Habitual Entrepreneurs

Abstract

Entrepreneurial behaviour is increasingly recognized as being heterogeneous. One notable source of heterogeneity is variations in the level and nature of entrepreneurs' experience. This has led to the distinction between experienced ('habitual') entrepreneurs and first-time ('novice') entrepreneurs. A number of high profile entrepreneurs have successfully owned several businesses. These individuals are known as habitual entrepreneurs, to reflect their ownership in more than one business, either sequentially (i.e. serial entrepreneurs) or concurrently (i.e. portfolio entrepreneurs). Although habitual entrepreneurs are widespread and have received media attention, there has been limited conceptual and theoretical understanding of this group. This article seeks to address this void by utilizing human capital theory to provide a framework for studying habitual entrepreneurs.

Full text

Foundations and Trends
R

in
Entrepreneurship
Vol. 4, No. 4 (2008) 309–450
c
 2008 D. Ucbasaran, G. A. Alsos, P. Westhead
and M. Wright
DOI: 10.1561/0300000014
Habitual Entrepreneurs
Deniz Ucbasaran
1
, Gry Agnete Alsos
2
,
Paul Westhead
3,4
and Mike Wright
5
1
Nottingham University Business School, Jubilee Campus, Wollaton Road,
Nottingham, NG8 1BB, England, UK, deniz.ucbasaran@nottingham.ac.uk
2
Nordland Research Institute, NO-8049 Bodø, Norway,
gry.alsos@nforsk.no
3
Durham Business School, Durham University, Mill Hill Lane, Durham,
DH1 3LB, England, UK, paul.westhead@durham.ac.uk
4
Bodø Graduate School of Business, NO-8049 Bodø, Norway,
5
Center for Management Buy-out Research, Nottingham University
Business School, Jubilee Campus, Wollaton Road, Nottingham, NG8 1BB,
England, UK, mike.wright@nottingham.ac.uk
Abstract
This review explores the emerging debate relating to habitual
entrepreneurs. Habitual entrepreneurs (also known as experienced or,
latterly, repeat entrepreneurs) are a widespread phenomenon. An
entrepreneur’s business ownership experience may differ according to
the number of private businesses s/he has established, inherited and/or
purchased. The nature of an entrepreneur’s business ownership expe-
rience may not be homogeneous. Some habitual entrepreneurs may
exit one private business before owning a subsequent one (i.e., serial
entrepreneurs), while others may start/purchase and retain ownership
of several private businesses concurrently (i.e., portfolio entrepreneurs).
This review compares the profiles, behavior, and contributions of

habitual entrepreneurs (i.e., serial and portfolio entrepreneurs) and
novice entrepreneurs (i.e., entrepreneurs with no prior business own-
ership experience). The theoretical and policy cases for distinguishing
between different types of entrepreneur are made. Differences between
types of entrepreneur are examined in terms of their human capital pro-
files (e.g., education, motivations, and skills). Behavioral differences
are examined with regard to the acquisition of resources, opportu-
nity identification, pursuit and mode of exploitation, and organiza-
tional strategies. Finally, entrepreneur and firm performance differences
between the different types are reviewed. Policy and practitioner impli-
cations are raised and assuming an interventionist stance, the case for
targeted assistance toward habitual, serial, and portfolio and novice
entrepreneurs is discussed. Avenues for additional research attention
are highlighted relating to the following themes: the nature of oppor-
tunities; information search; leveraging human capital; entrepreneurial
teams; measures of habitual entrepreneurship; the role of the external
environment; contexts for habitual entrepreneurship; and methods and
data issues.

