Teemu Kautonen
2.2 Motivations for business start-up
Turning to the motivations for starting up in business, a distinction between ‘pull’ and ‘push’
factors is commonly found in the literature (e.g., Basu and Goswami, 1999; Stanworth and Curran,
1973; Wennekers et al., 2001). The former refer to positive factors that ‘pull’ people into business
ownership, such as independence, increased earning and opportunities for carrying out their own ideas.
Moreover, older individuals on the brink of retirement may see small-scale entrepreneurial activity as a
positive way of keeping themselves active, thereby increasing their social inclusion and benefiting the
society with their human and social capital (Kautonen et al., 2008; Webster and Walker, 2005). ‘Push’
factors, on the other hand, comprise negative impulses such as redundancy, a lack of alternative career
opportunities and dissatisfaction with the current job (McClelland et al., 2005; Singh and DeNoble,
2003). If there is a lack of paid employment opportunities in the labour market, self-employment
becomes more attractive, as does retirement in the particular context of older entrepreneurs (Dyer,
1994; Singh and DeNoble, 2003). However, Weber and Schaper (2004) note that insufficient retirement
funds and inadequacies in pension entitlements also act as ‘push’ factors to entrepreneurship.
Dissatisfaction with the current job and career development opportunities are particularly relevant for
the Third Age segment, given that older people can face problems such as age discrimination and
limited access to training opportunities in the labour market (Brown, 2000; Webster and Walker, 2005).
Singh and DeNoble’s (2003) conceptualisation of three groups of older entrepreneurs based on
their outlook and risk-taking propensities provides a useful further distinction to the ‘pull’/‘push’
discussion. The authors argue that each type of entrepreneur demonstrates different manifestations of
post-career self-employment. Constrained entrepreneurs are individuals who have relatively high
entrepreneurial tendencies, but have been unable to act on these in their main career phase due to
established or perceived constraints. The main motive for pursuing entrepreneurship in a later age is
likely to be personal accomplishment. Rational entrepreneurs refer to individuals who decide to
become entrepreneurs based on a rational comparison between the benefits offered by the person’s
current position and entrepreneurship. Although the authors acknowledge a range of motives behind
this rational choice – including prestige, respect and honour – the main motive is argued to be a reliable
and steady stream of income, which is required to support the person’s established lifestyle. Reluctant
entrepreneurs form the third group in this taxonomy. While constrained and rational entrepreneurs are
attracted to entrepreneurship on the basis of ‘pull’ factors, reluctant entrepreneurs are self-employed by
necessity due to a lack of viable employment opportunities in the primary labour market and the lack of
such financial resources that would allow retirement while maintaining the preferred lifestyle.
3 METHOD AND DATA
The data used in this study originates from a survey conducted in October 2006 as part of a policy-
oriented project on factors influencing the emergence of new enterprises in Finland. This study was,
however, not designed specifically to compare Prime Age and Third Age entrepreneurs. Nevertheless,
the dataset contained a substantial number of both older entrepreneurs and variables apposite for
exploring their characteristics and motivations, thus making the data suitable for the purposes of this
paper.
The sample was drawn from the Business Register maintained by Statistics Finland. The sampling
frame included all businesses founded in 2000 or later, up until and including August 2006, amounting
to a total of 97,804 enterprises. A random sample of 3900 was drawn and questionnaires were sent out
by regular mail. 939 usable responses were received by the deadline, giving a response rate of 24.1%
which can be considered satisfactory based on previous experience and other studies using similar
sampling frames. However, even though the sampling frame was limited to businesses established in
2000 or later, the sample nevertheless contained 88 enterprises which had been founded in the 1990s.
This is probably due to changes in the firm’s name, ownership or legal status, which had caused the
business to re-register 2000-2006. These firms were removed from the sample, as were those few firms
where the entrepreneur had been under the age of 20 or over the age of 64 when starting the business.
This was done in order to facilitate comparability with previous research by using the definitions of
Prime Age and Third Age in Hart et al. (2004).
The final dataset used in this analysis contains 839 firms founded between 2000 and 2006 by
people who were between 20 and 64 years of age at the time of starting the business. A little over a
third (36.5%) of the firms had been established in 2006 or 2005, a further third (32.2%) in 2004 or
2003 and the rest (31.3%) in 2002, 2001 or 2000. Hence, there is a slight majority of younger firms in
the sample. However, there are no notable differences between the Third Age and Prime Age segments
in terms of how many years the firms had been in business at the time the survey was conducted. There
were no significant differences in terms of the sectoral distribution of the businesses established by