Entrepreneurial Choice Research Articles

Pluripotent Digital Ventures and Their Paths to Product-Market Fit in New Markets

Ventures are pluripotent in their early years. Pluripotentiality refers to the absence of fixed developmental potentialities (i.e. ventures can take multiple paths to different outcomes). Entrepreneurs have to coordinate many choices across multiple domains to find product-market fit (PMF). While PMF has been discussed in the practitioner literature, it is not clear how ventures coordinate the market and product choices to find PMF in the early years. This is important given the degrees of freedom but limited resources early ventures have. Using a multiple-case study of five digital ventures in the U.S. healthcare ecosystem, our analysis reveals three paths ventures take to structure their search for PMF. We discuss the flexibility afforded by digital products and the duality between choice and commitment. We contribute to research on entrepreneurial choice in strategy formulation and link these observed paths to “adjacent conversations” in the broader strategy literature.

Entrepreneurship as a Response to Labor Market Discrimination for Formerly Incarcerated People

This paper examines entrepreneurship as a way to overcome labor market discrimination. Specifically, we examine entrepreneurship as a career choice for formerly incarcerated individuals, a group of individuals who face substantial discrimination in the labor market. Using the United States National Longitudinal Survey of Youth 1997 data, we find that formerly incarcerated people are more likely to become entrepreneurs compared to individuals without a criminal record. We take advantage of an exogenous state and county level policy shock “Ban-the-Box” in the United States to further disentangle the underlying mechanism of how labor market discrimination affects formerly incarcerated individuals in their entrepreneurial choices. The findings suggest that entrepreneurship is a viable alternative career choice for formerly incarcerated people, yielding both higher income and lower recidivism rates. In addition to reporting robustness checks and addressing alternative explanations, we discuss theoretical, empirical, and policy implications.

Homeownership, Home Equity, and Black-Owned Business Starts

In this article, I examine the ways in which housing wealth explains observed differences in the probability of starting a business for blacks as compared with whites. A growing body of empirical work on the housing collateral channel shows a positive relationship between increases in housing assets and the likelihood of entering entrepreneurship. It is well documented that blacks possess less housing wealth than whites on average in the US. Though the literature identifies racial differences in access to financial capital generally as a leading driver of black-white disparities in entrepreneurship, it is virtually silent on the extent to which black-white disparities in housing wealth, in particular, may explain racial differences in firm starts. Using Blinder-Oaxaca decomposition technique, I estimate that the differences in average levels of home equity account for approximately 13 percent of the black-white gap in firm starts among homeowners. I also estimate entrepreneurial choice models on panel data from 2003 through 2013, a time frame that includes a housing boom and subsequent bust. I exploit the variation in home-based assets during this period to examine whether there is a differential effect of these assets on firm starts by race. I find no relationship between homeownership and starting a business, however, conditional on owning a home, an increase in home equity is positively related to the probability of starting a business for whites but not for blacks. Thus, while deficits in home assets contribute to black-white gaps in entrepreneurship, blacks who do own home assets are less able to access the housing collateral channel than whites with similar levels of home assets.

Influence of Confucian culture on entrepreneurial decision making using data from China's floating population

Confucian culture has had a deep-rooted influence on Chinese thinking and behavior for more than 2,000 years. With a manually created Confucian culture database and the 2017 China floating population survey, we used empirical analysis to test the relationship between Confucian culture and individual entrepreneurial choice using data obtained from China's floating population. After using the presence and number of Confucian schools and temples, and of chaste women as instrumental variables to counteract problems of endogeneity, we found that Confucian culture had a significant role in promoting individuals' entrepreneurial decision making among China's floating population. The results showed that, compared with those from areas of China not strongly influenced by Confucian culture, individuals from areas that are strongly influenced by Confucian culture were more likely to choose entrepreneurship as their occupation choice. Our findings reveal cultural factors that affect individual entrepreneurial behavior, and also illustrate the positive role of Confucianism as a representative of the typical cultures of the Chinese nation in the 21st century.