1
Introduction
Considerable debate continues to surround the notion of entrepreneurs
and entrepreneurship. Numerous theories have been developed to
explain the activities of entrepreneurs and the organizations they
own (Cuevas, 1994; Westhead and Wright, 2000). Entrepreneurship
theorists generally suggest that the entrepreneur is the key unit of
analysis (Shane, 2000; Davidsson and Wiklund, 2001). It is very
difficult to present an over-arching theory of entrepreneurship, because
there is no consensus surrounding the definition of entrepreneurs or
the entrepreneurial process. Definitions have focused upon “who the
entrepreneur is” (i.e., the entrepreneur as a particular type of person
or the entrepreneur as the product of a particular environment), or
“what the entrepreneur does” (i.e., the entrepreneur as the performer
of a particular role in society, entrepreneurship as a specific input in the
economy, entrepreneurial events, and entrepreneurial processes) (Gart-
ner, 1990). Enterprise scholars have traditionally focused on the profiles
of entrepreneurs and what the entrepreneur does (Gartner, 1989), as
well as the performance of individual entrepreneurs and firms (West-
head et al., 2005a,b,c). Venkataraman (1997, p. 120) has, however, sug-
gested that the field of entrepreneurship research should seek “... to
311

312 Introduction
understand how opportunities to bring into existence ‘future’ goods
and services are discovered, created, and exploited, by whom, and with
what consequences.”
Beyond definitional problems, an additional source of difficulty
in understanding entrepreneurship stems from the heterogeneity of
entrepreneurs. One notable source of heterogeneity is variations in the
level and nature of entrepreneurs’ experience. The nature and impact of
entrepreneurial experience, in particular business ownership experience,
is attracting increasing attention (Chandler and Jansen, 1992; Reuber
and Fischer, 1999; Erikson, 2003; Westhead et al., 2004, 2005a,b,c).
Information relating to experience accumulated by an entrepreneur
is widely used by practitioners (i.e., financial institutions and enter-
prise agencies) to screen applications for assistance (MacMillan et al.,
1985; Westhead and Wright, 1999). In this review, we focus in par-
ticular on business ownership experience. Business ownership by key
decision-makers is an important defining feature of entrepreneurship
(Hawley, 1907; Gartner and Shane, 1995). Variations in business owner-
ship experience have led to the distinction between experienced (habit-
ual) entrepreneurs and first-time (novice) entrepreneurs. This review
focuses on habitual entrepreneurs who have the potential to leverage
their business ownership experience in subsequent ventures. Habitual
entrepreneurs will be compared against novice entrepreneurs who do
not have any prior business ownership experience to draw upon.
In comparison to novice entrepreneurs, habitual entrepreneurs with
prior business ownership experience may have broadened their knowl-
edge and skill bases to ensure that they can leverage a more diverse
human capital (Becker, 1975) profile. A novice entrepreneur who can
only leverage the experience accumulated with reference to their cur-
rent venture may be unable to move down the experience curve relating
to the issues and processes associated with identifying and exploiting
entrepreneurial opportunities (i.e., those relating to the start-up or pur-
chase of businesses) (MacMillan, 1986).
The wealth creation potential of habitual entrepreneurs is attracting
growing research attention (Westhead and Wright, 1998a,b, 1999; West-
head et al., 2003a; Rerup, 2005; Baron and Ensley, 2006). Scott and
Rosa (1996) have argued that habitual entrepreneurs are an important

