Skip to main content

Advertisement

SpringerLink
Log in

The Effect of Aging on the Innovative Behavior of Entrepreneurs

  • Published:
Journal of the Knowledge Economy Aims and scope Submit manuscript

Abstract

The populations of economically developed countries are rapidly aging. This represents a sign of demographic success but at the same time it poses several problems for these societies, among which would be an eventual loss of entrepreneurial spirit. Concomitant with the latter idea, the body of empirical literature has shown that the probability of starting a business seems to increase with age up to a threshold point (between 35 and 44 years of age) and to decrease thereafter. However, this does not automatically imply that the innovative attitude of those who opt for an entrepreneurial career in an older population is lower than that characterizing a younger population. One may, indeed, surmise that more efforts will be exerted to introduce innovations as a strategy to compensate the negative effects produced by the shrinking in labor force size and in human capital productivity. Establishing whether population aging has an impact on the innovation attitude of entrepreneurs is crucial to offering a better understanding of the ways through which aging my affect economic growth.

In the present paper, we implement a cross-country analysis aimed at answering the following research questions: are older individuals characterized by a lower probability of becoming entrepreneurs? If this turns out to be true, then are the entrepreneurs operating in older societies less or more prone to innovate?

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Notes

  1. In particular, Sauvy (1948) observed that “In countries suffering from aging, the spirit of enterprise, and hence the willingness to accept risks without which capitalism cannot function, gradually atrophies and is replaced by a new feeling: the desire for security” (p.118).

  2. To give an idea of the magnitude of this phenomenon, the World population prospects (2017) elaborated by the population division of the United Nations report that in high income countries (i.e., those countries with GDP per capita greater than 12,000$) the old-age dependency ratio (i.e., ratio of population aged 65+ per 100 population 15–64) will pass from the 25.7 registered in 2015 to the 46.3 in 2050. This means that in 2050 for every two individuals in the work-force we will have an over 65, presumably out of it. The previsions could be consulted at https://esa.un.org/unpd/wpp/

  3. The acronym GEM stands for Global Entrepreneurship Monitor; it is an international survey realized by the GEM consortium to investigate entrepreneurship across a wide set of countries.

  4. We will not focus on the discussion of the origin of these opportunities. The interested reader is referred to Shane (2000).

  5. For opportunities, they intend “ … [S]ituations in which new goods, services, raw materials, and organizing processes can be introduced and sold at greater than their cost of production .” (Shane and Venkataraman 2000, p.220). The Kirzerian definition is wider including entrepreneurs that could be both innovator and non-innovator. It must be noted that in a recent contribution, Davidsson (2015) has criticized the concept of opportunity sustaining that is should be reviewed to better drive theoretical and empirical analysis. It is not an aim of this paper to enter in this discussion

  6. Interestingly, Jones (2010), analyzing the time evolution of the characteristics of those who have introduced great innovations both in the academic sector and in business sector, found that these are less and less coming from the young.

  7. For more details, see http://www.gemconsortium.org/. See also Braga et al. (2018) for a brief description of this data source.

  8. Not all countries are present in each wave. Detailed information on the combination of country and year are available upon request to the corresponding author. Alternatively, this information may be obtained from Global Monitor Entrepreneurship Report written each year by the GEM consortium to illustrate the main results of the survey.

  9. Please note that with the exception of age, the other statistic presented in Table 1 are sample proportions. See also https://www.gemconsortium.org/about/wiki for information about sampling strategy.

  10. We were unable to also estimate a model a biprobit model for newtec because of a problem with convergence in the algorithm for the optimization. In all the models that we present, both country and year dummies are included. The associated results are available upon request to the corresponding author.

References

  • Acemoglu, D., & Linn, J. (2004). Market size in innovation: theory and evidence from the pharmaceutical industry. The Quarterly Journal of Economics, 119(3), 1049–1090.

    Google Scholar 

  • Achen, C. H. (1986). The statistical analysis of quasi-experiments. Berkeley: University of California Press.