Endogenous hours and the wealth of entrepreneurs

US entrepreneurs typically work long hours in their firms and these hours form a large part of the firms' labor input. This paper studies the role of endogenous owner hours in shaping the wealth distribution among entrepreneurs. We introduce owners' endogenous labor supply into a model of entrepreneurial choice and financial frictions. The model fits well the levels and the dispersion of wealth among entrepreneurs. Long owner hours incentivize poor, highly productive individuals to be owners and help the most productive owners to accumulate large quantities of wealth. On net, owners working long hours decreases the median owner wealth and increase wealth dispersion among owners. Differently, the ability to work sufficiently short hours incentivizes owners to run low productivity firms with high wealth to income ratios. Finally, alternative calibrations ignoring the endogenous labor supply of owners lead to owners that are much richer than in the data and overstate the effect of financial frictions in the economy.

Start-ups launched by recent STEM university graduates: The impact of university education on entrepreneurial entry

University education is a crucial source of human capital and influences graduates’ choice of entrepreneurship as a career. Here, we discuss the contrasting effects on recent graduates’ entrepreneurial entry of the type and quality of the human capital developed through university education in STEM fields. We determine which effects prevail by examining the graduates who obtained a Master of Science degree in the period 2005–2009 from Politecnico di Milano. A university curriculum specialized into a limited number of scientific and technical fields, training in economics and management, and the scientific quality of the university in the research fields pertinent to the graduate's degree programme are positively associated with entrepreneurial entry immediately after graduation, while the graduation grade is not. The graduation grade and the scientific quality of the university positively moderate the impact of curriculum specialization. These effects weaken over time, but are still relevant five years after graduation.

The Gendering of Context: A Fresh Perspective of Women Social Enterprise in Pakistan

Entrepreneurship has been anticipated as a male “gendered connotation” and is considered a “masculine concept”. There is very limited academic work pertaining to women entrepreneurship and social entrepreneurship in the context of developing countries. Our research theoretically contests the explicit masculinist traditional entrepreneurship perspective and aims to investigate the drivers and hurdles of women social entrepreneurship in a developing country context (Peshawar, Pakistan). This research integrates and capitalizes on a theoretical lens grounded in “new institutional theory” and “feminism perspectives”. Hence, this research contributes by emerging a useful multilayer theoretical logic through integration of the two competing theoretical perspectives and adds new insights to entrepreneurship theory and practice. We argue that women’s entrepreneurial choices revolve around and are shaped by a complex interplay between socio cultural contexts. Capitalising on an interpretive, exploratory and qualitative research methodology, we have collected empirical data through semi structured in-depth interviews from ten women social entrepreneurs of Peshawar, KP, Pakistan and analysed and presented through qualitative thematic analysis. Empirically, this paper identifies how women entrepreneurs exercise agency to negotiate their roles within the household and the society and debates on various interesting perspectives that relates to the women entrepreneurship such as "women empowerment, patriarchal culture, religious extremism and terrorism, change creators, institutional corruption and security issues”. The paper also provides insights on how gendering of context determines social entrepreneurship in KP, Pakistan.

Age, labour market situation and the choice of risky innovative entrepreneurship

ABSTRACTWe examine the effect of age and the moderating effect of labour market situations on individuals’ decisions to enter into risky innovative entrepreneurship. Using population-level data from 94 countries from the Global Entrepreneurship Monitor database we find that although age is negatively related to the choice of innovative entrepreneurship, the age–innovative entrepreneurship choice relationship is moderated by the labour market status of the individual. More specifically, full-time employed older individuals, who are most likely to become successful entrepreneurs, are less likely to choose risky innovative entrepreneurship. Considering that innovative entrepreneurship is crucial for economic growth, our results point to the importance of facilitating employed middle-age and older individuals’ entries into innovative entrepreneurship especially in a context of ageing societies.

