Small Firms Can Breed Other Small Firms

 

Small businesses are more likely to be breeding grounds for potential entrepreneurs than are larger companies, reports a study by two Purdue University professors. The study, which received financial backing from the National Federation of Independent Business, surveyed owners-managers of 1,805 small companies nationwide.

Professors Arnold C. Cooper and William C. Dunkelberg found that certain types of jobs act as "incubators" for entrepreneurs, providing them with the knowledge, skills, and motivation to start their own businesses. Smaller businesses are especially prone to spinoffs, because they give employees a broad range of job experiences.

The study also showed that 70% of entrepreneurs started businesses in fields they had job experience in; 36% have 16 or more years of schooling (as compared to 13% of the overall population); and 50% had parents who owned their own businesses.

Entrepreneurs spent an average of eight years at their previous jobs before striking out on their own, the study adds, and most of the financing for the ventures came from personal savings and from institutions.