The Entrepreneur's Mode of Entry: Business Takeover or New Venture Start?

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 06-089/3

Classification and Topics

• Classification: Wirtschaft ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Entrepreneurship ; New Firms; Startups
• Subject: entrepreneurship ; human capital ; business takeover ; venture start up ; family firm ; Unternehmensgründung ; Markteintritt ; Humankapital ; Niederlande

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Parker, Simon C. ; van Praag, C. Mirjam
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/86397
• Last update: 10.03.2025, 11:42 AM CET