    Google Scholar 

  • Acs, Z. J., & Varga, A. (2005). Entrepreneurship, agglomeration and technological change. Small Business Economics, 24, 323–334.

    Google Scholar 

  • Ajzen, I. (1991). The theory of planned behaviour. Organizational Behavior and Human Decision Processes, 50(2), 179–211.

    Google Scholar 

  • Almund, M., Duckworth, A. L., Heckman, J., & Kautz, T. (2011). Personality psychology and economics, Institute for the study of Labor (IZA), Discussion paper No. 5500. Downloadable at http://ftp.iza.org/dp5500.pdf. Accessed 24 June 2019.

  • Badcock, L., & Loewenstein, G. (1997). Explaining bargaining impasse: the role of self-serving bias. Journal of Economic Perspectives, 11(1), 109–126.

    Google Scholar 

  • Baumol, W. J., & Strom, R. J. (2007). Entrepreneurship and economic growth. Strategic Entrepreneurship Journal, 1(3–4), 233–237.

    Google Scholar 

  • Becker, G. S. (1965). A theory of the allocation of time. The Economic Journal, 75(299), 493–512.

    Google Scholar 

  • Bloom, D. E., Canning, D., & Fink, G. (2010). Implications of population ageing for economic growth. Oxford Review of Economic Policy, 26(4), 583–612.

    Google Scholar 

  • Bloom, D. E., Canning, D., & Lubet, A. (2015). Global population aging: facts, challenges, solutions & perspectives. Daedalus, 144(2), 80–92.

    Google Scholar 

  • Bӧnte, W., & Piegeler, M. (2013). Gender gap in latent and nascent entrepreneurship: driven by competitiveness. Small Business Economics, 41(4), 961–987.

    Google Scholar 

  • Braga, V., Queirós, M., Correia, A., & Braga, A. (2018). High-growth business creation and management: a multivariate quantitative approach using GEM data. Journal of the Knowledge Economy, 9(2), 424–445.

    Google Scholar 

  • Camerer, C., & Lovallo, D. (1999). Overconfidence and excess entry: an experimental approach. American Economic Review, 89(1), 306–318.

    Google Scholar 

  • Choi, Y. R., & Shepherd, D. A. (2004). Entrepreneurs’ decisions to exploit opportunities. Journal of Management, 30(3), 377–395.

    Google Scholar 

  • Davidsson, P. (2015). Entrepreneurial opportunities and the entrepreneurship nexus: a re-conceptualization. Journal of Business Venturing, 30(5), 674–695.

    Google Scholar 

  • Drucker, P. F. (1985). Innovation and entrepreneurship. New Iork: Harper.

    Google Scholar 

  • Ellis, E. R., & Allaire, A. J. (1999). Modeling computer interest in older adults: the role of age, education, computer knowledge, and computer anxiety. Human Factors, 41(3), 345–355.

    Google Scholar 

  • Glaeser, E. L., Laibson, D., & Sacerdote, B. (2002). An economic approach to social capital. The Economic Journal, 112(November), F437–F458.

    Google Scholar 

  • Hall, J., & Sammons, P. (2013). Mediation, moderation, & interaction: definitions, discrimination & (some) means of testing. In T. Teo (Ed.), Handbook of quantitative methods for educational research (pp. 267–288). Rotterdam: Sense Publishers.

    Google Scholar 

  • Hallahan, T., Faff, R., & McKenzie, M. (2003). An exploratory investigation of the relation between risk tolerance scores and demographic characteristics. Journal of Multinational Financial Market, 13(4–5), 483–502.

    Google Scholar 

  • Haltiwanger, J. (2009). Entrepreneurship and job growth. In Z. J. Acs, D. B. Audretsch, & R. J. Strom (Eds.), Entrepreneurship, growth and public policy (pp. 119–145). Cambridge: Cambridge University Press.

    Google Scholar 

  • Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica, 47(1), 153–161.

