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Max-Planck-Institut für Ökonomik, Jena >
Discussion Papers on Entrepreneurship, Growth and Public Policy, MPI für Ökonomik >
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http://hdl.handle.net/10419/24924
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| Title: | | The entrepreneur's mode of entry: business takeover or new venture start?  |
| 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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