Share:


Economic and socio-cultural drivers of necessity and opportunity entrepreneurship depending on the business cycle phase

    Isabel Martínez-Rodriguez   Affiliation
    ; Fernando E. Callejas-Albiñana   Affiliation
    ; Ana Isabel Callejas-Albiñana   Affiliation

Abstract

This paper offers an in-depth examination of the behavior of necessity- and opportunitydriven entrepreneurship. First, it considers their relevance to total entrepreneurial activity. It then seeks to determine which socio-cultural and economic factors affect the two types of entrepreneurship, as well as their relative importance for a sample of 32 previously selected countries during a period of expansion (2001–2008) and of crisis and recovery (2009–2016). The analyzed factors include monetary and fiscal policy instruments (economic factors) and representative variables of governance and human capital (socio-cultural ones). The findings show that both necessity- and opportunity-driven entrepreneurship largely explain the behavior of total entrepreneurial activity. They moreover show that the explanatory factors of both kinds of entrepreneurship differ depending on the business cycle phase considered. These findings will be key to proposing efficient economic policy measures to promote entrepreneurial activity and, thus, economic growth in different economies around the world.

Keyword : entrepreneurship, opportunity, necessity, socio-cultural factors, economic factors, economic growth, business cycle, GEM

How to Cite
Martínez-Rodriguez, I., Callejas-Albiñana, F. E., & Callejas-Albiñana, A. I. (2020). Economic and socio-cultural drivers of necessity and opportunity entrepreneurship depending on the business cycle phase. Journal of Business Economics and Management, 21(2), 373-394. https://doi.org/10.3846/jbem.2020.11848
Published in Issue
Feb 27, 2020
Abstract Views
2300
PDF Downloads
1855
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

References

Acs, Z. J. (2006). How is entrepreneurship good for economic growth? Innovations: Technology, Governance, Globalization, 1(1), 97–107. https://doi.org/10.1162/itgg.2006.1.1.97

Acs, Z., Astebro, T., Audretsch, D., & Robinson, D. T. (2017). Public policy to promote entrepreneurship: A call to arms. Small Business Economics, 47(1), 35–51. https://doi.org/10.1007/s11187-016-9712-2

Akinyemi, A., Oyebisi, O., & Odot-Itoro, E. (2018). Entrepreneurship, unemployment and economic growth in Nigeria. Covenant Journal of Entrepreneurship (CJoE), 1(1), 30–46.

Amorós, J. E., & Bosma, N. (2014). Global entrepreneurship monitor 2013. Global report: Fifteen years of assessing entrepreneurship across the globe. Babson College, Universidad del Desarrollo, UnivesitiTun Abdul Razak, and London Business School.

Angulo–Guerrero, M. J., Pérez–Moreno, S., & Abad–Guerrero, I. M. (2017). How economic freedom affects opportunity and necessity entrepreneurship in the OECD countries. Journal of Business Research, 73, 30–37. https://doi.org/10.1016/j.jbusres.2016.11.017

Arnold, J., Brys, B., Heady, C., Johansson, A., Schwellnus, C., & Vartia, L. (2011). Tax policy for economic recovery and growth. Economic Journal, 121(550), 59–80. https://doi.org/10.1111/j.1468-0297.2010.02415.x

Back, L. K., & Rosen, R. J. (2011). The effect of monetary policy on the availability of credit: How the credit channel works (FRB of Chicago Working Paper, No. 2007-13 (revised)). https://doi.org/10.2139/ssrn.1066828

Baron, R., & Markman, G. (2003). Beyond social capital: The role of entrepreneurs’social competence in their financial success. Journal of Business Venturing, 18(1), 41–60. https://doi.org/10.1016/S0883-9026(00)00069-0

Bassetto, M., Cagetti, M., & De Nardi, M. C. (2015). Credit crunches and credit allocation in a model of entrepreneurship. Review of Economic Dynamics, 18(1), 53–76. https://doi.org/10.1016/j.red.2014.08.003

Baum, J. A. C., & Silverman, B. S. (2004). Picking winners or building them? Alliance, intellectual, and human capital as selection criteria in venture financing and performance of biotechnology startups. Journal of Business Venturing, 19(3), 411–436. https://doi.org/10.1016/S0883-9026(03)00038-7

Becker, G. S. (1964). Human capital. University of Chicago Press.