    Google Scholar 

  • Jones, B. F. (2010). Age and great invention. The Review of Economics and Statistics, XCII(1), 1–14.

  • Jovanovic, B. (1994). Firm formation with heterogeneous management and labor skills. Small Business Economics, 6(3), 185–191.

    Google Scholar 

  • Kautonen, T., Hatak, I., Kibler, E., & Wainwright, T. (2015). Emergence of entrepreneurial behaviour: the role of age-based self-image. Journal of Economic Psychology, 50, 41–51.

    Google Scholar 

  • Kihlstrom, R., & Laffont, J. (1979). A general equilibrium entrepreneurial theory of firm formation based on risk aversion. Journal of Political Economy, 87(4), 719–748.

    Google Scholar 

  • Kirzner, I. M. (1973). Competition and entrepreneurship. Chicago: University of Chicago Press.

    Google Scholar 

  • Kirzner, I. M. (2009). The alert and creative entrepreneur: a clarification. Small Business Economics, 32(2), 145–152.

    Google Scholar 

  • Koellinger, P. (2008). Why are some entrepreneurs more innovative than others? Small Business Economics, 31, 21–37.

    Google Scholar 

  • Koellinger, P., Minniti, M., & Schade, C. (2007). ‘I think I can, I think I can’: overconfidence and entrepreneurial behavior. Journal of Economic Psychology, 28(4), 502–527.

    Google Scholar 

  • Kohlbacher, F., Herstatt, C., & Levsen, N. (2015). Golden opportunities for silver innovation: how demographic changes give rise to entrepreneurial opportunities to meet the needs of older people. Technovation, 39-40(May–June), 73–82.

    Google Scholar 

  • Lamotte, O., & Colovic, A. (2013). Do demographics influence aggregate entrepreneurship? Applied Economics Letters, 20(13), 1206–1210.

    Google Scholar 

  • Lazear, E. P. (2005). Entrepreneurship. Journal of Labor Economics, 23(4), 649–680.

    Google Scholar 

  • Levesque, M., & Minniti, M. (2006). The effect of aging on entrepreneurial behavior. Journal of Business Venturing, 21(5), 177–194.

    Google Scholar 

  • Levesque, M., & Minniti, M. (2011). Age matters: how demographics influence aggregate entrepreneurship. Strategic Entrepreneurship Journal, 5, 269–284.

    Google Scholar 

  • Levie, J., & Autio, E. (2008). A theoretical grounding and test of the GEM model. Small Business Economics, 31(3), 235–263. https://doi.org/10.1007/s11187-008-9136-8.

  • Lindberg, M., Lindgren, M., & Packendorff, J. (2014). Quadruple helix as a way to bridge the gender gap in entrepreneurship: the case of an innovation system project in the Baltic Sea region. Journal of the Knowledge Economy, 5(1), 94–113.

    Google Scholar 

  • Lucas, R. E. (1978). On the size distribution of business firms. Bell Journal of Economics, 9, 508–523.

    Google Scholar 

  • Lucchese, M., & Pianta, M. (2012). Innovation and employment in economic cycles. Comparative Economic Studies, 54(2), 341–359.

    Google Scholar 

  • Marvel, M. R., & Lumpkin, G. T. (2007). Technology entrepreneurs’ human capital and its effects on innovation radicalness. Entrepreneurship: Theory and Practice, 31(6), 807–828.

    Google Scholar 

  • McGee, J. E., Peterson, M., Mueller, S. L., & Sequeira, J. M. (2009). Entrepreneurial self-efficacy: refining the measure. Entrepreneurship: Theory and Practice, 33(4), 965–988.

    Google Scholar 

  • Meyers, C. M., van Woerkom, M., & Dries, N. (2013). Talent — innate or acquired? Theoretical considerations and their implications for talent management. Human Resource Management Review, 23(4), 305–321.

