National Panel Study of U.S. Business Startups: Background and Methodology

NATIONAL PANEL STUDY OF U.S.
BUSINESS STARTUPS:1 BACKGROUND

AND METHODOLOGY
Paul D. Reynolds2
Where do new businesses come from? Few questions are as important in

modern life and for which so little is known. A research program focusing on
this issue, initiated in 1992, is now reaching maturity and will do much to
reduce ignorance about the firm start-up process. The following provides an
introduction to the phenomena and existing knowledge about the firm creation
process followed by a brief history of the current research program. The design
of this research program is reviewed, followed by a discussion of the data set
and its potential for analysis. The chapter concludes with an assessment of the
research program and its potential impact on public policy and scholarly
understanding of the entrepreneurial process. Selected details are provided in
the Appendices.
INTRODUCTION TO THE PHENOMENA: EMERGENCE

OF NEW ORGANIZATIONS
Nothing is more fundamental to modern societies than business organizations,
which provide the largest proportion of jobs and the vast majority of goods and
services consumed by the members of society. The origins of business firms has
always been important, but has received substantially more attention in the past
two decades. This followed the discovery of the critical role of new and
growing firms for economic growth and adaptation (Birch 1981; Haltiwanger &
Databases for the Study of Entrepreneurship, Volume 4, pages 153–227.

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153
154 PAUL D. REYNOLDS
Krizan, 1998) and the downsizing of firms across all advanced economies
(Loveman & Sengenberger, 1990).
It is obvious to anyone in modern societies that there is a constant churning
or turnover of business firms. More precise understanding, however, of exactly
how many firms exist as well as how many are created or disappear in any
given time period has turned out to be a major challenge. This challenge has
been met in the past decade in most advanced countries. It has been met in the
past several years in the United States. About 700,000 new firms with
employees were identified in the United States between 1994 and 1995 (Acs &
Armington, 1998), a firm birth rate of 12% on a base of 5,770,000 firms with
employees. If the same birth rate prevails for the 20 million business entities
without employees—mostly forms of self-employment, then another 2,400,000
new businesses can be expected for an annual total exceeding 3 million.
To give a sense of the scope of this phenomena, these 3 million new business
ventures is greater than the 2,362,000 marriages that occurred in the United
States in 1994 (Table 90, Statistical Abstract of the United States: 1996).
Hence, the annual number of new business entities, many of which are new
social systems, is substantial. New firm creation is not a subtle, obscure, or rare
event that should be difficult to observe. Almost any U.S. adult of working age
knows someone trying to start a new firm. Identifying a representative sample
of such phenomena, as will be seen, is another matter.
A. Existing Paradigms: Several approaches have been used to study business
start-ups or the entrepreneurial process. One is to track the context in which
new organizational listings are observed to explore how variations in context
may affect firm birth rates. A second is to emphasize retrospective accounts of
surviving firms. A third is to utilize large-scale longitudinal data sets on labor
force participation and adopt reports of self-employment as an indicator of
entrepreneurial behavior or firm creation. For different reasons, none provide a
detailed assessment of how new firms come into being.
There are three versions of the first approach, the ‘context affecting firm
birth variation’ paradigm. Market entry studies are well established in
economics, part of the study of industrial organization. The basic strategy is to
utilize a data set that provides detailed descriptions of the business entities,
generally establishments (locations where production takes place) rather than
firms (complete legal entities) in different economic or market sectors. For
example, manufacturing establishments might be classified in terms of the
specific type of product being manufactured. If access to a complete listing of
such firms is available at two points in time, new entries in the second listing
can be considered a ‘market entry’. Often, it is unknown if this is an
autonomous new start up, a corporate sponsored new venture, or even an
National Panel Study of U.S. Business Startups 155
existing activity that has changed its focus or product line. At the same time,
if some entities listed in the first list are missing in the second list, they can be
considered an ‘exit’. The next stage of the analysis is to consider the conditions
surrounding different entry rates and exit rates, perhaps expansion of demand,
barriers to entry – such as a high fixed capital cost, and the like. Comparisons
are made across market sectors, or economic sub-sectors. A systematic
difference in entry or exit rates between different markets provides opportuni-
ties for developing creative causal theories (Orr, 1974; Geroski, 1995).
A second research paradigm starts with the conceptualization of organiza-
tional populations borrowed from the study of biological populations. It is
assumed that when an appropriate opportunity – or niche – is present, people
will organize to create a new organization, particularly when it may perform a
valued social function. Research has emphasize specific types of organizations
– mortuaries, newspapers, telephone companies, labor unions, and the like –
and consists of using historical, archival records to create a count of the number
of organizations of a specific type present in a geographic area, such as a
country. By considering the changes in external conditions over time, factors
that affect the emergence of new organizations can be determined. Again, if
there are systematic patterns – such as an increase the total number of similar
organizations that precedes a decline in the appearance of new organizations –
then inferences are made about the processes that encourage or hinder new firm
births (Aldrich, 1990; Hannan & Freeman, 1989).
A third strategy is to use comparisons, at the same point in time, of
geographic regions. Again, the measures of firm births are new occurrences in
some type of firm registry. New firms birth rates may be based on either the
human population or population of existing firms. A set of harmonized studies
in various countries utilized a longitudinal, cross-regional analysis to explore
the effect of regional factors on variations in new firm birth rates (OECD, 1993;
Reynolds, Storey & Westhead, 1994; Reynolds, Miller & Maki, 1995). The
results of analyses in eight countries (France, Germany, Ireland, Italy, Japan,
Sweden, United Kingdom, United States) using a harmonized conceptual
scheme but a wide range of operational definitions was both successful and
remarkably consistent. Simple linear additive models were able to explain from
60 to 90% of the regional variance in firm birth rates. The same types of
independent variables were found to be important in all models, including
measures of growth in demand, large proportion of small firms in the
organizational population, diversity of economic structure, and the presence of
individuals suited to participation in a firm start-up.
All three of these strategies have been successful as research paradigms,
providing reliable relationships between contextual variation and variation in
firm birth rates. But there are major holes in the analysis, for they provide no
information about those responsible for creating a new market entry,
organizational type, or regional firm. Low barriers to market entry, resource
rich organizational niches, or the expansion of consumer demand do not create
new firms – people create new firms. This paradigm does not help identify the
people or describe the process that leads to a new firm birth and, eventually, a
new entry in a firm registry.
A second popular approach is to shift the emphasis to successful – surviving
or high growth – businesses. A journalist or scholar will identify a business,
preferable one that is well known or with a sexy new business plan, and explore
the features surrounding the start-up and growth of the business. Some may
focus on the business organization, as Chandler (1980) did in The Visible Hand
or others have done with start-up or growing organizations (Churchill & Lewis,
1983; Gartner, et al. 1989; Greiner, 1972). Still others may focus on the
individuals involved. The popular business media, magazines, books and
television shows, are replete with interviews or stories provided by business
persons that are asked to describe, retrospectively, how or why they established
a business. They never fail to provide an answer and are confidently loquacious
about those factors critical for their success. From the standpoint of a source of
reliable data, this is probably in the same category as asking one’s parents
‘Why did you get married?’ A candid, complete explanation is unlikely to be
provided.
A slightly different version of this strategy is widely used for studies of start-
ups, emphasizing those that have contacted assistance programs or participated
in workshops for business start-ups and the like. The central problems with this
strategy are several. First, the number of start-ups efforts that contact such
assistance programs is unknown. Second, the stage in the start-up process when
such contact is initiated is generally unknown. Third, there is no method for
comparing these individuals or start-up efforts with any type of comparison
group, one that may be used for determining if those seeking assistance are
unique. In short, this is an adequate procedure for describing those that are
seeking assistance, but cannot be a basis for extrapolation to the complete,
unknown population of start-up efforts.
A third approach, pursued by those that like large scale data sets, is to utilize
government data on reported ‘self-employment’ – taking the position that self-
employment is an appropriate measure of entrepreneurial behavior (Acs, et al,
1991; Evans & Leighton, 1989). This allows the testing of formal models on
data sets that often have tens of thousands of cases. The results, however, are
not very useful, and for several reasons. First, self-employment is a poor
indicator of firm creation. Existing studies of start-up efforts indicate that the
majority of those starting new firms are working full or part time or managing
another business while they get involved in the creation of a new, and different,
firm (Reynolds & White, 1997, pg. 97). None of these people would be
identified in a survey of labor participation where respondents must choose one
option to represent their current situation. Second, such a focus has led to some
rather unusual conclusions – quite discordant with most impressions of
entrepreneurs, including that they are ‘misfits cast off from wage work’ (Evans
& Leighton, 1989).
None of these research strategies get to the heart of the start up process. They
do not provide descriptions of those in the start-up process and, indeed, do not
provide a controlled comparison of those with start-up efforts that become
infant firms with those that abandon the start-up process. As a result, there are
few reliable descriptions of the individuals that start firms and the actions they
pursue to create a new firm. These research strategies cannot, by their very
nature, provide comparisons of those that complete the start-up process with an
infant firm and those that disengage before a firm is created. This project is
designed to fill this void.
C. Constituencies to be served: There are several important groups that
could benefit from enhanced understanding of how new businesses come into
being. First, knowledge of how the process works and what activities are more
effective or efficient can reduce the burden on those trying to start new
businesses – the nascent entrepreneurs themselves. Dissemination of this
information will, by necessity, be conducted through the existing educational
institutions and assistance programs, enhancing their effectiveness and
credibility.
Second, public policy makers, elected officials and career public admin-
istrators have a strong interest in improving national economic well-being and
reducing the cost of economic change. Their efforts should improve from
knowing more about the impact of infrastructure, context and assistance
programs on new firm creation.
Third, the scholarly and research community, particularly that sub-sector
emphasizing entrepreneurial phenomena, would substantially benefit from a
reliable description of the phenomena. It is much harder to create explanatory
theories when there is no precise description of the phenomena itself.
An example of such a continuing controversy centers on the exact shape of
the ‘hazard function’ for new firms. This curve represents the survival patterns
of infant firms following birth. Some analysis have supported the ‘liability of
newness’ argument, that indicates a declining risk of death as infant firms age.
The probability of ‘non survival’ is highest the day after the firm birth, and
declines thereafter (Stinchcombe, 1965; Carroll, 1983; Freeman, Carroll &
Hannan, 1983; Phillips & Kirchhoff, 1989). The alternative is the ‘liability of
adolescence’, where the risk of ‘non-survival’ is highest after a brief period
where they are very low, providing an inverted ‘U-shaped’ function (Ben-Ner,
1988; Bruderl & Schussler, 1990; Bruderl, Preisendorfer & Ziegler, 1992;
Finchman & Leventhal, 1991; Preisendorfer & Voss, 1990; Reynolds & Miller,
1992; Wagner, 1994). While both perspectives agree that there is dramatic drop
in firm deaths after 4–5 years, the differences in the first years after firm birth
is substantial. It is clear that this is related to a lack of consensus on what
constitutes a ‘firm birth’, for the different analyses have been based on
registries that use different criteria for incorporating a new listing in the data
set. There is, in other words, a lack of agreement or understanding on that stage
in the start-up process when a new firm is incorporated in these data sets. Only
systematic tracking of the start-up process from conception until the new entity
is listed in various data sets can resolve this issue. This is to be provided in the
project described below.
There are, in addition, other groups – potential employees, potential
investors, potential customers, potential suppliers and, in a sense, society at
large – that would receive indirect benefits from a more complete and precise
understanding of how new business organizations come into being.
The dissemination of the major results, however, is likely to be in the reverse
order. The scholarly community is most likely to be the first to become aware
of the project outcomes, followed by policy makers, and – after awareness
spreads among the educational community – to those directly involved in the
entrepreneurial process and the general public.
D. Rationale for the Research Program: The primary objective is to provide
a basic description of the firm start-up process, along with it most salient
features. A secondary objective is, however, to allow for tests of hypotheses
regarding those factors that may have an impact on different stages of the start-
up process. To facilitate discussion of the start-up process, it has been
convenient to conceptualize the entrepreneurial process as occurring within a
political and economic context, as indicated in Exhibit 1.
The process itself is considered to have four stages, with three transitions.
The first transition occurs when an individual, either on their own or
responding to an initiative of an existing firm, elects to pursue a firm start-
up. Becoming, if it is an independent start-up, a nascent entrepreneur [NE]. If
they are sponsored by an existing business, they can be considered a nascent
intrapreneur [NI]. Conception may be considered the beginning of this, the firm
gestation process. The second transition in the life course of the firm occurs
when the gestation process is complete, firm birth has occurred, and an infant
firm is in place as an operating business. For many in the start-up phase,
however, the next transition is to abandon the effort. The firm is, in a sense,
stillborn. The third transition for infant firms is a passage into adolescence, a
stage where survival is considered more certain and not a constant challenge.
A secondary feature of the third transition would the nature of the growth
trajectory of surviving new firms; a new firm pursing a high growth trajectory
may be considered to have a different character compared to those that are
‘persistent, stable survivors’.
Three of the critical features of the entrepreneurial process about which very
little is known are represented by question marks in Exhibit 1: ‘?a’ represents
the proportion of start-up that complete the process with the implementation of
an infant firm. ‘?b’ represents the proportion of start-ups that never complete
the process, although when they are abandoned is also a major issue on which
little is known. Finally, ‘?c’ represents the features of the gestation process
itself, both the length of time required to develop an infant firm and the
activities that take place.
The primary objective, then, of the research program is to provide
systematic, reliable data on the basic features of the entrepreneurial or start-up
process. This would include information on the nature and extent of variation
in the critical aspects of the start-up process: the proportion of the adult
population involved in firm conceptions, the activities that compose the start-up
process, the proportion of start-ups that complete the second transition to
become infant firms, and the survival and growth trajectories of the new firms.
The second objective, although equally important, would be to provide
reliable data on those factors or variables that would account for or explain or
predict the variation in these transitional events. These would include, but are
not limited to, the following categories:
• Economic context, including national conditions, local conditions, and

conditions in the economic sector or market of the new firm.
• Personal context, including work and family situations and responsibilities,
as well as the presence of supportive social networks for members of the
start-up team.
• Personal background and relevant experience, based on early family life,
educational or occupational training, or in specific economic or market
sectors for members of the start-up team.
• Personal pre-dispositions, either in terms of decision-making style, risk
preferences, desire for autonomy, personal aspirations, and the like for
members of the start-up team.
• Socio-demographic background – age, gender, race – of the members of the
start-up team.
• Nature and sequence of start-up activities pursued in the firm gestation

process.
• Nature of the markets, competition for the new firm, and the strategic focus.
• Access to and use of resources, financial and otherwise.
• Access to and use of programs designed to assist start-ups and new
businesses.
While assessing whether or not any of these topics or factors might affect the
start-up process is one thing, and much research in entrepreneurship has
emphasized one or two of the factors from this list. A measure of the relative
impact of these factors requires that data be assembled on all factors or
processes on the same start-up efforts. This then, was a major challenge in the
design of this project, collecting data on all of these topics from the same set
of respondents or the same set of start-up initiatives.
In a word, the research program is designed to provide a comprehensive
description of and the potential for explanation of the entrepreneurial process.
Understanding of the firm start-up process is currently too imprecise and
incomplete to generate focused hypotheses or formal theories. Indeed, the most
basic ‘testable hypotheses’ of the research program is determining the extent to
whether or not the conceptualization presented in Exhibit 1 is useful for
enhancing understanding of the firm creation process.
Based on these objectives, and the constituencies to be served by the results,
the final research design should have a number of features. First, a technique
for developing systematic descriptions of the start-up process from the very
beginning – and the beginning is assumed to occur when somebody decides to
implement a new firm. Second, it should provide a representative sample of the
start-up efforts and their outcomes, so that estimates for the entire population
– of people or firms – would be possible. Third, as the creation of a new firm
appears to be very complex and multi-faceted – with many small factors having
direct and interactive influences – it is important that all major perspectives be
represented in the data collection. This is tantamount to trying to measure a
wide range of potential independent variables. Fourth, as the focus is on the
process of implementing a new business, the project would need to be designed
as a longitudinal or panel study. Fifth, as the resulting data set is likely to be
complex, a wide range of scholarly talents and perspectives should be involved
in the research design and analysis.
Fortunately, as discussed below, a diverse set of skills and perspectives were
involved in the design of the initial projects. Involvement of experienced
researchers in creating the research design not only ensures that major issues
are not overlooked, but that the research program can withstand the scrutiny of
the scholarly community. Research programs considered scientifically accept-

able are much more likely to be adopted as unbiased and legitimate by policy
makers.
HISTORY OF THE NASCENT ENTREPRENEUR

