Explaining engagement levels of opportunity and necessity entrepreneurs

Abstract

This paper investigates\ndifferences between opportunity and necessity entrepreneurs in terms of\nsocio-demographics, attitudes and perception of obstacles . We use the\n2004 Flash Eurobarometer Survey data. Explanatory variables include\ngender, age, education level and self-employed parents, risk tolerance,\nlocus of control, perceptions of four obstacles and country effects. The\n obstacle variables include the perception of availibility of financial\nsupport; administrative complexity; of access to information on new\nventure creation and an unfavorable economic climate. Using probit\nequations we investigate differences in the preference for self-employment\nof opportunity and necessity entrepreneurs. A probit equation is estimated\nrelating the explanatory variables to opportunity versus necessity\nentrepreneurship. Moreover, differences in the entrepreneurial engagement\nof opportunity and necessity entrepreneurs are investigated on the basis\nof a (ordered) multinomial logit model. Findings indicate that opportunity\nentrepreneurs have a higher preference for self-employment because of\nfamily encouragement. Also, opportunity entrepreneurs are found to\nperceive of administrative complexity and an unfavorable economic climate,\nnegatively influencing their entrepreneurial involvement, while this is\nnot the case for necessity entrepreneurs.

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