Block, J., & Sandner, P. (2009). Necessity and opportunity entrepreneurs and their duration in selfemployment: Evidence from German micro data. Journal of Industry, Competition and Trade, 9, 117–137. https://doi.org/10.1007/s10842-007-0029-3

Block, J., & Wagner, M. (2010). Necessity and opportunity entrepreneurs in Germany: Characteristics and earnings differentials. Schmalenbach Business Review, 62, 154–174. https://doi.org/10.1007/BF03396803

Bonnet, J., Abdesselam, R., Renou-Maissant, P., & Aubry, M. (2015). What happened to entrepreneurial economies after the financial crisis? An empirical study of OECD countries. In 55th Congress of the European Regional Science Association: “World Renaissance: Changing roles for people and places”, 25–28 August 2015. Lisbon, Portugal, European Regional Science Association (ERSA), Louvainla-Neuve.

Bougheas, S., Mizen, P., & Yalcin, C. (2006). Access to external finance: Theory and evidence on the impact of monetary policy and firm-specific characteristics. Journal of Banking and Finance, 30(1), 199–227. https://doi.org/10.1016/j.jbankfin.2005.01.002

Caliendo, M., & Kritikos, A. S. (2019). “I Want to, But I Also Need to”: Start-Ups resulting from opportunity and necessity. In E. Lehmann, & M. Keilbach (Eds.), From industrial organization to entrepreneurship (pp. 247–265). Springer, Cham. https://doi.org/10.1007/978-3-030-25237-3_23

Carree, M. A., & Thurik, A. R. (2003). The impact of entrepreneurship on economic growth. In D. B. Audretsch, & Z. J. Acs (Eds.), Handbook of entrepreneurship research (pp. 437–471). Kluwer Academic. https://doi.org/10.1007/0-387-24519-7_17

Carter, N. M., Gartner, W. B., Shaver, K. G., & Gatewood, E. J. (2003). The career reasons of nascent entrepreneurs. Journal of Business Venturing, 18(1), 13–39. https://doi.org/10.1016/S0883-9026(02)00078-2

Cassar, G. (2007). Money, money, money? A longitudinal investigation of entrepreneur career reasons, growth preferences and achieved growth. Entrepreneurship and Regional Development, 19(1), 89–107. https://doi.org/10.1080/08985620601002246

Clark, D. R., Li, D., & Shepherd, D. A. (2018). Country familiarity in the initial stage of foreign market selection. Journal of International Business Studies, 49(4), 442–472. https://doi.org/10.1057/s41267-017-0099-3

Cullen, J. B., & Gordon, R. H. (2007). Taxes and entrepreneurial risk-taking: theory and evidence for the U.S. Journal of Public Economics, 91(7–8), 1479–1505. https://doi.org/10.1016/j.jpubeco.2006.12.001

Cumming, D., & Li, D. (2013). Public policy, entrepreneurship, and venture capital in the United States. Journal of Corporate Finance, 23, 345–367. https://doi.org/10.1016/j.jcorpfin.2013.09.005

De La Vega, I. (2008). Informe Ejecutivo GEM. España: Global Entrepreneurship Monitor.

