Necessity Entrepreneurship Research Articles

The Moderating Roles of Economic Complexity in the Entrepreneurship‐Sustainable Environment Nexus for the Gulf Cooperation Council Economies

ABSTRACTThere are conflicting views on the effect of business and entrepreneurial activities on environmental degradation in developing economies. However, none of this study examines whether economic complexity can serve as a policy tool for mitigating the effect of entrepreneurial business activities on a sustainable environment. Economic complexity consists of the structural and economic transformation process from a simple production system to a more complex and innovation‐based one. It predicts the variations in income level and its impact on the choice of goods being produced in an economy. This study examines the moderating effect of economic complexity on the link between entrepreneurship and sustainable environment in Gulf Cooperation Council (GCC) countries from 2006 to 2020. It further examines the validity of the Entrepreneurial Environmental Kuznets Curve (EEKC). The study uses the Driscoll‐Kraay standard error fixed effect, Panels Corrected Standard Errors (PCSE), method of moment quantile regression and Dumitrescu–Hurlin causality that are robust to heteroscedasticity, cross‐sectional dependency and other pitfalls of least square estimating technique. The results validate the inverted U‐shaped EEKC hypothesis across all the quantiles. Economic complexity increases ecological degradation at the lower quantile levels, while it decreases environmental footprint at the upper quantiles. Furthermore, economic complexity moderates the detrimental impact of entrepreneurial activity on the environment at the higher quantiles. A two‐way relationship is established between entrepreneurial activity and the environment, while one one‐way connection from economic complexity to the environment was found. The study recommends that policymakers should encourage innovative rather than necessity entrepreneurs. Entrepreneurs should be encouraged to engage in business activities that are friendly toward preserving the ecological environment, and green innovative activities should be prioritised in their entrepreneurial activities.

Discovering resource mobilization pattern of selected necessity entrepreneurs in the Philippines

Discovering resource mobilization pattern of selected necessity entrepreneurs in the Philippines

Opportunity and necessity entrepreneurship: do linguistic structures matter?

Opportunity and necessity entrepreneurship: do linguistic structures matter?

How unemployment benefit duration shapes startup motivation and growth

AbstractBusiness creation is economically important, and unemployment precedes the creation of a substantial share of new firms. Yet, most research has focused on analyzing the effects of unemployment insurance policies on re-employment outcomes, ignoring self-employment. In this paper, we analyze how the potential duration of unemployment benefits, a fundamental design choice of unemployment insurance systems, affects whether new firms are founded out of opportunity or necessity and their growth potential. To this end, we construct a comprehensive dataset on German firm founders that links administrative social insurance information with business survey data. Exploiting reform and age-related exogenous variation in the potential duration of unemployment benefits, we find that longer potential benefit duration implies longer actual unemployment and, as a consequence, more necessity entrepreneurship and worse startup outcomes in terms of sales and employment growth. We explain this overall effect of potential benefit duration through a mix of compositional and individual-level duration effects. Our findings underline that new firms started out of unemployment are a highly heterogeneous group and suggest that the (optimal) design of unemployment insurance systems has important externalities on whether innovation- and growth-oriented firms are started out of unemployment.

The Impact of Social Liberalization on Female Entrepreneurship

Although the impact of institutional change on entrepreneurship is well documented, little is known about how institutional changes influence the creation of high-growth ventures founded by female entrepreneurs. By implementing the difference-in-differences approach, this study examines the impact of a socially liberal policy (i.e., legalization of same-sex marriage) on female entrepreneurship. We show that social liberalization policies may increase the creation of high-growth ventures by female entrepreneurs. We also show that when ethnic minorities are more prevalent, the positive effect of social liberalization on female-founded high-growth ventures is stronger, but that this positive effect might not be driven by necessity entrepreneurship. A supplementary analysis with a funding round level sample shows that after controlling for ventures, founders, and industry characteristics, social liberalization tends to increase the amount of early-stage funding that women entrepreneurs receive. This study extends prominent literature on female entrepreneurial entry and offer practical implications for policymakers by shedding lights on the impact of social liberalization on the entry of women to entrepreneurship. This study also extends the emerging literature examining the effect of an institutional change on certain types of entrepreneurship by showing that an institutional change can foster female-founded high growth ventures.

