RESE ARCH REPORT 0002/E

Determ i nant s of Su ccess fu l E ntrepreneurs h i p

SCA LES
SCientifi c A naLysis of Entrepreneurs hip and SMEs

Niel s Bo s m a M irja m va n Pra a g G errit d e W it

J u n e 2000

ISBN: 90-371 -0781 -8 Pri c e: NLG 35 , O rd er n u m b er: H0002

Thi s re p ort h a s b e e n w rit t e n in t h e fra m e w ork o f EIM s e c o n o mi c m o d ellin g progra m m e SC ALES , w hi c h i s fin a n c e d by t h e N e t h erla n d s M ini s try o f E c o n o mi c A f f air s.

EIM / Bu sin e ss & Poli c y Re s e ar c h e m ploys 170 pro f e ssio n als. EIM provid e s p olic y- a n d pra c ti c e-oriented s o c io-e c onomi c information on and for all s e c tors in private enterpris e and for poli c y -makers. EIM is e s tablis hed in Zoetermeer . B e side s on the Netherland s, EIM als o fo c u s e s on the European e c onomy and on other c ontinent s. You may c onta c t u s for more information about EIM and it s s ervi c e s. A d dre ss: It alila a n 33 M ailin g a d dre ss: P. O . Box 7001 2701 A A Zoetermeer Tele p h o n e: + 31 79 341 36 34 F a x: + 31 79 341 50 24 W e b sit e: w w w . eim . nl

Th e re s p o n s ibility f or t h e c o n t e n t s o f t hi s re p ort lie s w it h EIM . Q u o tin g o f n u m b er s a n d / or t ext s a s a n expla n a tio n or s u p p ort in p a p er s, e ss ay s a n d b o o k s i s p ermit t e d o nly w h e n t h e s o ur c e i s c le arly m e n tio n e d . N o p art o f t hi s p u bli c a tio n m ay b e c o pie d a n d / or p u bli s h e d in a ny f orm or by a ny m e a n s, or s t ore d in a re trieval s y s t e m , w it h o u t t h e prior w rit t e n p ermissio n o f EIM . EIM d o e s n o t a cc e p t re s p o n s ibility f or prin tin g error s a n d / or o t h er im p erf e c tio n s.

Contents

Summary .......................................................................................... 5 1 2
2.1 2.2 2.3 2.4 2.5

Introduct i on ..................................................................................... 9 Theori es of entrepreneursh i p ...................................................11

In tro d u c tio n ........................................................................................ 11 Cla ss i c vie w s o n e n tre pre n e ur s hip ....................................................... 11 Thre e m e a s ure s o f e n tre pre n e urial s u cc e ss .......................................... 12 D e t ermin a n t s o f s u cc e ss ...................................................................... 14 Lin kin g d e t ermin a n t s t o s u cc e ss .......................................................... 14

3
3.1 3.2 3.3 3.4 3.4.1 3.4.2 3.4.3 3.4.4 3.4.5 3.5

Entrepreneursh i p data for the Netherl and s ..........................16

In tro d u c tio n ........................................................................................ 16 EIM firm f o u n d er s s urvey .................................................................... 16 En tre pre n e urial s u cc e ss: o p era tio n al varia ble s .................................... 17 D e t ermin a n t s o f s u cc e ss: o p era tio n al varia ble s ................................... 18 H u m a n c a pit al ..................................................................................... 18 Fin a n c ial c a pit al .................................................................................. 20 So c ial c a pit al ....................................................................................... 21 K e e pin g u p w it h d evelo p m e nt s releva n t f or t h e b u s in e ss e s ................ 22 Co n trol s .............................................................................................. 22 Di sc u ss io n ........................................................................................... 23

4
4.1 4.2 4.3 4.4 4.5

Emp irica l resu l ts ...........................................................................26

In tro d u c tio n ........................................................................................ 26 N o n-re s p o n s e ...................................................................................... 26 Pro fit .................................................................................................. 27 Em ploym e n t ....................................................................................... 29 D ura tio n ............................................................................................. 31

Li terature ........................................................................................34 Append i x

Th e s urvival m o d el .............................................................................. 36

Summary
Introdu ct i on
In t h e p a s t d e c a d e s, t h e vie w s o n e n tre pre n e ur s hip d evelo p e d t o w ard s a c o m m o n a gre e m e n t w it h re s p e c t t o it s im p ort a n c e f or (e c o n o mi c ) s o c ie ty . Entre pre n e ur s hip re c eive s s u b s t a n tial in t ere s t fro m b o t h s c ie n ti s t s a n d p oli c y m aker s. En tre pre n e ur s hip , h o w ever , h a s m a ny a s p e c t s. Thi s diver s io n c a n b e s e e n in lit era t ure - w h e n explorin g t h e vie w s o f t h e c la ssi c c o n trib u t or s t o e ntre pre n e ur s hip t h eory - a s w ell a s in t h e re al w orld . By s tim ula tin g e n tre pre n e ur s hip , t h e a c t u al g o al i s e s p e c ially t o s tim ula t e t h e p e o ple w h o w ill b e s u cc e ss f ul a f t er s t artin g u p t h eir b u s in e ss e s. Co n s id erin g t h e gre a t varie ty w it hin t h e gro u p o f (p o t e n tial) e n tre pren e ur s, t h ere i s n e e d f or s p e c ifi c in s ig h t in t h e f a c t or s t h a t d e t ermin e t h e s u cc e ss o f s t artin g e n tre pren e ur s. Thi s i s inve s tig a t e d in t h e pre s e n t s t u dy f or t h e N e t h erla n d s.

Approach
W e h ave a cc e ss t o t h e EIM firm f o u n d e r s s urvey , a larg e D u t c h d a t a p a n el c o ns i s tin g o f p e o ple w h o s t art e d a b u s in e ss in 1994 . Th e fir s t s urvey w a s h eld in t h e p erio d o f t h e s t art-u p . Th e re s p o n d e n t s g ave d e t aile d in f orm a tio n o n t h e m s elve s, o n t h eir e nviro n m e n t a n d o n t h eir s tra t e gie s. Th e firm f o u n d er s w ere f ollo w e d in t h e ye ar s a f t er , in w hi c h t h ey provid e d in f orm a tio n o n t h eir a c hieve m e n t s a n n u ally . Su cc e ss c o uld b e m e a s ure d by t h e pro fit s o f t h e e n tre pre n e ur , e m ploym e n t c re a t e d by t h e e n tre pre n e ur , a n d t h e s urvival p erio d o f t h e firm . Th e d e t ermin a n t s id e n tifie d fro m t h e s urvey are c la ss ifie d in a fra m e w ork t h a t di s tin g ui s h e s t h e dif f ere n t re s o ur c e s fro m w hi c h t h e s t artin g e n tre pre n e ur c a n dra w . Th e s e rela t e t o h u m a n c a pit al , fin a n c ial c a pit al a n d s o c ial c a pit al . A d di tio n ally , t h e s tra t e gie s o f t h e e n tre pre n e ur t o k e e p u p w it h b u s i n e ss a s w ell a s s o m e c o n trol varia ble s are id e n tifie d . To inve s tig a t e t h e in flu e n c e s o f p o t e n tial d e t ermin a n t s (re s ultin g fro m t h e 1994 s urvey) o n s u cc e ss (re s ultin g fro m t h e s urvey s u n til 1997) , m ultiple re gre ss io n a n aly s i s w a s u s e d . Thi s a p pro a c h m e a s ure s t h e in flu e n c e o f e a c h d e t ermin a n t o n s u cc e ss, w hile c o n trollin g f or t h e o t h er d e t ermin a n t s id e n tifie d . For e a c h s u cc e ss m e a s ure , t h e rela tio n s b e t w e e n d e t ermin a n t s a n d s u cc e ss are es tim a t e d .

Resu l t s
G e n eral re s ult s are t h a t t h e a m o u n t o f h u m a n c a pit al i s e s p e c ially im p ort a n t f or d e t erminin g d ura tio n a n d pro fit , w hile fin a n c ial c a pit al i s e s p e c ially rela t e d t o e m ploym e n t . So c ial c a pit al a n d s tra t e gie s f or re trievin g releva n t inf orm atio n s e e m t o b e a b o u t e q u ally im p ort a n t f or all s u cc e ss m e a s ure s. Th e s p e c ifi c d e t ermi n a n t s are d e alt w it h b elo w .

H u m a n c a pit al
En tre pre n e ur s a t hig h er a g e (a g e i s u s e d a s a proxy t o k n o w le d g e o f t h e w orld) s e e m t o m a k e le ss pro fit a n d t o c re a t e le ss e m ploym e n t t h a n yo u n g er e n tre pre n e ur s d o . H o w ever , t h e avera g e d ura tio n o f t h e f o u n d e d firm i s hig h er: yo u n g er e n tre pre n e ur s h ave hig h er pro b a bilitie s t o q uit t h e b u s in e ss e arly . Th e e d u c a tio n al level o f t h e en tre pre n e ur al s o m a t t er s f or s u cc e ss, t h o u g h o nly w h e n pro fit s are c o n s id ere d . Exp erie n c e i s al s o im p ort a n t in d e t erminin g s u cc e ss. H avin g h a d exp erie n c e in t h e s a m e s e c t or a s t h e n e w ly f o u n d e d b u s in e ss in c re a s e s t h e pro b a bilitie s o f s u cc e ss in m a kin g pro fit s a n d in s urvivin g . H avin g exp erie n c e a s a n e m ploye e h a s a p o s itive im p a c t o n t h e d ura tio n o f t h e firm , n o t o n pro fit s or e m ploym e n t . Exp erie n c e in s elf -e m ploym e n t o nly m a t t er s f or a c hievin g hig h er pro fit s. Fin a n c ial exp erie n c e i s s e e n t o b e le ss f avo u ra ble f or t h e d ura tio n o f t h e firm , w hile it i s p o s itively a ss o c ia t e d w it h e m ploym e n t .

Fin a n c ial c a pit al

Th e a m o u n t o f in c o m e , o t h er t h a n t h e in c o m e g e n era t e d fro m t h e f o u n d e d firm , h a s a n e g a tive e f f e c t o n pro fit a bility a n d g e n era t e d e m ploym e n t . A firm t h a t i s fin a n c e d w it h o w n c a pit al al s o le a d s t o le ss e m ploym e n t . Em ploy m e n t a c hieve m e n t s are f o u n d t o b e hig h w h e n a b u s in e ss p art n er m a d e s o m e fin a nc ial c o n trib u tio n . N o s ig nifi c a n t e f f e c t s w ere f o u n d f or a ny o f t h e s e d e t ermin a n t s rela tin g t o d ura tio n .

S o c ial c a pit al
Th e in flu e n c e o f o t h er e n tre pre n e ur s in t h e f a mily i s n e g a tively rela t e d t o pro fit m a kin g . H avin g c o n t a c t w it h o t h er e n tre pre n e ur s in n e t w ork s i s p o s itively rela t e d t o t h e a m o u n t o f e m ploym e n t c re a t e d . Em o tio n al s u p p ort fro m t h e s p o u s e in flu e n c e s pro fit a bility a n d d ura tio n in a p o s itive w ay . If t h e e n tr epren e ur b o ard s o u t a c tivitie s t o o t h er p artie s, t hi s c a n b e s e e n a s a n in di c a tio n o f s u cc e ss re g ardin g g e n era t e d e m ploym e n t .

S tra t e gie s f or k e e pin g u p w it h b u s in e ss

W h e n t h e e n tre pre n e ur f o c u s e s o n c o m m er c ial rela tio n s in re trievin g releva n t in f orm a tio n t h a t w ill h elp t o k e e p u p w it h b u s in e ss, t hi s in di c a t e s s u cc e ss f or all t hre e m e a s ure s. Fo c u s o n t h e bra n c h in g e n eral i s o nly a ss o c ia t e d w it h d u ra tio n , w hile t h e f o c u s o n dire c t b u s in e ss rela tio n s (c u s t o m er s a n d s u p plier s) i s lin k e d t o pro fit a bility . In f orm al c o n t a c t w it h f ello w- e n tre pre n e ur s h a s a s lig h t in flu e n c e o n g e n era t e d e m ploym e n t .

Co n trol varia ble s

O ur inve s tig a tio n s s u g g e s t t h a t m ale e n tre pre n e ur s p erf orm b e t t er t h a n f e m ale e n tre pre n e ur s, t h o u g h o nly w h e n s urvival o f t h e firm i s a d dre ss e d . For pro fit a bility a n d e m ploym e n t , n o s ig nifi c a n t e f f e c t f or g e n d er i s f o u n d . En trepre n e ur s w h o in di c a t e d t o h ave e m ploym e n t gro w t h a s a g o al in d e e d c re a t e d

s ig nifi c a n tly m ore e m ploym e n t t h a n t h e o t h er s did . H o w ever , t h ey did n o t m a k e hig h er pro fit s. Bein g p art-tim e e n tre pre n e ur i s al s o im p ort a n t f or d e t erminin g s u cc e ss. En tre pre n e ur s w h o are 100 p er c e n t s elf- e m ploye d s c ore esp e c ially hig h er o n d ura tio n . Re m ark a bly , a s tro n g n e g a tive rela tio n w a s f o u n d in rela tio n t o g e n era t e d e m ploym e n t f or f ull-tim e e n tre pre n e ur s. A n e n tr epre n e ur w h o i s a c tive in t h e b u s in e ss s ervi c e s s e c t or , or a n e n tre pre n e ur w h o c o n s id er s t h e (exp e c t e d) hig h er in c o m e a s a n im p ort a n t m o tiva tio n t o s t art t h e b u si n e ss, d o e s n o t s e e m t o h ave m ore s u cc e ss t h a n hi s c o u n t erp art s.