Diochon, M., Menzies, T. V., & Gasse, Y. (2008). Exploring the nature and impact of gestation-specific human capital among nascent entrepreneurs. Journal of Developmental Entrepreneurship, 13(2), 151–165. https://doi.org/10.1142/S1084946708000909

Djankov, S., Ganser, T., Mcliesh, C., Ramalho, R., & Shleifer, A. (2010). The effect of corporate taxes on investment and entrepreneurship. American Economic Journal: Macroeconomics, 2(3), 31–64. https://doi.org/10.1257/mac.2.3.31

Du, K., & O’Connor, A. (2018). Entrepreneurship and advancing national level economic efficiency. Small Business Economics, 50(1), 91–111. https://doi.org/10.1007/s11187-017-9904-4

Fairlie, R. W., & Fossen, F. (2018). Opportunity versus necessity entrepreneurship: Two components of business creation (CESifo Working Paper Series, 6854). https://doi.org/10.2139/ssrn.3132357

Fotopoulos, G., & Storey, D. J. (2019). Public policies to enhance regional entrepreneurship: another programme failing to deliver? Small Business Economics, 53(1), 189–209. https://doi.org/10.1007/s11187-018-0021-9

Friedman, B. (2011). The relationship between governance effectiveness and entrepreneurship. International Journal of Humanities and Social Science, 1(17), 221–225.

Fritsch, M., Kritikos, A. S., & Pijnenbug, K. (2016). The effect of the business cycle on start-ups across industries and regions – An empirical analysis for Germany. DIW Berlin and Friedrich Schiller University Jena, mimeo.

Fryges, H., Kohn, K., & Ullrich, K. (2011). The interdependence of R&D activity and debt financing of business start-ups (summary). Frontiers of Entrepreneurship Research, 31(3).

Gaiotti, E., & Generale, A. (2001). Does monetary policy have asymmetric effects? A look at the investment decisions of Italian firms (Working Paper Series 110). European Central Bank.

Gemmell, N., Kneller, R., & Sanz, I. (2011). The timing and persistence of fiscal policy impacts on growth: Evidence from OECD countries. Economic Journal, 121, 33–58. https://doi.org/10.1111/j.1468-0297.2010.02414.x

Gertler, M., & Gilchrist, S (1994). Monetary policy, business cycles, and the behavior of small manufacturing firms. The Quarterly Journal of Economics, MIT Press, 109(2), 309–340. https://doi.org/10.2307/2118465

Giacomin, O., Janssen, F., Pruett, M., Shinnar, R. S., Llopis, F., & Toney, B. (2011). Entrepreneurial intentions, motivations and barriers: differences among American, Asian and European students. International Entrepreneurship and Management Journal, 7(2), 219–238. https://doi.org/10.1007/s11365-010-0155-y

Gnyawali, D. R., & Fogel, D. S. (1994). Environments for entrepreneurship development: key dimensions and research implications. Entrepreneurship Theory and Practice, 18(4), 43–62. https://doi.org/10.1177/104225879401800403

Grilo, I., & Irigoyen, J. (2006). Entrepreneurship in the EU: To wish and not to be. Small Business Economics, 26(4), 305–318. https://doi.org/10.1007/s11187-005-1561-3

Halicioglu, F., & Yolac, S. (2015). Testing the impact of unemployment on self-employment: Empirical evidence from OECD countries. Paper presented at the meeting of the World Conference on Technology, Innovation and Entrepreneurship. Istanbul University. https://doi.org/10.1016/j.sbspro.2015.06.161

Harju, J., & Kosonen, T. (2012). The impact of tax incentives on the economic activity of entrepreneurs (NBER Working Paper, 18442). https://doi.org/10.3386/w18442

Hayton, J. C., George, G., & Zahra, S. A. (2002). National culture and entrepreneurship: A review of behavioral research. Entrepreneurship Theory and Practice, 26(4), 33–52. https://doi.org/10.1177/104225870202600403

Hechavarria, D. M., & Reynolds, P. (2009). Cultural norms and business start-ups: The impact of national values on opportunity and necessity entrepreneurs. International Entrepreneurship and Management Journal, 5(4), 417–437. https://doi.org/10.1007/s11365-009-0115-6

Hessels, S. J., Van Gelderen, M., & Thurik, A. R. (2008). Entrepreneurial aspirations, motivations, and their drivers. Small Business Economics, 31(3), 323–339. https://doi.org/10.1007/s11187-008-9134-x

Kahneman, D., & Lovallo, D. (1994). Timid choices and bold forecasts: A cognitive perspective on risk taking. In R. P. Rumelt, D. E. Schendel, & D. J. Teece (Eds.), Fundamental issues in strategy: A research agenda (pp. 71–96). Harvard. Business School Press.

