Business creation is a fundamental process in the economy. It provides millions of people with a career choice and creates new jobs and wealth for the country. Yet, most start-up efforts fail and the proportion of nascent ventures that reach profitability is small. Understanding the factors that determine whether and when people engage in this activity is important for policy makers. This book provides a rich description of the key features of contemporary business creation, drawn from ten empirical studies on representative samples of nascent entrepreneurs and ventures across diverse economic sectors.
The analysis focuses on identifying the individual cognitive characteristics that condition the decision to engage in business creation. The main variables identified are perceived self-efficacy, fear of failure, the perception of opportunities and knowing another entrepreneur. The results confirm the importance of these cognitive variables and highlight their impact on the probability that an individual enlists in a business venture. The results also suggest that the perception of risk is a crucial factor and that individuals who perceive the possibility of failure are less likely to enlist in a business venture (Weber and Milliman Reference Weber and Milliman2007; Arenius and Minniti Reference Arenius and Minniti2005).
These findings can be used to inform policies designed to promote business creation. For example, the authors suggest that it might be useful to increase funding for startup costs, particularly among low-income individuals. It might also be important to promote entrepreneurship programs that are more responsive to the needs of different populations, including women and minorities.