Opting out of Entrepreneurship by the Second Generation in Entrepreneur Families

Abstract

Research is rare on opting out of entrepreneurship by the second generation in business families. We theorize on why those who have the specific resources and adequate competencies for promising entrepreneurial careers, choose to opt out. We identify two sources of entrepreneur resource endowments for second generation entrepreneur potentials – (a) being born in a business community endows them network resources and (b) being born in a business family endows them business and family resources. We consider two sources of entrepreneur competence among those endowed – (a) business competence built by assisting in their family business as teenagers and (b) business competence built through formal education in business beyond their teenage years. Literature suggests that these four factors should help initiate entrepreneurial careers, but their relative and cumulative effect is not known. However, we find many in the second generation in business families not interested in an entrepreneurial career, even if it means taking charge and growing an ongoing family business. We theorize on why each of these factors individually and in specific combinations may result in the second generation opting out of promising entrepreneurial careers. We suggest remedial measures that may reduce opting out by high potential second generation entrepreneurs.