Taxing Top Earners: The Role of Entrepreneurs

This paper studies the optimal top marginal income tax rate in a quantitative framework with entrepreneurial choice, financing constraints, and realistic earnings and wealth distributions. I find that the revenue-maximizing top tax rate is approximately 41 percent — close to the recent levels in the US. In contrast, when calibrated with only workers to match realistic earnings and wealth distributions, the model predicts a revenue-maximizing top tax rate of 81 percent — close to the established view. There are two channels through which the baseline model has a lower revenue-maximizing top tax rate. First, the wealth distribution channel: increasing the top tax rate decreases wealth accumulation and leads to a less skewed wealth distribution in the long run (there are more top entrepreneurs with low wealth and less top entrepreneurs with high wealth). With financing constraints, there is a similar change in the business earnings distribution, implying a fall in the average business earnings at the top. Second, the general equilibrium effect on labor earnings of workers: in the model with entrepreneurs, increasing the top tax rate reduces the capital stock much more than labor supply, which decreases the capital-labor ratio and thus the equilibrium wage rate in the model economy. Finally, I find that the welfare-maximizing top marginal income tax rate is close to the revenue-maximizing one.

Technical Change and Entrepreneurship

In this paper, I document a significant decline in the share of entrepreneurs among US households over the last three decades. Most of this decline is accounted for by a drop in the share of entrepreneurs among college graduates. Using an otherwise standard entrepreneurial choice model with two skill groups of individuals — high skill and low skill — I then argue that the decline in entrepreneurship is the equilibrium outcome of two technological forces that have increased the returns to high-skill labor since the 1980s: the skill-biased technical change and the decrease in the cost of capital goods. I find that these two forces jointly account for three-quarters of the decline in the share of entrepreneurs observed in the United States over the last 30 years.

Does Social Pressure Hinder Entrepreneurship in Africa? The Forced Mutual Help Hypothesis

In the absence of a public safety net, wealthy Africans have the social obligation to share their resources with their needy relatives in the form of cash transfers and inefficient family hiring. We develop a model of entrepreneurial choice that accounts for this social redistributive constraint. We derive predictions regarding employment choices, productivity, and profitability of firms run by entrepreneurs of African versus non‐African origin. Everything else equal, local firms are overstaffed and less productive than firms owned by non‐locals, which discourages local entrepreneurship. Using data from the manufacturing sector, we illustrate the theory by structurally estimating the proportion of missing African entrepreneurs. Our estimates, which are suggestive due to the data limitation, vary between 8% and 12.6% of the formal sector workforce. Implications for the role of social protection are discussed.

What Do Survey Data Tell Us about US Businesses?

This paper examines the reliability of survey data on business incomes, valuations, and rates of return, which are key inputs for studies of wealth inequality and entrepreneurial choice. We compare survey responses of business owners with available data from administrative tax records, brokered private business sales, and publicly traded company filings and document problems due to nonrepresentative samples and measurement errors across several surveys, subsamples, and years. We find that the discrepancies are economically relevant for the statistics of interest. We investigate reasons for these discrepancies and propose corrections for future survey designs. (JEL C82, C83, D22)

PENGARUH POLA PIKIR KEWIRAUSAHAAN ADVERSITY QUOTIENT DAN PENDIDIKAN KEWIRAUSAHAAN TERHADAP MINAT BERWIRAUSAHA MAHASISWA DI KOTA TANGERANG

This study aims to determine the effect of Entrepreneurial Mindset, Adversity Question and Entrepreneurship Education on student entrepreneurial interest in the city of Tangerang. Entrepreneurship education is intended as a learning process to change students' attitudes and mindsets on entrepreneurial career choices. The sampling technique used is purposive sampling, Research respondents used were students from universities in the city of Tangerang. This research is included in quantitative research. The data source in this sztudy is primary data. The data is used by distributing questionnaires directly. The data analysis method used is Structural Equation Modeling (SEM) analysis with the help of LISREL software. Research Results show that entrepreneurial mindset influences entrepreneurial interest with a correlation value of 0.63, which means that entrepreneurial mindset has a positive direction towards entrepreneurial interest. , adversity quotient influences entrepreneurial interest with a correlation value of 0.58, which means adversity quotient has a positive directional effect on entrepreneurial interest. entrepreneurship education has an effect on entrepreneurial interest with a correlation value of 0.66 which means that entrepreneurship education has a positive influence on entrepreneurial interest.