Identity Construction in Conditions of Poverty: How Necessity Entrepreneurs Shape Who They Are

Identity Construction in Conditions of Poverty: How Necessity Entrepreneurs Shape Who They Are

Self-employment, financial access and economic welfare: empirical evidence from Africa

Purpose This study aims to investigate the empirical linkages between self-employment, financial access and economic welfare in Africa. It particularly examines the moderating role of financial access in the self-employment-economic welfare nexus and determines relevant thresholds. Design/methodology/approach The paper samples 52 African economies from 2000 to 2018 and deploys the fixed effects and bootstrap quantile regression estimators. Findings The results show that self-employment has a negative and significant relationship with economic welfare, while access to finance has a positive and significant relationship with welfare. More notably, the conditional effect of self-employment and finance is significant and positive, confirming a synergetic effect. The result suggests that pushing more people into self-employment does not necessarily enhance economic welfare, other than the avoidance of unemployment, due to the large number of replicative and necessity entrepreneurs. However, granting the self-employed more access to affordable finance that boosts entrepreneurial activities enhances economic welfare. Practical implications African governments and relevant policymakers must recognize that deepening the financial sector is crucial in creating sustainable opportunity entrepreneurs and boosting general economic welfare. Originality/value The uniqueness of this paper centers on the exposé of the relevance of financial access/development in promoting the economic welfare of self-employed persons and entrepreneurs. It also determines relevant thresholds at which finance is most significant in procuring positive impacts on economic welfare. In addition, the simultaneous quantile regression is used to show snapshots of human development index at which this impact is paramount.

Spawned by opportunity or out of necessity? Organizational antecedents and the choice of industry and technology in employee spinouts

AbstractResearch summaryI examine how the organizational antecedents of spinouts shape the new firms' industry and technological trajectory choices compared to those of the parent firms. Building on prior research on employee entrepreneurship and integrating insights from the literature on opportunity and necessity entrepreneurship, I hypothesize that spinouts launched to exploit a new business opportunity shunned by the parent firm (i.e., opportunity spinouts) are more likely to enter a different but related industry and technological field to those of the parent firm. I hypothesize also that spinouts triggered by adverse developments in the parent firm (i.e., necessity spinouts) are more likely to target the same industry and technological field as the parent. Analysis of data from the European biotech industry supports these predictions.Managerial summaryThe prevailing view of employee entrepreneurship is that the established firm's unwillingness to commercialize an employee's ideas leads to the employee leaving to start a new firm. However, evidence suggests that spinout activity (new firm formation by former employees) can be also triggered by adverse developments in the established firm that disrupt an employee's job. This study examines how the organizational antecedents of spinouts shape the new firms' early‐stage strategic choices. Using data from the biotech industry, I show that opportunity driven spinouts are more likely to enter a different but related industry and technological field to those of their founders' prior employer and that necessity driven spinouts are more likely to target the same industry and technological field as the prior employer.