Introduct i on

In t h e p a s t d e c a d e s, t h e view s o n e n tre pre n e ur s hip d evelo p e d t o w ard s a c o m m o n a gre e m e n t w it h re s p e c t t o it s im p ort a n c e f or (e c o n o mi c ) s o c ie ty . Entre pre n e ur s hip re c eive s s u b s t a n tial in t ere s t fro m b o t h s c ie n ti s t s a n d p oli c y m a k er s. Ext e n s ive s t u die s are u s e f ul a s e n tre pre n e ur s hip h a s m a ny f a c e t s; t h e rela t e d a s p e c t s are al s o diver s e . Thi s diver s io n c a n b e s e e n in lit era t ure - w h e n explorin g t h e vie w s o f t h e c la ss i c c o n trib u t or s t o e n tre pre n e ur s hip t h eo ry - a s w ell a s in t h e re al w orld . By s tim ula tin g e n tre pre n e ur s hip , t h e a c t u al g o al i s e s p e c ially t o s tim ula t e t h e p e o ple w h o w ill b e s u cc e ss f ul a f t er s t artin g u p t h eir b u s in e ss e s. Th e s e firm f o u n d er s are b elieve d t o play a k ey role in t h e e c o n o mi c pro gre ss. Co n s id erin g t h e gre a t varie ty w it hin t h e gro u p o f (p o t e n tial) e n tre pre n e ur s, t h ere is n e e d f or s p e c ifi c in s ig h t in t h e f a c t or s t h a t d e t ermin e t h e s u cc e ss o f s t artin g e n tre pren e ur s. Thi s i s inve s tig a t e d in t h e pre s e n t s t u dy u s in g a lo n git u din al p a n el d a t a s e t c o n s i s tin g o f D u t c h firm f o u n d e r s.

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Theories of entrepreneursh i p

2.1 Introduct i on
A lt h o u g h it i s alm o s t u n a nim o u s ly a cc e p t e d t h a t e n tre pre n e ur s hip play s a m ajor role in e c o n o mi c d evelo p m e n t , t h e evid e n c e o f t hi s rela tio n i s re m ark a bly limit e d . Thi s m ay very w ell b e c a u s e d by t h e f a c t t h a t t hi s rela tio n re q uire s t h e a c k n o w le d g e m e n t o f in t erm e dia t e pro c e ss e s. En tre pre n e ur s hip i s c lo s ely rela t e d t o s m all b u s in e ss e s a n d t e c h n olo gi c al c h a n g e . Th ere i s e m piri c al evid e n c e o f t h e p o si tive in flu e n c e o f t h e pre s e n c e o f s m all b u s in e ss e s o n e c o n o mi c gro w t h . In ord er t o im prove allo c a tio n e f fi c ie n tly , p o t e n tially s u cc e ss f ul e n tr epre n e ur s s h o uld b e s tim ula t e d in t h eir a c tivitie s. To b e a ble t o di s tin g ui s h b et w e e n hig h - a n d lo w-p o t e n tial e n tre pre n e ur s, t h e s u cc e ss d e t ermin a n t s o f t h e e n tre pren e ur w ill b e id e n tifie d in t h e f ollo w in g c h a p t er s.

2.2 Cl a ssic v iew s on entrepreneursh i p

E c o n o mi c t h e orie s a t trib u t e a gre a t varie ty o f f u n c tio n s t o t h e e n tre pre n e ur . A n u m b er o f f u n c tio n a s p e c t s a p p e ar in m a ny dif f ere n t t h e orie s a s a p art o f t h e t o t al c o n s tru c t o f t h e e n tre pre n e ur . In ord er t o g ain in s ig h t in t h e im p ort a n c e o f t h e s e re c urrin g f u n c tio n a s p e c t s, t h e role playe d by t h e s e a s p e c t s in t h e t h e orie s o f t h e m ajor c o n trib u t or s t o e n tre pre n e ur s hip re s e ar c h i s s u m m aris e d in t a ble 1 . O f c o ur s e , t hi s re pre s e n t a tio n a b s tra c t s fro m m a ny a s p e c t s o f t h e s e t h e orie s. This re pre s e n t a tio n i s c h o s e n f or re a s o n s o f c o m p ara bility a n d c larity . Th e c o n c eiver s o f t h e t h e orie s s u m m ari s e d in t a ble 1 are w id ely a cc e p t e d a s m ajor c o n trib u t or s t o t h e ore ti c al k n o w le d g e a b o u t t h e e n tre pre n e ur (s e e e . g . Hb ert a n d Lin k , 1982 , or va n Pra a g , 1999).
Ta ble 1 A s pe c t s of the entrepreneurial fun c tion in theorie s of the entrepreneur* p erio d Cantillon Say M ars h all M e n g er Knight Sc h u m p e t er Kirz n er * 1680-1734 1767-1832 1842-1924 1840-1921 1885-1972 1883-1950 1930ris k taker +++** ++ + +++ -*** arbitra g e u r ++ o ++ + o + +++ c a pitalis t + +++ m a n a g er o +++ +++ ++ o in n ova t or o ++ o o + +++ o

This s u m m ary is b a s e d o n Ca n tillo n [1931], Say [1845], M ars h all [1961], M e n g er [1950], K nig h t [1921], Sc h u m p e t er [1934], Sc humpeter [1942], Kirzner [1979] and Kirz n er [1981] . o + ++ : a s p e c t expli c itly ex c lu d e d : a s pe c t not in c luded : a s pe c t impli c itly in c luded : a s p e c t expli c itly in c lu d e d

** The meaning of the symbols u s ed to s ummaris e the fun c tion a s pe c t s is:

+++ : a s p e c t is e ss e n tial t o t h e t h e ory .

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*** This denial of the ris ktaking fun c tion by Kirzner refers to the c on c ept s pre s ented in Kirzner [1979]. In a la t er p a p er (Kirz n er [1981]) ris k t a kin g is in tro d u c e d in his visio n o n t h e e n tre pre n eu rial fun c tion .

Table 1 s h o w s t h a t ri s k t a kin g i s o f t e n t h o u g h t t o b e in c lu d e d in t h e e n tre pre n e urial f u n c tio n . M e n g er , Sc h u m p e t er a n d Kirz n er expli c itly s t a t e t h a t t h e f u n c tio n o f t h eir e n tre pre n e ur d o e s n o t involve t a kin g ri s k s. A cc ordin g t o Cantillo n a n d K nig h t , ri s k t a kin g i s t h e k ey f u n c tio n o f t h e e n tre pre n e ur . Ca n tillo n , M ar s h all , M e n g er , Sc h u m p e t er a n d Kirz n er id e n tify t h eir e n tre pre n e ur a s a n arbitra g e ur . Kirz n er c o n s id er s arbitra g e a c tivitie s t o b e o f prin c ip al im p ort a n c e t o t h e e n tre pre n e ur . Th e q u e s tio n w h e t h er or n o t t h e e n tre pre n e ur i s a c a pit ali s t i s o n e o f t h e m ajor i ss u e s in e n tre pre n e ur s hip t h e orie s. Th e a ss o c iatio n o f t h e e n tre pre n e ur w it h t h e c a pit ali s t re c eive s s tro n g s u p p ort (M ar s h all a n d Ca n tillo n) a s w ell a s s tro n g o p p o s itio n (Say , M e n g er , K nig h t , Sc h u m p e t er a n d Kirz n er) . M ar s h all eve n c o n s id er s t h e c a pit ali s t f u n c tio n t o b e a n e ss e n tial asp e c t o f t h e a c tivitie s o f t h e e n tre pre n e ur . Th e m a n a g erial f u n c tio n o f t h e entre pre n e ur i s s tre ss e d by Say , M ar s h all a n d M e n g er . K nig h t a n d Sc h u m p e t er expli c itly d e ny t h e a ss o c ia tio n o f t h e e n tre pre n e urial a n d m a n a g erial f u n c tio n . Bo t h Say s a n d M ar s h all s e n tre pre n e ur are pre d o min a n tly involve d in m ana g e m e n t a c tivitie s. Th ere i s n o o p p o s itio n a g ain s t t h e in c lu s io n o f t h e in n ovat or f u n c tio n a s p e c t in t h e a c tivitie s o f t h e e n tre pre n e ur . Th e in n ova t or f u n c tio n i s, o f c o ur s e , e ss e n tial in t h e e n tre pre n e ur s hip t h e ory o f Sc h u m p e t er . For a m ore d e t aile d d e sc rip tio n o f t h e f u n c tio n o f t h e e n tre pre n e ur in e c o n o m i c t h e orie s s e e H b ert a n d Lin k (1982) , V a n Dijk a n d Th urik (1995) or va n Pra a g (1996 , 1999).

2.3 Three measures of entrepreneuri a l success

Th e e n tre pre n e ur d o e s n o t ex c lu s ively d e t ermin e t h e s tru c t ure o f a firm . Th e e nviro n m e n t al s o play s a n im p ort a n t role in d e t erminin g t h e s tru c t ure o f t h e firm . In a c a d e mi c lit era t ure a gre a t d e a l o f at t e n tio n i s p aid t o t h e in flu e n c e o f t h e e nviro n m e n t o n t h e firm . Fig ure 1 s h o w s t h e rela tio n b e t w e e n t h e e n tre pre n e ur a n d s u cc e ss w h e n t h e im p a c t o f t h e e nviro n m e n t o n t h e firm i s ac k n o w le d g e d .

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Fig ure 1

The relation bet w een the entrepreneur and s u cc e ss w hen the role of the environment is a c k n o w ledged

Entrepreneur

Firm

Success

Environment

Th e e n tre pre n e ur a n d t h e e nviro n m e n t d e t ermin e t h e s tru c t ure o f t h e firm . Su cc e ss o f t h e e n tre pr en e ur i s m e a s ure d by s u cc e ss o f t h e firm . Th e o bje c tive o f t hi s s t u dy i s t o id e n tify t h e s u cc e ss d e t ermi n a n t s o f t h e e n tre pre n e ur . To c orre c t f or t h e in flu e n c e o f t h e e nviro n m e n t a n u m b er o f varia ble s c h ara c t eri s in g t h e e nviro n m e n t s h o uld b e in c lu d e d .

Prof i t
Th e a ss o c ia tio n b e t w e e n t h e s u cc e ss f ul e n tre pre n e ur a n d pro fit m a kin g i s alm o s t u n di s p u t e d in lit era t ure . Ta ble 2 i s t a k e n fro m va n Dijk (1996) a n d s u mm ari s e s t h e im p ort a n c e a t trib u t e d t o pro fit m a kin g in dif f ere n t e n tre pre n e urs hip t h e orie s in a m a n n er s imilar t o t h e s u m m ary o f f u n c tio n a s p e c t s o f t h e e n tre pren e ur in Ta ble 1 .
Ta ble 2 Im p ort a n c e o f pro fit m a kin g in t h e t h e orie s o f t h e e n tre pre n e ur* . Cantillon Im p ort a n c e o f pro fit * + +** Say + M ars h all ++ M e n g er ++ Knight +++ Sc hu mp e t er ++ Kirz n er +++

This s umm ary is b a s e d o n Ca n tillo n (1931), Say (1845), M ars h all (1961), M e n g er (1950), K nig h t (1921), Sc h u m p e t er (1934), Sc h u m p e t er (1942), Kirz n er (1979) a n d Kirz n er (1981). + : pro fit m aking is a ss o c iated with the entrepre n e ur

** The meaning of the symbols u s ed to s ummaris e the importan c e of profit is: + + : profit making is c on sidered to be an important re s ult of entrepre neurial a c t +++ : profit m a king is th e c e ntral iss u e of th e th e ory .

Th e e m p h a s i s o n pro fit m a kin g a s a n in di c a t or o f s u cc e ss f or t h e e n tre pre n e u r m o tiva t e s t h e u s e o f pro fit m a kin g a s a p erf orm a n c e in di c a t or in t hi s s t u dy .

Generated emp l oyment , s urv i va l t i me

Pro fit m a kin g rela t e s t o in divid u al s u cc e ss. H o w ever , w e are al s o in t ere s t e d in s u cc e ss f or s o c ie ty . Th ere f ore , pro fit m a kin g w ill n o t b e t h e o nly in di c a t or o f e n tre pre n e urial s u cc e ss t a k e n in t o c o n s id era tio n . Thi s s t u dy w ill al s o a n aly s e

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g e n era t e d e m ploym e n t a n d t h e s urvival p erio d o f t h e firm f o u n d e d by t h e entre pre n e ur a s a m e a s ure o f p erf orm a n c e .

