Ucbasaran, Ayse Deniz
(2004)
Business ownership experience, entrepreneurial behaviour and performance: novice, habitual, serial and portfolio entrepreneurs.
PhD thesis, University of Nottingham.
Abstract
Recent media reports have drawn attention to entrepreneurs who have successfully owned several businesses. Entrepreneurs who have owned at least two businesses are known as 'habitual entrepreneurs'. However, not all habitual entrepreneurs are consistently successful. Further, studies show that habitual entrepreneurs are heterogeneous. A distinction has been made between portfolio entrepreneurs (i.e., those who own multiple businesses simultaneously) and serial entrepreneurs (i.e., those who have owned multiple businesses sequentially).
It has been argued that to really understand entrepreneurship, there is a need to understand habitual entrepreneurs because they have been able to move down the experience curve with respect to the problems and processes of owning a business. If habitual entrepreneurs are distinct from other groups of entrepreneurs such as novice entrepreneurs (particularly in terms of superior performance), then there may be advantages associated with identifying their practices. Practitioners, such as providers of finance, can make sure that the qualities of habitual entrepreneurs are present in the entrepreneurs they choose to find. Policy-makers wanting to maximise the return on their investments may provide financial support to this group. In addition, guided by the knowledge of how habitual entrepreneurs behave, support can be directed to novice entrepreneurs to encourage best practice.
In this study, the theoretical rationale for distinguishing between these groups is provided using human capital theory. Business ownership experience is viewed as one component of an entrepreneur's specific human capital. In particular, it is argued that as a result of their experience, habitual entrepreneurs may have had an opportunity to develop other aspects of their human capital to a greater extent than novice entrepreneurs.
Consequently, one objective of the thesis was to identify differences in the human capital profile of habitual and novice entrepreneurs. The results of the study show that while similarities exist, habitual entrepreneurs display different human capital characteristics than novice entrepreneurs. Further, portfolio entrepreneurs also display different human capital characteristics than serial entrepreneurs. The thesis also explored the relationship between business ownership experience and entrepreneurial behaviour as well as performance. The evidence indicates that habitual entrepreneurs do not search for more information than novice entrepreneurs but they do use different sources of information. Further, habitual entrepreneurs (in particular portfolio entrepreneurs) identify and pursue a significantly greater number of opportunities in a given period. Using a variety of entrepreneur and firm-level performance measures, habitual entrepreneurs do not out-perform their novice counterparts. Interestingly, neither those habitual entrepreneur-s who had been consistently successful, nor those who had previously failed, report superior performance to novice entrepreneurs.
On the basis of the findings presented in this study, a number of policy suggestions can be made. Unfortunately, as no particular group of entrepreneur was associated with superior performance, the recommendation than financial support be targeted to a certain group could not be made. However, given relationships between other aspects of human capital and performance, some suggestions for support, particularly in terms of training are offered. Given identified differences in the human capital and behavioural profile of novice, habitual, serial and portfolio entrepreneurs, a case for tailored support is made.
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