Top

Small Business Economics

Published in:

01-09-2012

Entrepreneurship in India: the question of occupational transition

Authors: Erik Monsen, Prashanth Mahagaonkar, Christian Dienes

Published in: Small Business Economics | Issue 2/2012

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

Occupational transition from salaried to self-employment status is important in developed economies, but is even more critical in emerging economies, as individuals’ occupational choices can drive economic development. Using data on 3,295 individuals from 23 administrative regions in India, we examine the effect of regional and geographic factors on actual and intended transition. We find that regional self-employment and unemployment rates are associated with a lower likelihood of past and future transitions, but that regional gross domestic product (GDP) per capita is only relevant for actual transitions. Further, urban/rural location moderates the effects of income ratios and regional GDP per capita. While we observe similarities between India and developed economies, there are intriguing differences, and new insights are identified.

previous article Quantity and quality of information and SME financial structure

next article Firm growth and barriers to growth among small firms in India

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

UNESCO 2007; Available at: http://www.unicef.org/infobycountry/india_statistics.html

Akerlof (1976) describes how caste customs affect economic decisions in India.

The National Data on Savings Patterns of Indians can be downloaded free of charge at http://finmin.nic.in/stats_data/pension_data/index.htm.

To ensure consistent and accurate data, the NSSO conducted a pilot study, comprised of 56 focus group discussions. The questionnaire was designed based on these focus group discussions.

These are also publicly available data and can be found on the websites http://planningcommission.nic.in and http://finmin.nic.in.

We identify small firms by the number of employees. Firms with fewer than 20 employees are regarded as small firms.

It should be noted that Carrasco (1999) found a positive relationship in Spain.

Acs, Z. J., & Armington, C. (2004). Employment growth and entrepreneurial activity in cities. Regional Studies, 38(8), 911–927.CrossRef

Acs, Z. J., Audretsch, D. B., & Evans, D. S. (1994). Why does the self-employment rate vary across countries and over time? Discussion Paper No. 871, Center for Economic Policy Research.

Acs, Z. J., Desai, S., & Hessels, J. (2008). Entrepreneurship, economic development and institutions. Small Business Economics, 31(3), 219–234.CrossRef

Ahluwalia, M. S. (2002). Economic reforms in India since 1991: Has gradualism worked? Journal of Economic Perspectives, 16(3), 67–88.CrossRef

Ahluwalia, M. S. (2005). India’s economic reforms: An appraisal. Government of India: Papers of the Planning Commission of India.

Akerlof, G. A. (1976). The economics of caste and of the rat race and other woeful tales. Quarterly Journal of Economics, 90(4), 599–617.CrossRef

Akerlof, G. A., & Kranton, R. E. (2000). Economics and identity. Quarterly Journal of Economics, 115(3), 715–753.CrossRef

Armington, C., & Acs, Z. J. (2002). The determinants of regional variation in new firm formation. Regional Studies, 36(1), 33–45.CrossRef

Ashcroft, B. K., Holden, D. R., & Low, K. (2009). Entrepreneurial interest, vision and the self-employment choice decision in UK regions. Regional Studies, 43(8), 1075–1090.CrossRef

Audretsch, D. B., & Fritsch, M. (1994). On the measurement of entry rates. Empirica, 21(1), 105–113.CrossRef

Banerjee, A. V., & Newman, A. F. (1993). Occupational choice and the process of development. Journal of Political Economy, 101(2), 274–298.CrossRef

Bhalotra, S. (2003). The impact of economic liberalization on employment and wages in India. ILO Working paper No. 12, International Labor Organization, Geneva.

Blanchflower, D. G., & Oswald, A. J. (1998). What makes an entrepreneur? Journal of Labor Economics, 16(1), 26–60.CrossRef

Blau, D. M. (1985). Self-employment and self-selection in developing country labor markets. Southern Economic Journal, 52(2), 351–363.CrossRef

Bönte, W., Falck, O., & Heblich, S. (2009). The impact of regional age structure on entrepreneurship. Economic Geography, 85(3), 269–287.CrossRef

Boschma, R. A., & Fritsch, M. (2009). Creative class and regional growth: Empirical evidence from seven European countries. Economic Geography, 85(4), 391–423.CrossRef

Bruton, G. D., Ahlstrom, D., & Obloj, K. (2008). Entrepreneurship in emerging Economies: Where are we today and where should the research go in the future. Entrepreneurship Theory & Practice, 32(1), 1–14.CrossRef

Carrasco, R. (1999). Transition to and from self-employment in Spain: An empirical analysis. Oxford Bulletin of Economics and Statistics, 61(3), 315–341.CrossRef

Carsten, J. M., & Spector, P. E. (1987). Unemployment, job satisfaction, and employee turnover: A meta-analytic test of the Muchinsky model. Journal of Applied Psychology, 72, 374–381.CrossRef

Casson, M. C. (2003). The entrepreneur: An economic theory, 2nd edn (ed: E. Elgar). Oxford: Martin Robertson.

