Entrepreneurial aspiration and transition into self-employment: evidence from British longitudinal data

Abstract

This paper is about whether transitions into self-employment are preceded by well-formed entrepreneurial aspirations, and the extent to which aspiration and actual transition are associated with the same factors. It analyses data from a British general purpose longitudinal survey, allowing the tracking of stated entrepreneurial aspiration through to self-employment transition one or more years later. The majority of transitions are not preceded by a statement of aspiration a year earlier and therefore many new ventures may be hastily conceived. Studies which identify nascent entrepreneurs from a sample of the general population and subsequently trace new venture creation may therefore miss significant numbers of entrepreneurial transitions. Although first noted by Katz (1990), this issue has attracted relatively little research attention since. The paper adopts the novel approach of allowing unexplained heterogeneity in the formation of aspirations to be correlated with that in the self-employment transition choice. Aspirations are associated with displacement factors such as low job satisfaction, but this finding is not translated into an association with transitions. Aspirations are not found to be associated with intentional activity such as active saving, or with correlates of personal efficacy such as financial wealth and educational background. Aspirations display regional variation with some regions having higher levels of aspiration that do not translate into a higher start-up rate. These findings reinforce a strong conclusion that policy should address the level of preparedness for new business start-up amongst aspiring entrepreneurs.

What distinguishes a serial entrepreneur?

“…This positive relation means that transitions to entrepreneurship are on average preceded by entrepreneurial aspirations and that aspirations can be a useful predictor of subsequent labour market behaviour. This result corroborates that of Henley (2005) and is of particular interest, for a typical criticism against using aspirations data in economics is that an individual's aspirations may predict her actual behaviour only poorly, if at all, even if she is unconstrained to live by her aspirations. The finding that entrepreneurial aspirations are positively correlated with the actual transitions into entrepreneurship is of interest also for another reason: Unless the transitions to entrepreneurship are preceded by some kind of search and systematic development of entrepreneurial ideas that the entrepreneurial aspirations reflect, actual transitions into entrepreneurship must be relatively hasty and the potential pool from which the supply of entrepreneurs come, becomes ill-defined.…”

“…The only other study that focuses on the materialization of entrepreneurial aspirations is Henley (2005 Lehto and Sutela, 1999 …”

Effect of Individual Factor on Entrepreneurship Intention among Undergraduate Students in Bhutan

“…The argument here is that students will realize the accumulation of entrepreneurship knowledge and skills when nearing graduation. A study by Henley (2007) also tends to agree with the argument, which states that most people's intention to start new businesses are formed at least a year before the actual implementation. …”

Parents’ performance in entrepreneurship as a “double-edged sword” for the intergenerational transmission of entrepreneurship

“…Studies such as Henley (2007), Kolvereid and Isaksen (2006), Franco, Haase, and Lautenschlaeger (2010), and Kuckertz and Wagner (2010) find a nonsignificant relationship between parents' and offspring's entrepreneurship in samples from the USA, Norway, Russia, Germany, and Portugal. Zhang et al (2014) even find strong evidence for a negative relationship.…”