Viability of Self-Employment

Abstract

Empirical studies on self-employment uniformly cite the high mortality rate in both developed and developing countries. Several studies on the entry into self-employment incorporate a savings constraint. Policy makers and international aid agencies have responded by providing credit to would-be entrepreneurs yet the mortality rate persists. We formulate a model of the viability of self-employment that incorporates the impact of cost perceptions at the time of entry. We use the ability to meet monthly loan repayment ratios as a measure of viability since loans are usually the largest explicit cost. Our results have important policy implications on the desirability of interest rate subsidies, the size of initial capital relative to market size and criteria for granting additional credit to existing enterprises.

Evaluation of self‐employment support policies using survival analysis. The discounted flat rate in Andalusia (Spain)

“…In their study, Nziramasanga et al (2009) argue that the measurement of survival may entail certain limitations if the empirical results are derived from the completion of a survey. On the one hand, the sample selection can be biased giving more weight to the survivors, or even when enough beneficiaries that have exited self‐employment are surveyed, they may not remember exactly when their company failed.…”

“…However, these measures can also lead to several undesirable effects. First, as Nziramasanga, Bhattacharjee, and Lee (2009) recognize, these measures have focused on facilitating entry into self‐employment, but not on the survival of the businesses created. These authors consider that such businesses last a relatively short time, and even argue that the political measures attempting to improve survival rates do not go beyond the provision of seed capital or some technical assistance for the self‐employed.…”

“…Regarding other variables that have an influence on survival, Nziramasanga et al (2009) state that factors such as interest rates or macroeconomic stability could have an impact on survival rates. They also hold that human capital and the choice of an appropriate activity by the grant beneficiary are important elements for the subsequent viability and duration of the business.…”

Evaluation of Self-Employment Development Factors: Latvian Case

“…Up to now, the biggest part of the scientific research has been directed towards the identification of the factors that determine self-employment start-up success or failure (Dawson, et. al., 2012;Nziramasanga, et. al., 2009).…”

Counselling for Self-Employment: The Application of Decision Support System

“…Also, it was revealed that perceived behavioural control impacted on the intention to become self-employed (Pejvak et al 2009). Other group of scientists (Nziramasanga et al 2009) in their studies formulated a model of the viability of self-employment that incorporated the impact of cost perceptions at the time of entry. It was revealed that interest rates and macroeconomic stability were important for sustainability of self-employment.…”