“I Want to, But I Also Need to”: Start-Ups Resulting from Opportunity and Necessity

Abstract

When unemployed persons start businesses, they are often characterized as necessity entrepreneurs because push motives, namely their unemployment, likely prompted their decision. Based on a panel data set of more than 2600 start-ups by unemployed persons, we show that not only push but also pull motives can be observed among previously unemployed business founders. Moreover, a third type of entrepreneur emerges, motivated by a combination of both push and pull factors. When analysing the entrepreneurial performance of these three motivational types over a period of nearly 5 years, we reveal that motivation matters even in the long term: pull type entrepreneurs have higher survival rates and do create more jobs than push type entrepreneurs. Entrepreneurs being motivated by a combination of both, i.e. the start-ups resulting from opportunity and necessity fall between the two extremes.