RESEARCH PROGRAM
For this research question:
What are the underlying processes and factors that lead individuals to pursue the creation
of a new business firm?
The optimal strategy seems quite straightforward. Locate individuals involved

in the start-up process and find out as much as possible about their situation and
how they create a new business. Periodic follow-ups would provide information
on the outcome of their efforts. While simple in concept, implementation is
another matter. The major obstacle was the cost of developing a representative
sample of individuals involved in the start-up process.
The first application of the research procedure was with the adult population
of Wisconsin in 1992 and 1993 (Reynolds & White, 1993, 1997). A second
application involved the purchase of time in the monthly Survey of Consumer
Attitudes (SCA) completed by the University of Michigan Institute for Social
Research for October and November in 1993 (Curtin, 1982; Reynolds, 1997).
These two studies provided similar results regarding prevalence rates (about
4% were identified as nascent entrepreneurs), demonstrated the technical
feasibility of the research protocol, and indicated that costs would be high but
affordable.
The cost of locating a cohort, or sample, of nascent entrepreneurs is directly
related to their prevalence in the population. The cost of identifying a typical
adult is constant with a given sampling procedure. For illustration, assume a
cost of $5.00 for each adult located at random. If nascent entrepreneurs are 1%
of the adult population, then 100 random contacts would be required to locate
a single suitable respondent. Each sample point would then cost $500. A cohort
of 100 would cost a total of $50,000 – before they were asked a single question
about their start-up activities. There are only two ways that this cost would be
reduced, one is to reduce the cost of the screening, and the other would be if
the actual prevalence rate were higher. Both have occurred, but in ways not
anticipated in the initial planning for the research program.
The first effort to locate a random sample of nascent entrepreneurs involved
an application of multiplicative sampling. Developed with Charles Palit, of the
University of Wisconsin Survey Research Laboratory, this application required
a systematic procedure to identify the social network of a representative sample

of adults (Sudman, Sirken & Cowan, 1988; Palit & Reynolds, 1993). This
involved establishing a list of each respondent’s parents, siblings, adult
children, co-workers, and significant other (usually a spouse) during the
interview. The respondent is then asked if any of these people are currently
involved in a start-up effort. If they are, the respondent is asked for details so
they may be contacted for a more complete interview.
While this may appear similar to snowball sampling, it differs in one
important respect. When a person nominated by the respondent as a nascent
entrepreneur is interviewed, they are asked questions that will make it possible
to determine the probability they would be nominated by more than one person
in the initial sample. This allows the use of the information from the procedure
to compute the probability with which nascent entrepreneurs occur in the total
population.
While the implementation of the procedure involved the creation of
relatively complete and very useful descriptions of the respondent’s social
networks, it was abandoned for several reasons. Most important, in less than
40% of the cases was a person in a social network nominated as a nascent
entrepreneur actually interviewed. In 20% of the cases the original respondent
was not able to provide the full name and phone number for the nominated
nascent entrepreneur. In 40% of the cases, the original respondent refused to
provide the full name and location information for the nominated nascent
entrepreneurs. They were, after all, talking to a stranger on the phone and may
not have fully believed that the interview was related to research. A pretest
effort completed in 1997 using one household member to nominate others in
the household for a nascent entrepreneur interview also lead to very poor
results; interviews were completed with very few, less than 10%, of the within-
household nominees.
Two events have led to a change in procedures. First, prevalence rates were
four to eight times higher than the 1–2% initially expected. Second, it was
possible to locate a commercial marketing research firm that could include two
appropriate screening questions for $1.60 per adult, or $1,600 per 1,000
individuals screened. Assuming a 4% prevalence rate, this reduced the cost of
identifying nascent entrepreneurs to about $40 apiece. This changed the
situation with regards to ‘costs of locating’ nascent entrepreneurs and is the
procedure currently being employed. It is discussed in more detail below.
Sponsorship: Even with one in twenty-five adults reporting participation in
new firm start-ups, the direct data collection costs of a longitudinal project with
a representative sample of nascent entrepreneurs in the hundreds would clearly
cost hundreds of thousands of dollars. The initial Wisconsin project was
supported by the Wisconsin Housing and Economic Development Authority as

part of a larger project, and the small pretest in Fall 1993 was supported by
internal development funds of the University of Michigan Institute for Social
Research and a small grant from the Rockefeller Foundation. Two proposals for
developing a national panel study submitted to a federal agency were not
funded, but preparation of the proposals helped to crystallize the issues and
design considerations in development of the research program.
As knowledge of the project and the research design spread through the
entrepreneurial research community, the idea of developing a collaborative
project emerged. This was presented in an open meeting conducted by Nancy
Carter, Bill Gartner, and Paul Reynolds at the April 1995 Babson College-
Kauffman Foundation Entrepreneurship Research Conference held at the
London Business School. Several proposals were developed and a second
organizational meeting was held at the Chicago O’Hara airport hotel in
November 1995. Based on an estimated minimum cost of $400,000, it was
agreed that the project could move forward if 20 member units each pledged to
contribute $20,000, to be paid as $10,000 per year for each of two years. It was
further agreed that if 20 units were able to make first payments of $10,000, the
project could go forward. The funds were received and held by Babson
College, selected as the host institution, to be returned if the minimum was not
achieved. The initial $200,000 was assembled within 6 months and the research
program was able to move forward.
The result was the creation of the Entrepreneurial Research Consortium
(ERC), which currently involves 32 member units that are sponsoring 111
individuals, listed in Appendix 1. (Two additional units joined during the initial
year but dropped out before making their second payment.) The number of
member units grows slowly, but changes among the sponsored teams occur
constantly. Most member units has contributed $20,000 toward the cost of data
collection ($10,000 for seven foreign affiliates), for a total of $570,000. [These
units voted to provide member unit status to the university responsible for
obtaining the National Science Foundation Grant for an oversample of minority
nascent entrepreneurs.] The funds are supervised by Babson College, the host
institution for the project and about 80% have been used to cover the direct
costs of data collection.
The organizational structure of the ERC is considerable, and specified in a
Memorandum of Agreement signed by all member units; each individual
participant has signed a statement – the ‘loyalty oath’ – agreeing to follow the
rules adopted by the group. The affairs of the group are defined and data
collection supervised by a seven person elected committee.3 On important
issues – such as the final approval of interview schedules – all member units
provide a written vote. The development of the interview schedules has been
coordinated through four design team, one each for person, women and
minorities, organizational and strategy, and infrastructure and government
policy.4
While all data is provided to all sponsored individuals, an elaborate
procedure has been implemented to allocate research topics. This represents a
modification of that adopted by another research consortium, Cooperative
Regional Project: NE–167R (Heck, et al. 1999). Teams of sponsored
researchers submit proposals for analysis to the executive committee. Once
approved, they receive a one year Preferential Right to Scholarly Analysis
(PRSA) to analyze, present, and publish on that topic. Other members are
expected to respect these allocations and emphasize their own PRSAs. Over 30
have been awarded throughout the ERC, and more are expected in the future.
All data is eventually expected to be placed in a public archive, but the current
procedures provide those that designed and funded the project a first
opportunity for analysis.
Based on all prior studies, it was clear that one-third of a random sample of
nascent entrepreneurs would be women. Hence, a proposal to supplement the
nascent entrepreneur sample was submitted to the National Science Foundation
(Carter, et al. 1998) and funding was received to double the number of women
nascent entrepreneurs and cover the cost of a 24 month follow-up for the entire
sample. All procedures are identical for the two projects in terms of data
collection. All data from the female over-sample have been combined with all
other data and distributed to all sponsored ERC participants for analysis.
The preliminary screening was completed over 8 months. After 10,000
screening interviews were complete a preliminary assessment indicated that the
situation of Blacks and Hispanics were quite distinctive, not only did Blacks
have a much higher rate of participation than whites, but the contextual and
personal background factors among whites, Blacks, and Hispanics seemed to
be very different. Based on these findings, a second proposal (Greene, et al.
1999) was prepared for the National Science Foundation to sponsor an over-
sample of Blacks and Hispanics, using the same screening and interview
procedures employed with the main sample. This was subsequently funded and
the additional data collection was implemented in September 1999. These data
files, when assembled, will be added to the existing data set and distributed to
all sponsored ERC participants.
Finally, 10 of the ERC member units are located outside the United States
(Australia, Canada – two units, Finland, Germany, Greece, Netherlands,
Norway, Sweden, and the United Kingdom). Harmonized projects are
underway in five countries [Finland, Netherlands, Norway, Sweden, and the
United States] and in development in the other four. An independent effort has
been established in Argentina (Rearte, et al. 1998). Participation in the ERC has
provided the member units with full access to all pretest data, research
procedures, operational information, and interview schedules for nascent
entrepreneurs, comparison group individuals, and follow-up interviews.
THE RESEARCH PROCEDURE

The research design has two basic features, (1) the procedure for identifying
and interviewing nascent entrepreneurs and a comparison group and (2) the
content of the interviews. The interview schedules, developed with the
assistance of the design teams, are summarized in Appendices 2 and 3. The
design of the procedures and the selection of the respondents are presented
below.
A. Research Design: The research design for the 1998–99 National Panel
Study of U.S. Business Start-Ups is presented in Exhibit 2. It has three
components and reflects data collection from two types of respondents. The
first stage involves large-scale screening to create two samples representative of
the national population of adults, those 18 years old and older. First, a sample
of those involved in attempting to start a new business was identified. These are
either autonomous start-ups, referred to as nascent entrepreneurs [NEs], or
sponsored by an existing firm, referred to as nascent intrapreneurs [NIs].
Second, a representative sample of typical adults to be used as the comparison
group [CG]. Both types must meet certain criteria, the most important being a
willingness to participate. Once the screening procedures are completed, the
second stage of data collection involves detailed phone interviews followed by
completion of self-administered questionnaires mailed to the respondents. The
third stage is the follow-up phone and mail interviews completed with nascent
entrepreneurs to determine the outcome of their efforts to implement a new
firm. The initial design included plans for 12 and 24-month follow-up
interviews. As additional funding becomes available, it is expected that further
follow-ups will be completed.
This design involved resolving a number of technical issues and optimizing
a number of desirable, though often incompatible, features. Among these issues
were choices between the sample size versus the amount of information
assembled from each respondent; the scope of information to be included in the
interviews versus the desire to keep respondents involved over multiple data
collection activities; which type of items were best suited for which type of
interview, phone or self-administered; and the simplicity of the interview items
versus the complexity of the research concepts.
Both the cost structure and the availability of funds varied during the
development of the final research design. Constant adjustments were made in
the sample sizes, data collection procedures, and number of follow-up
interviews. First priority was ensuring that the total amount of funds could
cover all the basic elements, screening, initial detailed data collection and
follow-up data collection. Second, there is the basic trade-off between the size
of the sample and the amount of information obtained from each respondent.
In this project, identifying a suitable nascent entrepreneur cost about $40,
initial phone interviews cost about $180 per respondent, and the initial mail
interview about $200. Each follow-up data collection on each nascent
entrepreneur was projected to cost about $100, or $200 for two follow-up
interviews. Hence, the total cost for each nascent entrepreneur that participants
in all stages of the data collection is expected to cost more than $600. For this
reason, great care was taken in assessing a potential nascent entrepreneur
before they were included in the cohort.
There is, of course, no one or correct or single best solution to this
optimization problem. The design of this research program was the result of
both technical issues and the need to provide data for use by over 100 scholars
and researchers. A political process led to an acceptable solution for this group
of scholars. Another research team may have developed another solution.
The most important participants in the research were the nascent entrepre-
neurs. They were to be asked to participate in annual interviews for at least
three years, perhaps longer. The central dilemma becomes one of trying to
obtain enough information for useful analysis, but not so much that they
withdrew from the study. Respondent ‘fatigue’ – or willingness to endure long
interviews – is a constant concern. When a great deal of material is required for
research objectives, there are several ways to reduce ‘perceived’ respondent
burden. First, it is important to have wording and item flow designed to
minimize confusion and uncertainty for the respondent. A great deal of pre-
testing was completed to achieve this. Second, it helps if the subject matter is
of interest to the respondents; this certainly was the case in this project, and
accounts for the long phone interviews, which averaged 60 minutes. Third,
breaking the material into two parts, phone and mail, helped a great deal to
make participation less onerous. On the other hand, not all respondents will
return the mail questionnaire. Scholars expecting to do the analysis of the mail
questionnaire data will have fewer cases for analysis; a point not lost on this
subset of ERC participants. Furthermore, many of the topics were best suited
to phone interviews or self-administered questionnaires. Attitude or personality
item inventories – which consist of a number of short items with common
response alternatives – are fast and easy to answer in a self-administered
questionnaire, but require long and boring repetition in a phone interview.

Conversely, sensitive questions about household income or net worth are more
likely to be answered at the completion of a personal exchange where good
rapport has developed between the interviewer and the respondent.
Many ideas widely accepted as affecting those starting new firms – risk
tolerance, competitive strategy, analysis of alternative work options – are
discussed with little confusion in the research community. It is another matter
to get clear reactions from ordinary people, most of who have not completed
college. It is a basic requirement that the interviewers must be able to
understand the items in the phone interview. If the interviewers cannot interpret
the material for the respondents, then it is not possible to have confidence that
the respondents understood the issues associated with the items. For example,
there was a particular problem in simplifying the concept of household net
worth to the point that interviewers were comfortable explaining the idea to
respondents. Most of these issues were overcome through extensive pre-testing
and consultation with interviewers; they often provide substantial enhance-
ments and clarifications of the interview schedules.
The research procedure involved the national screening, the initial round of
data collection through phone and mail interviews, and the follow-up
interviews. After these elements are presented, there is a discussion of the
operational features of the data collection procedure and a presentation of the
procedure used to development respondent weights, critical for providing
estimates of population values and tests of statistical significance.
B. National Screening: National screening of the adult population was
completed by a commercial market research firm (TeleNation Program, Market
Facts, Inc.; Arlington Heights, IL) that, as of 1999, draws three random samples
of 1,000 adults each week in the contiguous 48 states and the District of
Columbia. Random digit dial sampling procedures (which avoid the problems
of high percentages of households with unlisted phones) are used to locate
households where the first individual 18 and older that will complete the phone
interview is accepted as a respondent. Quota sampling is used to ensure that
half of each sample are men and the other half women. Each sample is
completed in a three-day period with three-call criteria (initial call and two call-
backs). However, up to 2% of the respondents are called from 4–9 times to
complete an interview. The interviews are controlled to be less than 30 minutes
long to minimize mid-interview terminations.
For locating eligible nascent entrepreneurs, an equal number of samples
were screened on weekdays (Monday, Tuesday, and Wednesday) and weekends
(Friday, Saturday, and Sunday). The yield of eligible nascent entrepreneurs was
actually about 0.5% higher for the weekend samples. In the middle of questions
about marketing issues and consumer preferences, two items were inserted to
determine if a respondent might qualify as a nascent entrepreneur.
• Are you, alone or with others, now trying to start a new business?
• Are you, alone or with others, now starting a new business or new venture for
your employer? An effort that is part of your job assignment?
Those that answered yes to either (6.1% to the first and 2.8% to the second) or
both (1.2%) of these items are considered candidates for the nascent
entrepreneur interview if they meet three criteria:
• They expect to be owners or part owners of the new firm.
• They have been active in trying to start the new firm in the past 12 months.
• The effort is still in the start-up or gestation phase and is NOT an infant
firm.
The first two criteria are included as part of the commercial marketing
interview procedure. The third criteria is incorporated in the next phase of the
data collection.
Those that expect to be owners of the new firm and have been active are
invited to participate in ‘a national study of new businesses being conducted
through the U. of Wisconsin’ and told a cash payment is to be provided. About
87% of those that meet these criteria provide their first name. Their first name,
along with their phone number, is then provided to the University of Wisconsin
Survey Research Laboratory in Madison, Wisconsin, responsible for the
remainder of the data collection.
A similar procedure is used to identify candidates for the comparison group,
except that all respondents in the sample are offered a chance to participate in
a ‘study of the work and career patterns of all Americans, including those not
currently working’. Again, a cash payment is mentioned as an inducement. In
this case, 62% agree to provide their first name, and it is provided, along with
the phone number, to the University of Wisconsin Survey Research Labo-
ratory.
In addition to providing candidates for the nascent entrepreneur cohort and
the comparison group, the resulting data set includes basic socio-demographic
information on the respondent and their household as well as the county and
state in which the phone was located. Those screened but not qualifying as
participating in start-ups are used in computing the population prevalence rates,
a ‘screening comparison group’ of about 30,000 individuals.
C. Initial Detailed Interviews: Detailed data collection covers a wide range
of topics in phone and mail interviews outlined in Appendix 2. The names and
address of potential candidates for the nascent entrepreneur interview are
relayed to the University of Wisconsin Survey Research Laboratory. The

