Effects of entrepreneurial heterogeneity within necessity- and opportunity-based entrepreneurs on business performance

Abstract

This paper examines whether and how heterogeneity within necessity- and opportunity-based entrepreneur groups affects business performance using a survey of 21,532 new firms in Japan. The major findings are as follows. First, business performance is not homogeneous among either necessity- or opportunity-based entrepreneurs. Second, the existing theory that necessity-based entrepreneurs tend to show poorer performance than opportunity-based entrepreneurs does not necessarily hold when considering heterogeneity within the groups. Specifically, among some types of necessity- and opportunity-based entrepreneurs, necessity-based entrepreneurs can even exhibit better performance than opportunity-based entrepreneurs.