Is encouraging people to become entrepreneurs harmful?

Mojca Svetek  |  10 April 2024

Entrepreneurship is not always about chasing profits or dreams. Sometimes it’s about survival. 1 in 4 entrepreneurs in Europe and 1 in 6 in the USA didn’t leap – they were pushed into entrepreneurship. For them, entrepreneurship was a way to escape unemployment or a very bad job. It was necessity – not opportunity – that birthed these entrepreneurs.

Today, we take a closer look at necessity entrepreneurship. Tune in to find out:

  • Why necessity entrepreneurs perform worse than opportunity entrepreneurs;
  • Why developed, well-functioning economies are characterized by a low level of nascent entrepreneurial activity and low levels of necessity entrepreneurship;
  • Whether necessity entrepreneurs benefit in any way from engaging in entrepreneurship.

Research articles:

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  • Åstebro, T., & Tåg, J. (2015). Entrepreneurship and Job Creation. SSRN No. 2576044.
  • Belda, P. R., & Cabrer-Borrás, B. (2018). Necessity and opportunity entrepreneurs: Survival factors. International Entrepreneurship and Management Journal, 14, 249-264.
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  • Larsson, J. P., & Thulin, P. (2019). Independent by necessity? The life satisfaction of necessity and opportunity entrepreneurs in 70 countries. Small Business Economics, 53(4), 921-934.
  • Mota, A., Braga, V., Ratten, V. (2019). Entrepreneurship Motivation: Opportunity and Necessity. In: Ratten, V., Jones, P., Braga, V., Marques, C.S. (Eds.), Sustainable Entrepreneurship. Contributions to Management Science. Springer, Cham.
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  • Shane, S. (2009). Why encouraging more people to become entrepreneurs is bad public policy. Small Business Economics, 33, 141-149.
  • Shane, S. A. (2008). The illusions of entrepreneurship: The costly myths that entrepreneurs, investors, and policy makers live by. Yale University Press.