facility and procedures are discussed in more detail in Appendix 4. They are
then assigned for a phone interview. If the respondent is involved in several
start-up efforts, they are asked to focus on only the most recent start-up effort.
[Up to one-third will report simultaneous participation in several start-ups.]
The third criteria is reflected in a series of four questions to determine the
following:
• Has the start-up has a positive monthly cash flow that covers expenses and
the owner-manager salaries for more than three months?
If the answer is yes, the activity is considered an infant business and not a start-
up effort. In these cases the respondent is thanked for their time and sent, since
this takes less than 5 minutes on the phone, a token payment of $5.00 and
dropped from the study. Approximately one-fourth [27%] of the respondents
are dropped at this stage as too far advanced to be considered in the start-up or
gestation phase of the entrepreneurial process. This represents the ambiguity
associated with the phrase ‘start-up business’.
Among the remaining respondents, it is not possible to locate and contact
about 7%. Another 20% of the remaining group will not or cannot complete the
phone interview. Hence, the response rate is 80% of those that can be contacted
and are eligible or 74% of those that may be eligible, whether or not they are
contacted. The complete phone interview takes an average of 60 minutes to
complete, with a range of from 35 to 90 minutes. At the completion of the
interview, the respondents are sent a check for $25.
A similar procedure is followed with the comparison group, except that only
a randomly selected subset of respondents is taken from those that volunteered
during the national screening. This phone interview takes about 25 minutes to
complete and respondents are also sent a check for $25.
At the completion of the phone interview, all respondents – NE and CG – are
asked if they would be willing to complete a brief (12 page or 10 page) self-
administered questionnaire for a second payment of $25. [The
self-administered questionnaire was actually sent in the same envelope with the
check for completing the phone interview.] Ninety-eight percent agreed to
consider completing the self-administered questionnaire. The procedures
employed to gain cooperation on this phase are outlined in Appendix 5. After
repeated post-card reminders, mailings, and phone calls, 72% of the nascent
entrepreneur respondents returned the mail questionnaire and 79% of the
comparison group, for an overall return rate of 73%. These follow-up calls
were terminated 240 days after the completion of the phone interviews when it
was discovered that those that returned the mail questionnaire tended to do so
within 40–50 days; 75% are received within two months.
D. Follow-up Data Collection One critical dependent variable in the study
is the outcome of the start-up process. Being able to contact a willing
respondent 12 months after the first interview is an important issue. Several
features to facilitate cooperation were included in the study. At the completion
of the phone interview, each nascent entrepreneur is asked for the name and
phone number of a ‘friend or relative that could help us locate you’. In addition,
a ‘contact post card’ is sent to all nascent entrepreneurs 6 months following
their first interview. Upon receipt, the respondent is asked to confirm their
present mailing address and telephone number. If these have changed, they are
asked to provide the new information on the ‘mail-back’ portion of the two-part
post card.
The follow-up data collection adopted by the Entrepreneurial Research
Consortium is summarized in Appendix 3. Again, there are both phone and
mail components. Most critical is the single item that specifies the current
status of the start-up effort. Previous studies indicate that four alternatives are
commonly reported (Carter, et al. 1996; Reynolds & White, 1997, pg. 68):
• Active start-up, continued efforts to implement a new firm.
• Dormant start-up, no current efforts underway, but start-up has not been
abandoned.
• Abandoned start-up, not successful and no further efforts are expected.
• Going concern, the start-up has become an infant business.
A different set of questions is asked depending upon the current status of the
start-up effort. All respondents, however, received the same self-administered
mail questionnaire, which is a reduced form of the questionnaire used in the
initial data collection.
Two other issues complicate the follow-up interview.5 First, a small
proportion of start-up efforts change focus, they shift the type of economic
activity being pursued. This is, however, relatively easy to accommodate in the
follow-up phone interview.
But there are cases, among that half of the start-up efforts that are a team
initiative, when the original respondent is no longer involved in the start-up but
others on the team are still working on creating a business, sometimes with
success. This occurrence reflects a major conceptual issue for the project,
whether it is the study of (a) individuals trying to start firms or (b) firm start-
ups, located by sampling individuals. [The average team size is slightly more
than 2.] The current procedure is to ask the respondent for the name and phone
number of a current member of the start-up team so that information on the firm
may be obtained from an active participant. The success of this strategy for
U.S. respondents has yet to be determined.
E. Operational Issues and Respondent Cooperation No data set is perfect,
but some are more complete than others. Completeness reflects the cooperation
of the respondents in terms of participation in the project as well as cooperation
during the interview procedure. Because of the need to collect data over an
extended period of follow-ups, a high level of respondent trust and cooperation
is desirable. This seems to have occurred in this project.
The basic features of the respondent processing mechanism, along with
indicators of respondent cooperation, are presented in Table 1. The first column
represents the results for nascent entrepreneurs, the second for the comparison
group. The first section indicates the total counts of individuals involved at the
different stages of the data collection process, from the thousands involved in
the national screening to the hundreds completing and returning the mail
questionnaire. This gives some idea of the scope of the challenge of keeping
track of every individual involved, whether or not they are in the full data set.
The second section summarizes the level of cooperation at the different
stages of the project. Potential nascent entrepreneurs are more interested in
volunteering for the project than those in the comparison group, 87% versus
62% volunteer, but those in the comparison group are more likely to complete
all aspects of the data collection procedure. Quite simply, the reduced
cooperation from the nascent entrepreneurs reflects the severe time pressures
on those trying to start new firms, which are extreme, compared to those in the
comparison group.
The time and effort required to obtain completed phone interviews is
indicated by the time lags between the initial screening and the phone
interview, which average 51 and 62 days, with a maximum of 250 days. It is
also reflected in the lag between completion of the phone interview and receipt
of the mail questionnaire, which averages 51 and 37 days, with a maximum of
337 days. Further, the number of contacts required to obtain the phone
interviews averages 8 for nascent entrepreneurs and 5 for the comparison
group, with a maximum of 74. Twenty-five percent of the nascent entrepreneur
phone interviews required more than 9 calls and 25% of the comparison group
phone interviews required more than 7 calls.
Reactions of the respondents are measured in several ways. Nascent
entrepreneurs were asked, at the end of the phone interview, how the
experience affected their interest in starting a new firm. As shown in Table 1,
59% said it increased their interest, 39% said it had no effect, and 1.2%, 8 out
of 669, indicated that it reduced their interest in starting a new firm. In fact, the
positive effect may cause some problems, for some may claim that
Table 1. Indicators of Respondent Cooperation
Nascent Comparison
Entrepreneurs Group
Respondent Processing
Initial national screening: Total respondents contacted 31,261 2,010
Respondents eligible to participate in detailed interviews 2,024 2,010
Volunteered to participate in interviews 1,752 1,242
Selected to participate in detailed interviews* 1,163 275
Eligible to participate in detailed interviews 932 256
Completed detailed phone interview 669 223
Completed detailed mail questionnaire 482 176
Respondent participation/Response rates

Agree to participate in main study during the national screening 87% 62%
interview
Percent eligible respondents completing phone interview 72% 87%
Percentage willing to complete mail questionnaire 98% 98%
Percentage phone completes returning mail questionnaire 72% 79%
Time, effort required to complete data collection:

Days: Screening interview to phone interview completion
Average 51 62
75 percentile 65 72
Maximum 250 96
Contacts initiated: To phone interview completion
Average 8 5
75 percentile 9 7
Maximum 74 31
Days: Phone interview completed to mail questionnaire
received:
Average 51 37
75 percentile 55 44
Maximum 337 136
Nascent entrepreneur reaction to phone interview

Percentage Indicating Phone interview:
Increased interest in starting a business 59.4% N/A
No effect or not sure of effect 39.4% N/A
Reduced interest in starting a business 1.2% N/A
Table 1. Continued.
Nascent Comparison
Entrepreneurs Group
Respondent completion of items

Percent completing 5% sample of mail questionnaire items 98% 98%
Completion of household financial items in phone interview:
Household income estimate, ratio value 90% 92%
Household income estimate, ratio or categorical value 97% 98%
Household net worth estimate, ratio value 78% 80%
Household net worth estimate, ratio or categorical value 95% 98%
*Cost restrictions prevented all eligible individuals from being processed for detailed phone
interviews and mail questionnaires. Random procedures selected those to be approached for
detailed data collection.
participation in the project may increase interest and, because of the content of
the interview schedules, business knowledge of the nascent entrepreneur
participants. This may improve their chances for business success. In a sense,
the Heisenberg effect in research, that collecting data from a phenomena takes
energy from the process under study, may be offset by the Hawthorne effect,
that a known research focus on work activity may lead to higher levels of work
productivity.
A random sample of 5% of the mail questionnaire items (17 in the nascent
entrepreneur questionnaire, 15 in the comparison group questionnaire)
indicates that 98% of the respondents completed the items. The mail
questionnaires that are returned are almost always complete.
The most difficult issue on which to get responses in survey research are
details regarding household financial status. It is easier to get candid responses
about drug use, deviant or extra-martial sexual behavior, cheating on income
tax returns, and almost any other personal activity. The completion rates for
items regarding household income and net worth in the phone interview are
presented at the bottom of Table 1. Over 95% of the nascent entrepreneurs have
provided information on both items; 98% of the comparison group have
provided the requested information. In terms of respondent cooperation in
survey research in the United States at the end of the twentieth century – this
is as good as it gets!
Why are the response rates and interview schedule completion rates so high?
A great deal of effort, involving the interviews themselves, was devoted to
modifying and adjusting the interview schedules so that the entire interviewing
staff felt comfortable with the project and the procedures, as reflected in the
descriptions in Appendix 4 and 5. Their commitment to the project and
confidence in the interview procedure is transmitted to the respondent who, in
turn, reciprocates with cooperation and trust. This is, obviously, not a trivial
accomplish, and reflects the sustained dedication of the University of
Wisconsin Survey Research Laboratory staff.
F. Sampling Procedure and Computation of Respondent Weights The target
population for the Nascent Entrepreneur survey is a relatively rare sub-
population of adults in the U.S., from four to six percent of the U.S. adult
population. To find one eligible respondent, from 15 to 25 adults in the general
population must be screened. Consequently the study design called for large
scale screening of U.S. adults to find eligible respondents.
The initial pilot studies integrated the screening for and actual data collection
from eligible respondents. The cost of completing an interview with an eligible
respondent was quite high, primarily due to the cost of locating a national
Random Digit Dial [RDD] sample of households for a single study. Efforts to
offset these costs by expanding the procedure through household based
multiplicative sampling, where all adults in each household would be screened
and interviewed, were not successful (Palit & Reynolds, 1993). Based on these
pilot study outcomes and cost structures, the final design called for the
selection of one respondent from each sample housing unit. A further reduction
in costs was obtained by incorporating the initial screening phase into a large-
scale omnibus survey. The final selection designs were as follows.
Nascent Entrepreneur Selection:
Phase I
1. Select a random digit dial [RDD] sample of telephone numbers
2. Screen these numbers to locate Telephone Housing Units
3. Ask pre-screen questions to locate potential eligible respondents
4. Obtain an Identification tag (usually a first name) for the potential
eligible respondent
5. Pass the persons qualified by the pre-screen to the next phase.
Phase II
1. Employ additional screening criteria to exclude ineligible respon-
dents
2. Pass qualified/eligible persons on to the next phase.
Phase III
1. Secure a detailed phone interview with the eligible respondent.
2. Secure a completed mail questionnaire from each eligible respon-
dent.
Comparison Group Selection:

Phase I
1. Select a random digit dial [RDD] sample of telephone numbers
2. Screen these numbers to locate Telephone Housing Units
3. Ask all respondents to participate in the project
4. Obtain an Identification tag (usually a first name) for volunteers
5. Pass the persons qualified by the pre-screen to the next phase.
Phase II
1. Randomly select a sub-sample for the comparison group inter-
views.
Phase III
1. Secure a detailed interview with the eligible respondent.
2. Secure a completed mail questionnaire from each eligible
respondent.
Utilizing this design the cost of locating an eligible nascent entrepreneur
respondent was reduced to 10% of the single purpose, national screening/
household based multiplicative sampling design.
Omnibus National Survey Sampling Design: Market Facts completes several
national surveys (TeleNation Surveys) of the adult population of the contiguous
United States each week. Each survey uses a single stage random digit dial
(RDD) technique to select a sample from all available residential telephone
numbers in the contagious United States. A minimum of 1,000 interviews with
adults are completed with adults 18 years of age or older; 500 male and 500
female. Each survey is conducted over a 3-day period. Up to three attempts are
made on the selected telephone numbers.
The TeleNation data is provided with post-stratification weights for each
respondent based on estimates from the U.S. Census Bureau’s Current
Population Survey. The post-stratification scheme is based on gender, age,
household income, and the four National Census Regions [Northeast, South,
Midwest, and West]. The scheme produces a total of 144 cells for weighting
adjustments.
Sub-samples weighting calculations: Because the sample size for the
entrepreneurial study is somewhat smaller than the TeleNation Sample, and
because small cell size in post-stratification tends to increase rather than
decrease variance, the TeleNation post-stratification scheme is modified to
reduce the number of cells from 144 to 32. This is accomplished by retaining
all post-stratification variables but reducing the number of intervals used for
each. This modified weight is a precursor to the final weight.
For the comparison group [CG] sample the final weight is the modified
weight adjusted for the second phase sampling rate and response rate,
specifically:
CG Weight = ((100) (Initial Weight))/((sub-sampling rate for comparison
group) (CG response rate))
A similar adjustment is used for the nascent entrepreneur [NE] sample. Here
the modified weight is adjusted for the non-response in the second phase of
data collection and for the differential selection probabilities used for males
and females. In one-half of the screening waves, only female nascent
entrepreneurs were selected for detailed interviews. Each TeleNation national
survey is counted as an independent replicate for the entrepreneurial sample.
The weight for the entrepreneurial sample is:
NE Weight = ((100) (Initial Weight)
(Female adjustment))/(NE response rate)
Female adjustment:
Female respondent = 1
Male respondent = (number of replicates used for females/number of
replicates used for males)
Because females were sampled from all omnibus screening replicates, and
males from approximately one half, this increases the weight of male
respondents relative to female respondents. For all respondents, those in cells
with lower response rates are assigned larger weights.
Final adjustments to weights: This resulted in Four different weights were
calculated and attached to the respective records:
• A weight for the initial screening.
• A weight for nascent entrepreneurs identified in the initial screening.
• A weight for the completed phone interviews.
• A weight for the completed mail questionnaires.
All weights were adjusted such that the sum of all weights equaled the total
number of respondents in the sample. Use of these weights for each respondent
in the sample would, assuming a negligible number of missing values on the
relevant item, provide for (1) calculation of appropriate confidence intervals for
extrapolation to population values and (2) appropriate sample sizes in tests of
statistical significance involving intra-sample comparisons.
Examples of the Effect of Weights: The effects of the use of weights can be
illustrated through comparisons of the use of alternative weights on
descriptions of the basic features of the respondents, age, gender, and ethnic
identity.
Four different presentations are provided in Table 2. Four sets of columns
represent four different sets of respondents: (1) the total sample screened to
locate nascent entrepreneurs, (2) those identified as meeting two of the criteria
for nascent entrepreneurs, (3) those completing the nascent entrepreneur phone
interview, and (4) those returning the nascent entrepreneur mail questionnaire.
The percentage of men and women in five age categories are presented twice,
without and with weights, in two sets of rows.
As can be seen in Table 2, the effects of weights are small on the data from
the total sample in the first two sets of columns. The effect is, however,
substantial for proportion of female nascent entrepreneurs in the right two sets
of columns. Because of the oversample of female nascent entrepreneurs, they
were approximately one-half of all nascent entrepreneurs with complete data;
51.1% of those completing phone interviews and 53.2% of those returning mail
questionnaires. When the appropriate weights are used in the calculation of
frequencies, the proportion of female nascent entrepreneurs is reduced to
33.8% of those completing the phone interview and 35.6 % of those completing
the mail questionnaire. Because the age distribution of male and female nascent
entrepreneurs is similar, the age distribution of those completing the phone and
mail interview schedules is not greatly affected by the use of weights.
The differences between those identified as meeting two nascent entrepre-
neur criteria and those completing the phone interviews is presented in Table 3
for males and females of different ages. In this case, the unweighted and
weighted frequencies are presented in adjacent columns. The level of statistical
significance for male-female comparisons is presented in the bottom row. The
differences are not affected much by weighting for all nascent entrepreneurs
identified in the screening, women nascent entrepreneurs are more likely to be
concentrated in the 35–44 year old range, men are more dispersed by age, with
higher percentages 18–24 years old as well as over 55 years old. The statistical
significance of the difference is equivalent for weighted and unweighted
analysis.
Among those that had completed the NE phone interviews, however,
weighting does have an impact. The level of statistical significance is greater
(0.006 compared to 0.01) for the weighted analysis. This reflects, once again,
the deliberate oversampling of women nascent entrepreneurs.
A similar analysis is presented by gender and ethnic background in Table 4.
In the comparisons of nascent entrepreneurs identified in the screening, the
level of statistical significance changes dramatically, from highly significant
(p value of 0.00010) for the unweighted comparison too not significant (p value
180
Table 2. Effects of Weights on Gender, Age Distributions
Total Sample NE Qualified NE NE
Screened for (2 criteria) Completed Completed
NEs Phone Mail
Interview Questi’aire
Total Respondents: Unweighted 31,261 1,960 669 476
Total Respondents: 31,261 2,042 684 477
Weighted by WEIGHT
Without Weights
Gender: Males 15,599 49.9% 1,286 65.6% 327 48.9% 223 46.8%
Gender: Female 15,662 51.1% 674 34.4% 342 51.1% 253 53.2%
Number with data 31,261 100.0% 1,960 100.0% 669 100.0% 476 100.0%
Age: 18–24 years old 3,257 10.7% 215 11.1% 42 6.3% 24 5.0%
Age: 25–34 years old 5,869 19.3% 538 27.9% 174 26.0% 119 25.0%
Age: 35–44 years old 6,947 22.9% 619 32.1% 219 32.8% 160 33.6%
Age: 45–54 years old 5,700 18.8% 391 20.3% 164 24.6% 119 25.0%
Age: 55–99 years old 8,564 28.1% 167 8.7% 69 10.3% 54 11.3%
Number with data 30,337 99.8% 1,930 100.1% 668 100.0% 476 99.9%
With Weights [variable label]: WEIGHT VOL1WGT PHONEWT MAILQWT