2.4

Determ i nants of success

In t hi s s e c tio n w e explore t h e d e t ermin a n t s o f s u cc e ss f ul e n tre pre n e ur s hip t h a t ari s e fro m lit era t ure . Th e c la ss i c vie w s o n e n tre pre n e ur s hip pro d u c e p o ss ible s u cc e ss d e t ermin a n t s f or s t artin g e n tre pr en e ur s. Th e s e are s u m m ari s e d in 1 Ta ble 3 , w hi c h i s t a k e n fro m va n Pra a g (1999) . In t hi s s t u dy w e s h all e m piric ally t e s t pro p o s e d d e t ermin a n t s t h a t s t e m fro m t h e s e c la ss i c al vie w s, a s w ell a s s o m e o t h er d e t ermin a n t s pro p o s e d in lit erat ure . So m e g e n eral c la ss ifi c a tio n o f t h e d e t ermin a n t s w ill b e c larifyin g . W e m a k e a di s tin c tio n b e t w e e n d e t ermin a n t s t h a t are rela t e d t o h u m a n c a pit al , fin a n c ial c a pit al , s o c ial c a pit al a n d o t h er (c o n trol) d e t ermin a n t s.
Ta ble 3 Determinant s of s u cc e ss ful entrepreneurs hip disc u ss ed by the c la ssi c authors (taken from van Pra a g , 1999) H avin g s u cc e ss a s e n tre pren e u r Cantillon Say M ars h all J u d g e m e n t , p ers evera n c e , k n o w le d g e o f the w orld , bu sine ss and o cc up a tion Intelligen c e , general ability (dep e nd e n t o n family ba c kground and edu c a tio n) K n o w le d g e o f t h e tra d e Be ar Ris k Le a d ers hip O w n c a pit al Sc h u m p e t er Knight Kirz n er A bility t o d e al w it h u n c ertainty: s elfc onfiden c e , fore sight , intelle c tual c apa c ity Creativene ss and leaders hip to exploit pro fit o p p ort u nitie s Le a d ers hip Good lu c k G o o d f ort u n e Fa t h er e n tre pre n e ur St art a n d b e a s u cc e ss f ul e n tre pre n e ur A lert n e ss a n d f ore sig h t Be ar ris k Be ar ris k

2.5 Li nk i ng determ i nants to success

To s t u dy t h e im p a c t o f p o ss ible d e t ermin a n t s o f s u cc e ss f ul e n tre pre n e ur s hip e m piri c ally , t h e o bvio u s a p pro a c h i s t o m a k e u s e o f a p a n el d a t a s e t o f e n tr epre n e ur s. De t ermin a n t varia ble s are c o n s tru c t e d fro m t h e c h ara c t eri s ti c s o f t h e e n tre pre n e ur s, a n d s u cc e ss varia ble s are c o n s tru c t e d fro m t h e firm s a c hiev e -

V a n Pra a g als o lis t e d t h e d e t ermin a n t s f or s t artin g a firm . This is n o t releva n t in t h e pre s e n t s tudy , a s w e w ork with a data panel of entrepreneurs w ho already s tarted their bu sine ss e s. D e t ails o f t his p a n el w ill b e disc u ss e d in s e c tio n 3 . 2 .

14

m e n t s a s re p ort e d by t h e e n tre pre n e ur . W h e n t h e n u m b er o f e n tre pre n e ur s i s c o n s id era ble , t h e a n aly s i s w ill le a d t o u s e f ul in s ig h t s. W e h ave a s uit a ble d a t a s e t f or t h e N e t h erla n d s a t o ur di s p o s al , w hi c h i s di sc u ss e d in c h a p t er 3 . In c h a p t er 4 , t h e m o d el s t h a t are u s e d f or lin kin g t h e d e t ermin a n t s t o s u cc e ss are d e s c ri b e d .

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Entrepreneursh i p data for the N etherlands

3.1 Introduct i on
In t h e N e t h erla n d s, t h ere h a s b e e n in c re a s e d a t t e n tio n f or e n tre pre n e ur s hip . Thi s i s illu s tra t e d by p u bli c a tio n o f t h e g overn m e n t W hit e Pa p er (1999) , d esc ribin g t h e im p ort a n c e o f e n tre pre n e ur s hip f or s o c ie ty . Th e D u t c h g overn m e n t p oli c y i s t o s tim ula t e p e o ple t o s t art a firm a n d t o c re a t e a n e nviro n m e n t t h a t h a s n o u n n e c e ss ary b arrier s t h a t w o uld preve n t t h e e n tre pre n e ur s t o p e rf orm w ell . To a c hieve t hi s, it i s o f in t ere s t t o h ave s o m e k n o w le d g e o f t h e typi c al c h ara c t eri s ti cs o f e n tre pre n e ur s hip in t h e N e t h erla n d s. Th e c o n s tru c tio n o f t h e EIM firm f o u n d er s s urvey in 1994 h a s b e e n o n e o f t h e in s tr u m e n t s t o a c hieve t hi s k n o w le d g e . A d e sc rip tio n o f t hi s s urvey i s provid e d in s e c tio n 3 . 2 . Fro m t h e s urvey , w e are a ble t o c o n s tru c t t h e varia ble s a s di sc u ss e d in t h e pr evio u s c h a p t er: m e a s ure s o f s u cc e ss (s e c tio n 3 . 3) a n d p o ss ible d e t ermin a n t s o f s u cc e ss (s e c tio n 3 . 4) .

3.2 EI M f irm founders survey

EIM Bu s in e ss & Poli c y Re s e ar c h s t art e d a firm f o u n d er s s urvey in 1994 , p artly o n re q u e s t o f t h e N e t h erla n d s M ini s try o f E c o n o mi c A f f air s. Thi s s urvey w a s c o n s tru c t e d t o b e a ble t o o b s erve p o s itive a n d n e g a tive d evelo p m e n t s in t h e D u t c h firm p o p ula tio n . It c o n s i s t s o f in f orm a tio n o f a n n u al in t ervie w s c o nd u c t e d a m o n g a s a m ple o f s t artin g e n tre pre n e ur s in t h e N e t h erla n d s. Th e initial s a m ple w a s t a k e n fro m t h e d a t ab a s e o f t h e D u t c h Ch a m b er o f Co m m er c e . Th e s a m ple w a s t a k e n fro m all n e w ly re gi s t ere d firm s in t h e fir s t q u art er o f 1994 . Th e initial s a m ple c o n s i s t e d o f 10 , 627 firm s. Firm s in c lu d e d in t hi s s a m ple h a d t o s a ti s fy a n u m b er o f s p e c ifi c at i o n s. Th e firm s h a d t o b e f o u n d e d in t h e fir s t q u art er o f 1994 . Firm s t h a t re-re gi s t ere d b e c a u s e o f a c h a n g e in Ch a m b er o f Co m m er c e di stri c t w ere ex c lu d e d . Firm s t h a t re-re gi s t ere d b e c a u s e o f s o m e o t h er c h a n g e in lo c a tio n w ere exc lu d e d . Firm s t h a t re-re gi s t ere d b e c a u s e o f a c h a n g e in a c tivitie s or a c h a n g e in leg al s t a t u s w ere ex c lu d e d . Firm s t h a t w ere p art s o f previo u s ly exi s tin g c o m p a nie s w ere ex c lu d e d . Part s o f exi s tin g firm s t h a t re gi s t ere d s e p ara t ely w ere ex c lu d e d . A gri c ult ural firm s a n d firm s in t h e min eral s e c t or w ere ex c lu d e d .

To m a k e s ure t h a t t h e firm s w ere re a s o n a bly di s trib u t e d a m o n g t h e dif f ere n t s e c t or s, t h e fra c tio n o f n e w firm s s ele c t e d fro m t h e s ervi c e s s e c t or w a s limit e d t o o n e h alf . N orm ally , a larg er fra c tio n o f all n e w ly re gi s t ere d firm s b elo n g s t o t hi s s e c t or . Thi s a p pro a c h c a u s e d t h e o t h er s e c t or s t o b e re pre s e n t e d in t h e s a m ple w it h a hig h er fra c tio n t h a n in t h e p o p ulatio n .

16

Th e initial 10 , 627 firm s w ere c o n t a c t e d by t ele p h o n e . A t o t al o f 3 , 000 firm f o u n d er s a gre e d t o p arti c ip a t e in t h e s urvey . A p proxim a t ely 2 , 000 firm f o u nd er s fin ally c o m ple t e d t h e 1994 q u e s tio n n aire . Th e 2 , 000 firm f o u n d er s w h o c o m ple t e d t h e J u n e 1994 q u e s tio n n aire w ere s e n t t h e 1995 q u e s tio n n aire , w hi c h w a s c o m ple t e d by over 1 , 100 re s p o n d e n t s. Th e firm s iz e a n d s e c t or di strib u tio n o f t h e 1994 a n d 1997 re s p o n d e n t s w ere c o m p ara ble t o t h o s e o f t h e initial s a m ple . Th e fir s t q u e s tio n n aire c o n s i s t e d o f 90 q u e s tio n s divid e d in t h e c a t e g orie s g e n eral , firm , w ork exp erie n c e , m o tive s, f o u n din g s it u a tio n , c a pit al a n d inve s t m e n t s, pro ble m s e n c o u n t ere d , c o n trol a n d s u b c o n tra c tin g , e nviro n m e n t a n d m ark e t , s ale s a n d vuln era bility , t arg e t s a n d s tra t e gy , p erf orm a n c e a n d exp e c t a tio n , a n d a g e a n d e d u c a tio n . Th e q u e s tio n s w ere b a s e d o n releva n t asp e c t s o f n e w ve n t ure c re a tio n a s d e sc rib e d in re c e n t lit era t ure . Th e q u e s tio n n aire in 1997 c o n t ain e d a t o t al o f 44 q u e s tio n s, in a p proxim a t ely t h e s a m e c at e g orie s. Th e in f orm a tio n fro m t h e fir s t q u e s tio n n aire i s u s e d t o c o n s tru c t t h e e n tr epre n e urial f u n c tio n varia ble s a n d t h e varia ble s t h a t m e a s ure t h e s u cc e ss d e t ermin a n t s. En tre pre n e urial s u cc e ss i s ex c lu s ively m e a s ure d by varia ble s c o ns tru c t e d fro m t h e q u e s tio n n aire s in 1995-1997 .

3.3 Entrepreneuri a l success: operat i ona l vari ab l es

In c h a p t er 2 w e s t a t e d o ur in t e n d e d s u cc e ss m e a s ure s. Th e s e t hre e m e a s ure s c a n b e c re a t e d fro m t h e d a t a s e t w it h in f orm a tio n o n p erf orm a n c e in t h e p erio d 1994-1997 .

Prof i t
Pro fit i s e q u a t e d t o t h e pro fit m a d e in 1997 . Th e e n tre pre n e ur h a s t h e n b e e n a c tive f or t hre e ye ar s. Th e pro fit m ay e s p e c ially in t h e fir s t t w o ye ar s b e s o m e w h a t mi s le a din g , a s initial (s u n k) c o s t s o f t e n h ave t o b e g ain e d b a c k , w hi c h red u c e s pro fit . For e n tre pre n e ur s w h o are k n o w n t o h ave e n d e d t h eir b u s in e ss e s t h e pro fit varia ble i s e q u a t e d t o z ero .

Emp l oyment
W h ere t h e pro fit m e a s ure i s m ainly a n in divid u al s u cc e ss m e a s ure , t o t al employm e n t c re a t e d c a n e s p e c ially b e s e e n a s s u cc e ss f or s o c ie ty . Th e e m ploym e n t m e a s ure u s e d i s t h e c u m ula tive e m ploym e n t c re a t e d in t h e p erio d 1994 1 1997 .

O ther employment mea s ure s have als o been inve s tigated . The s e in c lude employment gro w th , the employment in 1997 . Both me a s ure s produ c ed similar re s ult s. This c ould be expe c ted , a s high c orrelation s exis ted bet w een the s e employment mea s ure s. W e therefore c ho s e to fo c u s on the mea s ure that refle c t s the c umulative employment .

