The Selectiveness of the Entrepreneurial Process

Abstract

This paper focuses on the phase before a firm is founded. Based upon cross‐sectional data from the German section of the Global Entrepreneurship Monitor, the specific aims of the paper are to shed some light on the selection that takes place during the entrepreneurial process and to explain empirically the demographic and cognitive characteristics of (potential) entrepreneurs. The results reveal significant differences between common determinants of the different phases of the entrepreneurial process.

Notes

1 Considering, for example, the founder's networks or the regional environment in which she lives, see, for example, the comments on the relevance of social proximity for entrepreneurial activities by Boschma (2005) and Sternberg (2007).

2 See Audretsch and Fritsch (2002), Bade and Nerlinger (1999), Brixy and Grotz (2007), Falck (2007), Fritsch and Mueller (2004), Fritsch and Schmude (2006), and Sternberg and Rocha (2007) on German regions or Acs and Armington (2004), Braunerhjelm and Borgmann (2004), and Bosma (2009) for regions in other countries.

3 In literature based upon GEM data the businesses of these young entrepreneurs are often called “baby businesses.” As this paper focuses on the individuals (and not their businesses) the term young entrepreneurs seems to be appropriate. However, the definition is the same for both terms.

4 Because we included two regional variables (development of GDP and unemployment) it is necessary to relax the assumption of independence within groups. We used stata 10 command: “mprobit . . . , robust.” To calculate the marginal effects we used the command “mfx compute, predict (. . .).”

5 The relatively high coefficient of both regional variables should not be misconceived: the scaling of these variables is quite different from the others (mostly dummies). The beta coefficient of the mentioned positive overall influence on becoming a latent nascent entrepreneur is only 0.009.

6 Our screening for entrepreneurial states differs slightly from the one use by GEM. The GEM screening is described by Reynolds et al. (2005, pp. 214–215).

Additional information

Notes on contributors

Udo Brixy

Udo Brixy is Senior Researcher in the Department of Regional Labour Markets at the Institute for Employment Research, Nuremberg, Germany and in the Department of Geography at the Ludwig‐Maximilians University of Munich.

Rolf Sternberg

Rolf Sternberg is Full Professor of Economic Geography in the Institute of Economic and Cultural Geography at the University of Hannover.

Heiko Stüber

Heiko Stüber is Researcher in the Department of Regional Labour Markets and in the Department of Institutions and Macroeconomic Labour Market Analysis at the Institute for Employment Research, Nuremberg, Germany, and Ph.D. student at the University of Hohenheim, Germany.