Gender: Males 15,077 48.2% 1,238 63.2% 443 66.2% 306 64.4%
Gender: Female 16,184 51.8% 722 36.8% 226 33.8% 170 35.6%
PAUL D. REYNOLDS
Number with data 31,261 100.0% 1,960 100.0% 669 100.0% 476 100.0%
Age: 18–24 years old 3,888 12.5% 246 12.6% 44 6.6% 23 4.9%
Age: 25–34 years old 6,398 20.6% 581 29.7% 179 26.8% 120 25.3%
Age: 35–44 years old 7,044 22.7% 602 30.8% 205 30.6% 151 31.7%
Age: 45–54 years old 5,275 17.0% 361 18.5% 164 24.5% 119 25.1%
Age: 55–99 years old 8,416 27.1% 163 8.4% 76 11.4% 62 13.1%
Number with data 31,021 99.9% 1,953 100.0% 668 99.9% 476 100.1%
of 0.11629) for the weighted comparison. There is a similar change for those
completing the nascent entrepreneur phone interview, although neither would
be considered statistically significant. For both nascent entrepreneurs and the
comparison groups, the distribution by ethnic background is more similar for
men and women when the weighted samples are used to produce the frequency
distributions.
The implications are quite clear; any analysis should be completed with a
weighted sample. While there may be cases where unweighted and weighted
samples produce the same results, appropriate tests of statistical significance
require the use of weighted samples. These various weights are a reflection of
a number of procedures employed in the sampling and data collection that
increased the yield and efficiency of the procedures.
Table 3. Effects of Weights on Gender by Age Distributions of Nascent

Entrepreneurs
NE NE NE Completed NE Completed
Qualified Qualified Phone Phone
(2 criteria) (2 criteria) Interview Interview
UNWEIGHTED WEIGHTED UNWEIGHTED WEIGHTED
Total Respondents 1,930 1,953 668 658

MALES:
Age: 18–24 years old 13.2% 14.8% 8.0% 7.9%
Age: 25–34 years old 28.3% 29.7% 30.1% 29.3%
Age: 35–44 years old 30.9% 29.2% 27.3% 26.7%
Age: 45–54 years old 18.3% 16.9% 23.6% 23.8%
Age: 55–99 years old 9.3% 9. 3% 11.0% 12.2%
Number with data 1,267 1,233 326 442
FEMALES:
Age: 18–24 years old 7.2% 8.9% 4.7% 4.0%
Age: 25–34 years old 27.0% 29.7% 22.2% 21.9%
Age: 35–44 years old 34.4% 33.6% 38.0% 38.2%
Age: 45–54 years old 24.0% 21.1% 25.4% 26.2%
Age: 55–99 years old 7.4% 6.7% 9.6% 9.8%
Number with data 663 720 342 226
Statistical Significance 0.00006 0.00010 0.01033 0.00646

[Chi-Square, Pearson]
ANALYSIS POTENTIAL
No data set provides answers to all questions, and the 1998–99 National Panel
Study of U.S. Business Start-Ups is no different. It does have the potential for
making headway on a wide range of issues. Following a brief description of the
contents of the data set, there is an overview of its structure. This is followed
by a review of selected conceptual domains and examples of operational
definitions. Examples of topics suited for analysis are then presented, followed
by a commentary on access to the data set itself.
A. What is Represented: Overview of the Sample. An overview of the
individuals represented in the sample is provided in Table 5. The first column
presents comparable data from the most recent U.S. federal government data on
the same variables. Comparison of this data is only relevant for the comparison
group, selected to be representative of typical adults 18 and older in the United
Table 4. Effects of Weights on Gender by Ethnicity Distributions of Nascent

Entrepreneurs
NE NE NE Completed NE Completed
Qualified Qualified Phone Phone
(2 criteria) (2 criteria) Interview Interview
UNWEIGHTED WEIGHTED UNWEIGHTED WEIGHTED
Total Respondents 1,930 1,953 669 669

MALES:
White 75.3% 75.5% 76.9% 76.9%
Black 12.6% 12.0% 14.5% 14.2%
Hispanic 7.3% 7.8% 3.7% 3.5%
Other 4.9% 4.8% 4.9% 5.4%
Number with data 1,257 1,220 324 439
FEMALES:
White 74.4% 73.8% 75.6% 75.5%
Black 16.0% 15.5% 18.2% 17.6%
Hispanic 6.2% 7.1% 3.8% 3.8%
Other 3.5% 3.6% 2.4% 3.1%
Number with data 664 713 340 225
Statistical Significant 0.00010 0.11629 0.21101 0.40142

[Chi-Square, Pearson]
Table 5. Sample Compared with Population: Selected Characteristics
US CG NE CG NE
Weighted Weighted No Wts No Wts
No of Cases 1,000 for U.S.) 195,568 223 669 223 669

Date of US Population Data 1/1/ 99:1
Gender: Men over 18 48% 50% 66% 47% 49%
Gender: Women over 18 52% 50% 34% 53% 51%
Date of US Population Data 1/1/99:1
Age: 18–24 Years Old 13% 7% 7% 8% 6%
Age: 25–34 Years Old 19% 15% 27% 17% 26%
Age: 35–44 Years Old 22% 31% 31% 34% 33%
Age: 45–54 Years Old 17% 21% 25% 25% 25%
Age: 55–99 Years Old 29% 26% 11% 15% 10%
Date of US Population Data 1/1/99:1
Ethnic: White 72% 82% 76% 78% 76%
Ethnic: Black 12% 9% 15% 11% 16%
Ethnic: Hispanic 11% 4% 4% 5% 4%
Ethnic: Other 4% 5% 5% 6% 4%
Date of US Population Data 3/98:2
Education: Up to HS Degree 51% 18% 21% 19% 16%
Education: HS plus, no Coll Deg 26% 41% 47% 47% 40%
Education: College Degree 15% 24% 16% 17% 24%
Education: Post College 7% 17% 18% 17% 19%
Date of US Population Data 3/97:3
HH Income: Up to $20K/Yr 27% 14% 9% 13% 10%
HH Income: $20K–$39K/Yr 26% 29% 29% 27% 31%
HH Income: $40K–$59K/Yr 19% 27% 24% 29% 26%
HH Income: $60K–$99K/Yr 19% 24% 27% 24% 24%
HH Income: $100K/Yr and up 9% 6% 10% 7% 10%
HH Net Worth: Negative 4% 4% 5% 4%

HH Net Worth: $0–$99K 46% 51% 48% 51%
HH Net Worth: $100K–$249K 18% 16% 18% 15%
HH Net Worth: $250K–$499K 6% 8% 5% 7%
HH Net Worth: $500K–$999K 24% 18% 23% 20%
HH Net Worth:$1,000K and up 2% 4% 2% 3%
Date of US Population Data 1995:4
HH Net Worth: Negative – $99K 64% 50%
HH Net Worth: $100K–$249K 17% 18%
HH Net Worth: $250K and up 14% 32%
(1) ‘http://www.census.gov/population.estimates/nation/intfile2–1.txt’ for 1 Jan 99 [27 Aug 99].

(2) Current Population Survey, March 1998 data, ‘http://www.census.gov’.
(3) Current Population Survey, March 1997 data, ‘http://148.129.86.150:8080/macro/
031998/1_000.htm’; 102,528,000 households.
(4) Kennickell, Arthur, et al., 1997. Family Finances in the U.S.: Recent Evidence from the
Survey of Consumer Finances. Federal Reserve Bulletin, January, Table 1, pg. 3. Based on
interviews with 4,299 families in July through December 1995.
States. Table 5, however, includes both weighted and unweighted distributions

for both the comparison group and the nascent entrepreneurs. These differences
are important for the nascent entrepreneur sample, as a special oversample of
women nascent entrepreneurs provides more details on the women, but can
provide a misleading portrayal of all nascent entrepreneurs if the appropriate
weighting is not utilized.
Confidence that the nascent entrepreneur sample represents the U.S.
population will be affected by the extent to which the comparison group is
similar to the estimates for the U.S. population. For example, the Bureau of the
Census estimates the U.S. population 18 and older for 1 January 1999 at
195,568,000, of which 48% are men and 52% women. The comparison group,
with weights attached, has 50% men and 50% women, perhaps reflecting the
gender quota sampling utilized in the initial screening. The estimated age
distribution for the U.S. is also somewhat different than that for the comparison
group. The comparison group has an under-representation of those less than 25
years old or over 54 years old. This may reflect the emphasis on the primary
economic decision-makers, head of household or principal shopper, in the
commercial marketing firms screening protocols.
There are, in addition, differences in the estimates of the ethnic composition
of the U.S. adult population and the comparison group; there is small under-
representation of Blacks and a substantial under-representation of Hispanics in
the comparison group. Hispanics are 4% of the comparison group and 11% of
the U.S. population as of January 1999. This is, no doubt, a direct consequence
of the ‘English only’ interview protocol used in the marketing firm screening.
Respondents that have trouble with an English conversation are immediately
dropped from the interview. [This marketing research firm provides, for
Hispanic marketing research, a separate national screening of Hispanics with a
different sampling strategy.]
The under-representation of Blacks, and to some extent that of Hispanics,
may also reflect the under representation of those with low levels of household
income and educational attainment, as indicated in the middle rows of Table 5.
The under-representation of those with low reported levels of educational
attainment is probably a reflection, in part, of the under-representation of older
adults, those 55 and older. It is these age groups that are most likely to report
lower levels of educational attainment.
Given the under-representations of Minorities in the Comparison Group, the
relatively large proportion [15%, weighted] of Blacks in the nascent
entrepreneur sample is of interest. This reflects two phenomena. First,
compared to whites, a higher level of participation by Blacks in firm start-ups.
Second, Blacks were more likely to volunteer for the project. For example,
94% of the Blacks accepted the invitation during the screening interviews to
participate in the nascent entrepreneur data collection, compared to 84% of the
whites. As a consequence, over 100 Black nascent entrepreneurs are included
in the sample.
Hispanics comfortable with an English conversation are similar to whites in
both participation in firm start-ups and the tendency to volunteer for the
detailed interviews. They have the same proportion in both comparison group
and nascent entrepreneur samples.
The comparison group has a smaller proportion of the lower end of both
educational attainment and household income than found in the U.S.
population, and an under-representation of those with higher levels of
household income. The latter comparison is somewhat complicated by the age
of the federal population estimates, which are for a period, 1997, two years
prior to the collection of the comparison group data in 1999.
‘Old data’ is a particular problem related to U.S. population data on
household net worth, which was assembled for 1995, three years prior to the
survey. As the two major sources of household net worth, equity in the primary
residence and the value of retirement investments, have appreciated over the
1995–1998 period, it is no surprise to discover major differences between the
comparison group estimates and the U.S. population data. However, even with
this taken into account, it would appear that a higher proportion of the
comparison group are in the $250,000 and over net worth category. This may
reflect the less precise measures used in the current effort, compared to the
detailed procedures employed in the Federal Reserve sponsored Survey of
Consumer Finances. Until more current U.S. population data on household net
worth is available, there is no way to determine if the bimodal nature of the
comparison group distribution – with one quarter of the households reporting
net worth in excess of half a million – is accurate.
This review suggests that the screening procedures and modest sample sizes
may have produced comparison and nascent entrepreneur cohorts that are not
precise replications of the U.S. population. Certainly, any extrapolation to
provide population estimates will require stratification based on age and
gender. Further, any conclusions about ‘all’ U.S. Hispanics needs to be done
with caution, as those not comfortable with English were excluded from the
samples. On the other hand, the differences are known and not so great as to
preclude any conclusions about the entire U.S. adult population.
The economic sector of the start-up efforts is presented in Table 6. Here the
U.S. comparison is all firms with employees identified in 1996. The distribution
of all business entities, which would include all self-employed individuals, may
be slightly different. The weighted sample of start-ups reported by the nascent
186
Table 6. Business Start-Ups: Economic Sector by Gender
Economic Sector All U.S. Start-Up Men Women Men Women

Businesses with Efforts W/ W/ w/o w/o
employees, All weights weights weights weights
1996 weighted
[Number of cases- Weighted/Un-weighted] 5,478,047 669 444 226 327 342

Agricultural, Forestry, Fishery 2 .0% 4% 4% 4% 5% 4%
Mining 0.4% – – – – –
Construction 11.8% 6% 8% 2% 8% 2%
Manufacturing 6.0% 6% 7% 5% 7% 4%
Transportation, Communication, Utilities 4.0% 2% 3% 1% 3% 1%
Wholesale 7.6% 3% 2% 5% 2% 5%
Financial, Insurance, Real Estate 8.2% 6% 7% 6% 6% 6%
Retail, including restaurants and bars 20.0% 25% 22% 29% 22% 29%
Services 39.5% 45% 44% 47% 45% 46%
Others, cannot classify 0.5% 2% 2% 2% 2% 2%
PAUL D. REYNOLDS
Column Total 100.0% 99% 99% 101% 100% 99%
U.S. data from Office of Advocacy, U.S. Small Business Administration, Firm Size Data, ‘http://www.sba.gov/adv/stats/’.
entrepreneurs indicates a very similar distribution, with a slightly higher

proportion in services and retail and a slightly lower portion in construction and
wholesale. The gender differences are not dramatic, with men more likely to
report start-ups in construction and women more likely to report start-ups in
retail. Without question, a wide range of business activities is represented in
this sample of start-ups. More precise analysis can identify those with a
technological emphasis or for which the owners anticipate high growth.
B: Structure of the Data Set As illustrated in Table 7, there are three basic
data sets available as of Fall 1999. A fourth, reflecting the results of the
12-month follow-up interviews, will be added in fall 2000. A fifth, reflecting
the results of the 24-month follow-up, will be added in fall 2001 – and so on.
The first file reflects the results of the national screening of 31,261 U.S.
adults to locate 2,024 that meet two of the three criteria adopted for nascent
entrepreneurs: anticipated ownership and currently active. The data from the
screening interviews includes basic personal and household socio-demographic
items and up to 8 responses related to start-up activity. These are currently
supplemented with 55 items reflecting the county in which the respondent
lives.
The second data set contains the results of the phone interviews with the
nascent entrepreneurs and the members of the comparison group. As material
Table 7. Structure of the Data Set
Name Unit of analysis Number of U.S. Fixed Open

respondents county data choice ended
items items items
National screening Typical Adult 31,261 55 20 None

for nascent
entrepreneurs
Nascent entrepreneurs 2,024 55 27 1

(satisfy 2 criteria)
Phone interview Nascent entrepreneurs 669 804 116

(satisfy 3 criteria)
Comparison group 223 311 47
Mail questionnaire Nascent entrepreneurs 476 351 6
Comparison group 176 291 4

related to starting a new firm is omitted from the comparison group interview
schedule, this schedule is somewhat shorter. These interviews are composed
mostly of fixed response items, ‘What is your current martial status?’
supplemented with open-ended items on critical issues, ‘What would you be
doing if you were not trying to start a new firm’? The majority of the open-
ended responses from the phone interview reflect a response to the ‘other’
response category, when the fixed responses for the item were not appropriate.
The third data set is similar to the second except it focuses on the mail
questionnaire responses, of which only 6 are open ended in the nascent
entrepreneur version and 4 in the comparison group version.
While technically part of the phone interview or mail questionnaire data sets,
the responses to the open-ended or unstructured items are provided in separate
data files in a different format. All responses are broken into 101 character
lines. A long response may take several lines; the maximum was eleven, or a
thousand characters. Responses are then organized by item in the interview, so
that all responses to each item occur together. For example, the 669 responses
to the question, ‘Why do you want to start this business’? occur together, along
with the respondent identification number. This facilitates the development of
one or more coding scheme to characterize the emphasis in these spontaneous
oral reports.
All data files are physically produced as SPSS PC ‘export’ and SPSS
Windows ‘save’ data files. A unique respondent identification number is
contained in each record so that variables from any file can be consolidated for
any specific respondent.
C. Conceptual Domains and Operational Definitions: What is covered in
the interviews with 669 nascent entrepreneurs in 60-minute phone interviews
and 12 page self-completed questionnaires? In two words – a lot. A summary
of the phone interview contents appears as Appendix 2, with most of the items
paraphrased and without the many complicated skip patterns required for
smooth progress through the interview. The self-administered mail ques-
tionnaire is summarized in Appendix 3. The major conceptual domains
included in the nascent entrepreneur and comparison group interviews are
presented in Table 8.
As mentioned above, the nascent entrepreneur interview completed at 12
months is complicated by the different alternatives that are generally presented.
Table 9 provides an overview of the material covered for each of the four
options. Those that report a dormant start-up effort or one that has been
abandoned, all members of the start-up team have quit, have a much shorter
interview that those reporting infant firms or an active start-up effort.
Table 8. Interview Topics: Nascent Entrepreneur and Comparison Group