Microfranchising and necessity entrepreneurs

Microfranchising and necessity entrepreneurs

Necessity entrepreneurship: A journey from unemployment to self‐employment

AbstractThis study provides a comprehensive examination of necessity entrepreneurship, a concept distinct from its counterpart, opportunity entrepreneurship. Necessity entrepreneurship emerges from the compelling need to address economic hardship or unemployment, contrasting with opportunity entrepreneurship, which is driven by the pursuit of new market opportunities. The backdrop of this study is anchored in the escalating unemployment crisis and its implications for sustainable economic growth and the attainment of sustainable development goals. Through an integrative review combining bibliometric–content analysis of 96 publications, following the PRISMA protocol, and a detailed case analysis of 10 globally recognized entrepreneurs who embarked on their ventures driven by necessity, this study unravels the critical factors fueling the rise of necessity entrepreneurship. The findings delineate the relationship between necessity and opportunity entrepreneurship, highlighting how an entrepreneurial orientation can serve as a pivotal link. This orientation not only mitigates the adverse effects of unemployment but also propels the economy toward sustainable growth, thereby contributing significantly to the sustainable development goals. The insights derived from this study traverse multiple domains including entrepreneurial orientation, socio‐economic factors, as well as innovation and digitalization, offering a granular perspective on business policy, entrepreneurial ecosystems, the disparate impacts on developed versus developing nations, and the role of innovation in dynamic entrepreneurship. Through a conceptual framework, this study elucidates how entrepreneurial orientation can effectively bridge the gap between the unemployment crisis and sustainable economic growth. Therefore, this study not only enriches the academic discourse on necessity entrepreneurship but also provides pragmatic insights for entrepreneurs, policymakers, and scholars, emphasizing the crucial role of entrepreneurship in navigating economic and social challenges.

Entrepreneurship promotion policies and urban carbon emission efficiency: does environmental concerns matter?

To foster economic and social development, many countries have adopted entrepreneurship promotion policies. However, existing research on entrepreneurship promotion policy primarily focuses on its employment incentive effect, while neglecting to examine the underlying impact mechanism and its effect on environmental sustainability. Based on the quasi-natural experiment of China’s National Entrepreneurial Pilot Cities, this paper employs the difference-in-differences model to examine the impact of the National Entrepreneurial Cities pilot policy on urban carbon emission efficiency. The study finds that China’s National Entrepreneurial Cities pilot policy has generally impaired urban carbon emission efficiency, and a series of robustness tests show that the results are robust. National Entrepreneurial Cities pilot policy decreases urban carbon emission efficiency by increasing the proportion of necessity entrepreneurship, inhibiting the upgrading of industrial structure, and increasing overcapacity. The government’s environmental concerns and the public’s environmental concerns play a prominent role in improving the adverse impact of the National Entrepreneurial Cities on carbon emission efficiency and mainly play a significant role in central and western cities, cities with low per capita GDP, cities with high economic growth pressure, and resource-dependent cities. The research of this paper provides a reference for the government to promote entrepreneurship while taking environmental effects into account.

A framework for investigating new firm entry: The (limited) overlap between informal-formal and necessity-opportunity entrepreneurship

