Imacs 2016 imecs 2016 Proceedings (Preliminary version) of the 4
DRIVERS OF SENIOR ENTREPRENEURSHIP IN VISEGRAD COUNTRIES
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- 116.Introduction
- 117.1 Senior entrepreneurship and its importance
- 1.1 Drivers of entrepreneurial activity in senior population
- 118.2 Material and methods
- 119.3 Results and discussion
- 120.Conclusion
- 121.Acknowledgment
DRIVERS OF SENIOR ENTREPRENEURSHIP IN VISEGRAD COUNTRIES115.Marian Holienka – Zuzana Jancovicova – Zuzana KovacicovaAbstract Senior entrepreneurship is an important topic in the context of current socio-economic challenges, such as unemployment, aging population, or low competitiveness of older generations on the labor market. Involvement in entrepreneurial efforts is a promising solution to these problems. However, Visegrad countries (Czech Republic, Hungary, Slovakia and Poland) traditionally exhibit low inclusion of senior (i.e. 55+) generation in early-stage entrepreneurial activity. Therefore, the aim of our study is to analyze the individual-level factors related to business start-up, considering the opportunity-necessity motive dichotomy. We base our analysis on Global Entrepreneurship Monitor Adult Population Survey data for V4 countries for years 2011 to 2014. Our findings identify the main drivers of seniors’ involvement in early-stage entrepreneurial activity, with specific focus on common factors and differences between businesses driven by opportunity and necessity. Key words: entrepreneurship, seniors, opportunity, necessity, drivers JEL Code: L26, J14 116.IntroductionSenior entrepreneurship is definitely a hot topic in nowadays socio-economic context. Aging population and associated questionable sustainability of pension systems, increasing retirement age and disadvantaged position on labor market put self-sufficiency through entrepreneurship as one of the important options. Positions of older workforce groups are even weaker when job opportunities are scarce and employers have more applicants available. In vacant positions where this is not true, seniors usually do not match the required profile. On contrary, even if their business fails, seniors with entrepreneurial experience are usually equipped with skills and knowledge improving their positions on job market. However, seniors often face unequal barriers in starting businesses or becoming self-employed, and are generally under-represented in entrepreneurial activity. Last but not least, due to demographic trends, in few decades the senior population will immensely grow, representing a huge potential market for senior entrepreneurs who should be closest to understanding and serving the needs of this segment. Despite its considerable importance, particularly emphasized by policy makers on national and international levels, elaboration on senior entrepreneurship in literature and empirical research is still underrepresented. However, we have seen a positive trend with this respect in last few years. Thus, our aim is to contribute to the forming body of knowledge in this field. The main research question of our paper is to find out what are the main drivers of senior involvement in early-stage entrepreneurial activity from among individual characteristics and perception of societal attitudes towards entrepreneurship, while distinguishing between opportunity and necessity motives. 117.1 Senior entrepreneurship and its importanceSenior entrepreneurship is, similar to other types of entrepreneurship, a multifaceted phenomenon. Seniors face certain barriers to enter the entrepreneurship process, but at the same time they generally possess some advantages they could capitalize through business start-up. Due to unequal barriers preventing seniors from involvement in entrepreneurial activity, they are one of the main target groups of inclusive entrepreneurship research and policy. In this context, seniors are usually considered as individuals 50+ or 55+ years old (Pilkova et al., 2014). Generally, the inclusive entrepreneurship policies intend to enable all people, regardless of their personal characteristics or background, an opportunity to start-up and operate in business or self-employment (OECD/EU, 2015). As summarized by Pilkova et al. (2014), there are certain reasons for supporting senior population in order to consider entrepreneurship as an option before, but also during the retirement age. First, involvement of seniors in entrepreneurial activities can help to unveil the untapped potential of their accumulated human and social capital. With this respect, seniors themselves might not only act as entrepreneurs, but they also may transfer their knowledge and wisdom to younger generations of entrepreneurs through formal or informal mentoring. Second, self-employment of seniors, especially those starting businesses from unemployment or retirement, can help to unburden social security and retirement schemes. Even though senior entrepreneurship is not necessarily a source of innovative and high growth businesses crucial for economic growth, it still reduces the pressure on social security and retirement systems, as well as negative effects of unemployment. Thus, senior entrepreneurship brings considerable benefits not only to senior population, but also to the entire society as such. 1.1 Drivers of entrepreneurial activity in senior populationThe most frequently studied drivers of individual business start-up (whether in age-specific connotation or not) are the individual entrepreneurship-related attributes, social capital and perception of societal attitudes, and individual demographic characteristics. Individual demographic characteristics studied for their influence on taking the entrepreneurial path are mainly the age, gender, educational attainment and household income. The role of age is based on the opportunity costs of time, since with increasing age the opportunity costs of involvement in an entrepreneurial activity increase (Lévesque and Minniti, 2006). Gender studies suggest that the entrepreneurial propensity of men and women may be influenced by differences attributed to gender-specific characteristics (Langowitz and Minniti, 