Opting out of Entrepreneurship by the Second Generation in Entrepreneur Families

Description

Research on the decision of second-generation members in business families to opt out of entrepreneurship remains limited. In this study, we theorize why individuals who possess significant resources and competencies conducive to successful entrepreneurial careers nevertheless choose not to pursue them. We identify two key sources of entrepreneurial resource endowments for second-generation individuals: (a) being born into a business community, which provides access to valuable network resources, and (b) being born into a business family, which offers both business-specific and familial resources. In addition, we consider two sources of entrepreneurial competence: (a) practical business experience gained by assisting in the family business during formative years, and (b) formal business education acquired later in life. Existing literature suggests that these four factors should encourage the pursuit of entrepreneurial careers; however, their relative and combined effects remain unclear. Contrary to these expectations, we observe that many second-generation individuals in business families are disinclined to pursue entrepreneurship, even when it involves taking over and expanding an existing family enterprise. We theorize how each of these factors, individually and in combination, may contribute to the decision to opt out of entrepreneurial careers. Finally, we propose potential interventions and strategies that may reduce such opt-out decisions among high-potential second-generation entrepreneurs.

Publication Date

1-1-2019

Keywords

Entrepreneurship, Family business

Conference

Thirteenth biennial conference, entrepreneurship development institute of India, 20-22 February, 2019, Ahmedabad, India

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