We analyse entrepreneurial entry along the dimensions of informal-formal and necessity-opportunity entrepreneurship, distinguishing between them yet considering them jointly. While the dominant view in the literature conflates necessity with informal entry, and opportunity with formal entry, we hypothesise that informal entrepreneurship may be attractive to higher-income individuals as a testing ground for entrepreneurial ideas. We also explain why higher-income individuals may undertake necessity entrepreneurship. We utilise individual Global Entrepreneurship Monitor (GEM) data from Chile (2019–2021), which identifies informal-formal and necessity-opportunity entrepreneurial entry modes, to test hypotheses on the role of individuals´ income in the four types of entrepreneurial entry. We also consider changes in entrepreneurial entry during a crisis and a non-crisis periods. Our results confirm that the patterns in the data are consistent with hypotheses derived from our proposed theoretical framework. Executive summaryEmerging markets economies have very large informal sectors, and their entrepreneurial entry is often motivated by economic necessity rather than by business opportunity. But neither informal nor necessity entrepreneurship are usually expected to generate the positive benefits for growth and development predicted for formal and opportunity entrepreneurship. We argue that the dominant stream in the literature actually conflates informal and necessity entrepreneurship, both of which have been associated with low human and financial capital and productivity. We propose that the appropriate typology is more complex than this because there are examples of successful and dynamic informal firms. This leads us to identify four categories of entrepreneurial entry: informal-necessity (Type 1), formal-opportunity (Type 2), informal-opportunity (Type 3), and formal-necessity (Type 4). While necessity entrepreneurship has typically been associated with low-income individuals, we propose that formal-necessity entrepreneurship may be an entry path for both low- and high-income individuals, though for different reasons. Informal opportunity entry may likewise be an option for people with low-income as well as high-income.We therefore seek to disentangle the analysis of opportunity-necessity and of formal-informal entry and to demonstrate that the two less explored entry modes - informal-opportunity, and formal-necessity - are of considerable theoretical and practical significance in emerging economies. We test our framework in the emerging market economy setting of Chile, one of the more prosperous and open economies in Latin America. We use Global Entrepreneurship Monitor (GEM) data which uniquely for Chile allow us to distinguish between individuals along both the formal-informal and the necessity-opportunity dimensions. On this basis, we distinguish empirically between these four categories of entrepreneurial entry and explain how higher-income individuals may use informal-opportunity entrepreneurial entry as a “seed bed” to test their new business ideas. At the same time, we show that necessity entrepreneurship may be attractive to both lower- and higher-income individuals.We also show that the interplay between individuals´ income groups and four entrepreneurial entry modes is stable over “normal times” versus “crisis periods”. We observe that in response to a crisis, individuals with lower-incomes are likely to engage more in informal-necessity entrepreneurship while opportunity-informal entry by higher-income individuals will decline. These changes represent a more complex adjustment pattern than has been identified for developed economies, where entrepreneurial activity has been found to be countercyclical. Thus, in emerging markets, informal-necessity entrepreneurship plays a stabilizing role for those individuals with a more marginal position in the labor market during the crisis. In contrast, for those individuals who have access to higher household income, all forms of entrepreneurship become a less attractive option. We interpret this as indicating that these individuals have the option to wait for higher return opportunities to re-emerge. This is one of the first papers to explore the impact of the COVID-19 pandemic on entrepreneurship in an emerging market economy.

The implications of economic freedom and gender ideologies on women's opportunity-to-necessity entrepreneurship

PurposeThis study explores the relationship between economic freedom and gender ideologies on the allocation of women’s opportunity-to-necessity entrepreneurship across countries. Opportunity entrepreneurship is typically understood as one’s best option for work, whereas necessity entrepreneurship describes the choice as driven by no better option for work. Specifically, we examine how economic freedom (i.e. each country’s policies that facilitate voluntary exchange) and gender ideologies (i.e. each country’s propensity for gendered separate spheres) affect the distribution of women’s opportunity-to-necessity entrepreneurship across countries.Design/methodology/approachWe construct our sample by matching data from the following country-level sources: the Global Entrepreneurship Monitor’s Adult Population Survey (APS), the Fraser Institute’s Economic Freedom Index (EFI), the European/World Value Survey’s Integrated Values Survey (IVS) gender equality index, and other covariates from the IVS, Varieties of Democracy (V-dem) World Bank (WB) databases. Our final sample consists of 729 observations from 109 countries between 2006 and 2018. Entrepreneurial activity motivations are measured by the ratio of the percentage of women’s opportunity-driven total nascent and early-stage entrepreneurship to the percentage of female necessity-driven total nascent and early-stage entrepreneurship at the country level. Due to a first-order autoregressive process and heteroskedastic cross-sectional dependence in our panel, we estimate a fixed-effect regression with robust standard errors clustered by country.FindingsAfter controlling for multiple macro-level factors, we find two interesting findings. First, economic freedom positively affects the ratio of women’s opportunity-to-necessity entrepreneurship. We find that the size of government, sound money, and business and credit regulations play the most important role in shaping the distribution of contextual motivations over time and between countries. However, this effect appears to benefit efficiency and innovation economies more than factor economies in our sub-sample analysis. Second, gender ideologies of political equality positively affect the ratio of women’s opportunity-to-necessity entrepreneurship, and this effect is most pronounced for efficiency economies.Originality/valueThis study offers one critical contribution to the entrepreneurship literature by demonstrating how economic freedom and gender ideologies shape the distribution of contextual motivation for women’s entrepreneurship cross-culturally. We answer calls to better understand the variation within women’s entrepreneurship instead of comparing women’s and men’s entrepreneurial activity. As a result, our study sheds light on how structural aspects of societies shape the allocation of women’s entrepreneurial motivations through their institutional arrangements.