2007), with female population being generally less involved in business activities. The assumptions about effect of educational attainment is related to the concept of human capital, a knowledge base determining capacity to recognize and pursue entrepreneurial opportunities (Ramos-Rodríguez et al., 2010). Finally, the role of household income in relation to involvement in entrepreneurial activity can be viewed through the financial resources perspective, especially with the opportunity costs of reducing this income (Kim et al., 2006). The most commonly investigated individual attributes regarding the involvement in early-stage entrepreneurial activity are the alertness to entrepreneurial opportunities, self-confidence and fear of failure related to starting a business. According to Kirzner (1979), alertness to unexploited business opportunities is a key perceptual characteristic of entrepreneurial behavior and a necessary precondition for entrepreneurial action. Individual entrepreneurial self-confidence relates to the concept of self-efficacy, representing one’s judgement of own ability to execute an action and produce designated levels of performance (Bandura, 1994). Thus, it has been established as a reliable predictor of different goal-directed behaviors, including entrepreneurship. Fear of failure represents a subjective perception regarding the risk of entrepreneurial failure and its possible consequences. Since the majority of individuals are supposed to be risk-averse by nature, increased fear of failure is expected to act as an inhibitor of entrepreneurial action (Arenius and Minniti, 2005). Social capital in entrepreneurship context generally refers to social networks of an individual, or so-called external knowledge, that enable to extract benefits from these social structures, networks and memberships through the social exchange. Thus, social capital fosters the discovery of opportunities, their exploitation as well as the identification, collection and allocation of scarce resources (Ramos-Rodríguez et al., 2010; Davidsson and Honig, 2003). Perception of societal attitudes towards entrepreneurship represents an individual perception of social norms, values, beliefs and assumptions socially carried by individuals within the society, influencing their behavior. One of such is the status of successful entrepreneurs in a society. If an individual believes successful entrepreneurs enjoy high levels of social status and respect, he will be generally more likely to find entrepreneurial activity desirable. He would perceive that by joining an entrepreneurial path he would achieve legitimacy by conforming to norms and values within society (Lonsburry and Glynn, 2001). Specifically in the context of senior population, previous empirical research findings on factors affecting individual involvement in business activity were summarized by Pilkova et al. (2014) and Pilkova and Rehak (2015). According to their overview, from among individual-level attributes, age, former work experience in managerial or entrepreneurial positions, social capital (in terms of broad and relevant networks) and accumulated financial capital influence seniors’ decision to engage in entrepreneurial path. Another important question is, how the generally expected relationship between the above discussed factors and individual involvement of seniors in entrepreneurial activity is moderated by the motive behind the decision to start a business. Various motives to start a business can be generally divided into the two main categories - opportunity and necessity motives. Verheul et al. (2010) argue that distinction between opportunity and necessity entrepreneurs is important for several reasons, one of them being the difference between determinants of these two types of entrepreneurship. Some evidence on relationship between individual characteristics and push/pull entrepreneurship has already been provided by empirical studies, but it is often quite ambiguous.
We created a pooled sample derived from GEM APS individual level data for V4 countries from years 2011 to 2014, with age of respondents between 55 to 64 years as the only selection criterion. Our sample comprised of total 6,306 senior individuals (1,394 from Czech Republic, 1,768 from Hungary, 1,496 from Slovakia and 1,648 from Poland), containing altogether 273 early-stage senior entrepreneurs (out of them 165 running their businesses based on opportunity, 101 necessity-driven business owner-managers, and 7 who refused to indicate the main motive for business start-up). The main sample was further divided into two subsamples - one for analyzing factors influencing the opportunity-driven entrepreneurship (containing non-entrepreneurs and entrepreneurs out of opportunity), and latter for the analysis of necessity-based activity drivers (comprising of non-entrepreneurs and entrepreneurs starting out of necessity) among senior population. Our analysis was based on standard GEM variables. Dependent variables indicated involvement of respondents in opportunity- or necessity-driven early-stage entrepreneurial activity. In GEM, total early-stage entrepreneurial activity (TEA) includes individuals actively involved in setting up a business or owning-managing new firms that are less than 3.5 years old. These individuals are further classified according to self-reported dominant reason for starting a business. Individuals who reported having no better choices for work are considered as necessity-driven entrepreneurs, while those whose reason was mainly/partially to take advantage of business opportunity, or those seeking for better opportunities than in their recent jobs, are classified as opportunity-driven entrepreneurs. The explanatory variables included the following: 1) entrepreneurial self-confidence (belief in having knowledge, skill and experience required to start a new business: yes=1, no=0); 2) alertness to opportunities (perception of good opportunities for starting a business in his/her area in the close future: yes=1, no=0); 3) fear of failure (having a fear of failure that would prevent one from starting a new business: yes=1, no=0); 4) knowing an entrepreneur (knowing