‘Entrepreneurs out of necessity’: a snapshot

Abstract

‘Entrepreneurs out of necessity’ as identified by the Global Entrepreneurship Monitor (GEM) survey are a sizeable group across countries. This article documents that they tend to have low education, run smaller firms, expect their firms to grow less, but are likely to stay in the market. This evidence matters for policy supporting small businesses. It is a challenge for existing theories of heterogeneous firms and points to the importance of heterogeneous outside options.

Keywords:

• entrepreneurship
• firm size
• survival
• firm growth

JEL Classification:

• L26
• O40

Notes

¹The GEM data, now broadly used in entrepreneurship research, consist in cross-country microdata with a focus on entrepreneurs, collected in a harmonized way. For details, see Reynolds et al. (2005) and http://www.gemconsortium.org/.

²Here and in the following, respondents are classified as entrepreneurs if they derive income from running a business of which they own a share, whether they employ others or not.

³See Gollin (2007) for an analysis of GDP per capita and self-employment rates more broadly.