Start-up motivation and (in)voluntary exit

We investigate the role of an entrepreneur’s start-up motivation in determining the mode of entrepreneurial exit. A distinction is made between involuntary exit through business failure and voluntary exit through business sell-out or transfer. Regarding an entrepreneur’s start-up motivation, we include two measures distinguishing between opportunity and necessity motivated business owners. Internationally comparable data from 2009 for 35 countries containing more than 2,600 former business owners are used. We find some evidence that necessity business owners are more likely to exit through failure than opportunity business owners or business owners that are driven by a combination of opportunity and necessity reasons. We argue that necessity business owners have lower entrepreneurial ability than opportunity business owners and run lower quality businesses which increases their probability of failure versus sell-out. Entrepreneurial ability seems to play a role beyond the human capital aspects that are included in the model.