Small Business Economics

, Volume 9, Issue 5, pp 449–462

Who Starts New Firms? – Preliminary Explorations of Firms-in-Gestation

  • Paul D. Reynolds
Article

DOI: 10.1023/A:1007935726528

Cite this article as:
Reynolds, P.D. Small Business Economics (1997) 9: 449. doi:10.1023/A:1007935726528

Abstract

Little is known about the factors which lead individuals to start a new firm. This hiatus is due to an absence of data about the gestation processes that precedes a firm birth. Most analyses have used reported self-employment as an indicator of entrepreneurial behavior and resorted to linear additive models to account for "entrepreneurship." The resulting models have not been very successful for predictions and the conception is at odds with the most salient characteristics of entrepreneur's start-up stories. These personal accounts emphasize the unique combination of events that led to a new businesses start-up. A pilot study that identified those developing new firms provides information on firms-in-gestation. Preliminary analysis using Automatic Interaction Detection (AID) explores the unique combinations of events that underlay a decision to start a new firm. Seven-in-ten startups in the U.S. may be initiated by those 25–34 years old with full-time jobs, part-time jobs, or managing another business. There is some limited support for an impact of unemployment or a "liquidity constraint" on initiating start-ups.

Copyright information

© Kluwer Academic Publishers 1997

Authors and Affiliations

  • Paul D. Reynolds
    • 1
  1. 1.Center for Entrepreneurial StudiesBobson CollegeWellesleyU.S.A

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