Pseudo-Panel Approach to Measure the Impact of Informal Networks on Start-Up and Established Entrepreneurs in Spain

Abstract

This paper examines the impact of informal networks such as knowing personally other entrepreneurs and having accessed to business angel investors. The analysis is focused on the impact of such constructs upon start-up and established entrepreneurs in Spain, which is our contribution. To do so, we constructed a pseudo-panel using micro data from the Spanish Global Monitor Entrepreneurship adult population survey over the period 2006–2009. This facilitated the tracking of cohorts by age over time, in turn making possible to control for cohort unobserved heterogeneity that may bias cross-sectional estimates of effects of other characteristics, especially age and year period. We find that informal networks such as role models from personally knowing other entrepreneurs have a positive relationship with start-up and established entrepreneurs. In contrast, having accessed to business angel investors has only impacted start-up entrepreneurs in Spain. We also find that start-up and established entrepreneurs in cohorts 49-58 and 59-64 “do better” than younger ones. Furthermore more some implications are highlighted.