Determinants of Latent entrepreneurship

The determinants of latent entrepreneurship are extended with employment situations: self-employment, paid-employment and unemployment. Using Flash Eurobarometer no 283 direct and indirect effects of willingness to take risk, self-efficacy and internal locus of control on latent entrepreneurship and employment situation are investigated on. Using a four step method in determining mediating effects of these factors it was found that willingness to take risk, self-efficacy and internal locus underlie current employment situations, and through these situations influence a preference for self-employment (latent entrepreneurship). As extension, this research considers unemployment benefit (UB) generosity of a country as being of influence on latent entrepreneurship and investigates on its influence on employment situation and latent entrepreneurship. It was found that employment situation heavily influences the preference for self-employment. Using binary logistic and multinomial logistic models, direct (employment situation) and indirect effects (through employment situation) of, character trait variables (risk taking, self-efficacy, internal locus) and UB generosity on latent entrepreneurship are investigated on. Results show that willingness to take risk partially mediates a preference for self-employment through being more prevalent amongst the self-employed and unemployed compared to paid-employed individuals. Self-efficacy was found to mediate a preference for self-employment only through its association with being unemployed versus paid-employed. Internal locus mediates through being associated with self-employment and paid-employed, but differs in its effects when different models are used for interpretation. Willingness to take risk and self-efficacy are found to directly influence latent entrepreneurship while internal locus lacks significance in the full model (model 1). UB generosity of countries determine partly in what employment situation individuals are –generous UB system countries destimulate entrepreneurship-, also they determine partly whether individuals express a preference for self-employment –directly and indirectly-.