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Durat i on
A n o t h er in t ere s tin g s u cc e ss m e a s ure i s t h e s im ple m a t t er o f s urvival . Is t h e firm s till in b u s in e ss in 1997? A n d if n o t , h o w m a ny m o n t h s h a s it t a k e n b e f ore t h e e n tre pre n e ur q uit? In t h e firm f o u n d er s p a n el , in f orm a tio n i s availa ble o n t h e d ura tio n o f t h e firm s. W e h ave c o n s tru c t e d a v a ri a b l e m e a s urin g t h e n u m b er o f m o n t h s t h a t a firm h a s b e e n a c tive . A d ura tio n m o d el w ill b e a p plie d t o t hi s vari a ble in c h a p t er 4 .
Ta ble 4 V aria ble pro fit in 10 000 guild ers c u m ula t e d e m ploym e n t in FTE d ura tio n in m o n t h s D e sc rip tive s t a tis ti cs o f s u cc e ss m e a s ure s Mean 4.3 3.1 33 . 6 St d . D ev . 8.5 15 . 1 14 . 2 M in . 0 0 0 M a x. 50 312 42

Ta ble 5 V aria ble

Correlation s of s u cc e ss mea s ure s pro fit 1 0 . 44 0 . 27 1 0 . 11 1 e m ploym e n t duration

profit in 10 000 guild ers c u m ula t e d e m ploym e n t in FTE d u ra tio n in m o n t h s

3.4

Determ i nant s of su ccess: operat i ona l vari ab l es

A larg e n u m b er o f p o ss ible d e t ermin a n t s c a m e alo n g in explorin g lit era t ure in c h a p t er 2 . O bvio u s ly , n o t all d e t ermin a n t s c a n b e in c lu d e d in o ur a n aly s i s. So m e it e m s c a n s im ply n o t b e m e a s ure d , lik e g o o d lu c k . O t h er s m ay n o t b e in c lu d e d in t h e d a t a s e t . M ore over , s o m e d e t ermin a n t s c o uld b e c o n s tru c t e d b u t w ere ex c lu d e d in t h e pro c e ss o f e s tim a tio n . In t h e f ollo w in g s u b s e c tio n s, t h e varia ble s in c lu d e d are d e sc rib e d in t h e fra m e w ork o f o ur c la ss ifi c a tio n . For e a c h d e t ermin a n t s o m e brie f expla n a tio n a n d t h e d e finitio n are provid e d . M o s t d e t ermin a n t s b e c o m e o p era tio n al a s d u m my vari a ble s. 3.4.1 Human cap i ta l H u m a n c a pit al rela t e s t o t h e in trin s i c q u alitie s a n d i s t h o u g h t t o h ave a p o s itive in flu e n c e o n t h e s u cc e ss o f s t artin g e n tre pre n e ur s. K n o w le d g e i s a n imp ort a n t f a c t or in t hi s re s p e c t , w hi c h m ay b e a c q uire d t hro u g h g e n eral e d u c atio n or t hro u g h tim e . Parti c ular e n tre pre n e urial c a p a bilitie s are g e n erally n o t t a u g h t in t h e e d u c a tio n pro gra m m e s. K n o w le d g e o f t h e w orld , k n o w le d g e o f b u s in e ss a n d fin a n c e , a n d e d u c a tio n al level m ay c o n trib u t e t o e n tre pre n e urial s u cc e ss. Th e f ollo w in g varia ble s t h a t rela t e t o h u m a n c a pit al c o uld b e d erive d fro m t h e firm f o u n d er s s urvey a n d are in c lu d e d in o ur a n aly si s.

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Age
Th e a g e o f t h e e n tre pre n e ur c a n b e c o n s id ere d a s a m e a s ure f or k n o w le d g e o f t h e w orld . In t h e s urvey , t h e re s p o n d e n t s w ere a s k e d t o s t a t e t h e a g e c a t e g ory t h ey w ere in (in t erval s o f 5 ye ar s) . Th e a g e varia ble t a k e s o n t h e valu e o f t h e m e a n o f t h e a g e in t erval divid e d by 10 . For exa m ple , if a n e n tre pre n e ur i s in t h e c at e g ory 20 -25 , t h e a g e varia ble t a k e s o n t h e valu e o f 2 . 25 .

Edu cat i on
If a n e n tre pre n e ur h a s exp erie n c e d a hig h level o f e d u c a tio n (u niver s ity or hig h-level vo c a tio n al trai nin g) , t h e d u m my varia ble f or e d u c a tio n a t t ain s t h e valu e o n e (a n d z ero o t h er w i s e) . In t h e s urvey , p e o ple w ere a s k e d t o c h o o s e t h e hig h e s t e d u c a tio n level t h ey h ave c o m ple t e d .

Exper i en ce i n the sector

Thi s d u m my varia ble in di c a t e s w h e t h er t h e re s p o n d e n t h a s exp erie n c e i n w orkin g in t h e s a m e s e c t or a s h e s t art e d t h e firm .

Exper i en ce i n trade
If t h e e n tre pre n e ur i s alre a dy f a miliar w it h tra d e , t hi s m ay e n h a n c e hi s re s ult s. Th e d u m my varia ble a t t ain s t h e valu e o f o n e if t h ere i s s o m e exp erie n c e in tra d e , a n d o f z ero o t h er w is e .

Exper i en ce a s an emp l oyee

H avin g exp erie n c e a s a n e m ploye e m ay b e b e n e fi c ial t o t h e s t artin g e n tre pr en e ur , a s it w ill e n h a n c e k n o w le d g e o f b u s in e ss. Th e d u m my varia ble e q u al s o n e if t h e re s p o n d e n t h a s b e e n a n e m ploye e a n d z ero if t hi s i s n o t t h e c a s e.

Experi en ce i n se l f-emp l oyment

Firm f o u n d er s w it h exp erie n c e in s elf-e m ploym e n t m ay h ave b e t t er pro s p e c t s f or a c hievin g s u cc e ss. Th e varia ble e q u al s o n e if t h e firm f o u n d er c o m e s fro m s elf-e m ploym e n t , a n d z ero o t h e r w is e .

Fi nan ci a l exper i en ce
Fin a n c e i s an im p ort a n t a s p e c t o f e n tre pre n e ur s hip . So m e k n o w le d g e o n fin a n c in g t h e b u s in e ss i s alm o s t a n e c e ss ity . If t h e e n tre pre n e ur h a s s o m e fin a n c ial exp erie n c e him s elf , t h e varia ble e q u al s o n e (a n d z ero o t h er w i s e) .

19

Ta ble 6 V aria ble age

D e sc rip tive s t a tis ti cs o f d e t ermin a n t s c o n sid erin g h u m a n c a pit al Mean 2 . 40 0 . 29 0 . 63 0 . 70 0 . 94 0 . 08 0 . 08 St d . D ev . 0 . 89 0 . 45 0 . 48 0 . 46 0 . 23 0 . 27 0 . 28 M in . 2 . 25 0 0 0 0 0 0 M a x. 6 . 75 1 1 1 1 1 1

high edu c ation exp erie n c e in t h e s e c t or exp erie n c e in tra d e experien c e a s an employe e experien c e in s elf-e m ploym e n t fin a n c ial exp erie n c e

3.4.2 Fi nan ci a l cap i ta l A lm o s t every firm n e e d s a s u b s t a n tial fin a n c ial in p u t . Th e fin a n c ial re s o ur c e s o f t h e s t artin g e n tre pre n e ur are t h ere f ore im p ort a n t . M a ny q u e s tio n s re g ard in g t hi s t o pi c are p o s e d in t h e firm f o u n d er s s urvey . W e w ill u s e t h e f ollo w in g d e t erm i n a n t s.

Amount other i n c ome

If t h e firm f o u n d er re c eive s in c o m e o u t s id e t h e in c o m e fro m s elf- e m ploym e n t , t hi s re d u c e s t h e ri s k s f or t h e firm f o u n d er . Th e a m o u n t o f o t h er in c o m e c o uld b e in di c a t e d in s ix c a t e g orie s, ra n gin g fro m z ero t o five (50 000 D u t c h g uilders).

O wn cap i ta l
Thi s varia ble m e a s ure s t h e s h are - t h a t c a n b e c la ss ifie d in 12 c a t e g orie s, ra n g in g fro m 0 t o 1 (100 p er c e n t) - o f o w n c a pit al in t h e t o t al a m o u n t o f initial c a pit al t h a t i s n e e d e d by t h e e n trep r e n e u r .

C ontr i but i on by bu si ne ss partner(s)

M ayb e a b u s in e ss p art n er m a k e s s o m e fin a n c ial c o n trib u tio n . Thi s p art n er w ill (p o ss ibly) b e n e fit fro m t h e n e w firm . Thi s w ill a g ain b e in di c a t e d u s in g a d u m my varia ble .

Rece i ved l oan from fam il y

If t h e f a mily c o m e s t o h elp in t h e fin a n c in g p art o f s t artin g t h e firm , t hi s i s indi c a t e d by a n o t h er d u m my varia ble .

Wage i n come rece i ved by s pou se

For d e t erminin g t h e s u cc e ss o f h o u s e h old s t h a t h ave d o u ble in c o m e , a varia ble i s in c lu d e d t h a t d et ermin e s w h e t h er t h e s p o u s e re c eive s a n in c o m e (varia ble e q u al s o n e) or n o t (varia ble e q u al s z ero) .

20

Ta ble 7 V aria ble

De sc riptive s tatis ti cs of determinant s c on sidering finan c ial c apital Mean 2 . 83 0 . 67 0 . 11 0 . 17 0 . 44 St d . D ev . 1 . 97 0 . 40 0 . 31 0 . 38 0 . 50 M in . 0 0 0 0 0 M a x. 5 1 1 1 1

a m o u n t o t h er in c o m e fin a n c e d w it h o w n c a pit al c o n trib u tio n by b u sin e ss p artn er(s) re c eived loan from family w a g e in c om e re c eive d by s pou s e

3.4.3 Soci a l cap i ta l In ord er t o h ave s u cc e ss a s a n e n tre pre n e ur , t h e im p ort a n c e o f c o m m u ni c a tin g w it h rela tio n s s e e m s t o b e gro w in g a n d gro w in g . H avin g c a p a bilitie s in t hi s re1 s p e c t c a n b e in di c a t e d a s o w nin g s o c ial c a pit al . A l s o in lit era t ure , in c re a s e d 2 a t t e n tio n i s p aid o n t h e rela tio n b e t w e e n s o c ial c a pit al a n d e n tre pren e ur s hip . Th e f ollo w in g it e m s d e alin g w it h s o c ial c a pit al c o uld b e d erive d fro m t h e firm f o u n d er s s urv e y .

E ntrepreneurs i n the fam il y

Bein g in flu e n c e d by s elf- e m ploye d m e m b er s o f t h e f a mily c a n b e a d e t erminin g f a c t or f or s u cc e ss. For t hi s, a varia ble i s c o n s tru c t e d t h a t h a s valu e o n e if t h e firm f o u n d er re p ort e d c o n s id era ble in flu e n c e o f s elf -e m ploye d f a mily m em b er s, valu e 0 . 5 if t h ere i s s o m e in flu e n c e a n d z ero if t hi s i s n o t t h e c a s e .

C ontact w i th entrepreneurs i n netw orks

Thi s varia ble in di c a t e s w h e t h er t h e firm f o u n d er h a s o f t e n (valu e e q u al s o n e) , s o m e tim e s (valu e e q u al s 0 . 5) or n ever (valu e e q u al s z ero) c o n t a c t s w it h o t h er e n tre pre n e ur s.

Emot i ona l s upport from s pou se

Thi s d e t ermin a n t rela t e s t o t h e e m o tio n al s u p p ort fro m t h e s p o u s e . If t hi s i s pre s e n t , t h e varia ble e q u al s o n e , an d z ero o t h er w i s e .

Board i ng out of act i v i t i es to others

D o e s t h e e n tre pre n e ur b o ard o u t a c tivitie s? Thi s s u g g e s t s a t le a s t a s tra t e gi c c h oi c e m a d e by t h e en tre pre n e ur . O f t e n , t hi s b o ardin g o u t i s t o a rela tio n s hip alre a dy k n o w n t o t h e e n tre pre n e ur b e f ore t h e s t art -u p . If t h e e n tre pre n e ur d o e s b o ard o u t , t hi s varia ble i s e q u al t o o n e , a n d it i s z ero o t h er w i s e .

J a c o b s (1961) introdu c ed this a s a term . Sin c e then , there have be en s everal interpretation s reg ardin g s o c ial c a pit al . W e w ill u s e t h e o n e pro p o s e d by Lo ury (1977), w h o d e fin e d it a s n a t urally o cc uring relation s hip s to promote or aid the development of valued s kills or c hara c teristi cs. See for example Brderl and Preis endorfer (1998), Cooke and Wills (1999).

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Ta ble 8 V aria ble

D e sc rip tive s t a tis ti cs o f d e t ermin a n t s c o n sid erin g s o c ial c a pit al Mean 0 . 26 0 . 28 0 . 73 0 . 45 St d . D ev . 0 . 35 0 . 36 0 . 44 0 . 50 M in . 0 0 0 0 M a x. 1 1 1 1

in flu e n c e d by e n tre pr . in t h e f a mily c o n t a c t w it h e n tre pr . in n e t w ork s emotional s upport from s pou s e b o ardin g o u t o f a c tivitie s t o o th ers

3.4.4 Keep i ng up w i th deve l opment s re l evant for the bu si nesses H o w d o t h e e n tre pre n e ur s g e t t h eir in f orm a tio n o n t h e d evelo p m e n t s t h a t are im p ort a n t f or t h eir p arti c ular b u s in e ss e s? A n u m b er o f q u e s tio n s re g ardin g t hi s t o pi c h ave b e e n p o s e d t o t h e e n tre pre n e ur s. Th e s e w ere t h e f ollo w in g: D o yo u vi s it c o n gre ss e s t a k e p art in c o ur s e s k e e p u p w it h lit era t ure g e t in f orm a tio n fro m c u s t o m er s g e t in f orm a tio n fro m s u p plier s g e t in f orm a tio n fro m b a n k s g e t in f orm a tio n fro m c o m m er c ial c o o p era tio n g e t in f orm a tio n fro m bra n c h org a ni s a tio n g e t in f orm a tio n fro m f ello w-e n tre pre n e ur s?