Kaufmann, D., Kraay, A., & Mastruzzi, M. (2014). Worldwide government indicators. The World Bank Group.

Keynes, J. M. (1936). The general theory of employment, interest and money. MacMillan.

Koellinger, P. D., & Thurik, A. R. (2012). Entrepreneurship and the business cycle. The Review of Economics and Statistics, 94(4), 1143–1156. https://doi.org/10.1162/REST_a_00224

Lawrenz, J., & Oberndorfer, J. (2018). Firm size effects in trade credit supply and demand. Journal of Banking & Finance, 93, 1–20. https://doi.org/10.1016/j.jbankfin.2018.05.014

Lucas, R. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3–42. https://doi.org/10.1016/0304-3932(88)90168-7

Ma, S., Wu, X., & Gan, L. (2019) Credit accessibility, institutional deficiency and entrepreneurship in China. China Economic Review, 54, 160–175. https://doi.org/10.1016/j.chieco.2018.10.015

Mayorga, M., & Muñoz, E. (2000). La técnica de datos de panel una guía para su uso e interpretación (Working paper of Central Bank of Costa Rica). Departamento de Investigaciones Económicas.

Meyer, N., & de Jongh, J. (2018). The importance of entrepreneurship as a contributing factor to economic growth and development: The case of selected European countries. Journal of Economics and Behavioral Studies, 10(4), 287–299.

Millán, J. M., Congregado, E., & Román, C. (2014). Entrepreneurship persistence with and without personnel: the role of human capital and previous unemployment. International Entrepreneurship and Management Journal, 10(1), 187–206. https://doi.org/10.1007/s11365-011-0184-1

Mota, A., Braga, V., & Ratten, V. (2019). Entrepreneurship motivation: Opportunity and necessity. In V. Ratten, P. Jones, V. Braga, & C. Marques (Eds.), Sustainable entrepreneurship. Contributions to management science. Springer, Cham. https://doi.org/10.1007/978-3-030-12342-0_8

Noorderhaven, N., Thurik, R., Wennekers, S., & Van Stel, A. (2004). The role of dissatisfaction and per capita income in explaining self-employment across 15 European countries. Entrepreneurship Theory and Practice, 28(5), 447–466. https://doi.org/10.1111/j.1540-6520.2004.00057.x

Pandit, D., Joshi, M. P., & Tiwari, S. R. (2018). Examining entrepreneurial intention in higher education: An exploratory study of college students in India. The Journal of Entrepreneurship, 27(1), 25–46. https://doi.org/10.1177/0971355717738595

Parker, S. C., Congregado, E., & Golpe, A. A. (2012). Is entrepreneurship a leading or lagging indicator of the business cycle? Evidence from UK self-employment data. International Small Business Journal: Researching Entrepreneurship, 30(7), 736–753. https://doi.org/10.1177/0266242612437560

Peña, I., Guerrero, M., & González-Pernía, J. L. (2014). Global Entrepreneurship Monitor executive report. Informe GEM España.

Pinillos, M. J., & Reyes, L. (2011). Relationship between individualist–collectivist culture and entrepreneurial activity: Evidence from Global Entrepreneurship Monitor data. Small Business Economics, 37(1), 23–37. https://doi.org/10.1007/s11187-009-9230-6

Poschke, M. (2013). Entrepreneurs out of necessity: A snapshot. Applied Economics Letters, 20(7), 658–663. https://doi.org/10.1080/13504851.2012.727968

Reynolds, P. D., Bygrave, W. D., Autio, E., Cox, L., & Hay, M. (2002). Global Entrepreneurship Monitor (2002 Executive Report). Kauffman Center for Entrepreneurial Leadership.

