Motivations for Business Creation
The start-up of a new business offers substantial personal rewards, above and beyond the financial gains. For those with an idea they’re passionate about, launching a business provides autonomy and fulfillment in the realization of that dream. But it’s not a simple endeavor; there are many obstacles to overcome.
In recent years, a surge of business applications has been seen, especially among those considered likely to become employers (Lower-Propensity Firms). The number of businesses launched in the last few years has surpassed the record set during the recession. The rise in new business applications presents an opportunity to understand the factors that influence the creation of firms and the reasons why some fail while others succeed.
Previous research has linked entrepreneurship with economic and social benefits through the discovery of unexploited niches, the exploitation of which leads to the creation of new jobs. Nevertheless, the motivations of individuals to launch their own businesses have been little understood. We have developed an experimental approach to explore the role of individual cognitive variables (perceived self-efficacy, fear of failure, the perception of opportunities and knowing another entrepreneur) in the decision to launch a company.
The results of this study are relevant to the development of policies that may support entrepreneurs and increase the proportion of nascent ventures that reach profitability. Small gains in the proportion of start-ups that achieve profitability would bring major benefits through increased productivity, employment and the formation and adaptation of economic sectors.