Ea c h re s p o n d e n t a n s w ere d 1 (o f t e n) , 2 (s o m e tim e s) or 3 (n ever) . A f a c t or 1 a n aly s i s o n t h e a n s w er s t o t h e q u e s tio n s reve ale d t h e f ollo w in g . Thre e f a c t or s w ere f o u n d w it h lo a din g s gre a t er t h a n 1 ( c u m ula tive acc o u n tin g f or 52 . 5 % o f t h e varia n c e) . A f o urt h f a c t or (lo a din g 0 . 9) i s a d d e d s u c h t h a t 61. 5 % o f t h e varia n c e i s a cc o u n t e d f or . Th e s e f o ur f a c t or s c a n b e give n t h e f ollo w in g in t erpre t a tio n s a s give n in Ta ble 9 . Th e f a c t or s c a n b e s e e n a s p o t e n tial s u cc e ss d e t ermin a n t s a n d w ill b e in c lu d e d in o ur a n aly s i s in c h a p t er 4 . Th e s u bje c t o f k e e pin g u p w it h b u s in e ss i s c lo s ely rela t e d t o s o c ial c a pit al . H o w ever , it c a n n o t b e c o n s id ere d a s a c o m p o n e n t o f s o c ial c a pit al . It re fle c t s t h e s tra t e gy u s e d t o re trieve releva n t in f orm a tio n fro m rela tio n s hip s. Th e s e re la tio n s hip s d o n o t o cc ur n a t urally .
Ta ble 9 Fa c t or a n alysis re g ardin g q u e s tio n s re f errin g t o k e e pin g u p w it h b u sin e ss Variable s with loading s greater than 0 . 5 Bran c h , c ongre ss, c ours e s, litera t ure Cu s t o m er , s u p plier Bank s, c ommer c ial c ooperation Conta c t with fello w -entrepreneurs

Dire c tion of fo c u s to keep up 1. 2. 3. 4. Fo c u s on bran c h in general Fo c u s o n dire c t b u sin e ss rela t i o n s Fo c u s on c ommer c ial rela tio n s Fo c u s o n f ello w-e n tre pre neurs

3.4.5 Contro ls
1

Prin c ipal c omponent s with varimax rotation , missing value s are s et to mean (ex c lu d ing the s e d o e s n o t le a d t o sig nifi c a n t c h a n g e s).

22

In t hi s s e c tio n w e d e al w it h p o t e n tial d e t ermin a n t s t h a t c o uld b e im p ort a n t in d e t erminin g e n tre pre n e urial s u cc e ss, t h a t d o n o t fit in t h e c la ss ifi c a tio n . In c lus io n i s n e c e ss ary , a s n e gle c tin g t h e s e varia ble s c o uld re s ult in bia s e d e s tim atio n s.

Gender
G e n d er i s k n o w n f or all e n tre pre n e ur s in t h e s urvey . Th e d u m my varia ble e q u al s o n e if t h e re s p o n d e n t i s m ale , a n d z ero if t h e re s p o n d e n t i s f e m ale .

Goa l: emp l oyment grow th

So m e e n tre pre n e ur s s im ply d o n o t w a n t t o hire e m ploye e s. Th e s e e n tre pr en e ur s are a p p oin t e d a valu e o f z ero , w hile t h e o t h er s h ave valu e s o n e t o t hre e , d e p e n din g o n t h e re p ort e d d e t ermin a tio n t o hire e m ploye e s.

F u ll s e l f-emp l oyment
If t h e e n tre pre n e ur i s n o t f ully e m ploye d , t hi s c a n h ave it s e f f e c t s o n p erf orm a n c e o f t h e firm . A d u m my varia ble i s c re a t e d t h a t a t t ain s a valu e o f o n e if t h e re s p o n d e n t in di c a t e s t h a t h e i s s elf-e m ploye d f or 100 p er c e n t .

Sector dummy bu si ness serv ices

Bu s in e ss s ervi c e s m ay n e e d s p e c ial a t t e n tio n . En tre pre n e ur s w h o are a c tive in t h e b u s in e ss s ervi c e s are give n a valu e o f o n e , w hile all o t h er e n tre pre n e ur s h ave a valu e o f z ero .

P u ll mot i ve to become se l f- emp l oyed : h i gher i n come than wage s

A varia ble i s c o n s tru c t e d t o s t u dy t h e in flu e n c e o f t h e m o tive b a s e d o n hig h er exp e c t e d g ain s o n p erf orm a n c e . Th e varia ble a t t ain s a valu e o f o n e if t hi s i s s tro n gly t h e c a s e , o f 0 . 5 if t hi s i s m o d era t ely t h e c a s e a n d o f z ero if t hi s i s n o t t h e c ase .
Ta ble 10 V aria ble g e n d er goal: employment gro w th 100 p er c e n t s elf-e m ploye d s e c tor dum my: b u sin e ss s ervi c e s motive to be c ome s elf-e m pl . : hig h er inc om e D e sc rip tive s t a tis ti cs o f d e t ermin a n t s c o n sid erin g t h e c o n trol variable s Mean 0 . 72 0 . 40 0 . 93 0 . 19 0 . 39 St d . D ev . 0 . 45 0 . 35 0 . 26 0 . 39 0 . 39 M in . 0 0 0 0 0 M a x. 1 1 1 1 1

3.5

D iscussi on
Thi s c h a p t er provid e d a d e sc rip tio n o f t h e d a t a s e t a n d a c la ss ifi c a tio n o f t h e c o n s tru c t e d d e t ermin a n t varia ble s. U n f ort u n a t ely , s o m e p o ss ible d e t ermin a n t s (s u c h a s g o o d lu c k) s im ply c a n n o t b e m o d elle d . A t t h e s a m e tim e , c h oi c e s h ave t o b e m a d e: t h e d a t a s e t c o n t ain s m a ny m ore o p p ort u nitie s f or c o n s tru c t -

23

in g o t h er , dif f ere n t d e t ermin a n t s. Th e a p pro a c h o f t h e u n d erlyin g s t u dy h a s a g e n eral c h ara c t er . Th ere f ore , u s in g t h e c la ss ifi c a tio n a p plie d , t h e m o s t a p p e al in g d e t ermin a n t s w ere c o n s id ere d . W h e n f o c u ss in g o n s p e c ifi c t o pi c s, it w ill b e p o ss ible t o s t u dy t h e in flu e n c e s o f o t h er , m ore s p e c ifi c d e t ermi n a n t s.

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25

Emp irical resu l ts

4.1 Introduct i on
In ord er t o t e s t t h e im p a c t o f a n u m b er o f d e t ermin a n t s o n e n tre pre n e urial s u cc e ss s o m e m o d el s are c o n s tru c t e d t h a t in c orp ora t e all g e n eral e f f e c t s o f t h e 1 s u cc e ss d e t ermin a n t s . Th e c o n c e p t o f n o n-re s p o n s e m ay b e im p ort a n t in d et erminin g t h e rela tio n s hip s b e t w e e n d e t ermin a n t s a n d s u cc e ss. Thi s m a t t er i s d e alt w it h in s e c tio n 4 . 2 . Th e m o d el s, a s w ell a s t h eir re s ult s, are d e sc rib e d in t h e n ext t hre e s e c tio n s f or t h e s u cc e ss m e a s ure s pro fit , e m ploym e n t a n d d ur atio n . W h ere a s t h e m o d el s f or pro fit a n d e m ploym e n t are e s tim a t e d u s in g ordin ary le a s t s q u are s, a s urvival m o d el i s c o n s tru c t e d f or d ura tio n .

4.2 Non-res pon se

Th e p er c e n t a g e o f firm s re p ortin g f ailure in 1995 i s o nly 6 p er c e n t , a n d 20 p erc e n t in 1997 . Earlier re s e ar c h - c o n d u c t e d in t h e N e t h erla n d s - s h o w e d f ailure ra t e s o f 10 p er c e n t in t h e fir s t ye ar a n d o f 26 p er c e n t in t h e fir s t t hre e ye ar s, s e e EIM (1994) . Thi s s u g g e s t s t h a t t h e p er c e n t a g e o f f ailin g firm s in t h e gro u p t h a t did n o t re s p o n d t o t h e la t er q u e s tio n n aire s i s s u b s t a n tially hig h er t h a n t h e p er c e n t a g e o f f ailin g firm s t h a t did provid e p erf orm a n c e in f orm a tio n . Th e pro b a bility di s trib u tio n o f p erf orm a n c e f or t h e re s p o n d e n t s w it h c o m ple t e d a t a i s dif f ere n t fro m t h e pro b a bility di s trib u tio n o f p erf orm a n c e in t h e p o p ula tio n . Thi s c a u s e s a c o m ple t e d a t a s a m ple s ele c tio n bia s. Fin a n c ial p erf orm a n c e m ay in flu e n c e t h e a bility or w illin g n e ss o f a re s p o n d e n t t o fill o u t a q u e s tio n n aire . W h e n a firm h a s s t o p p e d all a c tivitie s it i s o f t e n n o t p o ss ible t o c o n t a c t t h e firm t o c o n d u c t a p oll . K e a s ey a n d W a t s o n (1991) m entio n t hi s pro ble m a s t h e m ajor hin dra n c e f or g a t h erin g s m all firm p erf orm a n c e d a t a . Eve n if a f aile d firm i s re a c h e d by t h e c o n d u c t or s o f t h e s urvey , it m ay b e t h a t t h e re s p o n d e n t d o e s n o t s e e t h e u s e o f fillin g o u t t h e q u e s tio n n aire s in c e t h e firm d o e s n o t exi s t a ny m ore . A n o t h er p o ss ibility i s t h a t t h e re s p o n d e n t s im ply d o e s n o t f e el lik e re p ortin g f ai l ure . Be s id e s t h e m o d el s t h a t are d e alt w it h in t h e n ext s e c tio n s, m o d el s w ere c o n s tru c t e d t h a t allo w f or a rela tio n s hip b e t w e e n re s p o n s e t o t h e q u e s tio n n aire i n 1997 a n d p erf orm a n c e . It w a s hyp o t h e s i s e d t h a t t h e w illin g n e ss t o re s p o n d w a s p o s itively rela t e d t o p erf orm a n c e . Th e s e m o d el s did n o t o u t p erf orm t h e m o d el s w it h o u t n o n-re s p o n s e .

Th e e f f e c t s o f the determinant s for the different fun c tion a s pe c t s (a s mentioned in c hapter 2) did n o t dif f er sig nifi c a n tly . Th ere f ore , w e o nly disc u ss t h e re s ult s o f t h e g e n eral m o d el t h a t doe s not dis tinguis h the entrepreneurial fun c tion s.

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4.3 Prof i t
Le t i b e t h e pro fit f or re s p o n d e n t i in 1997 , a n d x ij re s p o n d e n t i s valu e o f d e t ermin a n t j in 1994 . Th e m o d el t o b e es tim a t e d i s t h e f ollo w in g:
J

ln i = + j x ij + i ,
j =1

w h ere

i ~ N (0, 2 p) .

W e h ave s p e c ifie d t h e lo g arit h m o f pro fit a s t h e d e p e n d e n t varia ble ra t h er t h a n pro fit it s elf , b e c a u s e w e t hin k c h a n g e s in t h e d e t ermin a n t s in flu e n c e rela tive pro fit (in p er c e n t a g e s) ra t h er t h a n a b s olu t e pro fit (in g uild er s) . Th e e q u a tio n a b ove c a n b e e s tim a t e d u s in g ordin ary le a s t s q u are s. Re s ult s are s h o w n in Ta ble 11 . H u m a n c a pit al varia ble s a p p e ar im p ort a n t d e t ermin a n t s o f t h e pro fit o f a n e n tre pre n e ur . Fo ur varia ble s a p p e ar t o b e s ig nifi c a n t . H avin g exp erie n c e in t h e s e c t or a p p e ar s t o h ave t h e larg e s t in flu e n c e: e n tre pre n e ur s w it h exp erie n c e in t h e s e c t or e arn a b o u t t hri c e a s m u c h c o m p are d t o e n tre pre n e ur s la c kin g t hi s exp erie n c e . A l s o , t h e in flu e n c e o f hig h e d u c a tio n a n d exp erie n c e in s elf-e m ploym e n t i s s u b s t a n tial: h avin g a hig h e d u c a tio n a p proxim a t ely d o uble s pro fit , t h e s a m e h oldin g tru e f or h avin g exp erie n c e in s elf -e m ploym e n t , alt h o u g h t h e u n c ert ain ty a b o u t t h e rig h t valu e o f t hi s la t t er in flu e n c e i s larg er . A g e a p p e ar s t o h ave a n e g a tive in flu e n c e o n pro fit: a n e n tre pren e ur t h a t i s 10 ye ar s old er a t t h e s t art o f hi s b u s in e ss e arn s a b o u t 25 % le ss t h a n hi s yo u n g er e q uival e n t . A s re g ard s fin a n c ial c a pit al varia ble s, if t h e e n tre pre n e ur re c eive s a n o t h er inc o m e b e s id e t h e pro fit s d erive d fro m s elf- e m ploym e n t , t hi s re d u c e s pro fit a bility . Every 10 t h o u s a n d g uild er s h e g e t s fro m o t h er s o ur c e s c o m e s t o g e t h er w it h a b o u t 15 % lo w er pro fit s. Th e o t h er fin a n c ial c a pit al varia ble s a p p e ar t o h ave n o s ig nifi c a n t in flu e n c e . A s re g ard s s o c ial c a pit al d e t ermin a n t s, t h e e m o tio n al s u p p ort o f t h e s p o u s e a p p e ar s im p ort a n t: e n tre pre n e ur s h avin g t hi s s u p p ort m a k e a b o u t 80 % m ore pro fit t h a n t h eir c o u n t erp art s h avin g t o d o w it h o u t t hi s s u p p ort . H o w ever , c o n trary t o w h a t o n e w o uld exp e c t , g e t tin g h elp a n d f e e d b a c k fro m s elf e m ploye d m e m b er s o f t h e f a mily in flu e n c e s pro fit s s tro n gly n e g a tive . Th o s e w h o g e t t hi s h elp m a k e a b o u t a t hird o f t h e pro fit s m a d e by t h eir c o u n t erp art s d oin g w it h o u t t hi s h el p a n d f e e d b a c k . Stra t e gie s f or k e e pin g u p w it h b u s in e ss t h a t are lin k e d t o pro fit s are t h e s tra t e gie s t h a t f o c u s o n dire c t b u s in e ss a n d c o m m er c ial rela tio n s. Fin ally , n eit h er o f t h e c o n trol varia ble s a p p e ar s t o h ave a s ig nifi c a n t in flu e n c e o n pro fit s.