Chandrasekhar, C. P., & Ghosh, J. (2007). Recent employment trends in India and China: An unfortunate convergence. Social Scientist, 35(3/4), 19–46.

Cowling, M., & Taylor, M. (2001). Entrepreneurial women and men: Two different species? Small Business Economics, 16(3), 167–175.CrossRef

Darity, W., Jr. (2005). Stratification economics: The role of intergroup inequality. Journal of Economics and Finance, 29(2), 144–153.CrossRef

Darity, W., Jr., & Deshpande, A. (2000). Tracing the divide: Intergroup disparity across countries. Eastern Economic Journal, 26(1), 75–85.

Davidsson, P., & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18(3), 301–331.CrossRef

Djankov, S., Miguel, E., Qian, Y., Roland, G., & Zhuravskaya, E. (2005). Who are Russia’s entrepreneurs? Journal of the European Economic Association, 3(2–3), 587–597.

Djankov, S., Qian, Y., Roland, G., & Zhuravskaya, E. (2006a). Entrepreneurship in China and Russia compared. Journal of the European Economic Association, 4(2–3), 352–365.CrossRef

Djankov, S., Qian, Y., Roland, G., & Zhuravskaya, E. (2006b). Who are China’s entrepreneurs? American Economic Review, 96(2), 348–352.CrossRef

Douglas, E. J., & Shepherd, D. A. (2000). Entrepreneurship as a utility maximizing response. Journal of Business Venturing, 15(3), 231–251.CrossRef

Douglas, E. J., & Shepherd, D. A. (2002). Self-employment as a career choice: Attitudes, entrepreneurial intentions, and utility maximization. Entrepreneurship Theory & Practice, 26(3), 81–90.

Drèze, J. (1990). Poverty in India and the IRDP delusion. Economic and Political Weekly, 25(39), A95–A104.

Dunn, T., & Holtz-Eakin, D. (2000). Financial capital, human capital, and the transition to self-employment: Evidence from intergenerational links. Journal of Labor Economics, 18(2), 282–305.CrossRef

Earle, J. S., & Sakova, Z. (2000). Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies. Labour Economics, 7(5), 575–601.CrossRef

Elfenbein, D. W., Hamilton, B. H., & Zenger, T. R. (2010). The small firm effect and the entrepreneurial spawning of scientists and engineers. Management Science, 56(4), 659–681.CrossRef

Evans, D. S., & Jovanovic, B. (1989). An estimated model of entrepreneurial choice under liquidity constraints. Journal of Political Economy, 97(4), 808–827.CrossRef

Evans, D. S., & Leighton, L. S. (1989). Some empirical aspects of entrepreneurship. American Economic Review, 79(3), 519–535.

Fairlie, R. W. (1999). The absence of the African-American owned business: An analysis of the dynamics of self-employment. Journal of Labor Economics, 17(1), 80–108.CrossRef

Fairlie, R. W., & Robb, A. M. (2007). Why are black-owned businesses less successful than white-owned businesses? The role of families, inheritances, and business human capital. Journal of Labor Economics, 25(2), 289–323.CrossRef

Frederick, H., & Monsen, E. (2011). New Zealand’s perfect storm of entrepreneurship and economic development. Small Business Economics. doi:10.1007/s11187-009-9234-2

Gartner, W. B., Shaver, K. G., Carter, N. M., & Reynolds, P. D. (2004). Forward. In W. B. Gartner, K. G. Shaver, N. M. Carter, & P. D. Reynolds (Eds.), Handbook of entrepreneurial dynamics: The process of business creation. Thousand Oaks, CA: Sage.

Glinskaya, E., & Lokshin, M. (2007). Wage differentials between the public and private sectors in India. Journal of International Development, 19(3), 333–355.CrossRef

Hamilton, B. H. (2000). Does entrepreneurship pay? An empirical analysis of the returns to self-employment. Journal of Political Economy, 108(3), 604–631.CrossRef

Henley, A. (2007). Entrepreneurial aspiration and transition into self-employment: Evidence from British longitudinal data. Entrepreneurship & Regional Development, 19(3), 253–280.CrossRef

Hout, M., & Rosen, H. S. (2000). Self-employment, family background, and race. Journal of Human Resources, 35, 670–692.CrossRef

Hurst, E., & Lusardi, A. (2004). Liquidity constraints, household wealth, and entrepreneurship. Journal of Political Economy, 112(2), 319–347.CrossRef

Katz, J. A. (1990). Longitudinal analysis of self-employment follow-through. Entrepreneurship & Regional Development, 2(1), 15–25.CrossRef

Kijima, Y., & Lanjouw, P. (2005). Economic diversification and poverty in rural India. Indian Journal of Labour Economics, 48(2), 349–374.