313
sub-group of entrepreneurs who have the potential to make a fundamen-
tal contribution to the process of wealth creation in society. This wealth
creation relates both to private returns in terms of financial gains at the
personal level and for investors, as well as at the societal level through
the creation of ventures that generate employment and taxation rev-
enues that may not otherwise have occurred. Moreover, studies that
specifically focus on habitual entrepreneurs should facilitate a broader
understanding of the entrepreneurial process (Rosa, 1998), as well as
shed light on the sources of wealth creation.
Studies exploring the relationship between business ownership expe-
rience and outcomes have tended to focus on whether or not the
entrepreneur has experience and/or the amount of experience (West-
head and Wright, 1998a; Baron and Ensley, 2006). These studies gen-
erally assume that more experience (i.e., extent) will be associated
with superior outcomes. For example, McGrath and MacMillan (2000)
provocatively asserted that repeat entrepreneurs (i.e., entrepreneurs
with multiple business ownership experience, also known as habitual
entrepreneurs) might have an “entrepreneurial mindset” that prompts
them to search out opportunities with enormous discipline, and to pur-
sue only the very best opportunities. There is limited empirical evidence
to support these assertions. Further, there is inconclusive evidence
relating to the link between an entrepreneur’s prior business ownership
experience and superior levels of firm performance (Stuart and Abetti,
1990; Birley and Westhead, 1993; Westhead and Wright, 1998a,b). Pre-
vious studies have generally failed to examine whether the nature of
experience (e.g., how experience is acquired and whether experience is
associated with business failure (or success)) is linked to the number of
business opportunities identified and the quality (i.e., wealth creation
potential) of opportunities exploited.
Habitual entrepreneurs can accumulate both assets and liabilities
associated with their previous business ownership experience (Starr
and Bygrave, 1991). Hence, it may be a myth to suggest that all habit-
ual entrepreneurs are successful and outperform novice entrepreneurs
(Ucbasaran et al., 2006a). The current stock of novice entrepreneurs
is the breeding ground (i.e., pool) for future experienced habitual
entrepreneurs. Some highly successful entrepreneurs may have also

314 Introduction
been associated with prior business “failures” which represent poten-
tially valuable opportunities for learning, and the revision of expecta-
tions (Sitkin, 1992; McGrath, 1999).
In response to calls for more research to focus specifically upon
habitual entrepreneurs (and sub-types such as serial and portfolio
entrepreneurs) (Wright et al., 1997a,b; Westhead and Wright, 1998a,b;
Ucbasaran et al., 2001; Carter and Ram, 2003), several recent stud-
ies have been conducted in a number of developed economies. In this
review, we examine theory and evidence relating to different “types” of
entrepreneurs with specific focus on the level and nature of their prior
business ownership experience. Emerging studies examining broader
dimensions of “experience” are beyond the remit of this review.
This review is organized as follows. The next section provides
the definitions of different types of entrepreneurs adopted in this
review and their justification. An examination of the scale of habit-
ual entrepreneurship is presented in Section 3. Guided by insights from
human capital theory and cognitive theories, the theoretical case for
distinguishing between different types of entrepreneurs with reference
to their prior business ownership experience profiles is then raised in
Section 4.1. The policy case for distinguishing between different types of
entrepreneurs is highlighted in Section 4.2. Assuming an interventionist
stance, the case for tailoring policy assistance to the needs of specific
types of entrepreneurs, rather than the provision of broad “blanket”
policies to all firms, is made. Empirical evidence relating to habitual
entrepreneurs is summarized in Section 5. Due to space constraints, not
all the themes explored in previous studies are reviewed. This review
focuses on the following themes: human capital differences, behavioral
differences, and firm and entrepreneur performance. With reference to
the discussed evidence base, several policy and practitioner implica-
tions are highlighted in Section 6. Despite recent research progress, sev-
eral gaps in the knowledge base relating to the habitual entrepreneur
phenomenon still exist. Avenues for future research are presented in
Section 7. Finally, conclusions are summarized in Section 8.

2
Defining Novice, Habitual, Serial,
and Portfolio Entrepreneurs
Defining habitual entrepreneurs is a conceptually difficult task. There
is no widely generally accepted definition. A variety of definitions have
been presented and used. It is, therefore, difficult to compare evidence
from studies that have selected contrasting definitions (MacMillan,
1986; Donckels et al., 1987; Birley and Westhead, 1993; Kolvereid and
Bullv˚ag, 1993; Hall, 1995; Alsos and Kolvereid, 1998; Westhead and
Wright, 1998a,b,c; Pasanen, 2003; Alsos and Carter, 2006). In this sec-
tion, the operationalized categories of entrepreneurs explored in this
review are discussed, but prior to this discussion the operationalized
definition of an entrepreneur is presented.
Entrepreneurs are defined with regard to three well-established
dimensions: business ownership, a decision-making role, and an abil-
ity to identify and exploit opportunities. Business ownership and a
decision-making role within the venture are recognized as important
dimensions of entrepreneurship (Hawley, 1907; Marshall, 1920). Fur-
ther, given the prevalence of team-based entrepreneurship (Birley and
Stockley, 2000; Ucbasaran et al., 2003a), this ownership may involve
minority or majority equity stakes. Emphasizing the importance of
ownership, Fama and Jensen (1983) argue that classic entrepreneurial
315

