The Power of Perception: Why Employees of Small Firms Choose Entrepreneurship

Abstract

This study investigates how the size of the organization influences employees’ perceptions of their skills and ability to start a new business and their attitudes toward entrepreneurship, with the goal of understanding the mechanism through which small firms disproportionately spawn entrepreneurs. An analysis of a sample of employees and entrepreneurs from the United Kingdom suggests that the transition from small-firm employment to entrepreneurship is more likely driven by the enhanced value associated with entrepreneurship than by perceptions of improved skillsets or ability to identify new business opportunities.