It's the rise of the older entrepreneur...

Published: 3 May 2013 at 10:10

Starting a business is no longer a young person’s game, say Anglia Ruskin academics

People’s desire to become self-employed actually increases with age, according to new research published by the Small Business Economics journal.

Using data from 2,566 individuals from across 27 European countries, the paper “Ageing and entrepreneurial preferences” breaks down the motivation behind different forms of entrepreneurial behaviour.

The conventional wisdom is that entrepreneurial activity is a “young person’s game”, but this is disproved by the research of Professor Teemu Kautonen and Professor Simon Down of Anglia Ruskin University and Professor Maria Minniti of Syracuse University in the US.

They found that entrepreneurial activity increases with age for individuals who prefer only to employ themselves (self-employers), whereas it increases up to a critical threshold (late 40s) before decreasing for those who want to employ staff (owner-managers).

Age is much less of a factor for those who do not necessarily prefer self-employment but are forced into it by the lack of an alternative (reluctant entrepreneurs).

The opportunity for starting a business increases with age, because many entrepreneurial resources – such as the amount of disposable income, assets that can serve as collateral for bank loans, social capital, and professional and industry experience and knowledge – accumulate with age.

Teemu Kautonen, Professor of Enterprise and Innovation at Anglia Ruskin, said:

“Our results show that the likelihood of taking the step from thinking about starting a business to actually acting upon the idea increases with age up until the early 60s – but only for individuals who aim to employ themselves.  Individuals in their 50s and 60s don’t tend to start businesses that aim to generate employment and grow.”

Although the authors of the report say it is unrealistic to expect older entrepreneurs to make substantial contributions to job creation, they believe that policies that make self-employment an attractive late-career option could lead to longer working careers, as self-employed people tend to retire later than employees.

Professor Kautonen added:

“Increasing awareness of entrepreneurship amongst older age groups might boost their participation in social and economic life, such as social enterprise and voluntary work, which may generate modest economic benefits and contribute towards a better quality of life.
“Also, if traditional employment markets continue to decline, many older people may be forced to give self-employment a go.”