316 Defining Novice, Habitual, Serial, and Portfolio Entrepreneurs
firms are those that combine residual risk bearers and decision-makers
in the same individuals. By creating or purchasing an organization, the
entrepreneur establishes ownership rights over the means of production.
Ownership rights allow the entrepreneur to make decisions about the
co-ordination of an organization’s resources. Entrepreneurs also have
to assume the risks associated with business ownership (Gartner and
Shane, 1995). To obtain an income or profit, the entrepreneur must own
or control the resources/activities s/he co-ordinates. Entrepreneurial
profit is seen as the residual between the cost of resources and the uncer-
tain value they have once they have been combined. Entrepreneurial
profit is the reward for bearing this uncertainty (Hawley, 1907). Man-
agers with no ownership rights do not accrue entrepreneurial profits
(or losses). The uncertainty arising from the co-ordination of a firm’s
resources are borne by entrepreneurs (i.e., individuals with owner-
ship rights) rather than managers. When the interests of owners (i.e.,
entrepreneurs) and managers are separated, the performance of the firm
may be retarded by agency problems. This conflict is potentially more
likely in older and larger organizations (Westhead et al., 2001), and
those seeking external capital to ensure business development. Various
remuneration packages (i.e., performance related pay, share options,
etc.) may be offered to managers to ensure the interests of firm owners
are pursued. Managers who take-up share options can gain a minor-
ity ownership stake (Bruce and Buck, 2005). However, the ownership
stake may not be large enough to encourage the latter managers to
adopt an entrepreneurial mindset and exhibit entrepreneurial behav-
ior. Management buy-out (MBO) studies (i.e., firms where managers
have significant ownership stakes) consistently show that firm perfor-
mance can be enhanced after a MBO, and the firm can exhibit more
entrepreneurial behavior (Wright et al., 1992, 2000; Zahra, 1995). These
findings lend support to the view that ownership and decision-making
are central to entrepreneurship.
The emerging opportunity-based perspective suggests that
entrepreneurship involves the identification and exploitation of at least
one business opportunity (Shane and Venkataraman, 2000; Ardichvili
et al., 2003). A business opportunity can relate to new firm formation
or the purchase of an existing private firm (Cooper and Dunkelberg,

317
1986). Entrepreneurs can, therefore, be viewed as having a minority or
majority ownership stake in at least one business that they have either
created or purchased, within which they are a key decision-maker.
A categorization of the nature of entrepreneurship by type of
entrepreneur is summarized in Table 2.1. The entrepreneurs covered
by cells 1, 2, and 3 are involved in the founding of a new independent
business. Novice founders (cell 1) have only founded one business, while
serial founders (cell 2) and portfolio founders (cell 3) have founded more
than one business sequentially or concurrently/simultaneously, respec-
tively. The entrepreneurs in cells 4, 5, and 6 have acquired an owner-
ship stake in an established independent business. The term “acquirer”
is used to reflect the fact that ownership in the existing business is
acquired even though this may take a variety of forms. Acquirers
include individuals from outside, who undertake a straight purchase
or a management buy-in (MBI), and individuals from inside the firm
who undertake a management buy-out (MBO). While novice acquir-
ers (cell 4) may have only acquired a single business, serial acquirers
(cell 5) and portfolio acquirers (cell 6) have purchased more than one
business sequentially or simultaneously, respectively. The categoriza-
tion of entrepreneur types summarized in Table 2.1 has, however, not
been universally adopted in previous studies but offers a broad canvas
for the development of research into entrepreneurship.
Table 2.2 summarizes the habitual entrepreneur definitions previ-
ously operationalized. To allow meaningful comparisons to be made
between studies, consistent definitions need to be universally opera-
Table 2.1 Types of entrepreneurs by independent business ownership experience.
Multiple activity
Single activity Habitual entrepreneurs
Nature of
entrepreneurship
Novice
entrepreneurs
Sequential
serial entrepreneurs
Simultaneous
portfolio entrepreneurs
Involving new
businesses
Novice founders Serial founders Portfolio founders
12 3
Involving existing
business
Novice acquirers Serial acquirers Portfolio acquirers
45 6

