PARENTAL SELF-EMPLOYMENT, START-UP ACTIVITIES AND FUNDING: EXPLORING INTERGENERATIONAL EFFECTS

Abstract

In this paper, we compare first generation entrepreneurs with entrepreneurs whose parents were self-employed. To test the hypotheses, we use PSED II data on nascent entrepreneurs to explore the effects of parental self-employment (PSE) on various start-up activities associated with planning and organization, and on funding structure. Overall, results show a difference in patterns of behavior between first generation entrepreneurs and entrepreneurs whose parents were self-employed, supporting the notion of intergenerational learning. Specifically, results indicate a positive relationship between PSE and early deployment of startup activities and a positive relationship between PSE and attaining informal external funding. Post hoc analyses for gender differences show that (a) the relationship between PSE and startup activities exists primarily for men and (b) gender differences exist in the effects of PSE on funding structure: for women, PSE is positively associated with the use of personal savings, whereas for men, PSE is positively associated with use of external informal funding. The results of our findings and their implications are discussed.