    Google Scholar 

  • Parker, S. C. (2006). Entrepreneurship, self-employment, and the labour market. In M. Casson, B. Yeung, A. Basu, & N. Wadeson (Eds.), Oxford handbook of entrepreneurship (pp. 435–460). Oxford: Oxford University Press.

    Google Scholar 

  • Parker, S. (2009). The economics of entrepreneurship. Cambridge: Cambridge University Press.

    Google Scholar 

  • Santoro, G., Ferraris, A., Giacosa, E., & Giovando, G. (2018). How SMEs engage in open innovation: a survey. Journal of the Knowledge Economy, 9(2), 561–574.

    Google Scholar 

  • Sartori, A. E. (2003). An estimator for some binary-outcome selection models without exclusion restrictions. Political Analysis, 11(2), 111–138.

    Google Scholar 

  • Sauvy, A. (1948). Social and economic consequences of the ageing of Western European populations. Population Studies, 2(1), 115–124.

    Google Scholar 

  • Schere, J. L. (1982). Tolerance of ambiguity as a discriminating variable between entrepreneurs and managers. Academy of Management Proceedings, (1), 404–408.

    Google Scholar 

  • Schumpeter, J. (1934). The theory of economic development. Cambridge: Harvard University Press.

    Google Scholar 

  • Shane, S. (2000). Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science, 11(4), 448–469.

    Google Scholar 

  • Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. The Academy of Management, 25(1), 217–226.

    Google Scholar 

  • van der Sluis, J., Van Praag, M., & Vijverberg, W. (2008). Education and entrepreneurship selection and performance: a review of the empirical literature. Journal of Economic Surveys, 22(5), 795–841.

    Google Scholar 

  • Tacken, M., Marcellini, F., Mollenkopf, H., Ruoppila, I., & Szeman, Z. (2005). Use and acceptance of new technology by older people: findings of the international MOBILATE survey: ‘enhancing mobility in later life’. Gerontechnology, 3(3), 126–137.

    Google Scholar 

  • Thébaud, S. (2010). Gender and entrepreneurship as a career choice: do self-assessments of ability matter? Social Psychology Quarterly, 73(3), 288–304.

    Google Scholar 

  • Van Praag, M., & Versloot, P. (2007). What is the value of entrepreneurship? A review of recent research. Small Business Economics, 29(4), 351–382.

    Google Scholar 

  • Verheul, I., Uhlaner, L., & Thurik, R. (2005). Business accomplishments, gender and entrepreneurial self-image. Journal of Business Venturing, 20(4), 483–518.

    Google Scholar 

  • Wainwright, T., & Kibler, E. (2014). Beyond financialization: older entrepreneurship and retirement planning. Journal of Economic Geography, 14(4), 849–864.

    Google Scholar 

  • Wong, P. K., Ho, Y. P., & Autio, E. (2005). Entrepreneurship, innovation and economic growth: evidence from GEM data. Small Business Economics, 24(3), 335–350.

  • van der Zwan, P., Thurik, R., Verheul, I., & Hessel, J. (2016). Factors influencing the entrepreneurial engagement of opportunity and necessity entrepreneurs. Eurasian Business Review, 6, 273–295.

    Google Scholar 

Download references

Funding

The research activity carried out by Gabriele Ruiu has been in part financed by the “Fondo per il finanziamento dei dipartimenti universitari di eccellenza” (Law nr. 232/2016).

Author information

Authors and Affiliations

  1. Department of Economics and Business, University of Sassari, Via Muroni 25, Sassari, Italy

    Gabriele Ruiu & Marco Breschi

Authors
  1. Gabriele Ruiu
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Marco Breschi
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Gabriele Ruiu.

Additional information

Publisher’s Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Ruiu, G., Breschi, M. The Effect of Aging on the Innovative Behavior of Entrepreneurs. J Knowl Econ 10, 1784–1807 (2019). https://doi.org/10.1007/s13132-019-00612-5

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s13132-019-00612-5

Keywords

Search

Navigation