318 Defining Novice, Habitual, Serial, and Portfolio Entrepreneurs
Table 2.2 Reported definitions and prevalence of habitual entrepreneurship.
National
context
Reported prevalence
Study Definitions operationalized Habitual Serial Portfolio
Cross (1981) Habitual entrepreneur: Previous experience of founding
a new company.
Scotland 11.5%
Storey (1982) Habitual entrepreneur: Previous business ownership
experience.
Cleveland,
England
32.0%
MacMillan (1986) Habitual entrepreneur: Individual who has had experience
from multiple business start-ups and simultaneously
is involved in at least two businesses.
Ronstadt (1988) Among persons with a career as independent founding
entrepreneurs, those who had created more than one
venture (practicing/ex-entrepreneurs).
USA 39.9%
Westhead (1988) Habitual entrepreneur: Previous experience of founding
an independent business.
Wales 34.2%
Kolvereid and Bullv˚ag
(1993)
Persons that had created and still owned at least two
businesses.
Norway,
New Zealand,
Great Britain
34%
18%
13%
Schollhammer (1991) Multiple entrepreneurs: Persons involved in the formation of
and having an equity stake and managerial responsibility
in two or more ventures, where each venture had
independent legal identity.
USA,
Southern
California
51%
Birley and Westhead
(1993)
Habitual founders: Founders that had established at least
one other business prior to the start-up of the current
new independent venture.
Novice founders: Individuals with no previous experience
of founding a business.
Great Britain 37.3% 12%
a
(Continued)

319
Table 2.2 (Continued).
National
context
Reported prevalence
Study Definitions operationalized Habitual Serial Portfolio
Kolvereid and Bullv˚ag
(1993)
Experienced business starters: Founders that had
established at least one business prior to the current one.
Successful multiple business starters: Experienced business
starters who still owned the most recent of the prior
established businesses (here: Portfolio starters).
Norway 47.2% 31%
Starr et al. (1993) Experienced entrepreneurs: Individuals with a track record
of forming, managing and owning equity stake in at least
two new ventures which eventually went public.
Scott and Rosa (1997) Multiple business owners: Persons who have an ownership
share in more than one independent business.
Scotland 14%
Alsos and Kolvereid
(1998)
Novice founder: Founder who has not started previous
businesses.
Serial founder: Founder who has started at least one
previous business, but this (these) business(es) has (have)
been sold or closed down.
Parallel founder: Founder who has started at least one
previous business, and have retained a previous business
Norway 35.8% 20.1% 15.7%
Taylor (1999) Habitual entrepreneur: Previous business ownership
experience.
England,
Australia,
Malaysia
41.8%
49.2%
38.6%
18.5%
23.8%
4.8%
23.3%
25.4%
33.7%
Westhead and Wright
(1998a)
Serial founder: Individual who sold their original business
but at a later date established or purchased another
business.
Portfolio founder: Individual who retained the original
business he/she established but at a later date
established or purchased another business.
Habitual founder: Serial or portfolio founder.
Great Britain 37.4% 25.3% 12%
(Continued)

