreneurs from The Netherlands provides broad support for these hypotheses, and also bears out a prediction that entrepreneurs whose parents run a family firm tend to invest the least in schooling. We go on to discuss the implications for researchers, entrepreneurs and public policy makers.
Keywords: Business start-up, Business takeover, Entrepreneur, Education, Human capital
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