Retirement of entrepreneurs: Implications for entrepreneurial exit

ABSTRACT

Retirement of a large portion of the workforce and, particularly, entrepreneurs is a contemporary trend in developed countries. Despite substantial economic and social consequences of entrepreneurs’ retirement, it has received limited scholarly attention. Using a mixed method approach, we shed light on how entrepreneurs approach retirement and the implications for exit strategy. Our findings suggest retirement is a voluntary decision over which entrepreneurs have considerable control, increasing their proclivity toward partial retirement at a later than normal age. Entrepreneurial identity plays a role in shaping approaches to retirement. Retirement intention influences preferences toward particular exit strategies and associated preparation efforts.

Notes

¹ Entrepreneurial identity refers to a constellation of personal characteristics that distinguish an individual in an entrepreneurial role, the set of activities associated with the entrepreneurial role, and the individual’s assessment of the entrepreneurial role, as well as its salience in shaping the individual’s self-concept (Hoang & Gimeno, 2010).

² Entrepreneurs’ age does not have a significant relationship (β= −0.02, n.s.) with retirement intention in our sample, mainly because we controlled for the effect of age by sampling entrepreneurs 50 years of age or older. The average age in our sample is 55.4 years old.

³ GEM reports indicate that U.S.-based entrepreneurs are less likely than those in other developed countries to retire and that entrepreneurial activity is higher in the U.S. among those 55 – 64 years of age Kelley et al. (2014).

⁴ Copeland (2009) reports close to half of the small business owners in the U.S. do not have a retirement plan in place. While the effort and cost of planning may be a consideration, McCullough (2012) concludes it is due to high levels of engagement in the venture, lack of clear retirement goals, and lack of a future time perspective.