Academic journal article Entrepreneurship: Theory and Practice

Deciding on an Entrepreneurial Career: A Test of the Pull and Push Hypotheses Using the Panel Study of Entrepreneurial Dynamics Data (1)

Academic journal article Entrepreneurship: Theory and Practice

Deciding on an Entrepreneurial Career: A Test of the Pull and Push Hypotheses Using the Panel Study of Entrepreneurial Dynamics Data (1)

Article excerpt

The Panel Study of Entrepreneurial Dynamics data were used to analyze if the potential for increased life satisfaction pulls or job dissatisfaction pushes individuals toward an entrepreneurial career. For life satisfaction, we found no significant mean differences between nascent entrepreneurs and the comparison group, whereas for job satisfaction, we found a significantly higher mean for the nascent entrepreneurs than for the comparison group. As these results show little about nascent entrepreneurs being pulled into an entrepreneurial career, the results have to be taken as strong evidence against nascent entrepreneurs being pushed toward an entrepreneurial career due to low job satisfaction in their preentrepreneurial employment.

Introduction

Few will contest the importance of new venture creation and its desirable effects on the economy. For example, out of the nascent entrepreneurs surveyed in the Global Entrepreneurship Monitor (GEM), 80% were expecting to create new jobs for other than themselves within the next 5 years (Minniti & Bygrave, 2004). Further, since Birch's (1979) study on job creation by small businesses, a considerable amount of research has substantiated his findings that small businesses are a major source of employment growth (Birch, 1979, 1987; Kirchhoff, 1994; Reynolds & White, 1997). However, Acs, Armington, and Robb (1999) found that there is a net loss of jobs among older businesses whether small, medium, or large. This suggests that new ventures, not small businesses per se, provide the principal force in creating new jobs.

Given the economic contributions of new ventures, the reasons entrepreneurs give for starting businesses are of practical, as well as academic, interest. One prominent account suggests that there may be factors that either pull individuals toward creating new ventures or push them into it. Specifically, e.g., according to the 2003 GEM report for the United States, 9% of Americans between 18 and 64 years of age were starting new ventures to pursue opportunities that could improve their conditions, and 1.7% were creating new ventures due to lack of alternatives for employment (Minniti & Bygrave, 2004). These data suggest that pull may be more important than push, but both ideas warrant closer examination. For example, in one of the early empirical studies of the "push" idea, Brockhaus (1980) found entrepreneurs to be less satisfied about their previous working conditions than were managers in other business organizations. Recognizing the limits of his convenience sample, Brockhaus also drew comparisons to "the normative data" collected by Smith, Kendall, and Hulin (1969) in their book describing the development of the job description index (JDI). It is, however, reasonable to wonder whether these findings--25 and over 35 years old, respectively--would be replicated today. Other prominent models of the relationship between job satisfaction and entrepreneurial activity such as Powell and Bimmerle (1980), Shapero and Sokol (1982), and even Herron and Sapienza (1992) also predate the Internet and the World Wide Web, each of which has helped to democratize the process of new venture creation.

In reexamining the issues today, one is confronted with the need to choose between administering a long and detailed job satisfaction questionnaire to a nonrepresentative convenience sample and using a much abbreviated measure on a nationally representative sample. We have elected to take the second route, provided by data from the Panel Study of Entrepreneurial Dynamics (PSED).

The PSED was developed to overcome a series of problems that have plagued the entrepreneurship literature (see Reynolds, 2000 for a review of these problems). The primary objective of the PSED was "to provide systematic, reliable data on the basic features of the entrepreneurial or start-up process," and the second objective was "to provide reliable data on those factors or variables that would account for or explain or predict the variation in these transitional events" (Reynolds, 2000, p. …

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