Bibliometric Analysis of the Term “Entrepreneurial Motivation”


 This study presents a comprehensive bibliometric analysis of the term "Entrepreneurial Motivation," reflecting the extensive scholarly interest in the determinants that incite individuals to undertake entrepreneurial endeavors. Utilizing a dataset from reputable databases such as Scopus, this research elucidates the evolution of entrepreneurial motivation as a concept and its significance in the entrepreneurship literature. We investigate key thematic clusters, seminal works, influential authors, and collaboration patterns in the field. Additionally, we explore publication trends in leading journals and identify research lacunae and emerging trends that signal future scholarly directions. Our findings indicate a robust engagement with factors such as educational background, personal traits, and socio-economic impacts, including the influence of the COVID-19 pandemic on entrepreneurial activity. The study also highlights potential new avenues for research in areas that have yet to become prominent within the existing literature, such as the role of risk perception, necessity entrepreneurship, passion, and social responsibility in shaping entrepreneurial motivation. This analysis provides a detailed landscape of the field, contributing to a more nuanced understanding of the dynamic forces that foster and sustain entrepreneurial motivation in an ever-evolving global economy.

The career history of Chinese entrepreneurs and their life outcomes: a life history study using sequence analysis

Chinese entrepreneurs, whose population has been steadily growing since the Reform and Open Up in 1978, are a diverse group of people. Though previous research has analysed Chinese entrepreneurs by special cases, few have conducted a nationally representative study of their typology. And even fewer have analysed the life outcomes of the different types of entrepreneurs. Relying on two waves of the panel data from the China Health and Retirement Longitudinal Study (CHARLS) and with the technique of sequence analysis, for the first time, we explored the heterogeneous career trajectories of Chinese entrepreneurs and their corresponding life outcomes. We successfully depicted four unique entrepreneurial trajectories in China since the 1950s, which are necessity entrepreneurs, employee entrepreneurs, persistent entrepreneurs and farmer entrepreneurs. Our empirical results can support both the cumulative disadvantage theory and the set-point theory in health-related studies. Among all the entrepreneurs, farmer entrepreneurs have the worst self-rated health in the long run, which supports the cumulative disadvantage theory. At the same time, all types of entrepreneurs have similar depressive symptoms and economic returns, which supports the set-point theory.

Understanding the link: the competencies and motivations of nascent entrepreneurs to engage in sustainable entrepreneurship

ObjetivoEste artigo tem como objetivo compreender a relação entre as competências empreendedoras (autoeficácia e capital social), e o empreendedorismo sustentável e sua incidência por meio de motivações empreendedoras (empreendedorismo de oportunidade e necessidade).Design/metodologia/abordagemAdotamos uma abordagem quantitativa e usamos regressões de mínimos quadrados ordinários (OLS) e análise de bootstrapping para testar nossas hipóteses sobre a relação entre competências empresariais e empreendedorismo sustentável mediada por motivações empresariais usando uma amostra transversal de 2.356 empreendedores nascentes do relatório Global Entrepreneurship Monitor (GEM) 2021–2022.ResultadosAs evidências sugerem que o empreendedorismo sustentável é influenciado positivamente pelo empreendedorismo orientado pela oportunidade e pela necessidade. Além disso, os resultados mostram que ambas as motivações empresariais mediam positivamente a relação entre a autoeficácia e o empreendedorismo sustentável.OriginalidadeNossa abordagem se afasta da perspectiva unidimensional tradicional sobre as motivações empresariais, reconhecendo que um empreendedor pode incorporar simultaneamente vários graus de ambos os ases motivações. Ao integrar o estudo das competências e motivações empresariais ao empreendedorismo sustentável, obtemos uma compreensão holística da dinâmica em jogo.