Initial Interviews
NE Schedules CG Schedules Phone Interview Topics
X Introductory Conversation on Start-up, Reasons, Expectations

X Start-Up Activities
X Firm Registration Activities
X Nature of Start-up Effort: Legal Form, Economic Sector, Etc.
X X (selected) Start-up Team: Composition, Background, and Contributions
X X Social Network: Scope, Background and Contributions
(start-up related) (career related)
X Start-up Funding: Requirements and Expectations
X Assessment of Market, Competition
X Competitive Strategy
X Knowledge, Use of Assistance Programs
X Future Expectations for the New Firm
X X Personal Decision-Making Style
X X Current Labor Force Activity
X X Work, Career Experiences
X X Residential tenure, migration (R and parents)
X X Respondent birth order
X X Family business background
X X Household structure
X X Household income
X X Household net worth
X Reaction to participation
Mail Questionnaire Topics

X Opportunity Recognition, Information Gathering Assessment
X X Entrepreneurial Climate Scale
X Start-up Problems
X Economic sector, community context assessment
X Financial management expectations
X X Work, training background of respondent
X Item Inventory: Reasons for starting a new firm
X X Assessment of Risk Preferences
X X Personal work background details
X X Individual problem solving orientation
X X Self-assessment inventory I: Work and start-up orientation
X X Self-assessment inventory II: Generalized personal domains
X X Time use diaries: Recent work day and day off
X X Work participation history, previous 11 years
Table 9. Interview Topics: Nascent Entrepreneur Follow-Up Interviews
Infant Active Dormant Quit Phone Interview Topics

Firm Start-Up Start-Up Start-Up
X X X X How decision made on current status of start-up

X X Critical events affecting decision
X X Start-Up Activities; Pursued since first interview
X X Firm Registration Activities
X X Nature of Start-up Effort: Legal Form, Economic
Sector, Etc.
X X Start-up Team: Changes in Composition, Background,
and Contributions
X X Social Network: Changes in Scope, Background
and Contributions
X X Current employment, sales
X X Market, geographic concentration of customers
X X Future expectations for the new firm
X X Assessment of market, competition
X X Competitive strategy
X X Knowledge, Use of Assistance Programs
X Financial structure of the new firm
X Current value (net worth) of the new firm
X Equity value of R in the new firm, future plans
X X Additional resources required for start-up
X X X Probability start-up will become infant firm
X Advise to others starting new firms
X X X X Current experience with other start-ups
X X X X Current labor force participation activities
X X X X Household income
X Proportion household income from new firm
X X X X Household net worth
X Proportion household net worth from new firm
Mail Questionnaire Topics

X X X X Opportunity Recognition, Information Gathering
X Assessment
X X X X Entrepreneurial Climate Scale
X X X X Economic sector, community context assessment
X X X X Self-assessment inventory I: Work and start-up orientation
X X X X Self-assessment inventory II: Generalized personal domains
X X X X Time use diaries: Recent work day and day off
Given that over a thousand fixed response items and dozens of open-ended
questions are included in the interview schedule, the total number of transforms
or indices that could be created is infinite. The range of conceptual topics and
measurement procedures associated with these data sets covers the entire
spectrum found in social science. Selected examples are discussed below.
A number of very precise, unambiguous measures are included. For
example, a measure of human population density (persons per square mile) is
about as reliable and unbiased as is possible. It is available as one feature of the
county in which the start-up is located. Further, the relationship to the concept
– human population density – to the operational definition – persons per square
mile – is unambiguous.
Other measures are quite reliable, but the interpretation of the concept may
be ambiguous. If those 30 to 40 years old are more likely to be involved in new
firm start-ups, is this because they have youth and energy to engage in this
activity, or because they have confronted limitations on their career develop-
ment and seek alternatives? Is gender to be considered an indicator of unique
biological characteristics, distinctive socialization and career experiences, or an
indicator of unique roles in the social order? It is, as always, up to the analyst
to make the call.
There are examples of sets of items selected on the basis of potential for
forming a reliable index. For example, the mail questionnaire includes a ten-
item scale to measure the perceived climate for entrepreneurship. Previous
applications indicate a moderate level of reliability [Chronbach’s Alpha of
about 0.65; Reynolds & White, 1997, Pg. 38]. Other items were chosen as
indicators of diverse aspects of individual personal dimensions, based on a
substantial history of work on given topics. The ERC person design team,
coordinated by Kelly Shaver, has developed 77 items to provide multi-item
measures of eight personal dimensions: attribution, creativity, opportunity
recognition, achievement motivation, personal satisfaction, commitment, self-
presentation, emotional intelligence, locus of control, and expectancy.
Summary measures of the strategic assessment of the start-ups were based
on previous research on the strategic emphasis of new firms. The original
inventory had over 30 items; too many to include in the start-up interviews.
Hence, the items with the highest loading in the factor analyses in the earlier
studies, replicated in three different samples of new firms, were chosen for
inclusion in the nascent entrepreneur phone interview (Carter, et al. 1994).
Development of completely new measures is reflected in a substantial effort
to code the responses to an initial set of open-ended items in the nascent
entrepreneur phone interview. These explore the spontaneous reactions to why
respondents were starting a new firm and their expectations from this personal
initiative. The typical respondent has generated several dozen words in
response to these questions, and a 44 page coding manual is in creation to
assure that reliable inferences will be developed from assessment of their
responses (Shaver, et al. in preparation).
One critical factor that may be confirmed are claims of respondents in the
follow-up interviews that the firm is an operating business. It would be
convenient to have independent verification of such claims, either from a
national registry (such as Dun and Bradstreet credit rating files) or some other
independent source, such as an on-site visit. Plans for such reliability checks
have not been completed.
There are a wide range of abstract concepts utilized in the project and great
many challenges for the creation of reliable measures. Fortunately, a number of
ERC participants are working on these different measurement issues.
D. Topics Selected for Analysis: The 111 individuals sponsored by the 32
ERC member units have spontaneously organized themselves into a number of
teams for different facets of the analysis. The teams have submitted proposals
for completing analysis on different topics. A large number have been accepted
as appropriate for a Preferential Right for Scholarly Analysis [PRSA]. Such
proposals are assumed to provide the submitting team 12 months or one year
to complete analysis and prepare presentations and publications before other
ERC participants will initiate work on that topic.
The topics, teams, and major focus of 37 different plans for analysis are
presented in Tables 10-A through 10-F. Each table presents, for the different
analyses, the title of the project, the ERC member unit that is sponsoring the
analysis [each unit has a quota of four active PRSAs], the individuals to be
involved, and the major objectives [O] or hypotheses [H] to be tested. The
identification number for the project is provided in brackets. These tables
represent six different domains.
The first topic, reflected in Table 10-A, are analyses of the effect of the
geographic, economic sector, or assistance programs that represent the context
in which new start-ups occur. These four plans focus on how different ‘seed-
beds’ – economic growth, presence of other start-ups, availability of assistance
programs – may give rise to more nascent entrepreneurs.
Table 10-B reflects eleven different efforts to consider the unique personal
disposition or cognitive styles of nascent entrepreneurs, or those involved in
starting a new firm, based on differences with the comparison group. Included
are measures of persistence, birth order, creativity, initiative, social skills, risk
perceptions, job satisfaction, personal motivation, and need for achievement.
The data provide a unique opportunity to test many of these factors with
samples that are representative of all nascent entrepreneurs in the United
States.
Eight plans for analysis of the personal characteristics and life course
situation of individuals on start-up activity are summarized in Table 10-C. Both
gender and ethnic differences are given serious attention, along with the effect
of role models, individual or household wealth, and the nature and the extent
of the individual social networks. As with the previous set of analyses, a major
advantage is the capacity to consider nascent entrepreneurs in relation to the
comparison group.
The mechanisms by which individuals discover or create new business ideas
is the focus of six proposals reviewed in Table 10-D. This includes, along with
analyses of opportunity recognition, efforts to consider how new technology is
adapted to new commercial applications.
Table 10A. Analysis Topics: Context and Start-up Activity
Contextual and Life Course Factors Affecting Nascent Entrepreneurs; Babson College: Paul
Reynolds [S1.02]
O1: Determine the relative impact of contextual factors (geographic economic
sector) and individual life course factors (education, residential tenure, HH
income, work experience) on participation in new firm startups.
Geography and Industry Affecting Firm Start-ups & Businesses Births; Babson College: Paul
Reynolds [S1.01]
O1: Estimate prevalence of start-ups and small business activity in the U.S.
O2: Explore the impact of geographic and economic sector variation on prevalence
of start-ups and small business activity.
Knowledge and Contacts with Training Programs – How Do Nascent Entrepreneurs Access Them?
NUTEK, Sweden: Frederick Delmar & Mary Williams [S2.14]
O1: Nature and rationale for nascent entrepreneur contacts with business assistance
programs.
O2: Type of help provided to nascent entrepreneurs by business assistance
programs.
O3: Nascent entrepreneurs’ perception of business programs.
Threshold Models and the Decision to Entrepreneur: Formal Models Comparing Individual and
Contextual Factors; Babson College: Maria Minniti and Paul Reynolds
[S3.02]
O1: Effect of existing level of (community) entrepreneurial activity on the decision
to entrepreneur.
Table 10B. Analysis Topics: Personal Dispositional Factors
Attribution Processes and Entrepreneurial Persistence; University of Houston: Elizabeth

Gatewood, Kelly Shaver, & Bill Gartner [S1.14]
O1: Description of individual motives and relational for participation in the start-up
process.
O2: Relation of individual motives and rational on perceptions associated with firm
start-ups.
O3: Determination of the impact of attribution and social cognition processes on
entrepreneurial persistence.
Birth Order and the Start-Up Process: Are Nascent Entrepreneurs Rebels or Super-Achievers? ;
Babson College: Reynolds [S3.07]
O1: Establish the relative tendency of first and only and later born adults to get
involved in a new firm start-up.
O2: Explore the effect of birth order on the type of firm and the growth aspirations
associated with a new firm start-up.
O3: Explore the effect of birth order on successful completion of the start-up
process with a firm birth and, eventually, the growth trajectory of the new
firm.
Creativity of Nascent Entrepreneurs: the Influence of Creative Style on Start-up Configurations
and Activities; Indiana University: Marc Dollinger [S1.06]
H1: Adapters and innovators are different in their start-up activities and
behaviors.
H2: The mismatch of personal style and problems influence start-up activities and
behaviors.
H3: Same style and complementary style are different in start-up activities and
behaviors.
Entrepreneurial initiative: The Personal Antecedents of the Entrepreneurial Design; Clemson
University: Wayne Steward [S2.10R]
O1: What personal initiative factors are associated with the decision to create a new
venture (an act of human volition)?
Entrepreneurship: Social Skills, Confidence, and Cognitive Errors; University of Colorado:
Gideon Markman [S2.07R]
O1: Do entrepreneurs have distinctive cognitive processes?
O2: Do entrepreneurs have distinctive social skills?
O3: Are distinctive cognitive processes and social skills related to entrepreneurial
success?
Expectancies, Persistence, and Discontinuation; University of Houston: Elizabeth Gatewood,
Kelly Shaver, & Bill Gartner [S1.15]
O1: Descriptions of expectations associated with firm start-ups.
O2: Relationship of personal expectations with firm start-up persistence.
O3: Relationship of personal expectations to firm start-up success.
Table 10B. Continued
Exploring the Risk perceptions of the Entrepreneurs; Univ. of Pennsylvania/Widener University:

