Deciding on an entrepreneurial career: a test of the pull and push hypotheses using the Panel Study Of Entrepreneurial Dynamics data (1).

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. 160). As these two objectives illustrate, the focus of the PESD was to survey individuals in the process of starting their business. In other words, the focus was to survey nascent entrepreneurs. As part of the PSED, data were also collected from a comparison group not engaged in starting a business. Both PSED subsamples are nationally representative, and the selection procedures for the nascent entrepreneurs have ensured that problems like survival bias and retrospective reporting would be avoided. Consequently, this study examines the PSED data to determine whether job dissatisfaction pushes and/or the potential for increased life satisfaction pulls individuals to pursue an entrepreneurial career.

Literature Review

Venture creation does not happen by accident; it requires directed effort exerted over time. In other words, direction, effort, and persistence over time are the three pillars of motivation (Spector, 1996). Motivation theory argues that individuals are either pulled or pushed toward a career choice, such as becoming an entrepreneur, and that satisfaction is a central factor in motivating behavior (Gartner, Bird, & Starr, 1992; Katzell & Thompson, 1990; Landy & Becker, 1987; Perry, 1993; Vroom, 1964; Wanous, Keon, & Latack, 1983). For example, in their conceptual model, Shapero and Sokol (1982) suggest that negative push factors (e.g., being fired) and positive pull factors can direct an individual toward new venture creation, or other career choices. Further, Powell and Bimmerle (1980) proposed in their conceptual model of the venture initiation process that dissatisfaction with work or nonwork was a contributing factor to new venture initiation. Similarly, Herron and Sapienza (1992) presented a conceptual venture creation model in which type and level of satisfaction were considered critical factors. Even though these researchers (Herron & Sapienza, 1992; Powell & Bimmerle, 1980; Shapero & Sokol, 1982) argued for the importance of satisfaction, they did not distinguish explicitly among types or levels of satisfaction that might pull or push individuals toward creating new ventures. Implicitly, however, these researchers do suggest that an expectation of increased life satisfaction pulls individuals toward entrepreneurship, whereas possible reduction of job dissatisfaction pushes them toward it.

Improved Life Satisfaction as a Reason for New Venture Creation

A study by Kolvereid (1996) addressed the reasons for career preference. He used an open-ended format to capture a wider range of reasons and sampled alumni from a 4-year masters program in business administration in Norway. From the data, Kolvereid identified 11 reasons for preferring either self-employment or organizational employment based on a representative sample of the alumni where 91% were not self-employed. Kolvereid found that economic opportunity, authority, autonomy, challenge, self-realization, and participation in the entire process were reasons for preferring self-employment, whereas security, workload, and autonomy were the reasons the respondents provided for preferring organizational employment.

These findings are interesting in two ways. First, no explicit mentioning of (job or life) satisfaction was cited as a reason for either type of employment despite the literature on career choice and employee turnover suggesting that life satisfaction and job dissatisfaction are key factors in job choice (Gartner et al., 1992) and in employee turnover (e.g., Mobley, 1977). Second, it is interesting that 40% of the sample preferred self-employment despite the fact that only 9% were in fact self-employed. This suggests that perhaps some of the respondents preferred self-employment, but other factors, like security, were more important to them in considering their actual choice of employment. The findings appear suggestive of reasons that would pull (e.g., self-realization and, in turn, the expectation of increased life satisfaction) the respondents toward self-employment without considering any push factors (e.g., job dissatisfaction). Further, the sample--individuals with advanced degrees (mostly in accounting)--is one that typically has good employment opportunities. For this group, job dissatisfaction might not have been a force acting to push the respondents into entrepreneurship.

A subsequent study by Noorderhaven, Thurik, Wennekers, and van Stel (2004) addressed life satisfaction as a reason for new venture creation directly. More specifically, these researchers examined how life dissatisfaction and dissatisfaction with the workings of democracy influence self-employment in 15 European countries using the Eurobarometer surveys. Their results show that dissatisfaction with life and with the way democracy works were both significant and positively associated with the rate of self-employment. Arguing that their measured variables were proxies for job dissatisfaction, Noorderhaven et al. (2004) argued that their findings indirectly pointed toward the importance of push factors in entrepreneurship. On the other hand, it is reasonable to wonder how good the proxies might actually be. Considering these proxies used by and the findings found by Noorderhaven et al., it seems pertinent to make some considerations about job satisfaction and life satisfaction explicit.

Job Satisfaction and Life Satisfaction: Some Considerations