personally someone who started a business in recent two years: yes=1, no=0); 5) perceived status of new entrepreneurs (one‘s agreement that in his/her country, successful new entrepreneurs possess high levels of status and respect: yes=1, no=0); 6) gender: male=1, female=2; 7) education (highest educational attainment); and 8) household income (total annual household income classified into lowest/middle/upper 33rd percentile for each country). Finally, we also included proxies for country and year of survey as control variables. To investigate the entrepreneurship drivers among senior population we applied a binomial logistic regression modelling. This model estimates the probability of an event happening. In our case this event was running an early-stage business activity based on necessity or opportunity. Thus, we conducted two regression models analysis with two different dependent variables - opportunity-driven and necessity-driven early-stage entrepreneurial activity. To estimate the parameters of each model we used statistical software R, namely its build-in function for Generalized Linear Models (GLM) which was set on binomial family with logit transformation. The significance of parameters was tested using Wald z-statistics, and Maximum likelihood estimations were used to calculate the logit coefficients denoting changes in the log odds of the dependent variable. Correlations between independent variables were tested and proved not to be problematic. The selections of final models were conducted through a stepwise regression function drop1 using Chi-square goodness of fit test, log-likelihood ratio function and Akaike Information Criterion. The selected final models were then compared to the real observation using Hosmer and Lemeshow goodness of fit (GOF) test, which indicated that the models are well fitted. 119.3 Results and discussionThe results of binomial logistic regression conducted to identify the drivers of senior involvement in opportunity- and necessity-driven entrepreneurship are displayed in Tab. 1. Tab. 1: Entrepreneurial activity drivers among seniors (logistic regression results)
Source: GEM 2011-2014 data, own elaboration As can be seen from the results in Tab. 1, only two hypothesized variables were significant for necessity entrepreneurship, while five of the hypothesized variables were found to be significant in case of opportunity-driven entrepreneurship. We found significant positive relationships between alertness to business opportunities, entrepreneurial self-confidence, personally knowing an individual who recently started a business, and higher income (belonging to middle and upper income category) and the odds of starting an opportunity-based early-stage entrepreneurial activity among senior population. On contrary, fear of failure was observed to have opposite relation and act as an inhibitor of senior opportunity-driven entrepreneurship. As for necessity-driven entrepreneurship, we found significant positive relation of early-stage entrepreneurial activity out of necessity with entrepreneurial self-confidence, and its negative relation with having a female gender. As for the remaining hypothesized variables, we found no significant relationships in case of perceived high societal status of those successful in starting a new business, or educational attainment with neither of the two types of entrepreneurship. Regarding our control variables, year of survey showed no significance, and from the analyzed V4 countries, only originating from Czech Republic significantly decreases the odds of becoming involved in early-stage entrepreneurial activity out of necessity among seniors. The results of our analysis are also summarized in Tab. 2 and discussed below.
Source: own elaboration; (+) = positive relationship, (-) = negative relationship Self-confidence was identified as the strongest driver related to involvement in entrepreneurial activity, irrespective its motive. Moreover, the strength of relationship was found to be similar in both cases. Thus, our findings suggest that belief in having skills, knowledge and experience required to start a business is a key factor influencing involvement of senior population in business start-up. Alertness to opportunities was found to be significant for opportunity entrepreneurship only. Therefore, we assume that for seniors in necessity economic situations, perception of good business opportunities is not a factor that would either persuade them to follow the entrepreneurial path or prevent them from doing so. Similarly, having fear of failure acts as an inhibitor only in case of opportunity entrepreneurship, but it is not significant for entrepreneurial activity out of necessity. This is an interesting finding, because it suggests that for seniors being at the edge of involvement in business activity out of necessity, i.e. having no other chance to earn for living, fear of failure is not a determining factor when deciding whether to start their own business or not. Knowing an entrepreneur was also identified as factor significantly related to business start-up out of opportunity. Having entrepreneurial network might broaden the horizon of available business opportunities, equip senior individuals with business-relevant skills and knowledge, or provide them access to resources required to start-up. Our findings on influence of gender suggest that it does not significantly affect involvement in opportunity entrepreneurship. On contrary, even in necessity situations, according to our results, female seniors will usually not consider starting a business. We assume that in their pre-retirement years, they will generally rather rely on their male partners or social security/retirement benefits, and focus on their traditional roles in families, i.e. taking care of their grandchildren and/or elderly parents. Finally, we found positive relationship between higher income levels and involvement in opportunity early-stage entrepreneurship. However, in this case we assume the opposite direction of this relationship. In our opinion, senior individuals achieve higher incomes thanks to being involved in entrepreneurship, not vice-versa.
