Opportunity versus Necessity: Understanding the Heterogeneity of Female Micro-Entrepreneurs

Abstract

Entrepreneurs that voluntarily choose to start a business because they are able to identify a good business opportunity and act on it-opportunity entrepreneurs-might be different along various dimensions from those who are forced to become entrepreneurs because of lack of other alternatives-necessity entrepreneurs. To provide evidence on these differences, this article exploits a unique data set covering a wide array of characteristics, including cognitive skills, noncognitive skills, and managerial practices, for a large sample of female entrepreneurs in Mexico. Descriptive results show that on average opportunity entrepreneurs have better performance and higher skills than necessity entrepreneurs. A discriminant analysis reveals that discrimination is difficult to achieve based on these observables, which suggests the existence of unobservables driving both the decision to become an opportunity entrepreneur and performance. Thus, an instrumental variables estimation is conducted, using state economic growth in the year the business was set up as an instrument for opportunity, to confirm that opportunity entrepreneurs have higher performance and better management practices. JEL codes: J24, L26, O12 IN T R O D U C T I O NSupport programs for micro-businesses have become increasingly common in developing countries in recent years for at least two reasons: first, micro-enterprises employ a substantial fraction of individuals in these economies (about 47 percent in Mexico); and second, despite their prevalence, the majority of these microenterprises tend to stay small and have low productivity. However, the impact of such programs-many of which provide business grants, training or a combination of both-has been mixed at best. This raises the question about whether

Defining Opportunity versus Necessity Entrepreneurship: Two Components of Business Creation

“…For example, the 2010 wave of the German Socio-economic Panel (SOEP) asks those who newly became self-employed in the survey year how much they agree with eight statements, including "I have always wanted to be my own boss", "I had an idea that I really wanted to implement", "I did not want to be unemployed anymore", and "I did not find employment (anymore)." Similar approaches to distinguish between opportunity and necessity entrepreneurs are used, for example, in a sample of entrepreneurs in Belgium (Giacomin et al 2011), the UK Quarterly Labour Force Survey (Dawson and Henley 2012), a sample of female entrepreneurs in Mexico (Calderon et al 2017), and an alternative survey for Germany Kritikos 2009, 2010).…”

“…Using a cross-country panel of 22 OECD countries from 1972 to2007 Koellinger and Thurik (2012) find that the entrepreneurial cycle is positively affected by the national unemployment cycle Congregado et al (2012),), Fritsch et al (2015,. andKonon et al (2018) report evidence of overall counter-cyclical entrepreneurship rates in Spain, the U.K., and Germany.2 The terms "pull" vs "push" entrepreneurship (e.g.,Storey 1991;Ritsilä and Tervo 2002), "disadvantaged" entrepreneurship, and "innovative" entrepreneurship have also been used in the previous literature to express roughly similar ideas.3 For recent examples of this voluminous literature, see for exampleWennekers et al (2005),Bergmann and Sternberg (2007),Ho and Wong (2007),Van Stel et al (2007),Acs and Amorós (2008),Bjørnskov and Foss (2008), McMullen et al (2008),Block and Koellinger (2009),Block and Sandner (2009), Kritikos (2009, 2010),Koellinger and Minniti (2009),Stephen et al (2009),Block and Wagner (2010),Kautonen and Palmroos (2010),Stephan and Uhlaner (2010),Terjesen and Amorós (2010),Giacomin et al (2011), Pinillos andReyes (2011),Serida and Morales (2011),Dawson and Henley (2012),Nissan et al (2012),Fossen and Buettner (2013),Van der Zwang et al (2016), andCalderon et al (2017).…”

Access to microfinance and female labour force participation

“…In other words, the occupation-specific impact of microfinance can be ambiguous because of preexisting heterogeneity among female borrowers. Some women are in entrepreneurship out of necessity while others with the highest growth potential started their business out of opportunity (Calderon et al 2016). Microfinance is likely to impact on the intensive margin among 'opportunity entrepreneurs' while aiding transition to salaried employment among subsistence (i.e.…”

Sobrevivência de Empresas Nascentes: Influência do Capital Humano, Social, Práticas Gerenciais e Gênero

“…Pesquisas recentes têm confirmado que a adoção de práticas gerenciais pode reduzir a taxa de mortalidade da empresa e estimular crescimento em empresas recém-inseridas no mercado (Calderon, Iacovone, & Juarez, 2016). Um dos possíveis canais é o estímulo à adoção de parâmetros de qualidade, o estabelecimento de objetivos e a busca de informações (O'Neill & Duker, 1986).…”