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Title:The entrepreneur's mode of entry: business takeover or new venture start? PDF Logo
Authors:Parker, Simon C.
van Praag, C. Mirjam
Issue Date:2006
Series/Report no.:Papers on entrepreneurship, growth and public policy 2606
Abstract:We analyse the decision to become an entrepreneur by either taking over an established business or starting a new venture from scratch. A model is developed which predicts how several individual- and firm-specific characteristics influence entrepreneurs'entry mode. The new venture creation mode is associated with higher levels of schooling and wealth, whereas managerial experience, new venture start-up capital requirements and risk promote the takeover mode. Entrepreneurs whose parents run a family firm are predicted to invest the least in schooling, since schooling reduces search costs and these individuals have the lowest probability of needing to search for a business opportunity outside their family. A sample of data on entrepreneurs from the Netherlands provides broad support for the theory; implications for policy-makers concerned about the survival of family firms lacking within-family successors are discussed.
Document Type:Working Paper
Appears in Collections:Discussion Papers on Entrepreneurship, Growth and Public Policy, MPI für Ökonomik

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