While opportunity-driven senior entrepreneurship quite well follows the expected patter in terms of its drivers, necessity-driven activities are completely different story. Seniors in situations of economic necessity do not follow most of the traditional patterns when deciding whether to seek for solution in starting a business or not. Thus, we suggest that this target group deserve special attention of policy makers. There is definitely a need for systematic work with senior population individuals who find themselves in economic necessity, in order to help them to consider whether entrepreneurship is a suitable way out or not, and, if so, to guide them in the first steps to the entrepreneurial path and in its beginning. 121.AcknowledgmentThis work was supported by the Slovak Research and Development Agency under the contract No. APVV-14-0647. 122.ReferencesArenius, P., & Minniti, M. (2005). Perceptual Variables and Nascent Entrepreneurship. Small Business Economics, 24(3), 233-247. Bandura, A. (1994). Self-efficacy. In V. S. Ramachaudran (Ed.), Encyclopedia of human behavior (Vol. 4, pp. 71-81). New York: Academic Press. Davidsson, P., & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18(3), 301-331. Estrin, S., & MIickiewicz, T. (2011). Entrepreneurship in Transition Economies: The Role of Institutions and Generational Change. In M. Minniti (Ed.), The Dynamics of Entrepreneurship (pp. 181-208). Oxford: Oxford University Press. Kim, P. H. et al. (2006). Access (Not) Denied: The Impact of Financial, Human, and Cultural Capital on Entrepreneurial Entry in the United States. Small Business Economics, 27(1), 5-22. Kirzner, I. M. (1979). Perception, opportunity and profit. Chicago: University of Chicago Press. Langowitz, N., & Minniti, M. (2007). The Entrepreneurial Propensity of Women. Entrepreneurship Theory and Practice, 31(3), 341-364. Lévesque, M., & Minniti, M. (2006). The effect of aging on entrepreneurial behavior. Journal of Business Venturing, 21(2), 177-194. Lonsburry, M., & Glynn, M. A. (2001). Cultural entrepreneurship: stories, legitimacy, and the acquisition of resources. Strategic Management Journal, 22(6-7), 545-564. OECD/EU (2015). The Missing Entrepreneurs 2015: Policies for Self-employment and Entrepreneurship. Paris: OECD Publishing. Pilkova, A. et al. (2014). Senior entrepreneurship in the perspective of European entrepreneurial environment. Procedia Economics and Finance, 12, 523-532. Pilkova, A., & Rehak, J. (2015). Regional aspects of inclusive entrepreneurship of seniors in Europe. In S. Kapounek (Ed.), Enterprise and Competitive Environment: 18th Annual International Conference (pp. 685-695). Brno: Mendel University. Ramos-Rodríguez, R. A. et al. (2010). What you know or who you know? The role of intellectual and social capital in opportunity recognition. International Small Business Journal, 28(6), 566-582. Singer, S., et al. (2015). Global Entrepreneurship Monitor 2014 Global Report. London: Global Entrepreneurship Research Association. Verheul, I. et al. (2010). Factors Influencing the Entrepreneurial Engagement of Opportunity and Necessity Entrepreneurs. EIM Research Reports No. H201011. Zoetermeer: EIM.
Marian Holienka Comenius University in Bratislava, Faculty of Management Odbojarov 10, P.O.Box 95, Bratislava 820 05, Slovak Republic marian.holienka@fm.uniba.sk
Comenius University in Bratislava, Faculty of Management Odbojarov 10, P.O.Box 95, Bratislava 820 05, Slovak Republic zuzana.jancovicova@st.fm.uniba.sk Zuzana Kovacicova Comenius University in Bratislava, Faculty of Management Odbojarov 10, P.O.Box 95, Bratislava 820 05, Slovak Republic zuzana.kovacicova@fm.uniba.sk Directory: wp-content -> uploads -> 2015 2015 -> Police Militarization 2015 -> 2015 ihbb championships: hs history Bowl Round 4 – Prelims First Quarter 2015 -> Wrtp/big step · 3841 W. Wisconsin Ave., Milwaukee, wi 53208 2015 -> Rao bulletin 1 December 2015 html edition this bulletin contains the following articles 2015 -> Darton College 2015 -> Training Workshop on Planning and Implementation of Multi-Sectoral Development Programme (MsDP) in Bihar Date : 6th 2015 -> Rao bulletin 15 June 2015 html edition this bulletin contains the following articles 2015 -> Rao bulletin 1 September 2015 html edition this bulletin contains the following articles 2015 -> Rao bulletin 1 August 2015 html edition this bulletin contains the following articles 2015 -> Science, and transportation united states senate Download 2.73 Mb. Share with your friends:
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