The Effects of the National System of Social Security Over Senior Entrepreneurs: A Comparative Analysis of Age Cohorts

The Effects of the National System of Social Security Over Senior Entrepreneurs: A Comparative Analysis of Age Cohorts

Allan Oswaldo Villegas Mateos (UDEM Business School, Universidad de Monterrey, Mexico) and José Ernesto Amorós (EGADE Business School, Tecnologico de Monterrey, Mexico & School of Business and Economics, Universidad del Desarrollo, Chile)
Copyright: © 2020 |Pages: 14
DOI: 10.4018/978-1-7998-2019-2.ch004

Abstract

The aim of this chapter is to analyze the relationship between the national systems of social security and senior entrepreneurial activity. To understand the growing phenomenon of senior entrepreneurship, the authors developed a multilevel model using a dataset from the Global Entrepreneurship Monitor that allows them to relate country-level variables, such as social security contributions, level of economic development, government support and policies, and burden taxes and bureaucracy, with individual-level variables, such as the household income, experience fear of failure, and type of business. This chapter contributes to the literature of the contextual determinants of entrepreneurship by examining multilevel data on 42,100 individuals from 31 countries members of the OECD for the period of 2010–2016. The findings indicate that the country-level predictor of social security contributions has a negative effect but statistically non-significant relationship with the decision to engage in senior entrepreneurial activity.
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Introduction

Entrepreneurship is essential because its implications on job creation, economic growth, and the development of many geographic entities, from small villages to regions and even entire countries (Lour et al., 2014). The impact of the entrepreneurial activity, particularly of the new business creation over employment and economic growth, are essential topics on many government’s agenda (Haftendorn & Salzano, 2003; Spigel & Harrison, 2018). Therefore, there is an increasing interest of researchers to analyze the factors or conditions as well as the new trends that foster and stimulate better entrepreneurial activities. One of the latest trends in entrepreneurship research is related to the age of entrepreneurs called intergenerational entrepreneurship. The key to success of this concept lies in thorough research of the differences and similarities between the different age cohorts of entrepreneurs and their practical implications (Kautonen, Down, & Minniti, 2014; Rehák et al., 2017). Most of entrepreneurship research focuses on nascent entrepreneurs or established entrepreneurs without taking into consideration the age variable. For example, Schlosser and Zolin (2016), entrepreneurs who start their first businesses between the ages of 55 and 64 years represent the fastest-growing entrepreneurship segment in America and Australia. The proportion of the population in European Union countries who are over 55 years old rose from 25% in 1990 to 30% in 2010, and it is estimated to reach 37% by 2030 (Eurostat, 2012). Hence, the authors noticed the potential growing segment for senior entrepreneurs, but also the lack of understanding in the literature about which are the best conditions for them to foster better entrepreneurial activities. Thus, this chapter investigates, in a cross-country study, the drivers associated between age cohorts of entrepreneurs and entrepreneurial opportunities.

There are two relevant drivers for senior entrepreneurship: (1) the national systems of social security that could guarantee a replacement rate of earnings after retirement, and (2) the senior stage of life could be accompanied with higher levels of experience, more networks, and more social capital, which enables a potential creation of new ventures reducing some risks that are present in other live-stages for example for inexpert youth entrepreneurs (Baucus & Human, 1994). Hence, to study this phenomenon it is relevant to consider some institutional variables at the country-level (DiMaggio & Powell, 1983; Scott, 2001). Additionally, there are factors or conditions necessary for entrepreneurship in accordance to entrepreneurial ecosystems’ theories (Isenberg, 2011; Reynolds et al., 2005; Stam, 2015; World Economic Forum, 2013) that shape the motivations to pursue entrepreneurial opportunities (Amorós et al., 2017; Baumol, 1990; Estrin et al., 2013; Williams, 2009).

Key Terms in this Chapter

Senior Early-Stage Entrepreneurs: percentage of adult population in the 55-64 years old cohort that are starting or own a new business that is not older than 3.5 years.

Global Entrepreneurship Monitor (GEM): is an international consortium, primarily associated with top academic institutions, that carries out survey-based research on entrepreneurship around the world.

Country Social Security Expenditure: Social security contributions as percentage of the country’s GDP.

Necessity-Driven Entrepreneurs: people that do not have any other options in the labor market and by consequence, they need to be entrepreneurs.

Youth Early-Stage Entrepreneurs: percentage of adult population in the 18-25 years old cohort that are starting or own a new business that is not older than 3.5 years.

Opportunity-Driven Entrepreneurs: people that voluntarily create a venture to pursue a perceived business opportunity to become more independent or to obtain additional incomes.

Government Entrepreneurship Framework Conditions: measure national experts’ perceptions of how taxes and different regulatory tasks burden entrepreneurial efforts in a country.

National System of Social Security: the set of programs for nationals that each country establishes through government programs that include in summary: Old Age, Disability, and Survivors, Sickness and Maternity, Work Injury, Unemployment, and Family Allowances.

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