Mary Williams, Frederic Delmar, & Per Davidsson [S1.1720R]
O1: Nature of risk perception among those starting new firms.
O2: Factors affecting variation in risk perception.
O3: Variations in risk perception over the start-up process.
O4: Relationship between risk perception and firm growth aspirations.
Job and Life Satisfaction: A Comparison of Nascent Entrepreneurs and Control groups; Indiana
University: Janet Near [S1.07]
H1: Nascent and actual entrepreneurs are more likely than others (control group) to
have higher life and job satisfaction.
H2: Among entrepreneurs, spillover is positively associated with role conflict and
difficulty balancing life and work.
H3: Among entrepreneurs, spillover is positively associated with success.
Nascent Entrepreneur Characteristics Underlying the Successful Follow Through of Start-Up
Intentions; NJ Inst of Technology: Marc Sommers [S3.06]
H1: Successfully following through on start-up intentions is related to the
demographic characteristics of the nascent entrepreneur.
H2: Successfully following through on start-up intentions is related to psycho-
logical characteristics associated with the nascent entrepreneur.
Nascent Entrepreneurs Risk Perception and Growth Motivation; NUTEK (Sweden): Frederic
Delmar & Per Davidsson [S3.04]
O1: How do entrepreneurs and non-entrepreneurs differ in risks perceptions
associated with a business start-up?
O2: Explore how entrepreneurs perceive risks?
O3: What is the relationship between risk perception and growth motivation?
O4: What other factors affect growth motivation and how are they interrelated?
Need for Achievement of Entrepreneurs; NUTEK (Sweden): Frederic Delmar & Per Davidsson
[S3.03]
O1: Comparison of nascent entrepreneurs and control group on Need for
Achievement.
O2: Determine the relationship of Need for Achievement to other personality
traits.
O3: Determine effect of Need for Achievement on Risk Perception and Growth
Motivation.
O4: Compare the effect of Need for Achievement on entrepreneurship for the US
and Sweden.
The mechanisms whereby start-ups are implemented are the focus of five
proposals list in Table 10-E. This includes both attention to the actual activities
pursued and their sequence as well as how resources are assembled to put the
new firm in operation.
Table 10C. Analysis Topics: Personal Characteristics, Background
Effects of Experience and Role Models on Entrepreneurial Behavior and Success; NUTEK,
Sweden: Per Davidsson, Frederic Delmar, Henrik Hall, & Anders Lundstrom
[S1.21]
H1: Direct and indirect experiences with entrepreneurship positively affect the
probability of becoming a nascent entrepreneur.
H2: Given NE status, direct and indirect experiences increase the probability that
the firm is actually started.
H3: Given the realization of the start-up, direct and indirect experiences positively
affect the probability or degree of success.
H4: The more direct the previous experience, the stronger the effect of experience
on entrepreneurial behavior and success.
H5: All the above relations are modified by the degree of encouragement or
perceived ‘positiveness’ of the impression of small firm ownership-manage-
ment the individual has received from his/her environment.
Exploring Entrepreneurial Career Interest; University of Cincinnati/Xavier University: Charles
Matthews [S1.12]
H1: Individuals who report a family background in small business are more likely
to indicate an interest in an entrepreneurial career than individuals not
reporting a family background in small business.
H2: Males will express a stronger interest in entrepreneurial career than females.
H3: Males [Females] with a family background in small business are more likely
to be interested in an entrepreneurial career than females with [females
without] a family background in small business
Exploring Social Network Characteristics and Their Effects in New Venture Initiation; University
of Cincinnati/Xavier University: Sherrie Human [S2.06] =
O1: Determination of characteristic features of nascent entrepreneur’s social
networks.
O2: Relationship of social network characteristics to start-up problems, access to
resources, and changes in business opportunities.
Gender and Social Networks: – U. of St. Thomas: Nancy Carter & Howard Aldrich [S1.09]
O1: Multi-dimensional description of individual social networks.
O2: Social networks as a factor affecting participation in new and small business.
Gender Differences in Pacing the Firm Gestation Process: Intentions or Difficulties Overcoming
Barriers to Entry; University of St. Thomas: Nancy Carter [S2.05]
O1: Determination of factors associated with gender that are related to increased
firm gestation time for female start-ups.
Table 10C. Continued
Net Worth and Entrepreneurship; University of North Carolina: Howard Aldrich and Lisa Keister
[S3.01]
O1: Causal relationship between liquidity (net worth) and (participation in)
entrepreneurship.
O2: Effect of net worth on selected aspects of entrepreneurial activity.
O3: Relative role of financial, human, and social capital in various stages of the
entrepreneurial process.
Resource Acquisition Approaches, Combinations and Growth: Does Gender Matter? Boston
University: Candida Brush, Patricia Greene, Barbara Bird, & Anne McCarthy
[S2.03]
O1: Determine gender differences in resource acquisition.
O2: Determine gender differences in the structure of start-up resources.
O3: Relationship between resource acquisition procedures, resource structure and
firm growth.
Resource Development in the Start-up Process by Minority and Ethnic Entrepreneurs; New Jersey
Institute of Technology: Patricia Greene, Nancy Carter, & Timothy Stearns
[S1.11]
O1: Influence of ethnic differences on firm start-up activities.
O2: Influence of ethnic differences and residential tenure on resource acquisition,
with particular attention to development of financial support.
The smallest number of the current proposals focus on the outcomes for the
new firm; three are included in Table 10-F. The major emphasis is on the
growth trajectory of the infant firms that emerge from the start-up process.
These plans for analysis are only the beginning. The major benefits of the
research program are the potential for tracking new firms as they emerge from
the start-up process and take their place in the economy. As data accumulates
over time, it is expected that the number of analysis proposals focusing on the
outcome for the infant firms will grow substantially.
F. Respondent Anonymity: All research procedures meet the current
guidelines associated with the inclusion of human participants in research. Two
elements are critical. The first is an informed consent statement is read to all
participants at the beginning of the phone interview and is placed on the first
page of the self-completed questionnaire. The second element, and perhaps
more important, is ensuring that respondents remain anonymous in the data
sets. All respondents are promised anonymity and their names, addresses and
phone numbers are not provided to the sponsored participants in the ERC. It is
possible, however, that respondents with very unique profiles might be
Table 10D. Analysis Topics: Start-up Process: Entrepreneurial Discovery
How Nascent Entrepreneurs Perceive Technological Change; New Jersey Institute of Technology:
Steve Walsh & Bruce Kirchhoff [S1.10]
O1: Explore the differences in start-up strategies and sequence of activities under
the condition of perceived stable technological environment and perceived
technological change, and between the technologically based nascent entrepre-
neurs and others.
O2: Explore the role played by education, technological work experience in
becoming technologically based entrepreneurs.
O3: Explore the differences in finance obtaining, start-up effort initiation and
fruition between technologically based entrepreneurs and others.
Opportunity Recognition: Perceptions and Behaviors of Entrepreneurs; Coleman Foundation/
University of Illinois, Chicago: Gerald Hills [S1.04]
O1: Develop a description of the opportunity recognition process.
O2: Determine the factors affecting the opportunity recognition process.
O3: Relative position of opportunity recognition in the start-up process.
Structure and Consequences of an Entrepreneur’s Perception of the Economic Attractiveness of a
Business Opportunity; U of British Columbia: Raphael Amit and Kenneth
MacCrimmon [S2.02]
O1: Inferred presence of rationality among nascent entrepreneurs in the start-up
process.
O2: Relationship of nascent entrepreneur behaviors and decisions in relations to
new venture risk, controllables, problems and uncertainties.
O3: Economic relationship between start-up discontinuances and new firm
discontinuances.
O4: Can distinct groups of nascent entrepreneurs with different success rates be
identified?
Technology Applications in High Tech Firms; University of Southern California: Katherine Allen
& Timothy Sterns [S2.01]
O1: Utilization of computers by those implementing hi tech firms.
O2: Relationship of firm technological sophistication and firm use of computers.
O3: Experience with and start-up implementation of computers in hi tech new
firms.
The Informational Basis of Entrepreneurial Discovery; University of the Pacific: James Fiet
[S1.23]
O1: Relative impact of insight versus systemic exploration on the development of
entrepreneurial discoveries, with controls for cost of information acquisition.
The Relation Between Entrepreneurial Uncertainty, Information Search, and Behavior; University
of Colorado, Boulder: Page West & Dale Meyer [S2.11]
O1: Explore effect of entrepreneur information gathering on uncertainty reduc-
tion.
O2: Relative impact of information gathering and uncertainty reduction on
entrepreneurial proactive start-up behavior.
identified through comparison with public data, such as phone directories,

which sometimes list occupations, and commercial credit rating services.
This has been a realistic concern with regards to reports of personal wealth,
as several respondents in low population counties reported a household net
worth in excess of $10 million dollars. Since their county, occupation, and
work history are included in the data set, it is possible that their specific
identities could be determined. For these cases, the net worth was adjusted to
Table 10E. Analysis Topics: Start-up Process: Implementation Activities
Examining Capital Structure Decision making in New Ventures; University of Cincinnati/Xavier

University: Charles Matthews [S2.08]
O1: Need for managerial control as related to belief about value of external debt.
O2: Relationship of individual risk aversion to belief about value of external debt.
Exploring Start-up Event Sequences; University of Southern California: Bill Gartner, Nancy
Carter, & Paul Reynolds [S1.18]
O1: Description, sequence of activities pursued in new firm start-up process.
O2: Nature and sequence of activities in relation to firm birth.
O3: Effect of geographic context on duration of start-up period.
Exploring Uncertainty and Planning in New Venture Initiation; University of Cincinnati/Xavier
University: Charles Matthews [S1.13]
H1: Increasing perceived environmental uncertainty will be associated with
decreasing sophistication of strategic and operational planning.
H2: Sophistication of strategic and operational planning will be higher in nascent
entrepreneurial ventures than in nascent small business ventures.
H3: When faced with increasing environmental uncertainty, nascent entrepreneur-
ial ventures will be less likely to reduce strategic and operational planning than
will nascent small business ventures.
Factors Underlying the Anticipated Types and Sources of Funds Sought by Nascent Entrepreneurs;
New Jersey Institute of Technology: Bruce Kirchhoff & Steve Walsh [S3.05]
H1: The types and sources of funds sought by the nascent entrepreneur are related
to the personal characteristics, personal environment, business environment,
business idea and goals of the nascent entrepreneur.
H2: There are patterns of variables that are associated with the types and sources
of funds sought by the nascent entrepreneur.
Resource Combinations and Acquisition Approaches Across Forms of New Ventures? Boston
University: Candida Brush & Rajiv Dant [S2.04]
O1: Relationship between initial resource combinations and form of new
business.
O2: Relationship between business form and resource acquisition.
O3: Interaction of resource structure and business form on firm growth.
Table 10F. Analysis Topics: Firm Development and Growth
Entrepreneurship Expansion Plans; Coleman Foundation/DePaul University: Harold Welsch

[S1.03R]
O1: Explore factors affecting variation in entrepreneurial intensity.
O2: Relationship between entrepreneurial intensity and anticipated firm growth.
Exploring the Effect of Start-up Problems on the Growth of New Ventures; University of
Pennsylvania/Widener University: Mary Williams [S1.16R]
O1: Description of new firm growth trajectories.
O2: Affect of context (geographic and economic sector) on new firm growth.
High Growth firm Predictors; University of Southern California: Bill Gartner, Katherine Allen,
Kelly Shaver, & Elizabeth Gatewood [S1.19]
O1: Exploration of factors predicting new firm growth trajectories.
O2: Effect of entrepreneurial goals on firm growth trajectories.
O3: Effect of resources endowments on firm growth trajectories.
O4: Effect of contextual economic growth on firm growth trajectories.
equal to the largest values in the continuous distribution, approximately $2.5

million.
F. Public Access to the Data Sets. From the inception, it was anticipated that
the data set from the 1998–99 National Panel Study of U.S. Business start-ups
would be placed in the public domain. This is explicit in the memorandum of
agreement establishing the Entrepreneurial Research Consortium. These plans
are reinforced by the commitment made to the National Science Foundation,
which is providing substantial funding for the project. They require that any
data set created with federal funds be placed in the public domain. How and
when this will occur has yet to be determined. It is most likely to occur in
stages, with the initial data set placed in a public archive 2–3 years following
data collection. This will be supplemented with additional data sets as the
follow-up data is accumulated and analysis is completed.
Data from two early studies, the Wisconsin Entrepreneurial Climate Study
and the national pretest completed in the fall of 1993, are in the Inter-university
Consortium for Political and Social Research [ICPSR] public archives.6 They
are available to any scholar sponsored by an institutional member of the
ICPSR, based at the Institute for Social Research at the University of
Michigan.
ASSESSMENT OF THE RESEARCH PROGRAM

This has been a discussion of the current status of a research program, as of fall
1999, and the data set created for analysis. The general importance of the topic
– how new business organizations come into being – and the new information
provided by this initiative suggests that this effort will continue for some time.
What can be said, at this stage, about the program and its contributions? The
following is a brief, perhaps biased, assessment.
A. Current Status of the U.S. Initiative: The most important achievements,
to date, have been two. First, provision of relatively precise estimates of the
level of start-up activity among the U.S. adult population. Three separate
research initiatives, conducted over 6 years, using somewhat different
screening procedures, have indicated a prevalence rate of about 4%. This refers
to individuals that meet the three criteria – currently active, anticipate
ownership in the new firm, and the effort is not yet an infant firm. Comparison
of the 1993 national sample prevalence rates with the results from the 1998–99
screening suggests that participation in start-ups may be increasing, but the
lack of large samples for the early studies implies some caution in this
conclusion.
Second, the actual data collection procedure is in very good shape. While
somewhat expensive and time consuming – as it takes a number of months to
collect data from the busy people attempting to start a new business – the
results are quite good. The quality of the results – in terms of the completeness
of the data assembled from the respondents, in two long and detailed interview
schedules, the candor provided about sensitive topics (such as the household
financial status), and the high level of cooperation from the respondents – rank
with the best of contemporary social science.
What remains are the analyses, exploration of the many factors that affect
participation in and successful completion of the entrepreneurial process. Some
will be delayed until follow-up interviews are completed. After the second
round of follow-up interviews, it will also be possible to explore the impact of
the start-up process on new firm survival and growth. Fortunately, over one
hundred sponsored participants in the Entrepreneurial Research Consortium
will be pursuing these analyses. A substantial number of detailed assessments
can be expected over the next several years. As these assessments proceed, it
is inevitable that new material will be suggested for future efforts when this
project is replicated.
B. Cross-National Extensions. Because of the pervasive problems with
economic expansion in many European countries, there has been considerable
interest in replicating the U.S. research paradigm in other countries. There are,
in fact, nine other countries represented among the 32 member units of the
ERC. In four of these countries teams have assembled the resources to
complete large-scale national screening [Finland, Netherlands, Norway, and
Sweden] and two [Norway and Sweden] have been able to complete follow-up
contacts with the nascent entrepreneurs. The national teams in two other
countries [Germany and the UK] have completed initial pilot studies. While the
intent has been to harmonize data collection to emulate the protocols
implemented in the U.S., reduced budgets and diverse sponsor objectives have
lead to some adjustments in the data collection procedures. In general, the level
of participation by adults in start-ups has been much lower in these Northern
European countries, generally about one-third or one-fourth the levels found in
the U.S. While the rate of participation in start-ups may be much lower, the
outcomes reported in the follow-up interviews in Norway and Sweden has been
quite similar to that found in the earlier U.S. studies. Studies in both countries
have similar proportions reporting a going business, continuation with an active
start-up, a dormant start-up, or an effort that has been abandoned. The future
potential for detailed cross- national comparisons is quite promising.
The same research protocol has been incorporated in a new cross-national
effort designed to explore the role of the entrepreneurial sector in national
economic growth, the Global Entrepreneurship Monitor [GEM] project
(Reynolds, Hay & Camp, 1999). A critical feature of this ten-country study
[Canada, Denmark, Finland, France, Germany, Israel, Italy, Japan, United
Kingdom, and the United States] was utilizing random samples of 1,000 adults
in each nation to determine the level of participation in new startups. To be
considered an active nascent entrepreneur, respondents had to meet the same
three conditions utilized in the U.S. project. The result indicated a 6-fold
difference between the highest and lowest levels of participation: from 1.4% in
Finland to 8.4% in the United States. Countries appeared to fall into three
categories, a high participation group consisting of Canada, Israel, and the
U.S.; a moderate group composed of Italy and the United Kingdom; and a low
participation group [Denmark, Finland, France, Germany, and Japan]. This
effort provided the first cross-national comparison that used harmonized
techniques and avoided the problems with comparing the official statistics on
new firm starts. Despite the considerable level of sophistication in tracking firm
dynamics with government statistical system, no two countries use the same
procedures, which substantially reduces confidence in cross-national compar-
isons. This project is expected to continue and add more countries in future
assessments.
There are, then, substantial reasons to expect further international adoption
of this research protocol. This is, in some ways, a clear indication of the utility
of this procedure for examining entrepreneurial phenomenon.
C. Extension to other domains: Informal Investors and Petite Angels While
not fully developed in the 1998–99 U.S. National Panel Study of Business
Start-Ups, one element of the pilot studies for the current project has shown
great promise. Because a substantial minority of the ERC participants was

interested in how start-ups were able to assemble financial resources, items
related to providing financing for new firms were added to the national
screening of representative adults. The early study indicated that 4–5% of all
adults reported an informal investment in the previous three years, a number
that was somewhat higher than expected.
Modified items about personal informal investments were then subsequently
included in the national surveys commissioned for the ten-nation GEM project,
mentioned above. By asking these ‘petite angels’ about the magnitude of their
investments, it was possible to estimate the aggregate contributions for an
entire country, say France or Italy. In fact, it was estimated that 2.5% of U.K.
adults had invested British Pounds 1.8 billion (US$ 2.9 billion) and 5.5 % of
U.S. adults had invested $56 billion in the previous year (Reynolds, Hay &
Camp, 1999, pg. 14; Levie, Hay & Reynolds, 1999, pg. 5; Zacharakis,
Reynolds & Bygrave, 1999, pg. 19). In both countries, this was ten to twenty
times the total annual funding provided to start-ups by the entire venture capital
community.
In short, expansion of this research paradigm to other topics related to new
firms has only begun to develop. The success of assessment of informal
investments would indicate that expansion of national screenings to inquire
about other topics, such as employment experiences in new firms, acting as a
customer of a new firm, or general attitudes toward new firms or entrepreneur-
ship or growth firms could have considerable value.
D. Policy Implications: Other studies have emphasized the role of new firms
in national economic growth and adaptation. There is also growing evidence of
the importance of the entrepreneurial option, or at least self-employment, in the
work careers of typical Americans. The major policy implications from this
project are, thus far, related to the implications for government efforts to
promote new firm creation.
For the U.S. there are several preliminary findings of relevance. First, the
very large number of people that are involved, either directly or indirectly,
because a family member, spouse, or friend is a nascent entrepreneur. Millions
of people are involved at any given time and tens of millions during any decade.
Closely related to this finding is the high level of turnover in the ‘start-up pool’.
At any given time a large proportion of nascent entrepreneurs have only
recently become involved, and a large proportion have given up or are in the
process of disengaging. Government efforts to reach, inform, supervise,
control, assist, or whatever must plan for a continued presence among or
presentation to the start-up and infant firm sectors. A single annual campaign
to reach start-ups will probably miss the majority of those involved in a given
12-month period.
Second, most of those involved are typical adults, seeking to explore new
ways of contributing to the economy. There are reasonable levels of
participation by individuals from all geographic, ethnic, and economic sectors.
Some may be ‘born to entrepreneur’, but most new firms are started by ordinary
people trying new career options. Any systematic program to track or assist
those involved in new firm creation should be designed to have a very broad
application.
E. Scholarly Applications: Perhaps most relevant is the rather strong
evidence that the conceptual framework underlying this research program has
great potential for expanding understanding of how new firms come into being.
It is clear that the ‘instant birth’ model of many market entry analyses is too
simplistic. There is a complex and intense period of assembling resources and
organizing activities that precedes the appearance of a new firm. It is equally
clear that to equate ‘entrepreneurship’ with reports of self-employment is
totally misleading; the two phenomena have little in common.
Major advances in understanding how new firms are created require serious
attention to the details of the start-up process. The 1998–99 National Panel
Study of U.S. Business Start-ups is a major step forward in providing this
information.
NOTES
1. Primary financial support has been provided by the Entrepreneurial Research

