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What Happens to Nascent Entrepreneurs? An Econometric Analysis of the PSED

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abstract

This article follows the progress of a large and nationally representative sample of American nascent entrepreneurs – identified in the initial interview of the Panel Study of Entrepreneurial Dynamics (PSED) – over the next 12 months of the panel. We develop a novel theoretical framework based on maximisation of expected utility and the value of waiting, and estimate it to reveal which personal and economic characteristics are associated with venture start-up – and which are associated with remaining a nascent entrepreneur, or giving up entirely. The value of waiting turns out to play a key role in helping us understand what happens to nascent entrepreneurs. We discuss the implications of our results for entrepreneurs, lenders, business start-up support agencies and policy-makers.

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Authors and Affiliations

  1. Business School, Accounting & Finance, Middlesex University, The Burroughs, Hendon, London, NW4 4BT, UK

    Yacine Belghitar

  2. Centre for Entrepreneurship, Durham Business School, Durham, DHI 3LB, UK

    Simon C. Parker

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  1. Simon C. Parker
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  2. Yacine Belghitar
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Correspondence to Yacine Belghitar.

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*The authors would like to thank two anonymous referees, as well as participants at Imperial College, London; Palm Springs (USASBE 2005); Babson College (BKERC 2005); and Clemson University (2004 PSED Symposium) and in particular Tom Lumpkin and Kelly Shaver for helpful comments on an earlier draft. The usual disclaimer applies.

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Parker, S., Belghitar, Y. What Happens to Nascent Entrepreneurs? An Econometric Analysis of the PSED. Small Bus Econ 27, 81–101 (2006). https://doi.org/10.1007/s11187-006-9003-4

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