320 Defining Novice, Habitual, Serial, and Portfolio Entrepreneurs
Table 2.2 (Continued).
National
context
Reported prevalence
Study Definitions operationalized Habitual Serial Portfolio
Carter (1998) Portfolio owners: Farm owners who owned one or more
additional firms.
Diversified activities at farms: Farms with other business
activities, or other businesses own by the farmer or located
at the farm.
England 21%
Spilling (2000) Multiple entrepreneurs: Managers that had been involved in two
or more start-ups.
Portfolio owners: Managers who had owner interests in two or
more companies.
Norway 28% of
managers
13% of
managers
b
Iacobucci (2002) Business group: Set of companies, which were legally distinct
and controlled by the same entrepreneur (or by members
of the same family).
Italy 25%
of firms
Alsos et al. (2003) Portfolio farm households: Farm households (husband and/or
wife) owning or managing another business in addition to the
farm business.
Norway 30.9%
Pasanen (2003) Portfolio owners: Individuals who owned more than one business
at a time.
Serial owners: Individuals who owned one business after another
but effectively only one business at a time.
Multiple entrepreneurs: SME owner-managers who were serial
and portfolio owners simultaneously.
Finland 50% 10% 40%
Westhead et al.
(2003a)
Habitual entrepreneurs: Individuals with prior minority or
majority business ownership experience either as business
founder, inheritor or purchaser of an independent business
who currently owned a minority or majority equity stake
in an independent business that was either new, purchased
or inherited.
Scotland 43.5% 24.9% 18.6%
(Continued)

321
Table 2.2 (Continued).
National
context
Reported prevalence
Study Definitions operationalized Habitual Serial Portfolio
Serial entrepreneurs: Individuals who had sold/closed a business
which they had a minority or majority ownership stake in,
and they currently had a minority or majority ownership stake
in a single independent business that was either new,
purchased or inherited.
Portfolio entrepreneurs: Individuals who currently had minority
or majority ownership stakes in two or more independent
businesses that were either new, purchased and/or inherited.
Haynes (2003) Prior entrepreneurial experience: Prior experience from launching
a new venture.
USA 29.2%
Alsos and Carter
(2006)
Novice entrepreneur: Entrepreneur with no current or previous
owner-management position in another business.
Serial entrepreneur: Entrepreneur with previous but no current
owner-management position in another business.
Portfolio entrepreneur: Entrepreneur with current
owner-management position in another business.
Norway 21.5% 13.7% 17.8%
Ucbasaran et al.
(2006a,b,
2008b)
Novice entrepreneurs: Individuals with no prior (majority or
minority) business ownership experience, either as a business
founder or a purchaser of an independent business, who
currently owned a minority or majority equity stake in an
independent business that was either new or purchased.
Habitual entrepreneurs: Individuals who held or had held a
minority or majority ownership stake in two or more
businesses, at least one of which was established or purchased.
Great Britain 51.8% 22.2% 29.6%
(Continued)

322 Defining Novice, Habitual, Serial, and Portfolio Entrepreneurs
Table 2.2 (Continued).
National
context
Reported prevalence
Study Definitions operationalized Habitual Serial Portfolio
Serial entrepreneurs: Individuals who had sold or closed at
least one business in which they had a minority or
majority ownership stake, and currently had a minority or
majority ownership stake in a single independent business.
Portfolio entrepreneurs: Individuals who currently had a
minority or majority ownership stake in two or more
independent businesses.
Great Britain
Bengtsson (2007) Serial entrepreneurs: Entrepreneurs involved in at least two
companies.
USA
Gompers et al.
(2007)
Serial entrepreneurs: Entrepreneurs who founded more than
one VC backed firm (previous non-VC backed firms
excluded and serial and portfolio entrepreneurs
not distinguished).
USA 7% to 14%
depending on
year
Hsu (2007) Number of start-ups founded USA 54%
a
Calculated from information provided in Birley and Westhead (1993).
b
This represents 21% of owner-managers.