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Ta ble 11

Es timation re s ult s for profit (logarithm) e s tim a t e a s t a n d ard err o r 0 . 135 0 . 258 0 . 254 0 . 268 0 . 407 0 . 426 0 . 392 * ** ** **

human cap i tal age high edu c ation exp erie n c e in t h e s e c t or exp erie n c e in tra d e experien c e a s an employee experien c e in s elf-employment fin a n c ial exp erie n c e f i nanci a l cap i ta l a m o u n t o t h er in c o m e fin a n c e d w it h o w n c a pit al c o n trib u tio n by b u sin e ss p artn er(s) re c eive d lo a n fro m family w a g e in c om e re c eive d by s pou s e social cap i tal in flu e n c e d by e n tre pr . in t h e f a mily c o n t a c t w it h e n tre pr . in n e t w ork s emotional s upport from s pou s e b o ardin g o u t o f a c tivitie s to others keep up strategy variab les f o c u s o n bra n c h in g e n eral fo c u s on dire c t bu sine ss rela tio n s fo c u s on c omm er c ial rela tio n s fo c u s on fello w -e n tre pre neurs contro l vari ab l es g e n d er goal: employment gro w th 100 p er c e n t s elf-e m ploye d s e c t or d u m my: b u sin e ss s ervi c e s motive to be c ome s elf-e m pl . : hig h er inc om e n u m b er o f o b s erva tio n s log likelihoo d a ** * 0 . 323 0 . 443 0 . 467 0 . 171 0 . 397 998 -1728 . 60 0 . 259 0 . 331 0 . 380 0 . 292 0 . 293 -0 . 162 0 . 234 0 . 213 0 . 187 0 . 116 0 . 112 0 . 116 0 . 112 ** * -1 . 024 -0 . 053 0 . 582 0 . 150 0 . 318 0 . 317 0 . 259 0 . 228 ** ** -0 . 183 -0 . 265 0 . 560 0 . 174 0 . 041 0 . 069 0 . 297 0 . 365 0 . 303 0 . 263 ** -0 . 264 0 . 721 1 . 059 0 . 196 -0 . 204 0 . 752 0 . 144

A s t h e lo g arit h m o f pro fit is m o d elle d , a n e s tim a t e w it h valu e , m e a n s t h a t if t h e d e t erminin g (dummy) variable c hange s from 0 to 1 , the profit c hange s with a fa c tor exp() . Signifi c ant at 5% level . Signifi c ant at 10% level .

28

4.4 Emp l oyment

Th e m o d el f or e m ploym e n t i s a n alo g o u s t o t h e m o d el f or pro fit . Le t Li b e t h e c u m ula t e d e m ploym e n t g e n era t e d by re s p o n d e n t i b e t w e e n 1994 a n d 1997 , a n d x ij re s p o n d e n t i s valu e o f d e t ermin a n t j in 1994 . Th e m o d el t o b e e s tim a t e d i s t h e f ollo w i n g:

ln Li = + j xij + ie ,
j =1

w h ere

ie ~ N (0, e2 ) .

Re s ult s are d e pi c t e d in Ta ble 12 . Co n trary t o w h a t w a s t h e c a s e w h e n a n aly s in g t h e d e t ermin a n t s o f pro fit s, h u m a n c a pit al varia ble s a p p e ar t o b e n o t d o min a n t in explainin g t h e e m ploym e n t g e n era t e d by e n tre pre n e ur s. O nly t w o varia ble s h ave s ig nifi c a n t in flue n c e . H avin g fin a n c ial exp erie n c e s e e m s t o h ave a p o s itive in flu e n c e: e n tr epre n e ur s h avin g t hi s exp erie n c e g e n era t e n e arly t w i c e t h e e m ploym e n t c o mp are d t o t h eir c o u n t erp art s la c kin g t hi s ex p erie n c e . A g e , o n t h e c o n trary , le a d s t o le ss e m ploym e n t: if a n e n tre pre n e ur i s 10 ye ar s old er a t t h e s t art h e g e n era t e s a b o u t 40 % le ss e m ploym e n t . A s re g ard s fin a n c ial c a pit al varia ble s, it a p p e ar s t h a t t h e m ore i s d o n e w it h o u t s id e c a pit al t h e hig h er t h e g e n era t e d e m ploym e n t i s. If b u s in e ss h a s b e e n s t art e d w it h 10 % p oin t m ore o u t s id e c a pit al t hi s le a d s o n avera g e t o 7 % m ore e m ploym e n t . Furt h erm ore , e n tre pre n e ur s b e n e fitin g fro m a fin a n c ial c o n trib u tio n by a b u s in e ss p art n er g e n era t e a b o u t t w o a n d a h alf a s m u c h e m ploym e n t a s t h eir c o u n t erp art s d oin g w it h o u t s u c h a c o n trib u tio n . If t h e e n tre pren e ur h a s o t h er in c o m e availa ble b e s id e s w h a t h e e arn s fro m hi s b u s in e ss, t hi s h a s a n e g a tive im p a c t o n t h e e m ploym e n t g e n era t e d . A s re g ard s s o c ial c a pit al varia ble s, e n tre pre n e ur s h avin g c o n t a c t s w it h o t h er e n tre pre n e ur s in n e t w ork s, g e n era t e a b o u t t w i c e a s m u c h e m ploy m e n t a s t h eir c o u n t erp art s la c kin g t h e s e n e t w ork s. Furt h erm ore , e n tre pre n e ur s b o ardin g o u t a c tivitie s g e n era t e a b o u t 50 % m ore e m ploym e n t . Stra t e gie s f or k e e pin g u p w it h b u s in e ss t h a t are lin k e d t o g e n era tin g employm e n t are t h e s tra t e gie s t h a t f o c u s o n c o m m er c ial rela tio n s a n d f ello wen tre pre n e ur s. T w o c o n trol varia ble s a p p e ar t o b e s ig nifi c a n t . A s w a s t o b e exp e c t e d , e n tre pre n e ur s w h o h a d a s g o al rig h t fro m t h e s t art t o g e n era t e e m ploym e n t gro w t h a p p e ar t o h ave s u cc e e d e d in t hi s re s p e c t w h e n c o m p are d t o t h eir f ello w-e n tre pre n e ur s w h o did n o t h ave t hi s in t e n tio n . O n avera g e , t h ey a p p e ar t o h ave c rea t e d eig h t tim e s a s m u c h e m ploym e n t . Curio u s ly , t h o s e w h o are f ull-tim e s elf-e m ploye d , g e n era t e le ss e m ploym e n t t h a n t h eir p art -tim e c o u n t erp art s: a b o u t 60 % le ss.

29

Ta ble 12

Es timation re s ult s for c umulated employment (logarithm) e s tim a t e a s t a n d ard err o r 0 . 107 0 . 211 0 . 208 0 . 219 0 . 338 0 . 336 0 . 331 * **

human cap i tal age high edu c ation exp erien c e in the s e c tor exp erie n c e in tra d e experien c e a s an employee experien c e in s elf-employment fin a n c ial exp erie n c e f i nanci a l cap i ta l a m o u n t o t h er in c o m e fin a n c e d w it h o w n c a pit al c o n trib u tio n by b u sin e ss p artn er(s) re c eived loan from family w a g e in c om e re c eive d by s pou s e social cap i tal in flu e n c e d by e n tre pr . in t h e f a mily c o n t a c t w ith e n tre pr . in n e t w ork s emotional s upport from s pou s e b o ardin g o u t o f a c tivitie s t o o t h ers keep up strategy variab les f o c u s o n bra n c h in g e n eral fo c u s on dire c t bu sine ss rela tio n s fo c u s on c omm er c ial rela tio n s fo c u s on fello w -e n tre pre neurs contro l vari ab l es g e n d er goal: employment gro w th 100 p er c e n t s elf-e m ploye d s e c t or d u m my: b u sin e ss s ervi c e s motive to be c ome s elf-e m pl . : hig h er inc om e n u m b er o f o b s erva tio n s lo g lik elih o o d a -0 . 121 2 . 064 -0 . 975 -0 . 199 0 . 070 847 -1209 . 31 0 . 208 0 . 266 0 . 299 0 . 236 0 . 235 ** ** 0 . 031 0 . 112 0 . 197 -0 . 154 0 . 093 0 . 089 0 . 091 0 . 088 ** * -0 . 174 0 . 815 0 . 022 0 . 425 0 . 252 0 . 254 0 . 206 0 . 183 ** ** -0 . 162 -0 . 729 0 . 884 0 . 134 0 . 344 0 . 055 0 . 236 0 . 286 0 . 242 0 . 212 ** ** ** -0 . 533 0 . 105 0 . 045 -0 . 298 -0 . 127 0 . 525 0 . 614

A s t h e lo g arit h m o f g e n era t e d e m ploym e n t is m o d elle d , a n e s tim a t e w it h valu e , mean s that if th e d e t ermining (dummy) varia ble c h a n g e s fro m 0 t o 1 , t h e g e n era t e d e m ploym e n t c h a n g e s w it h a f a c t or exp() . Signifi c ant at 5% level . Signifi c ant at 10% level .

** *

30

4.5

Durat i on
For d ura tio n , w e a p ply a dif f ere n t m o d el t h a n f or pro fit a n d e m ploym e n t , viz . a s urvival m o d el . In s u c h a m o d el t h e (lo g arit h m o f t h e) exp e c t e d s urvival tim e i s m o d elle d a s a f u n c tio n o f t h e c h ara c t eri s ti c s o f t h e e n tre pre n e ur s. A d e sc riptio n o f t hi s m o d el i s provid e d in t h e a p p e n dix . Re s ult s are s h o w n in Ta ble 13 . Po ss e ss in g h u m a n c a pit al a p p e ar s t o b e im p ort a n t f or t h e d ura tio n o f t h e b u s in e ss. Thre e h u m a n c a pit al -rela t e d d e t ermin a n t s a p p e ar t o h ave a s ig nific a n t p o s itive in flu e n c e o n d ura tio n . St artin g a t a n a g e t e n ye ar s hig h er inc re a s e s t h e exp e c t e d d ura tio n by a b o u t o n e t hird . H avin g exp erie n c e in t h e s e c t or or a s a n e m ploye e in c re a s e s t h e exp e c t e d d ura tio n by a b o u t 70 p er c e n t . Th e in flu e n c e o f fin a n c ial exp erie n c e h a s t h e u n exp e c t e d s ig n: it s e e m s t o af f e c t s urvival n e g a tively . H avin g fin a n c ial exp erie n c e d e c re a s e s t h e exp e c t e d d ura tio n by a p proxim a t ely 40 p er c e n t . Fin a n c ial c a pi t al d o e s n o t s e e m t o play a ny role in explainin g t h e d ura tio n o f a f ir m . So c ial c a pit al a f f e c t s s urvival t hro u g h t h e e m o tio n al s u p p ort o f t h e s p o u s e (t h e pre s e n c e o f t hi s a s p e c t rai s e s exp e c t e d s urvival tim e by aro u n d 50 p er c e n t) , a n d t hro u g h t h e b o ardin g o u t o f a c tivitie s t o o t h er s (w hi c h i s exp e c t e d t o inc re a s e s urvival tim e by a b o u t o n e t hird a s c o m p are d w it h e n tre pre n e ur s w h o d o n o t b o ard o u t). Stra t e gie s o f k e e pin g u p w it h b u s in e ss s e e m t o b e o f im p ort a n c e , w it h e f f e c t s c o m in g fro m t h e f o c u s o n t h e bra n c h in g e n eral a n d c o m m er c ial rela tio n s. In c o n tra s t t o t h e m e a s ure s o f s u cc e ss d e alt w it h b e f ore , g e n d er d o e s m a k e a dif f ere n c e: m ale e n tre pre n e ur s h ave s ig nifi c a n tly lo w er h a z ard ra t e s a n d are t h u s c o n s id ere d t o b e m ore s u cc e ss f ul a s f ar a s d ura tio n o f t h e firm i s c o nc ern e d . Th e a ss o c i a t e d a dva n t a g e expre ss e d in rela tive exp e c t e d s urvival tim e is e s ti m a t e d ra t h er hig h a t a b o u t 50 p er c e n t . W h e t h er t h e e n tre pre n e ur i s s elfe m ploye d f ull-tim e i s t h e o nly o t h er c o n trol varia ble t h a t i s o f s ig nifi c a n c e f or explainin g t h e d ura tio n o f t h e firm . A n e n tre pre n e ur w h o i s s elf-e m ploye d f or 100 p er c e n t h a s lo w er pro b a bilitie s t o q uit (lo w er h a z ard ra t e s) a n d i s exp e c t e d t o h ave a s urvival tim e t h a t i s a p proxim a t ely 1 . 5 tim e s hig h er t h a n t h a t o f p art- tim e e n tr epr e n e u r s.