The Entrepreneurial Process in a Remote Island Context: The Case of Madeira

This paper studies the entrepreneurial phenomenon on a remote island to assess the effects of the spatial location on the entrepreneurial process. A qualitative approach was adopted to conduct this research, through a multiple-case study of 8 entrepreneurs from the island of Madeira, an autonomous Portuguese region in the Atlantic. The primary goal of this study is to characterize the entrepreneurial process in remote islands. This study adopts Bygrave’s (2009) definition and model of the entrepreneurial process. The findings show that the geographical environment on remote islands influences most phases of the entrepreneurial process. The identification of business opportunities will vary greatly between sectors of activity. Additionally, island-based entrepreneurs were more motivated by push factors, which suggests that the entrepreneurial landscape in remote islands will be populated by necessity entrepreneurs. Moreover, findings also demonstrate that remote island entrepreneurs are more preoccupied with firm survival than they are with growth. Finally, this study also discusses the impact of advances in information technologies on the entrepreneurial process on small and remote islands.

Entrepreneurship performance in the EU: To what extent do economic, social, and government conditions matter?

Entrepreneurship is widely recognized as a key driver of economic development. At the same time, entrepreneurship is also affected by the economic conditions of the regions where it evolves. In the literature, negative impacts on entrepreneurial performance have been linked to the 2008 financial crisis in the European Union (EU). However, not enough evidence has been provided to support this assertion. To fill this gap, we tested the relationship between economic, social, and government conditions and entrepreneurial performance. We did this for opportunity entrepreneurship (OPP), necessity entrepreneurship (NEC), and total entrepreneurial activity (TEA), for the period 2003–2018, which covers before, during, and after the financial crisis. We considered 21 EU countries and applied descriptive, correlation, and multiple linear regression analyses. Our results demonstrate that (a) there is a positive and significant correlation between NEC and OPP, GDP per capita and OPP, unemployment and TEA, gender ratio and age, gender ratio and education, education and TEA, population and NEC, government indicators and GDP per capita, and government expenditure and NEC, and a negative and significant correlation between GDP per capita and TEA and (b) economic and government conditions had a negative impact on TEA, in contrast to a positive and negative impact on NEC. Social conditions are mixed for TEA and NEC and positive for OPP. The effects on economic conditions were mixed for OPP. Therefore, our study impacts practitioners by demonstrating the factors that do or do not impact entrepreneurial activity in the EU. Additionally, our study expands upon previously analyzed factors that influence entrepreneurial performance, promoting value and originality in the area.

Long-Term Effects of Shocks on New Opportunity and Necessity Entrepreneurship

Long-Term Effects of Shocks on New Opportunity and Necessity Entrepreneurship

Necessity entrepreneurship: An examination of control beliefs

ABSTRACT In the context of necessity entrepreneurship, control beliefs (that is, entrepreneurial locus of control and entrepreneurial self-efficacy) are examined as individual moderators and as simultaneous moderators of the effect perceived economic uncertainty has on entrepreneurial intention. Using recognized measures and an online questionnaire, data from a sample of 285 undergraduate business students are used to test a series of hypotheses. While confirming past findings, the results also provide surprising findings. The findings provide potential explanations for why previous research varies regarding locus of control, while the results are consistent with past entrepreneurship research on self-efficacy. Importantly, the results show that neither locus of control, nor self-efficacy, moderate the effect of perceived economic uncertainty alone. However, when considered simultaneously both control beliefs moderated the effect of perceived economic uncertainty on entrepreneurial intentions.