Consortium. Supplemental funding has been provided by the National Science
Foundation for an over-sample of women nascent entrepreneurs [Grant SBR–9809841,
Nancy Carter, U. of St. Thomas, Principal Investigator] and an over-sample of Black
and Hispanic nascent entrepreneurs [Grant SBR–9905255, Patricia Greene, U. of
Missouri, Kansas City, Principal Investigator].
2. Paul Reynolds of Babson College is Coordinator of the Entrepreneurial Research
Consortium and Principal Investigator of the Project. Important material on sampling
and the details of the data collection procedures and administration were provided by
U. Wisconsin Survey Research Laboratory staff: Nancy Davenport-Sis; Neli Esipova;
Amy Fusek, Charles Palit, and Linda Penaloza.
3. Candida Brush of Boston University, Nancy Carter of the U. of St. Thomas (St.
Paul, MN), Per Davidsson of Jonkoping International Business School (Sweden), Bill
Gartner of the University of Southern California, Kelly Shaver of the College of
William and Mary, Paul Reynolds of Babson College, and Mary Williams of Widener
College (PA).
4. Person team coordinator is Kelly Shaver; women and minority team coordinator
is Nancy Carter; organizations, strategy, and financial team coordinators are Jim Fiet,
Bruce Kirchhoff, and Tim Stearns; and the infrastructure and government policy team
coordinators are Denny Dennis and Mary Williams.
5. The Swedish National Panel Study of Business Start-Ups completed a 6-month
follow-up prior to the design of the 12-month follow-up for the U.S. Study. The material
provided by Per Davidsson and Henrick Hall was very useful in developing the follow-
up phone interview schedule to deal with these issues.
6. See the ICPSR web site for details, ‘http://www.icpsr.umich.edu’. The Wisconsin
Entrepreneurial Climate Study is listed as ICPSR No. 6241. The U.S. Survey of Nascent
Entrepreneurs is included as Part F of the Survey of Consumer Attitudes, October and
November 1993: ICPSR Nos. 6765 and 6766.
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208
APPENDIX 1 ENTREPRENEURIAL RESEARCH CONSORTIUM MEMBERSHIP
[20 OCT 1999]
Babson College Bill Bygrave T,A RISEbusiness Zolton Acs
Julian E. Lang Jerome Katz
Maria Minniti Rudy Lamont
Steve Spinelli Mark Schultz T,A
Paul D. Reynolds E Steve Isberg
Bodo Graduate Gry Alsos RWI/Essen, Germany Dieter Bogenhold
School of Business Svenn Jessen Bernard Lageman
[Norway] Lars Kolvereid T Bernard von Rosenbladt
Boston University Candida Brush T,E Friederike Welter T
Rajiv Dant Swinburn University David Forsaith
Ann McCarthy [Australia] Murray Gillin T
Canadian Council Yvon Gasse Kevin Hindle
On Small Business Rein Lepnurm Christena Singh
& Entrepreneurship Lois A. Stevenson T Syracuse University David Wilemon T
Peter Robinson Alan Young
Clemson University Charles R. Duke U. of British Columbia Raphael Amit T
Caron H. St. John Nancy Langton
Wayne H. Stewart T Ken MacCrimmon
Coleman Foundation Robert Brockhaus Charlene Zietsma
PAUL D. REYNOLDS
Gerald Gustafson U of Cincinnatti/Xavier U. Sidney L. Barton
Michael Hennessey A Sandy Eusitis
Gerald E. Hill Sherrie Human
Harold Welsch T Charles Matthews T
EIM: Small Business Koos van Elk U of Colorado, Boulder Gideon Markman
Research & Ivo R. Verdonkschot Dale Meyer T
Consultancy A. R. M. Wennekers Page West
[Netherlands] Wolters Teun T Andrew Zacharakis
National Panel Study of U.S. Business Startups
APPENDIX 1 CONTINUED
Entrepreneurship Ray Bagby T U of Houston Lowell W. Busenitz
Theory & Practice Barbara Bird Elizabeth Gatewood T
[Baylor U.] Steven Hanks Robert Hill
Greek Entrepreneur’s Dimitris A. Mavros Kelly Shaver E,D
Club Dimitri G. Mavros T U of Michigan Karen Bantel
Indiana University Marc Dollinger T David Brophy
Janet Near James Morgan T
KERA: Finnish Erkko Autio Larry Root
Regional Matti Koiranen U of Missouri,Kansas City Patricia Greene T
Development Agency Jukka Suokas T U of North Carolina, Howard Aldrich T
London Business Michael Hay T Chapel Hill Lisa Keister
School Colin Mason Hugh O’Neill
NFIB Educational Arnold Cooper U of Pennsylvania/ Ian McMillian
Foundation William Dennis T,D Widener U Mary Williams T,E,D
William Dunkelberg U of Southern California Kathleen Allen T
NJ Institute of Bruce Kirchhoff T,D Ann Graham Ehringer
Technology Marc Sommers Bill Gartner E
Steve Walsh Thomas O‘Malia
NUTEK: Swedish Per Davidsson T,E U. of St. Thomas Nancy Carter T,E,D
Industrial Board Frederic Delmar Cecilia Falbe
Henrik Hall Timothy Stearns
Anders Lundstrom U of the Pacific Jim Fiet
Lars Nyberg A Douglas Moesel
Resselear Richard Burke Newman Perry
Polytechnic Gina C. O‘Conner Robert Singh T
Institute Mark Rice T US Small Business Robert E. Berney
S. Venkataraman Administration, Office Bruce Phillips T
Of Advocacy Alicia Robb
209
A = administrator E = executive committee
D = design team leader T = member team leader
APPENDIX 2 – PHONE INTERVIEW CONTENTS

[Comparison Group sections indicated by *]
Domain Items
Introductory Conversation What kind of business are your starting?

Why do you want to start this business?
What is the name of this new business – what do you call
it when you talk about it?
Why do you expect this new business to be successful?
What major problems have you had in starting this
business?
If you were not starting this business, what would you be
doing with your time and money?
Start-Up Activities Did you spend a lot of time thinking about this new
business, or did the idea suddenly occur?
Has a business plan been prepared?
Has a start-up team been organized?
At what stage of development is the product or service this
start-up will be selling?
Have marketing or promotional efforts been started?
Has an application for a patent, copyright, or trademark
relevant this new business been submitted?
Have any raw materials, inventory, supplies, or compo-
nents for the start-up been purchased?
Have any major items like equipment, facilities, or
property been purchased, leased, or rented for the new
start-up?
Has an effort been made to define the market opportunities
by talking with potential customers or getting information
about the competition?
Have projected financial statements, such as income and
cash flow statements or a break-even analysis, been
developed?
Are you now saving money to invest in this business?
Have you invested any of your own money in this
business?
Have financial institutions or other people been asked for
funds?
Has credit with a supplier been established?
Have your arranged child care or household help to allow
yourself time to work on the business, either formally or
informally with friends and relatives?
Domain Items
Have you begun to devote full time to the business – 35 or

more hours per week?
Have any employers or managers been hired for pay –
workers that would NOT share ownership?
Has a bank account been opened exclusively for this new
business?
Has the new business received any money, income, or fees
from the sale of goods or services?
Have you taken any classes or workshops on starting a
business?
Firm Registration Activities Does the new business have its own listing in the phone
book?
Has the new business paid any state unemployment
insurance taxes?
Has the new business paid any federal social security taxes
(FICA payments)?
Has the new business filed a federal tax return?
To your knowledge, is the new business listed with Dun
and Bradstreet, the credit rating firm?
Nature of Start-Up What will be the major product or service of this new
business?
What will be the initial legal form of the business?
Would you describe this business as:
1. An independent start-up, created by an individual or
team working on their own;
2. A purchase or takeover of an existing business;
3. A franchise or multi-level marketing initiative;
4. A start-up sponsored by an existing business;
5. Something else.
How would you describe the location where this new
business is being developed?
Start-Up Team How may people will legally own this new business – only
(5,6,7,8,9*) you, you and your spouse, or you and other people or
businesses?
For each member of the start-up team . . .
1. How many total hours devoted to start-up?
2. How many hours in the past week?
3. How much money, debt or equity, put into the start-
up?
4. Years of work experience in the industry?
5. Number of others businesses helped to start?
Domain Items
6. Gender?
7. Age?
8. Ethnic background?
9. Primary occupation?
10. Contributions, other than time or money, to the start-
up?
11. Reason for providing other contribution(s)?
12. Relationship of start-up members to each other:
spouses/partners; relatives; business associates;
friends; strangers before joining the team?
Social Network How many other people, not on the start-up team, have
(Career assistance*) been particularly helpful to you in getting the business
started?
For those, up to five, that have been most helpful:
1. Gender?
2. Age?
3. Ethnic background?
4. Length of relationship with you?
5. Contributions to the start-up?
6. Reason for providing other contributions?
7. Occupation?
8. Personal experience with start-ups?
9. Relationship to respondent
Start-up funding requirements How much in total funds will the new business need
before it becomes self-sustaining?
How much cash will the new business need for the first 30
days?
How much money do you think the business will need
before it can expect any funds form the established
financial community?
Have any of the following been asked for funds:
1. Spouse or partner?
2. Friends and family?
3. Current employer?
4. A bank?
5. The Small Business Administration?
6. Venture capitalists?
7. Personal finance company?
Have the following been used to fund the new start-ups:
1. Second mortgage on start-up team residences?
2. Credit card loans?
Domain Items
How many months will it take before the new firm will be
able to pay back all start-up costs from all sources?
Market, Competition Assessment Would you describe the local economy as getting stronger,
stable, or getting weaker?
Within the first three or four years, what percentage of
your customers do you expect to be:
• Local, located within 20 miles
• Regional, located within 20–100 miles
• National, over 100 miles but within the U.S.
• International, outside the U.S.
What has been the annual growth rate, percent per year, of
your primary market?
What percentage of the primary market now goes tot he
new firm’s three largest competitors?
In a typical year, what percentage of your sales, income,
or fees would you expect to get from your three largest
competitors?
Competitive Strategy Compared to the competitors, what will be the major

advantage of this new firm?
How many months do you have to put this business in
place before any competitive advantage is lost?
Were the products and services to be provided by your
new business available in the marketplace five years ago?
Will spending money on research and development be a
major priority for this new business?
Would you consider this new business to be high tech?
How important are each of the following for the new firm
to be an effective competitor:
• Lower prices
• Quality products and services
• Serving those missed by others
• Superior location and customer convenience
• More contemporary, attractive products
• Developing new or advanced product technology
• Developing new or advanced process technology
• Technical or scientific expertise of the start-up team
Knowledge, Use of Assistance* Many programs to help new business get established have
been developed. Have you made any contact with such
programs? How many have you contacted?
Domain Items
Consider the most recent program you contacted, if any:

• Who sponsored the program?
• How many hours did you spend with the program?
• Why did you spend time with the program?
• What did the program do for you?
• Assuming a fair market price for this help, how much
would this service have cost?
• Would you recommend that those starting a new
business seek this kind of help?
• How valuable would this help be to those starting a
new business?
How many assistance programs could you contact in your
area, if you had the time?
Future expectations for the New What would you expect the total sales, revenues, or fees to
Business be in the first full year of operation? In the fifth year?
By the end of the first full year of operation, about how
many full-time employees, not counting owners, do you
expect to be working for this new business? Part- time
employees?
By the end of the fifth year of operation, about how many
full-time employees, not counting owners, do you expect
to be working for this new business? Part- time employ-
ees?
Which of the following two statements best describes your
preference for the future size of this business:
1. I want the business to be as large as possible, or
2. I want a size I can manage myself or with a few key
employees.
What percentage of the firm would you personally expect
to own five years after the firm began full operation?
On a scale of zero to one hundred, what is likelihood that
this business will become the primary source of your
family’s income?
On a scale of zero to one hundred, what is the likelihood
that this business will be operating five years from now,
regardless of who owns and operates the firm?
Personal Decision-Making Style* If someone asked you what kind of person you are, would
you say that your preferred ‘doing things better’ or ‘doing
things differently?’
How well does your preferred style of problem-solving
match the types of problems encountered in starting a new
business?
Domain Items
Consider your closest associate helping your start this

business. Would you consider this a person that preferred
‘doing things better’ or ‘doing things differently?’
How well does the problem-solving style of your closest
associate match the types of problems encountered in
starting a new business?
Current Labor Force Activity* Are you currently involved in any of the following (Yes or
no to each):
• Working for others for pay?
• A small business owner or self-employed?
• Managing a business owned by someone else?
• A homemaker?
• Retired (now or ever)?
• A student?
• Disabled an unable to work?
• Unemployed?
Work, career experience* How many total years of full time, paid work experience
have you had?
How many years of managerial, supervisory, or admin-
istrative experience?
Largest number of people ever supervised?
Highest level of education completed so far?
• Trade, major, or profession when last attended school?
• Year last attended school?
Worked on full time basis in past five years? Last year or
work?
• Suggestions made at work?
• Were suggestions adopted?
• Rewards for your suggestions?
• Typical response to employee suggestions?
Residential tenure, migration* County of residence?

How long living in this county?
How long living in this state?
How long living in the United States?
Born in United States?
• If no, country of birth? Citizen of United States?
Father born in United States?
• If no, country of birth?
Mother born in United States?
• If no, country of birth?
Domain Items
Respondent birth order* Did you grow up with brothers or sisters?

How many brothers or sisters born before you?
Family business background* Did parents every work for themselves or run their own
business?
How many different businesses did your father own or run
on his own?
• How many years?
• Largest number of paid employees?
• Did you ever work for your father’s business?
How many different businesses did your mother own or
run on his own?
• How many years?
• Did you ever work for your mother’s business?
How many different businesses did your parents own or
run on his own?
• How many years?
• Did you ever work for your parents’ business?
Among other relatives or kin, apart from your parents, did
most, some, a few, or none own their own business?
Among close friends and neighbors, did most, some, a few
or none own their own business?
From observing family, kin, and close friends with their
own businesses, what is your overall impression of
running a business as a career – very positive, positive,
neutral, negative, or very negative?
Have your family, relatives, or other close friends been
encouraging you to, or discouraging you from, starting a
business on your own?
Household structure* How many people live in your household, including

yourself, all adults and all children?
• How many of these are less than 6 years old?
• How many are 6 to 12 years old?
• How many are 13 to 17 years old?
• How many are 18 and older?
How many of those 18 and older, including yourself,
earned any money in the last year from salaries and
wages?
Did you earn any money last year from salaries and
wages?
How would you describe your current martial status?
Domain Items
Household income* What was your total household income from all sources
and before taxes last year? Be sure to include income from
work, government benefits, pensions, and all other
sources?
[If no answer, following pattern of items depends on
responses, 5 items maximum.]
Then, would you tell me, is your household’s total annual
income, before taxes:
• Over $50,000 per year?
• Over $ 5,000 per year?
Household net worth* If anyone in the household owns the home, what would be
the current value if sold today?
If there are mortgages on this home, how much is still
owed?
What would be the total current value of any other real
estate, cars or other vehicles, home furnishings, jewelry,
and the like? Do NOT include savings and investments?
What would be the current value of stocks, bonds, mutual
funds, savings accounts, checking accounts, retirement
accounts, non-incorporated business assets and the like?
What is the current value of all loans outstanding, such as
mortgages on other property, home equity loans, automo-
bile loans, credit card loans, education loans, and the like?
Please include all debts for which either the husband or
the wife are responsible.
What do you think is the current net worth of the
household? This is the total value of what you have minus
what your owe of all things owned or money owed
separately, or jointly by the husband and wife?
[If no answer, following pattern of items depends on
responses, 4 items maximum.]
Domain Items
Then, would you consider the total household net worth to

be:
• Over $1,000,000?
• Over $500,000?
• Over $750,000?
• Over $250,000?
• Over $100,000?
• Over $2,500,000?
• Over $5,000,000?
Reaction to interview Now that you have completed the interview, are you more,
or less interested in starting a new business?
APPENDIX 3 – MAIL QUESTIONNAIRE CONTENTS
[Comparison Group sections indicated by *]
Domain Descriptions of Items
Opportunity Recognition How did the original idea for starting a business develop?
Seventeen fixed response items related to role of opportu-
nity recognition and development of the business plan,
adjustments during the start-up process, and the role of
information gathering in the process.
Entrepreneurial Climate Scale* Ten items related to the community response to or support
for start-ups
Start-up Problems Five items related to the severity of start-up problems
Economic, community context Eleven items related to perception of potential infra-

structure and community support for the start-up
Financial management Three multi-part items related to the nature and sophistica-
tion of the financial management system being considered
for the start-up
Work, training background* Chart to be completed with regards to courses and years of
work experience related to nine business functional areas
(e.g. sales, production, economics, etc.).
Reasons for starting a new firm/ Eighteen items with a five-choice response scale covering
career choice* a wide range of reasons for becoming involved in a new
firm start-up.
Assessment of risk preferences* Ten fixed response items related to general preferences for
high risk/high payoff versus low risk/ reduced payoff
alternatives.
Work background* Nine items covering a variety of factual aspects of

previous work experience, such as the size of the
organization, job title, years of experience, etc.
Individual problem solving* Six fixed response items related to personal orientation
toward current work and personal goal setting.
Domain Descriptions of Items
Self-assessment I Sixteen items with five-choice responses providing a self-

assessment of orientations toward start-ups and work in
general.
Self-assessment II* Twenty-five items with five-choice responses providing a

generalized self-assessment covering a range of personal
dimensions.
Time use diaries* Time allocation to 11 activities (sleeping, work, for pay,
eating, childcare, etc.) on two days: most recent full day of
work and most recent day off.
Start-up assessments* Two items reflecting personal judgements about the

relative success and personal payoff for starting a new
firm in the United States.
Work participation history* Complete matrix indicating participation in 12 labor force

activities (work, student, self-employed, homemaker, etc.)
for each of past 11 years (1987–1998).
APPENDIX 4 – PHONE INTERVIEW PROCEDURES,