31

Ta ble 13

Es timation re s ult s for duration (logarithm) e s tim a t e a s t a n d ard error 0 . 097 0 . 190 0 . 177 0 . 183 0 . 265 0 . 288 0 . 289 * ** ** **

human cap i tal age high edu c ation exp erie n c e in t h e s e c t or exp erie n c e in tra d e exp erie n c e a s an employee experien c e in s elf-employment fin a n c ial exp erie n c e f i nanci a l cap i ta l a m o u n t o t h er in c o m e fin a n c e d w it h o w n c a pit al c o n trib u tio n by b u sin e ss p art n er(s) re c eived loan from family w a g e in c om e re c eive d by s pou s e social cap i tal in flu e n c e d by e n tre pr . in t h e f a mily c o n t a c t w it h e n tre pr . in n e t w ork s emotional s upport from s pou s e b o ardin g o u t o f a c tivitie s t o o t h ers keep up strategy variab les f o c u s o n bra n c h in g e n eral fo c u s on dire c t bu sine ss rela tio n s fo c u s on c omm er c ial rela tio n s fo c u s on fello w -e n tre pre neurs contro l vari ab l es g e n d er goal: employment gro w th 100 p er c e n t s elf-e m ploye d s e c t or d u m my: b u sin e ss s ervi c e s motive to be c ome s elf-e m pl . : hig h er inc om e n u m b er o f o b s ervation s lo g lik elih o o d a 0 . 409 0 . 080 0 . 928 -0 . 198 -0 . 228 961 -1141 . 30 0 . 177 0 . 231 0 . 250 0 . 208 0 . 208 ** ** 0 . 237 -0 . 027 0 . 228 0 . 085 0 . 081 0 . 079 0 . 091 0 . 079 ** ** -0 . 078 -0 . 169 0 . 407 0 . 295 0 . 220 0 . 228 0 . 177 0 . 163 ** * -0 . 034 -0 . 076 0 . 146 -0 . 003 -0 . 239 0 . 050 0 . 207 0 . 258 0 . 215 0 . 189 0 . 273 0 . 085 0 . 547 0 . 295 0 . 525 -0 . 454 -0 . 525

A s the logarithm of expe c ted s urvival time is modelled , an e s timate with value , m e an s that if the determining (dummy) variable c hange s from 0 to 1 , the expe c ted s urvival time c hange s with a fa c tor exp( ) . Signifi c ant at 5% level . Signifi c ant at 10% level .

** *

32

33

Literature
Br d erl , J . a n d P . Prei s e n d rf er (1998) , N e t w ork Su p p ort a n d t h e Su cc e ss o f N e w ly Fo u n d e d Bu s in e ss e s. S m all Bu s in e ss E c o n o mi c s 10: 213-225 . Ca n tillo n , R . (1931) , E ss ai s ur la N a t ure d u Co m m er c e e n G n ral , e d i t e d a n d tra n sla t e d by H . Hig g s, Lo n d o n: M a c milla n . Co o k e , P . a n d D . W illi s (1999) , Sm all Firm s, So c ial Ca pit al a n d t h e En h a n c e m e n t o f Bu s in e ss Perf orm a n c e Thro u g h In n ova tio n Pro gra m m e s, S m a ll Bu s i n e ss E c o n o mi c s 13:219-234 . Dijk , B . va n a n d A . R . Th urik (1995 , in D u t c h), En tre pre n e ur s hip: vi s ie s e n b e n a d erin g e n , EIM Re s e a r c h Re p ort 9510 / N, Zo e t erm e er: EIM . Dijk , B . va n (1996) , D e t ermin a n t s o f S u cc e ss f ul En tre pre n e ur s hip , d o c t oral s t u dy , Ro t t erd a m: Era s m u s U niver s ity . Gre e n e , W . H . (1997) , E c o n o m e tri c A n aly s i s , Pre n ti c e- H all , In c . H b ert , R . F . a n d A . N . Lin k (1988) , Th e En tre pre n e ur , M ain s tre a m Vie w s a n d Ra di c al Cri tiq u e s, Pra e g er , N e w Y ork . J a c o b s, J . (1961) , Th e Lif e a n d D e a t h o f Gre a t A m eri c a n Citie s, N e w Y ork: Ra n d o m H o use . K e a s ey , K . a n d R . W a t s o n (1991) , Th e St a t e o f t h e A rt o f Sm all Firm Failure Pre di c tio n: A c hieve m e n t s a n d Pro g n o s i s, In t ern a tio n al S m all Bu s in e ss J o urn al , V ol . 9 , p p . 11-28. Kirz n er , I . M . (1979) , Per c e p tio n , O p p ort u nity , a n d Pro fit: St u die s in t h e Th e ory o f En tre pre n e ur s h i p , C h i c a g o: U n iv ers ity o f Chi c a g o Pre ss. Kirz n er , I . M . (1981) U n c ert ain ty , Di s c overy a n d H u m a n A c tio n , p a p er pre s e n t e d a t t h e N e w Y ork U niversity -Lib erty Fu n d Ce n t e n ary Co n f ere n c e o n Lu d w ig vo n M i s e s, N e w Y ork . K nig h t , F . H . (1921) , Ri s k , U n c ert ain ty a n d Pro fit , N e w Y ork: H o u g h t o n M if flin . Lo ury , G . (1977) , A Dyn a mi c Th e ory o f Ra c ial In c o m e Dif f ere n c e s, in P . W alla c e a n d A . La M o n d (e d s. ) , W o m e n , M in oritie s a n d Em ploym e n t Di s c rimin a tio n , Lexin g t o n , M A : H e alt h , p p . 153 -186 . M ar s h all , A . (1961) , Prin c iple s o f E c o n o mi c s , Lo n d o n: M a c milla n . M e n g er , C . (1950), Prin c iple s o f E c o n o mi c s , tra n s la t e d by J . Din g w all a n d B . F . H o s elit z , Gle n c o e , Ill . : Fre e Pre ss. N e t h erla n d s M ini s try o f E c o n o mi c A f f air s (1999 , in D u t c h) , D e o n d ern e m e n d e s a m e nlevin g . M e er k a n s e n , min d er b e dreigin g e n vo or o n d ern e m er s c h a p , G overn m e n t W hit e Pa p er , Th e H a g u e . Pra a g , M . va n , 1996 , D e t ermin a n t s o f S u cc e ss f ul En tre pre n e ur s hip , A m s t erd a m: Th e s i s Pu bli s h er s. Pra a g , C . M . va n (1999) , So m e Cla ss i c Vie w s o n En tre pre n e ur s hip , D e E c o no mi s t 147: 311-335 . Say , J. B . (1845) , A Tre a ti s e o n Politi c al E c o n o my , Phila d elp hia: Grig g & Ellio t . Sc h u m p e t er , J . A . (1934) , Th e Th e ory o f E c o n o mi c D evelo p m e n t , Ca m brid g e , M a ss. : H arvard U niver s ity Pre ss. Sc h u m p e t er , J. A . (1942) , Ca pit ali s m , S o c iali s m a n d D e m o c ra c y , N e w Y ork: H arp er a n d Ro w .

34

35

Appendix The surv i va l mode l

In t h e s urvival m o d el , firm f o u n d er s s t art t h eir b u s in e ss a t tim e t =0 . Exit s are d e s c rib e d by a ra n d o m pro c e ss g overn e d by a pro b a bility d e n s ity f u n c tio n f (t ) a n d a djoinin g di s trib u tio n f u n c tio n F(T). Th u s, t h e pro b a bility o f a firm exitin g b e t w e e n t a n d t + dt i s d e n o t e d by f(t)dt, a n d t h e lik elih o o d t h a t a firm exit s in t h e fir s t T m o n t h s i s d e n o t e d by F(T). Co n s e q u e n tly , t h e s urvivor f u n c tio n S(T), d e fin e d a s t h e pro b a bility t h a t a firm s urvive s t h e firs t T m o n t h s, i s e q uivale n t t o 1-F(T). A l s o , t h e h a z ard ra t e (t ), s p e c ifyin g t h e c o n ditio n al pro b a bility t h a t a firm t h a t h a s rem a i n e d i n b u sin e ss f or a p erio d fro m 0 t o t , exit s in t h e s h ort in t erval [t, t+dt ] , i s e q uivale n t t o: (1)

(t) =

f (t ) . S (t )

Th e h a z ard f u n c tio n i s m o d elle d a s a f u n c tio n o f a s e t o f exo g e n o u s p er s o n s p e c ifi c re gre ss or s, t h e ve c t or x , a n d o f tim e t t o p ermit d ura tio n d e p e n d e n c e . A ss u min g t h e a b s e n c e o f re gre ss or s, t h e h a z ard i s a n o n-m o n o t o ni c f u n c tio n o f t . Th e a ss u m p tio n w a s s h o w n t o h old by a fir s t in s p e c tio n o f t h e d ura tio n d a t a . A s im ple h a z ard s p e c i fi c a tio n t h a t p ermit s n o n -m o n o t o ni c b e h avio ur i s t h e lo g-lo gi s ti c (s e e La n c a s t er , 1992 , p . 44) , (2) Le t (3)

( t , x) =

k ( x ) t 1 . 1 + k ( x )t

k ( x ) = exp( ' x ) . Th e n , it c a n b e d e m o n s tra t e d t h a t

E[ln t xi ] = ' xi 1 .

Th e s e are t h e c o e f fi c ie n t s (i . e . - ) t h a t are s h o w n in Ta ble 13 . Th e lik elih o o d f u n c tio n t o b e m aximiz e d i s t h e f ollo w in g: (4)

Li = S (t i ) i (t i ) di ,

w h ere d i =1 if in divid u al i s exit i s o b s erve d a t t i a n d d i =0 if i s le n g t h o f tim e in b u s in e ss i s rig h t c e n s ore d . A s e q u a tio n (1) c a n b e re w rit t e n a s

t d ln S ( t ) (t) = , i t f o ll o w s t h a t S (t ) = exp ( u) du . Th e lo g arit h m o f d (t ) 0

t h e lik elih o o d f u n c tio n c a n t h u s b e w rit t e n in t erm s o f t h e h a z ard f u n c tio n a s:
ti

(5)

ln Li = i ( u) du + d i ln i (t i ) .
0

Se e Gre e n e (1997), p a g e 993 .

