Entrepreneurial Parents and Networks: Perfect Substitutes or Fickle Friends?

Parental influence on self-employment rates among their offspring has been the subject of a multitude of studies. Despite many theories on how parental self-employment translates into youth self-employment, researchers rarely tested its interaction with other drivers of self-employment such as networks. The following study investigates these effects, suggests an interpretation of the interaction and tests how robust both are against macro influences. Approach:This study analyzes parental and network influences on self-employment with an original dataset for 11 European countries gathered in 2016 by the collaborative research project CUPESSE. In order to avoid confounding effects, this study builds on theory of planned behavior and supports the notion of entrepreneurial intention as the best proxy for future entrepreneurial engagement. Because of its cross-country structure, macro effects can be tested. According to the structure of the dependent variable, the study applies logistic regression techniques with Stata to identify relevant effects. In order to test cross-level interactions in a non-linear analysis, the model relies on multiplicative effects and country dummies accounting for all level-2 variance. Moreover, Eurostat macro figures were included. Findings:This study finds that (1), having access to entrepreneurial networks can boost entrepreneurial intention even more than parental self-employment (2) having access to entrepreneurial networks and peer groups can substitute the parental effects in equivalent direction and size, and (3) the impact of the national rate of youth unemployment decreases network effects while parent effects are more robust. Research/practical implications:The results suggest that entrepreneurial peer groups are an equivalent substitute for parental self-employment that policy makers could rely on when they want to foster entrepreneurship. However, current entrepreneurial networks are less stable and robust than family effects in countries with higher youth unemployment. Here, policy interventions might be a promising path to generate such stable networks with entrepreneurial role models also during economic crises. Originality/value:This study contributes to the theoretical analysis of entrepreneurship in two ways: It compares parental effects with network effects along an existing framework and adds for the first time an interaction of intergenerational transmission with youth unemployment.