The Influence of Necessity and Opportunity Motivations on the Choice of an Economic Sector: An Empirical Study of Belgian Entrepreneurs

Abstract

We study whether the necessity or opportunity characteristics of firm creators have an influence on the choice of the economic sector in which the business is started. Based on a sample of 538 Belgian entrepreneurs, we performed a Principal Components Analysis to identify necessity and opportunity motivations. Next, we performed a One Way-ANOVA and a Post-Hoc Multiple Comparisons Analysis to determine whether there is a difference between the various sectors in terms of sensitivity to necessity and opportunity motivations. Finally, we performed a Multinomial Logit Regression to estimate the effect, all things being equal, of necessity and opportunity motivations on the probability that an entrepreneur chooses to develop his business in a specific sector. First, our results show that the necessity and opportunity motivations do not have the same sensitivity within the various sectors. Second, we show that necessity motivations may be, more or less, present depending on the type of economic sector. Finally, our study highlights that, while necessity or opportunity motivations are more present in some sectors, they only have very little impact on the probability to create in a specific sector. Our research suggests that, although at the macroeconomic level, there are differences between necessity and opportunity entrepreneurs in terms of sector of creation (Block and Wagner, 2006), these differences do not result from the motivational characteristics of the creator.