Roche, M. P., & Conti, A. (2018). Necessity never made a good bargain: External conditions, entrepreneurial motives, and startup outcomes. In DRUID18 Copenhagen Business School Conference (pp. 11–13). Copenhagen, Denmark.

Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002–1037. https://doi.org/10.1086/261420

Sánchez, J. C. (2011). University training for entrepreneurial competencies: Its impact on intention of venture creation. International Entrepreneurship and Management Journal, 7(2), 239–254. https://doi.org/10.1007/s11365-010-0156-x

Shapero, A., & Sokol, L. (1982). The social dimensions of entrepreneurship. In C. Kent, D. Sexton, & K. H. Vesper (Eds.), The encyclopedia of entrepreneurship (pp. 72–90). Prentice-Hall.

Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65–94. https://doi.org/10.2307/1884513

Swan, T. W. (1956). Economic growth and capital accumulation. Economic Record, 32(2), 334–361. https://doi.org/10.1111/j.1475-4932.1956.tb00434.x

Thompson, P. (2011). Necessity and Opportunity Entrepreneurs through the Business Cycle (Working Papers 1102). Florida International University, Department of Economics.

Thornton, P., Ribeiro-Soriano, D., & Urbano, D. (2011). Socio-cultural factors and entrepreneurial activity: An overview. International Small Business Journal, 29(2), 1–16. https://doi.org/10.1177/0266242610391930

Thurik, A. R., Carree, M. A., Van Stel, A. J., & Audretsch, D. B. (2008). Does self-employment reduce unemployment? Journal of Business Venturing, 23(6), 673–686. https://doi.org/10.1016/j.jbusvent.2008.01.007

Tyszka, T., Ciéslik, J., Domurat, A., & Macko, A. (2011). Motivation, self-efficacy, and risk attitudes among entrepreneurs during transition to a market economy. The Journal of Socio-Economics, 40(2), 124–131. https://doi.org/10.1016/j.socec.2011.01.011

Urbano, D., Aparicio, S., & Audretsch, D. B. (2019). The effect of entrepreneurial activity on economic growth. In Institutions, entrepreneurship, and economic performance. International studies in entrepreneurship, 41. Springer, Cham. https://doi.org/10.1007/978-3-030-13373-3_4

Urbano, D., & Aparicio, S. (2016). Entrepreneurship capital types and economic growth: International evidence. Technological Forecasting and Social Change, 102, 34–44. https://doi.org/10.1016/j.techfore.2015.02.018

Van De Ven, A. (1993). The development of an infrastructure for entrepreneurship. Journal of Business Venturing, 8(3), 211–230. https://doi.org/10.1016/0883-9026(93)90028-4

Van Der Zwan, P., & Hessels, J. (2013). Start-up motivation and (in) voluntary exit (EIM Business and Policy Research, Panteia/EIM Research Report (H201309)).

Walsh, J., & Winsor, B. (2019). Socio-cultural barriers to developing a regional entrepreneurial ecosystem. Journal of Enterprising Communities: People and Places in the Global Economy, 13(3), 263–282. https://doi.org/10.1108/JEC-11-2018-0088

Weitzel, U., Urbig, D., Desai, S., Sanders, M., Y., & Acs, Z. (2010). The good, the bad, and the talented: Entrepreneurial talent and selfish behavior. Journal of Economic Behavior & Organization, 76(1), 64–81. https://doi.org/10.1016/j.jebo.2010.02.013

Xavier, S. R., Kelley, D., Kew, J., Herrington, M., & Vorderwülbecke, A. (2013). GEM 2012 Global Report (Working Papers). Global Entrepreneurship Monitor.