323
tionalized. With this aim in mind, the following definitions of novice,
habitual, serial, and portfolio entrepreneurs have been proposed (West-
head et al., 2003b; Ucbasaran et al., 2006a):
Novice entrepreneurs are individuals with no prior minority or
majority business ownership experience either as a business
founder or as purchaser of an independent business who cur-
rently own a minority or majority equity stake in an inde-
pendent business that is either new or purchased.
Habitual entrepreneurs are individuals who hold or have held a
minority or majority ownership stake in two or more busi-
nesses, at least one of which was established or purchased.
Habitual entrepreneurs are sub-divided as follows:
Serial entrepreneurs are individuals who have sold/
closed at least one business which they had a minority
or majority ownership stake in, and currently have a
minority or majority ownership stake in a single inde-
pendent business; and
Portfolio entrepreneurs are individuals who currently
have minority or majority ownership stakes in two
or more independent businesses.
The four broad categories of entrepreneurs can be easily opera-
tionalized. As discussed above, entrepreneurship is not a single action
event, and some current novice entrepreneurs will become future
habitual entrepreneurs. The business ownership experience profiles of
entrepreneurs can differ with some entrepreneurs reporting a string
of business “successes” or “failures”, whilst other entrepreneurs might
report a mixture of business “successes” and “failures.” Additional sub-
types of serial and portfolio entrepreneurs can and should be explored
in future studies. Wright et al. (1997a), for example, identified the
following three types of serial entrepreneurs: venture repeaters, organic
serials, and serial dealmakers. In Section 7, entrepreneur heterogeneity
and deviations from the utilized categories of novice, serial, and port-
folio entrepreneurs are highlighted with reference to additional avenues
for future research attention.

3
The Scale of the Habitual Entrepreneur
Phenomenon
Several studies have highlighted the heterogeneity of entrepreneurs
(Woo et al., 1991; Birley and Westhead, 1994; Westhead, 1995). As
intimated above, one notable source of heterogeneity is variations in
the level and nature of entrepreneurs’ business ownership experience.
Variations in experience have led to the distinction between experi-
enced (habitual) entrepreneurs and first-time (novice) entrepreneurs.
Table 2.2 shows that habitual entrepreneurs are a widespread phe-
nomenon. The proportion of habitual entrepreneurs identified in the
United Kingdom studies ranges from 12% (Cross, 1981) to 52%
(Ucbasaran et al., 2006a); this may indicate increased prevalence of the
phenomenon but the differences are partly attributable to variations in
operationalized definitions, and the industrial activities focused upon
between studies. High proportions of habitual entrepreneurs have also
been detected in the United States (51%–64%) (Schollhammer, 1991;
Ronstadt, 1988), Finland (50%) (Pasanen, 2003), Australia (49%) (Tay-
lor, 1999), Norway (47%) (Kolvereid and Bullv˚ag, 1993), Sweden (40%)
Wiklund and Shepherd (2008), and Malaysia (39%) (Taylor, 1999).
Some scholars studying multiple business ownership have taken
a slightly different perspective to determine the magnitude of the
324

325
phenomenon (Alsos, 2007). They focus on business groups relating to
the set of businesses under control of the habitual entrepreneur (Rosa,
1998; Rosa and Scott, 1999b; Iacobucci, 2002; Iacobucci and Rosa,
2005). Iacobucci (2002) noted that 25% of Italian manufacturing firms
were members of a business group created by a habitual entrepreneur
(or their associated entrepreneurial team). Using secondary data relat-
ing to Italian businesses, Iacobucci and Rosa (2005) found that growth
through the formation of business groups was a strategy to organize
geographical extension, product diversification or market differentia-
tion. They noted that business groups were more prevalent among
larger rather than smaller firms. Iacobucci and Rosa (2005) found sec-
toral variations in the prevalence of business groups. Rosa (1998) and
Rosa and Scott (1999a) also mapped out business clusters in Scotland,
and they noted a complex picture of portfolio entrepreneurship.
This discussion suggests that the “correct” magnitude of the habit-
ual entrepreneur (or business group) phenomenon may be difficult
to determine. The scale of the phenomenon is shaped by the defini-
tion selected, the industrial sector focused upon, and whether team
ownership is considered. Nevertheless, the scale of the phenomenon
highlighted in Table 2.2 suggests increased academic and practitioner
interest is warranted to understand the profiles, behavior, and contri-
butions of habitual entrepreneurs and their firms.

