Why are some people more likely to become small-businesses owners than others: Entrepreneurship entry and industry-specific barriers

Magnus Lofstrom, Timothy Bates*, Simon C. Parker

*Corresponding author for this work

Research output: Contribution to journalArticle

66 Citations (Scopus)

Abstract

Why are some individuals more likely to become owners of small businesses than others? We classify industries using measures of entry barriers and proceed to investigate how determinants of entry vary in high- as opposed to low-barrier fields. Claims that neither financial-capital constraints nor the educational backgrounds of aspiring small-business owners predict the likelihood of small-business entry are investigated in this context. These claims of irrelevance, we find, are inconsistent with the facts. The wealth and educational background characteristics potential entrepreneurs possess predispose them to make distinctly different industry choices, both because of the differing rewards available to them and the very different entry barriers they face. The characteristics of potential entrants, in other words, draw them toward some industries and away from others. (C) 2013 Elsevier Inc. All rights reserved.

Original languageEnglish
Pages (from-to)232-251
Number of pages20
JournalJournal of Business Venturing
Volume29
Issue number2
Early online date7 Mar 2013
DOIs
Publication statusPublished - Mar 2014

Keywords

  • Entrepreneurship entry
  • Entry barriers

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