36

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List of Research Reports

Th e re s e ar c h re p ort s erie s i s t h e s u cc e ss or o f b o t h t h e re s e ar c h p a p er a n d t h e 'res e ar c h p u bli c a tie' s erie s. Th ere i s a c o n s e c u tive re p ort n u m b e rin g f ollo w e d by / x . For / x t h ere are five o p tio n s: /E: a re p ort o f t h e b u s in e ss u nit Stra t e gi c Re s e ar c h , w rit t e n in En gli s h; / N: lik e / E , b u t w rit t e n in D u t c h; / F: lik e / E , b u t w rit t e n in Fre n c h; a re p ort o f o n e o f t h e o t h er b u s in e ss u nit s o f EIM /Sm all Bu s in e ss Re s e ar c h a n d Co n s ult a n c y; a re p ort o f t h e b u s in e ss u nit Stra t e gi c Re s e ar c h f or in t ern al p urp o s e s; ext ern al availa bility o n re q u e s t . Th e in t ert e m p oral s t a bility o f t h e c o n c e n tra tio n-m argin s rela tio n s hip in D u t c h a n d U . S . m a n u f a c t urin g; Yvo n n e Prin c e a n d Roy Th urik Per s i s t e n c e o f pro fit s a n d c o m p e titive n e ss in D u t c h m a n u f a c t urin g; A a d Kleij w e g Sm all s t ore pre s e n c e in J a p a n; M artin A . Carre e , J ero e n C . A . Po tje s a n d A . Roy Th urik M ulti-f a c t orial ri s k a n aly s i s a n d t h e s e n s itivity c o n c e p t; Erik M . V erm e ule n , J a a p Spro n k a n d Ni c o va n d er W ij s t D o s m all firm s' pri c e-c o s t m argin s f ollo w t h o s e o f larg e firm s? Fir s t e m piric al re s ult s; Yvo n n e Prin c e a n d Roy Th urik Exp ort s u cc e ss o f SM E s: a n e m piri c al s t u dy; Cin zia M a n c ini a n d Yvo n n e Prin ce H e t a a n d e el va n h e t mid d e n - e n klein b e drijf in d e N e d erla n d s e in d u s trie; K e e s Ba k k er e n Roy Th urik M ulti-f a c t orial ri s k a n aly s i s a p plie d t o firm evalu a tio n; Erik M . V erm e u l e n , J a a p Spro n k a n d Ni c o va n d er W ij s t Vi s u alizin g in t erfirm c o m p ari s o n; Erik M . V erm e ule n , J a a p Spro n k a n d Ni c o va n d er W ij s t In d u s try dyn a mi c s a n d s m all firm d evelo p m e n t in t h e Euro p e a n prin tin g in d u s try (Ca s e St u die s o f Brit ain , Th e N e t h erla n d s a n d D e n m ark); M i c h a el Kit s o n , Yvo n n e Prin c e a n d M e t t e M n s t e d Employment during the bu sine ss c y c le: eviden c e from Dut c h manufa c tu ring; M ar c el H . C . Lever and Wilbert H . M . van der Hoeven D e N e d erla n d s e in d u s trie in in t ern a tio n a al p er s p e c tie f: arb eid s pro d u ktivit eit , lo n e n e n c o n c urre n tie p o s itie; A a d Kleij w e g e n Sja a k V olle bre g t A mi c ro-e c onometric analysis of interrelated fa c tor demand; Ren Huigen , A ad Kleij w e g , G e org e va n Le e u w e n a n d K e e s Ze ele n b erg Be t w e e n e c o n o mie s o f s c ale a n d e n tre pre n e ur s hip; Roy Th urik L'volu tio n s tru c t urelle d u c o m m er c e d e gro s fra n ai s; Lu u k Klo m p e t Eug n e Re b ers

/ A: / I:

9301 / E 9302 / E 9303 / E 9304 /I 9305 / E 9306 / A 9307 / N 9308 / E 9309 / E 9310 / E

9401 / E 9402 / N 9403 / E 9404 / E 9405 / F

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9406 /I 9407 / E 9408 / N 9409 / E 9410 /I 9411 / N

9412 / E 9413 / A 9414/I 9501/ N 9502 / E 9503 / E 9504 / E 9505/ A 9506/I 9507 / E 9508/ N 9509 / E 9510/ N 9511/ A

9512/ N

9513/ A

Ba s i s in k o m e n: e e n inve n t ari s a tie va n arg u m e n t e n; Bo b va n Dijk In t erfirm p erf orm a n c e evalu a tio n u n d er u n c ert ain ty , a m ulti-dim e n s io n al fra m e-w ork; J a a p Spro n k a n d Erik M . V erm e ule n In di c a t ore n vo or d e dyn a mie k va n d e N e d erla n d s e e c o n o mie: e e n s e c t orale a n aly s e; G arm t Dijk s t erh ui s, H e n drik-J a n H e ere s e n A a d Kleij w e g En try a n d exit in D u t c h m a n u f a c t urin g in d u s trie s; A a d Kleij w e g a n d M ar c el L ever La b o ur pro d u c tivity in Euro p e: dif f ere n c e s in firm-s iz e , c o u n trie s a n d in d u strie s; G arm t Dijk s t erh ui s V er s la g va n d e d erd e m o n diale w ork s h o p Sm all Bu s in e ss E c o n o mi c s; Ti nb erg e n In s tit u u t , Ro t t erd a m , 26 -27 a u g u s t u s 1994; M . A . Carre e e n M . H. C . Lever In t ern al a n d ext ern al f or c e s in s e c t oral w a g e f orm a tio n: evid e n c e fro m t h e N e t h erla n d s; J o h a n J . Gra a fla n d a n d M ar c el H . C . Lever Sele c tie van leveran c iers: een k w e s tie van produkt , profijt en partnersc hap?; F. Pleijs t er Gra fisc he w eergave van tabellen; Garmt Dijk s terhuis Over de toepa ssing van de finan c iering s theorie in het midden- en klei n bedrijf; Erik M . V erm e ule n In sid er p o w er , m ark e t p o w er , firm siz e a n d w a g e s: evid e n c e fro m D u t c h m a n ufa c turi n g in d u s trie s; M ar c el H . C . Lever a n d J ola n d a M . va n W erk h o ove n Export performan c e of SMEs; Yvonne M . Prin c e Strategic Nic he s and Profitability: A Firs t Report; David B . A udret sc h , Yvonne M . Prin c e and A . Roy Thurik M eer over winkelopen s telling s tijden; H .J. Gianotten en H .J. Heere s Inters trato s; een onderzoek naar de mogelijkheden van de Inters trato s-data s et; J an de Kok Union c overage and s e c toral w age s: eviden c e from the Netherland s; M ar c el H . C . Lever and W e ss el A . M arquering O n t w ikkeling van de groottekla ss enverdeling in de Nederland s e Indu s trie; Sja a k V olle bre g t Firm size and employment determination in Dut c h manufa c turing indu strie s; M ar c el H . C . Lever Entrepreneurs hip: visie s en benaderingen; Bob van Dijk en Roy Thur i k De toegevoegde w aarde van de detailhandel; enkele verklarende theorien tegen de a c htergrond van ont wikkelingen in dis tributiekolom , te c hnologie en externe omgeving; J. T . Nienhuis en H .J. Gianotten Haalbaarheid s onderzoek M A N A GEMENT-m o d el; onderzoek naar de mogelij kheden voor een simulatiemodel van het bedrijf sleven , geba s eerd op gedetai lle erd e bra n c h e- en bedrijf s gegeven s; A ad Kleijw eg , Sander W ennekers, Ton K w aak en Ni c o van der Wijs t Chip p e n in bin n e n- en buitenland; De elektronisc he portemonnee in kaart gebra c ht; een verkenning van toepa ssingen , mogelijkheden en c on s equentie s va n

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9601/ N 9602/ N 9603 / E 9604 / E 9605 / N 9606 / N 9607 / E 9701 / N 9702 / E 9703 / A 9704/ N 9705 / N 9801 / E 9802 / A 9803 / E 9804 / E 9805 / N 9806 / A 9807 / A 9808 / A 9809 / E 9810 / E 9811 / E

9812 / E

de c hip c ard als elektronisc he portemonnee in binnen- en buitenland; drs. J. Roorda en drs. W .J.P. Vogele s ang O m z e t pro g n o s e s vo or d e d e t ailh a n d el; Pieter Fris, A ad Kleijw eg en J an de Kok Flexibiliteit in de Nederland s e Indu s trie; N .J. Rein c ke The De c ision bet w een Internal and External R&D; David B . A udret sc h , Albert J. M enkveld and A . Roy Thurik J o b c re a tio n by s iz e c la ss: m e a s urem e n t a n d e m piri c al inve s tig a tio n; A a d Kleij w e g a n d H e nry Nie u w e n h uij s e n H e t e f f e c t va n e e n b e ur s n o t erin g; dr s. K . R . J o n k h e er Ee n M i c ro -w erk g ele g e n h eid s m o d el vo or d e D e t ailh a n d el; dr s. P . Fri s D e m a n d f or a n d w a g e s o f hig h - a n d lo w-s k ill e d la b o ur in t h e N e t h e rla n d s; M . H . C . Lever a n d A . S . R . va n d er Lin d e n A rb eid s o m s t a n dig h e d e n e n b e drijf s gro o t t e . Ee n verk e n nin g m e t d e LISRELm e t h o d e; dr s. L . H . M . Bo sc h e n dr s. J . M . P . d e K o k Th e im p a c t o f c o m p e titio n o n pri c e s a n d w a g e s in D u t c h m a n u f a c t u rin g in d u s trie s; M ar c el H . C . Lever F A M OS , e e n fin a n c ierin g s m o d el n a ar gro o t t e kla ss e n; dr s. W . H . J . V erh o eve n Banen c reatie door M KB en GB; Pieter Fris, Henry Nieu w enhuijs en en Sjaak Volle bre g t N a ar e e n b e drijf s typ e n m o d el va n h e t N e d erla n d s e b e drijf s leve n; dr s. W . H . M . va n d er H o eve n , dr s. J . M . P . d e K o k e n dr s. A . K w a a k Th e K n o w le d g e So c ie ty , En tre pre n e ur s hip a n d U n e m ploym e n t; D avid B . A u dre t sc h a n d A . Roy Th urik Firm Failure a n d In d u s trial Dyn a mi c s in t h e N e t h erla n d s; D avid B . A u dre t sc h , Pa tri c k H o u w elin g a n d A . Roy Th urik Th e d e t ermin a n t s o f e m ploym e n t in Euro p e , t h e USA a n d J a p a n; A n dr va n St el PRISM A '98: Poli c y Re s e ar c h In s tru m e n t f or Siz e-a s p e c t s in M a c ro- e c o n o mi c A n aly s i s; To n K w a a k Ba n e n c re a tie bij h e t Klein-, M id d e n- e n Gro o t b e drijf; H e nry Nie u w e n h uij s e n , Be n va n d er Eijk e n e n Ro n va n Dijk M ilie u m o d el; dr s. K . L . Ba n g m a Barrier s f or hirin g p er s o n n el; J a c q u e s Nie h o f M e t h o die k k o s t e n e n b a t e n A rb o w e t g evin g; dr s. K . M . P . Bro u w er s, dr . B . I . va n d er Burg , dr s. A . F . M . Nij s e n e n ir . H . C . Vi s e e Bu s in e ss O w n er s hip a n d E c o n o mi c Gro w t h; A n Em piri c al Inve s tig a tio n; M artin Carre e , A n dr va n St el , Roy Th urik a n d Sa n d er W e n n e k er s Th e D e gre e o f Collu s io n in Co n s tru c tio n; M . H . C . Le v e r , H . R . N i eu w e n h uij s e n a n d A .J. va n St el Self-e m ploym e n t in 23 O ECD c o u n trie s; Ralp h E . W ild e m a n , G e ert H o f s t e d e , Niel s G . N o ord erh ave n , A . Roy Th urik , W im H . J . V erh o eve n a n d A lexa n d er R . M . W e n n e k er s SICLASS: Fore c a s tin g t h e Euro p e an e n t erpri s e s e c t or by in d u s try a n d s iz e c la ss; Niel s Bo s m a a n d To n K w a a k

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9901 / E 9902 / E

9903 / E 9904 / E

9905 / E 9906 / E 9907 / N 9908 / E 9909 / E 9910 / E 9911 / E 9912 / A 9913 / A 0001 / E

Sc a n nin g t h e Fu t ure o f En tre pre n e ur s hip; dr s. N . S . Bo s m a , dr s. A . R . M . W e n n e k er s a n d dr s. W . S . Z w in k el s A re Sm all Firm s Re ally Su b-o p tim al?; Co m p e n s a tin g Fa c t or Dif f ere n tial s in Sm all D u t c h M a n u f a c t urin g Firm s; D avid B . A u dre t sc h , G e org e va n Le e u w e n , Bert M e n kveld a n d Roy Th urik F A M OS; A s iz e-c la ss b a s e d fin a n c ial a n aly s i s m o d el; W . H . J . V erh o eve n a n d E . A . va n N o ort Co n d u c t a n d Perf orm a n c e in D u t c h M a n u f a c t urin g; A n A p pli c a tio n o f App elb a u m 1982 w it h a Pla u s ibility -Ch e c k; Fra n k A . Hin drik s, H e nry R . Nieuw e n h uij s e n a n d A dria a n J . va n St el N o n-c o m p e titive Re n t s in D u t c h M a n u f a c t urin g; Co n d u c t a n d Per f orm a n c e in t h e N e w Em piri c al In d u s trial O rg a niz a tio n; Fra n k A . Hin drik s A h u m a n -re s o ur c e -b a s e d t h e ory o f t h e s m all firm; Ch arlo t t e K o c h a n d J a n de Kok V a n w erk n e m er n a ar o n d ern e m er; Ee n hybrid e o f dire c t e s t art?; ir . H . C . Vis e e e n dr s. W . S . Z w in k el s M o d ellin g re t urn s t o R&D: a n a p pli c a tio n o n s iz e e f f e c t s; Pe t er Brou w er a n d H e nry Nie u w e n h uij s e n Turb ule n c e a n d pro d u c tivity in t h e N e t h erla n d s; Niel s Bo s m a a n d H e nry Nie u w e n h uij s e n St art-u p c a pit al: Dif f ere n c e s b e t w e e n m ale a n d f e m ale e n tre pren e ur s. D o e s g e n d er m a t t er?; In grid V erh e ul a n d Roy Th urik M o d ellin g Bu s in e ss O w n er s hip in t h e N e t h erla n d s; Niel s Bo s m a , Sa n d er W e n n e k er s, G errit d e W it a n d W im Z w in k el s M e a s urin g in n ova tive in t e n s ity: Sc ale c o n s tru c tio n; J . P . J . d e J o n g D e t ermin a n t s o f firm s iz e; Y . Bern ard t a n d R . M uller Stra t e gie s, u n c ert ain ty a n d p erf orm a n c e o f s m all b u s in e ss s t art u p s; M ar c o va n G eld ere n , M i c h a el Fre s e a n d Roy Th urik

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