Should I Stay or Should I Go? Geographic Entrepreneurial Choices in Brazilian Franchising

In the broad empirical literature on franchising, performance outcomes of location decisions appear to be a largely forgotten issue. Yet franchising represents a rich context to study the impact of geographic entrepreneurial choices. Addressing this “blank spot” in the literature, we deal with the following question: Is it better for a chain to stay in the same geographic area, or to expand via distant franchised units? Our econometric estimations on new and unique Brazilian panel data show that spatial agglomeration of chain outlets leads to higher performance, suggesting that agglomeration gains outweigh cannibalization and spatial monopoly effects.

Governing the entrepreneurial discovery of blockchain applications

PurposeThe purpose of this paper is to examine the institutional context of the entrepreneurial discovery of blockchain applications.Design/methodology/approachThis paper draws on institutional and entrepreneurial theory to introduce the economic problem entrepreneurship in the early stages of new technologies, examines the diversity of self-governed hybrid solutions to coordinating entrepreneurial information and draws policy implications.FindingsTo perceive a valuable and actionable market opportunity, entrepreneurs must coordinate distributed non-price information under uncertainty with others. One potential class of transaction cost economising solution to this problem is private self-governance of information coordination within hybrids. This paper explores a diverse range of entrepreneurial hybrids coalescing around blockchain technology, with implications for innovation policy.Originality/valueThis paper points to the problem of how the defining of the innovation problem as either choice-theoretic or contract-theoretic changes the remit of innovation policy. Innovation policy and blockchain policy should extend beyond correcting sub-optimal investments or removing barriers to action, to incorporate how polices impact entrepreneurial choices over governance structures to coordinate information.

Female entrepreneurship: business, marriage and motherhood in England and Wales, 1851–1911

ABSTRACTThis article offers a new perspective on what it meant to be a business proprietor in Victorian Britain. Based on individual census records, it provides an overview of the full population of female business proprietors in England and Wales between 1851 and 1911. These census data show that around 30% of the total business population was female, a considerably higher estimate than the current literature suggests. Female entrepreneurship was not a uniform experience. Certain demographics clustered in specific trades and within those sectors employers and own-account proprietors had strikingly different age, marital status and household profiles. A woman’s life cycle event such as marriage, motherhood and widowhood played an important role in her decision whether to work, the work available to her and the entrepreneurial choices she could make. While marriage and motherhood removed women from the labour force, they had less of an effect on their levels of entrepreneurship. Women who had young children were more entrepreneurial than those who had none, and entrepreneurship rates rose with the arrival of one child and continued to rise the more children were added to the family.

Does College Education Promote Entrepreneurship in China?

There is no consensus on the impact of education on entrepreneurial choice in both theory and empirics. China’s Higher Education Expansion (HEE) policy initiated in 1999 provides us a unique opportunity to identity the causal relationship between college education and entrepreneurship by exploiting the Fuzzy Regression Discontinuity Design (FRDD) approach. In this paper, we use the China Household Income Project (CHIP) 2013 database, finding that China’s HEE policy significantly increases the probability of obtaining college education by 12%. There is suggestive evidence that college education decreases overall and self-employed-type of entrepreneurial choices, but increases boss-type activities; none of the coefficients are precisely estimated, though. Our results are robust to different inference approaches.

