ISSUES
: Business and Trade
Chapter 1: Business today
20
Understanding motivations for
entrepreneurship
T
his research improves our
understanding of motivations
for starting a business in
the UK, helping to fill an important
evidence gap.
The recession and subsequent
downturn saw an increase
in numbers of very small
businesses and a rise in the
rate of entrepreneurial activity.
Despite little change in balance of
opportunity-driven and necessity-
driven entrepreneurship there was
a renewed focus on questions
about whether necessity-driven
businesses will tend to survive
and succeed. It is often assumed
that necessity-driven businesses
will be less successful than those
started to purse an opportunity and
this report establishes evidence to
address this.
The data
This study used a re-survey of
1,000 respondents to Global
Entrepreneurship Monitor (GEM)
surveys to provide reliable evidence
on the different motivations for
startingabusinessand toexplorehow
these differences might be related to
business performance. This survey
was carefully developed based
on a rapid evidence assessment
summarising the current knowledge
on motivations for entrepreneurship
and ten exploratory interviews.
The survey findings were further
supplemented by in-depth interviews
with 40 entrepreneurs.
Key points
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This
study
shows
that
motivations for starting a
business are complex and
that motivations other than the
traditional opportunity-driven
and necessity-driven distinction
are more closely related to
business survival and success.
These motivations can be
best classified in terms of the
importance attached to ‘autonomy
and better work’, ‘challenge’,
‘financial’ and ‘family and legacy’
aspects. Across
all business types,
entrepreneurs say
autonomy is their
most
important
motivator.
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Businesses can
do well regardless
of whether they
were started out
of opportunity or
necessity.
Both
opportunity-driven
businesses and
necessity-driven
businesses create
jobs, innovate and
export.
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The
most
important factor
for
business
success
was
ambition
with
those
firms
starting out with
high growth expectations
performing most strongly.
Indeed, motivations influence
business success mainly by
driving differences in growth
expectations, which in turn
drive success.
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Businesses
created
by
autonomy-
and
family-
motivated entrepreneurs have a
higher chance of survival.
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Motivations are generally stable
through the course of running a
business, with a small increase
in the importance attributed to
‘autonomy and flexibility’. This
finding is promising as it suggests
that
many
entrepreneurs’
expectations around autonomy,
flexibility and quality of work
are being met in their roles as
business owner-managers.
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The
recession
increased
entrepreneurs’
‘challenge’,
‘financial’ and ‘family and
legacy’ motivations to start
a business, while ‘autonomy
and flexibility’, opportunity
and necessity motivations did
not change. Many recession-
era entrepreneurs saw their
redundancy as an opportunity
and had a high level of ambition
when starting their business.
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Taken together, the research
shows that regardless of whether
originally driven by opportunity
or necessity, a business can
be successful. Most important
is the expectation to grow and
so emphasis should be placed
on encouraging and supporting
that. The expectation to grow
is in turn more strongly related
to ‘challenge’, ‘financial’ and
‘family and legacy’ motivations
than to the opportunity-
necessity dichotomy.
March 2015
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The above information is reprinted
with kind permission from
the Department for Business
Innovation & Skills. Please visit
for further information.
© Crown copyright 2016
