Abstract

Necessity entrepreneurship – the creation of firms out of unfavorable circumstances – is an increasingly important phenomenon due to the adverse labor market conditions stemming from the recent global crisis. Despite its importance, the existing literature has focused almost exclusively on opportunity-driven entrepreneurship. In this study, we set out to enhance knowledge of how the level of necessity experienced by a founder affects entrepreneurship. Specifically, we draw on organizational, sociological, and entrepreneurship theories to develop and empirically test a conceptual framework that predicts how, under the influence of increasing levels of necessity, a founder’s existing industry experience and the attractiveness of her home industry vis-à-vis external industries shape her industry choice and, thus, one of the most fundamental decisions in the creation of new organizations.

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