ADMINISTRATION, AND SUPERVISION
Amy Fusek, Nancy Davenport & Neli Esipova
Supervisory Staff; University of Wisconsin Survey Research Laboratory
General Interviewing Issues: The Wisconsin Survey Research Laboratory

(WSRL) telephone center has 40 Computer Assisted Telephone Interviewing
(CATI) stations. Each station is equipped with a Telematrix dual-line
telephone, an ACS binaural orator headset, and an IBM-compatible computer.
A DOS operating system with an NT network provides the environment for the
Computer Assisted Survey Systems (CASS) CATI software. The telephone
operates seven days per week. Interviewing is conducted from 9:00 am until
9:00 pm on Monday through Friday, 9:00 am until 6 pm on Saturdays, and 1:00
pm until 9:00 pm on Sundays. A toll free number given to research participants
is answered during the regular calling hours.
In September 1998, WSRL implemented its new ‘At Home interviewing’
operation. Professional interviewers are hired to conduct interviewing from
their homes. WSRL provides them the equipment necessary to conduct the
interviews and the data collected by the At Home interviewers are shipped to
WSRL weekly.
Telephone Interviewer Training. When interviewers are first hired by WSRL,
they take part in a group training session that includes both classroom and
interactive components. Trainees are provided with a copy of the WSRL
Telephone Interviewer Training Manual as a supplement to their training in
survey interviewing techniques, CATI system operation, sample flow and
distribution, interviewer responsibilities and performance standards, confiden-
tiality and privacy issues, call result coding, and specific project questionnaire
training. New hires are required to sign a statement of confidentiality. It is a
condition of employment with WSRL that they may not release information
leading to identification of survey respondents, questionnaires or study
materials, individual survey responses or survey results, and unpublished
tabulations of survey results.
After the group training, new hires work with senior interviewers in a more
detailed interactive training session called a ‘one-on-one’. During this phase,
the new hire and senior interviewer go through increasingly complicated mock
interviews that employ the techniques learned in the classroom. At this time,
trainees also use the silent entry monitoring system listen to experienced
interviewers conducting actual interviews. When it is time for the new hire to
go ‘live’ for the first time, he or she is seated next to a senior interviewer and
is monitored by a shift leader using the silent entry monitoring system.
At some point after their initial training, all interviewers attend refusal
avoidance and conversion training. During this interactive training, inter-
viewers listen to tapes of actual refusal conversions, receive written materials,
and are paired with senior interviewers to do role-playing exercises.
Telephone Interviewer Training for the National Panel Study of U.S. Business
Start-Ups: Due to the complexity and technical nature of the National Panel
Study of U.S. Business Start-Ups, new hires were not immediately trained in
this study. All experienced interviewers who worked in this project first
attended a briefing session as a group. During this session, Paul Reynolds and
Nancy Carter provided the background of the study, briefing materials were
presented and reviewed, and the questionnaire was examined question by
question.
Throughout the period of data collection for this study, project-specific
information was available in each CATI interviewing station project book. The
materials included answers to frequently asked questions about the study, test
specifications for use when doing a practice interview before going ‘live’ in the
project, definitions for the technical terms in the questionnaire, refusal
avoidance and conversion scripts developed specifically for the study, and lists
of consortium members. Additional information available to interviewers
included copies of published articles about the study and a printed copy of the
questionnaire for reference.
Quality Control: Monitoring and coaching are performed by various levels of
supervisory staff in the Telephone Center. The silent entry monitoring system
provides the ability to listen to both the interviewer and the respondent. When
the front line supervisor monitors the interviewers they are able to provide
coaching to the interviewers about the technique. At Home interviewers
working on this study were required to tape a portion of their completed
interviews. After they were shipped to WSRL, a telephone center supervisor
reviewed them for interviewing technique and feedback was provided.
Telephone Center supervisors review a sample of comments and coding
associated with calls made for the National Panel Study of U.S. Business
Startups. After each call, the interviewer records the comments about what
happened on that call. This is reviewed for accuracy and thoroughness. This
was especially important on this study because of the need to determine if the
correct respondent that was initially screened had been contacted and because
NE eligibility needed to be determined before conducting the full interview.
Interviewer capacity for obtaining respondent cooperation, reflected in
response rates and call-back refusals, was reviewed on a regular basis.

Interviewers with poor success at obtaining respondent cooperation on the
National Panel Study of Business Start-Ups were assigned to other projects.
Data Collection Procedures: Introduction to the Interview. The script used to

introduce the study to the respondent is a very important part of the interview.
The introduction used for this study was determined through the pilot study to
be the most productive. In order to maximize the completion rate, the
introduction script reminded the respondent about his or her participation in the
Market Facts screening study, advised the respondent of the monetary
compensation for participation, and was tailored to the Nascent Entrepreneur
questionnaire versus the Comparison Group questionnaire.
Data Collection Procedures: Calling Strategies: The development of calling

strategies is another aspect critical to the success of a study. WSRL computer
software is programmed to allow multiple calls to a phone number, or sample
point. Calls to a sample point are typically made during weekday mornings,
afternoons, and evenings, during Saturday mornings and afternoons, and during
Sunday afternoons and evenings. However, after the pilot study demonstrated
that our best opportunity for reaching a respondent in this study was during the
evening hours or on weekends, we focused the majority of our calls during the
evening and weekend shifts. In addition, we attempted to make the first call on
the same day of the week and at the same time of day as the Market Facts
screening interview was completed.
Once contacted, a respondent may wish to make an appointment to complete
the interview at a more convenient time. The interviewer will enter this
appointment into the computer so the sample point is not called again until that
appointed time. Often this feature is used after a respondent begins the
interview but is unable to complete it in one session. If the respondent does not
wish to set up a firm appointment time or is unavailable when called back at the
appointed time, the computer software allows the sample point to rotate
through the system to be called back at randomly targeted times of the day and
week.
If a respondent refuses to participate, the interviewer enters comments into
the computer describing the details of the refusal. A supervisor will review
these comments and determine whether to call the respondent again or not. In
households where there has been a recent death, serious illness, or the person
is emphatic about not being called again, the phone number is taken out of
circulation. Otherwise, after at least three days has passed since the refusal,
another interviewer will attempt to call the respondent again.
Data Collection Procedures- Refusal Avoidance and Conversion: Interviewers

were provided with refusal avoidance scripts specific to both the Nascent
Entrepreneur and Comparison Group surveys. Senior interviewers with
previous experience in both surveys helped to develop the scripts. The scripts
were readily available in each CATI interviewing station project book.
Depending on the nature of the refusal or objection, interviewers could use
tactics such as naming members of the consortium from the respondent’s area,
offering the titles of published articles, or mentioning that the interview could
be done in several segments if time was a factor.
Refusal conversion is a general practice attempted in almost every study at
WSRL, this study being no exception. However, due to the nature of the
refusals to this study, we had very limited success in our conversion efforts.
Tracking Operational Outcomes. Each replication or wave of sample,

represented by phone numbers and first names, was classified by time zone for
calling convenience. These ‘sample points’ were then issued to the inter-
viewers. Interviewing was performed in the WSRL telephone facility and by
the At Home operation.
Systematic, periodic reviews were completed the of active sample (sample
points in the data collection process) was conducted to determine (1) the
amount of sample that we would need to complete the study and (2) to make
decisions about which sample points may justify withdrawal from the cohort.
Weekly status reports provided summary information on the current status of
each sample point and facilitated continuous assessment of progress on the
project. Daily status reports were used to determine the allocation of the
interviewing resources available on each day.
In addition, active sample points with high levels of calls (more than 12
attempts) were reviewed to determine whether it was worthwhile to continue
calling. The decision to discontinue calling a sample point could be made for
several different reasons. Examples include receiving a firm refusal could not
be converted into a consent to the interview, a large number of calls without
contact with the respondent, or contact with the respondent without completion
of the interview (such respondent delays in setting an appointment or missing
scheduled appointments).
After a case by case review, a decision to pursue ‘trouble’ sample points
began with the development of a specific calling strategy for the interviewer.
This outline could include a suggested time to call back, a suggested approach
to convince the respondent to talk to us or to get by a gatekeeper, or an
instruction to leave a message on the answering machine on the next call.
Analysis of the periodic sample status reports also provided information on

the yield of completed interviews and the reasons why some of the sample
points from Market Facts failed to produce completed interviews. Such non-
completes may have reflected non-response or ineligibility. The non-response
and ineligibility rates calculated from the reports were used to forecast the yield
of completed interviews for the survey given the current condition. These
forecasts were used to adjust the size of the first phase screened sample
obtained from Market Facts.
Variation in Incentives: Three different incentive treatments were used in the
pilot study immediate prior to the main data collection: (1) no money, (2) a
single payment of $35 for phone and request for mail completion, (3) a
payment of $25 for phone completion followed by a second payment of $25 for
mail questionnaire completion. Both money payment conditions resulted in a
higher response rate and the results suggested that a single payment of $35 lead
to more completions. As a result, a second experiment was designed to test the
two money conditions, single payment of $35 upon completion of the phone
interview and two payments of $25 each, for a total of $50. Both NE and CG
respondents were randomly assigned to the two conditions. The general results
were:
Condition\Outcomes Total Explicit Complete Phone Mail Returned/

sample Refusals interview Phone completions
$35/$0 219 15.1% 80.8% 52.5%

$25/$25 972 1.9% 72.5% 70.2%
All cases 1191 4.3% 74.1% 66.7%
The $25/$25 payment condition seemed to provide the best overall coopera-
tion.
APPENDIX 5 – MAIL QUESTIONNAIRE PROCEDURES

AND ADMINISTRATION
Linda J. Penaloza
Director, University of Wisconsin Survey Research Laboratory
Both Nascent Entrepreneurs (NE’s) and the Comparison Group sample (CG.s)
were treated identically for data collection procedures. The following data
collection procedures apply to both groups.
Each respondent was offered a sum of money to complete the interviews.
They were told that the project included a self-administered questionnaire that
would be mailed to them after the interview was completed. At the end of the
phone interview, interviewers asked the respondents for name and address for
sending the check and the questionnaire. Nearly all respondents (98%) agreed
to provide their name and address, and said they would complete the self-
administered questionnaire.
With the approval of the principal investigator, an experiment on the
incentive structure was built into the data collection design. Approximately 85
percent of the respondents were offered $25 to complete the interview and
another $25 to complete the mailed survey. The remaining 15 percent of the
respondents, chosen at random, were offered $35 for the entire project
(both telephone and mail surveys). The results are summarized above in
Appendix 4.
Names and addresses were accumulated on a weekly basis, and the mailings
were sent out weekly, usually within seven to ten days of the telephone survey.
The mailings consisted of a cover letter (see attachment) addressed to the
respondent and individually signed, a 12-page survey booklet, a stamped return
envelope, and a hand-written check for either $25 or $35. To increase the
personalization of the mailing, the envelope was stamped with a first-class
postage stamp.
Each individual in the sample received a reminder postcard seven days after
the initial survey mailing. Three weeks after the initial survey mailing, each
non-respondent to the mail survey received a second copy of the mail survey,
with a second personalized and hand-signed cover letter, and a stamped return
envelope. Non-respondents to the second mailing were called beginning
approximately two to three weeks after this point. As the surveys were sent out
in weekly batches, the follow-up mailings and telephone calls were
individualized.
All those who had been paid $25 for the telephone interview were sent a
second check for $25 with a personal thank-you note as soon as they returned
the mail survey. Those who had been paid $35 for the telephone interview
received no further money or contact from the Lab.

National Panel Study of U.S. Business Startups: Background and Methodology

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National Panel Study of U.S. Business Startups: Background and Methodology

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NATIONAL PANEL STUDY OF U.S.

BUSINESS STARTUPS:1 BACKGROUND

Where do new businesses come from? Few questions are as important in

INTRODUCTION TO THE PHENOMENA: EMERGENCE

Databases for the Study of Entrepreneurship, Volume 4, pages 153–227.

• Economic context, including national conditions, local conditions, and

• Nature and sequence of start-up activities pursued in the firm gestation

the scholarly community. Research programs considered scientifically accept-

HISTORY OF THE NASCENT ENTREPRENEUR

The optimal strategy seems quite straightforward. Locate individuals involved

a systematic procedure to identify the social network of a representative sample

supported by the Wisconsin Housing and Economic Development Authority as

THE RESEARCH PROCEDURE

questionnaire, but require long and boring repetition in a phone interview.

relayed to the University of Wisconsin Survey Research Laboratory. The

Table 1. Indicators of Respondent Cooperation

Respondent participation/Response rates

Time, effort required to complete data collection:

Nascent entrepreneur reaction to phone interview

Respondent completion of items

Comparison Group Selection:

With Weights [variable label]: WEIGHT VOL1WGT PHONEWT MAILQWT

Table 3. Effects of Weights on Gender by Age Distributions of Nascent

UNWEIGHTED WEIGHTED UNWEIGHTED WEIGHTED

Total Respondents 1,930 1,953 668 658

Statistical Significance 0.00006 0.00010 0.01033 0.00646

Table 4. Effects of Weights on Gender by Ethnicity Distributions of Nascent

UNWEIGHTED WEIGHTED UNWEIGHTED WEIGHTED

Total Respondents 1,930 1,953 669 669

Statistical Significant 0.00010 0.11629 0.21101 0.40142

Table 5. Sample Compared with Population: Selected Characteristics

No of Cases 1,000 for U.S.) 195,568 223 669 223 669

HH Net Worth: Negative 4% 4% 5% 4%

(1) ‘http://www.census.gov/population.estimates/nation/intfile2–1.txt’ for 1 Jan 99 [27 Aug 99].

States. Table 5, however, includes both weighted and unweighted distributions

Economic Sector All U.S. Start-Up Men Women Men Women

[Number of cases- Weighted/Un-weighted] 5,478,047 669 444 226 327 342

entrepreneurs indicates a very similar distribution, with a slightly higher

Table 7. Structure of the Data Set

Name Unit of analysis Number of U.S. Fixed Open

National screening Typical Adult 31,261 55 20 None

Nascent entrepreneurs 2,024 55 27 1

Phone interview Nascent entrepreneurs 669 804 116

Comparison group 223 311 47

Mail questionnaire Nascent entrepreneurs 476 351 6

Comparison group 176 291 4

Table 8. Interview Topics: Nascent Entrepreneur and Comparison Group

NE Schedules CG Schedules Phone Interview Topics

X Introductory Conversation on Start-up, Reasons, Expectations

Mail Questionnaire Topics

Table 9. Interview Topics: Nascent Entrepreneur Follow-Up Interviews

Infant Active Dormant Quit Phone Interview Topics

X X X X How decision made on current status of start-up

Mail Questionnaire Topics

Table 10A. Analysis Topics: Context and Start-up Activity

Table 10B. Analysis Topics: Personal Dispositional Factors

Attribution Processes and Entrepreneurial Persistence; University of Houston: Elizabeth

Table 10B. Continued

Exploring the Risk perceptions of the Entrepreneurs; Univ. of Pennsylvania/Widener University:

Table 10C. Analysis Topics: Personal Characteristics, Background

Table 10C. Continued

Table 10D. Analysis Topics: Start-up Process: Entrepreneurial Discovery

identified through comparison with public data, such as phone directories,