CONTEXTUAL EMBEDDEDNESS AS A FRAMEWORK: THE CASE OF ENTREPRENEURSHIP IN SOUTH AFRICA

Why does South Africa underperform on benchmarks for nascent entrepreneurship? We use a contextualization framework to evaluate articles on entrepreneurship in South Africa, which appear in seven leading global entrepreneurship journals for the period 1986–2017. The literature is then discussed using a six-dimension contextualization framework. The historical and institutional dimensions of the contextualization framework unveil the path-dependent nature of entrepreneurial choice for Black South Africans. Understanding entrepreneurship in South Africa requires research designs that focus on where and when entrepreneurship developed in the country to render meaningful the why of entrepreneurial choices made by Black South Africans. This study illustrates the idiosyncratic nature of South Africa and its social, political and economic transitions, and how these have affected entrepreneurship development, particularly among previously disadvantaged Black South Africans. The nature of the South African case has broader impact and importance for developing and transitional economies.

Choice for an Entrepreneurial Career: Do Cognitive Styles Matter?

AbstractUpon graduation, students make the decision to either become an entrepreneur or an employee. Numerous studies have thus investigated personal and environmental factors that impact this decision. As cognitive styles have become more and more important in determining individual and organisational behaviour, and as they are presumed to provide new valuable insights over and above other personal factors, they provide the ideal focus to further explore this career choice. In this article, we aim to explore how creating, planning, and knowing cognitive style relate to entrepreneurial attitudes, intentions, and career choices. Using the Theory of Planned Behaviour, in a first sample, we investigate the direct and indirect impact that cognitive styles have on entrepreneurial intention through attitudes. In our second sample, we look at how career preferences for entrepreneurship or a more traditional career as an employee are affected by cognitive styles. Using structural equation modelling analysis, this study finds evidence for the importance of creating cognitive style on entrepreneurial outcomes. Additionally, we find evidence for the relationship between planning cognitive style and wanting to be an employee. Knowing style does not lead to either preference. This paper extends the current knowledge on cognitive styles and entrepreneurship by analysing the impact of other cognitive styles than the predominantly used innovative styles and by also exploring its impact on important antecedents of entrepreneurial intentions, such as entrepreneurial attitude and career preferences.

Making sense of mixed-embeddedness in migrant informal enterprising

PurposeThe purpose of this paper is to discuss how informal migrant entrepreneurs with different legal statuses interpret their mixed-embeddedness in social and economic contexts. Legal status represents a key determinant in shaping accessible social networks and market opportunities that in turn influence entrepreneurial choices.Design/methodology/approachThe paper adopts an interpretative stance to explore how migrant entrepreneurs interpret mixed-embeddedness. It draws on the empirical evidence from a cross-sectional sample of 26 asylum seekers that engaged with enterprising activities in the city of Nottingham in the UK. A recursive hermeneutic process guided the iterative readings of the accounts to develop theoretical insights on how these agents reinvent their relationship with structure.FindingsA novel theoretical framework emerges from the data analysis to present how these particular migrants use understandings of community and notions of capital to make sense of their mixed-embeddedness. The main theoretical contribution of the framework is to illustrate how groups with different legal statuses produce unique interpretations of mixed-embeddedness. This, in turn, reflects onto specific forms of enterprising and innovative entrepreneurial choices. The framework also produces an empirical contribution as it re-centres the analysis of mixed-embeddedness around the migrant entrepreneur from previous meso- and macro-level perspectives that dominated recent research.Research limitations/implicationsThe paper expands knowledge on the notion of mixed-embeddedness by providing insights on how informal migrant entrepreneurs make sense of it. This can form the basis for allowing scholars to address empirically how migrant entrepreneurs reconcile their embeddedness in both social and economic contexts. In terms of practical implications, the paper paves the way for policy-makers to re-evaluate the current approach to the right of asylum seekers to pursue entrepreneurial activities.Originality/valueThe notion of mixed-embeddedness is central to research on informal migrant enterprising. Nevertheless, the concept remains fuzzy and difficult to operationalise. The paper offers an opportunity to understand how migrant entrepreneurs make sense of mixed-embeddedness so that future scholars can better explore how mixed-embeddedness reconciles agency and structure.