Krueger, N. F., Reilly, M. D., & Carsrud, A. L. (2000). Competing models of entrepreneurial intentions. Journal of Business Venturing, 15, 411–432.CrossRef

Majumder, R. (2007). Earning differentials across social groups: Evidences from India. Indian Journal of Labour Economics, 50(4), 943–953.

Meager, N. (1992). Does unemployment lead to self-employment? Small Business Economics, 4(2), 87–103.CrossRef

Müller, P. (2006). Entrepreneurship in the region: Breeding ground for nascent entrepreneurs? Small Business Economics, 27, 41–58.CrossRef

Nafziger, E. W., & Terrell, D. (1996). Entrepreneurial human capital and the long-run survival of firms in India. World Development, 24(4), 689–696.CrossRef

Naudé, W. (2010). Entrepreneurship, developing countries, and development economics: New approaches and insights. Small Business Economics, 34(1), 1–12.CrossRef

Parker, S. (2004). The economics of self-employment and entrepreneurship. Cambridge: Cambridge University Press.CrossRef

Raudenbush, S. W., & Bryk, A. S. (2002). Hierarchical linear models: Applications and data analysis methods (2nd ed.). Thousand Oaks, CA: Sage Publications.

Reynolds, P., Storey, D. J., & Westhead, P. (1994). Cross-national comparisons of the variation in new firm formation rates. Regional Studies, 28(4), 443–456.CrossRef

Robson, M. T. (1998). Self-employment in the UK regions. Applied Economics, 30(3), 313–322.CrossRef

Schuetze, H. J. (2000). Taxes, economic conditions and recent trends in male self-employment: A Canada-US comparison. Labour Economics, 7(5), 507–544.CrossRef

Sen, A. (1976). Famines as failures of exchange entitlements. Economic and Political Weekly, 11(31–33), 1273–1280.

Shaver, K. G., Gartner, W. B., Crosby, E., Bakalarova, K., & Gatewood, E. J. (2001). Attributions about entrepreneurship: A framework and process for analyzing reasons for starting a business. Entrepreneurship Theory and Practice, 26(2), 5–32.

Sørensen, J. B. (2007). Bureaucracy and entrepreneurship: Workplace effects on entrepreneurial entry. Administrative Science Quarterly, 52(3), 387–412.

Spence, M. (1973). Job market signaling. Quarterly Journal of Economics, 87(3), 355–374.CrossRef

Uusitalo, R. (2001). Homo entreprenaurus? Applied Economics, 33(13), 1631–1638.CrossRef

Valliere, D., & Peterson, R. (2009). Entrepreneurship and economic growth: Evidence from emerging and developed countries. Entrepreneurship & Regional Development, 21(5/6), 459–480.CrossRef

Van der Sluis, J., van Praag, M., & Vijverberg, W. (2005). Entrepreneurship selection and performance: A meta-analysis of the impact of education in developing economies. World Bank Economic Review, 19(2), 225–261.CrossRef

Wagner, J. (2004). Are young and small firms hothouses for nascent entrepreneurs? Evidence from German micro data. Applied Economics Quarterly, 50(4), 379–391.

Wennekers, S., van Wennekers, A., Thurik, R., & Reynolds, P. (2005). Nascent entrepreneurship and the level of economic development. Small Business Economics, 24(3), 293–309.CrossRef

Yamada, G. (1996). Urban informal employment and self-employment in developing countries: Theory and evidence. Economic Development and Cultural Change, 44(2), 289–314.CrossRef

Title: Entrepreneurship in India: the question of occupational transition
Authors: Erik Monsen
Prashanth Mahagaonkar
Christian Dienes
Publication date: 01-09-2012
Publisher: Springer US
Published in: Small Business Economics / Issue 2/2012
Print ISSN: 0921-898X
Electronic ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-011-9316-9

Springer Professional

Abstract

Please log in to get access to your license.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Other articles of this Issue 2/2012

How SMEs exploit their intellectual property assets: evidence from survey data

Organisation structure and innovation performance in different environments

How does working capital management affect the profitability of Spanish SMEs?

Part-time entrepreneurship and financial constraints: evidence from the Panel Study of Entrepreneurial Dynamics

Founders’ human capital and the performance of UK new technology based firms

Employment growth from the Small Business Innovation Research program