4
The Case for Distinguishing Between Different
Types of Entrepreneurs
4.1 The Theoretical Case
4.1.1 Expected Differences in Human Capital
and Cognitive Mindset
4.1.1.1 Human Capital
We argue in this review that the behavior and performance of habit-
ual entrepreneurs (and their firms) is shaped, in part, by their human
capital profiles. Human capital theorists have explored “inputs” accu-
mulated by entrepreneurs in relation to “outputs” (i.e., the decision to
become self-employed and the size of the firm in which they have an
equity stake) (Bates, 1990; Otani, 1996; Iyigun and Owen, 1998). They
recognize that individuals acquire resources in particular contexts, and
the resources and attitudes acquired over time may influence subse-
quent entrepreneur behavior. Human capital theorists suggest that
individuals with broader pools of human capital resources consisting
of achieved attributes and skills will be associated with increased levels
of productivity (Becker, 1975).
Debate surrounds the definition of human capital and studies
have adopted narrow or broad views. We selected a broad human
326

4.1 The Theoretical Case 327
capital perspective to review the literature relating to the habit-
ual entrepreneur phenomenon. Most notably, a broad view of human
capital recognizes that an entrepreneur’s demographic characteristics,
achieved attributes, accumulated work and habits, and cognitive char-
acteristics can have a positive (or negative) impact on productivity
(Becker, 1993; Alvarez and Busenitz, 2001).
1
Cognitive approaches
offer additional insights into how individuals can acquire knowledge
and skills through learning and experience. Further, cognitive theorists
acknowledge and explain some of the difficulties involved in acquiring
human capital through experience.
The assumptions underpinning more traditional human capital
approaches and cognitive approaches are different. Grounded in the dis-
cipline of economics, traditional human capital approaches, especially
those that focus on education, often assume instrumental rationality.
Accordingly, the economic actor makes a calculated decision about how
much to invest in human capital. In contrast, cognitive theorists draw-
ing insights from the psychological paradigm are more likely to assume
situated rationality.
2
This divergence in opinion may suggest the need
for caution when integrating the concepts of human capital and cogni-
tion. Nevertheless, both approaches represent potentially valuable tools
for understanding differences in the behavior of entrepreneurs. More
recently, economists and human capital theorists have relaxed some of
the assumptions surrounding rationality. For example, Becker (1993)
calls for the inclusion of habits and other attributes of the individual
into the concept of human capital that can have a positive (or nega-
tive) impact on productivity. It appears that not all aspects of human
capital are accumulated through a conscious and calculated rational
process. Human capital theorists (March, 1994; Kahneman, 2003) are
1
We do not assume that all entrepreneurs make a positive contribution to society (Wennek-
ers and Thurik, 1999; Heugens, 2005). Moreover, we do not assume that an entrepreneur’s
human capital profile alone shapes the creation, discovery and exploitation of opportuni-
ties, and the performance of ventures owned by entrepreneurs. We recognize that socializ-
ing events can shape an individual’s goals, resources, and behavior (Stanworth and Curran,
1976), and the decisions made by actors may (positively and/or negatively) shape social
structures. How society behaves and the potential role played by social structures is, how-
ever, beyond the scope of this review.
2
We thank a reviewer for making this point.

328 The Case for Distinguishing Between Different Types of Entrepreneurs
now increasingly assuming bounded rationality (Simon, 1957). Taking
a bounded rationality view makes it easier to accommodate cognition
within a broader notion of human capital. After all, bounded rational-
ity as a concept emerged in recognition of individuals’ cognitive limits
in processing information. We, therefore, argue that the separation of
human capital and cognition may be difficult. This is largely because
the accumulation of human capital can be a function of an individual’s
cognitive characteristics and cognitive skills, as well as being influenced
by an individual’s human capital endowment. Nonetheless, wherever
possible, we seek to disentangle the traditional aspects of human capi-
tal from the cognitive aspects of human capital.
4.1.1.2 General and Specific Human Capital
Because of their experience, habitual entrepreneurs may have had
more opportunities to develop their human capital profiles than novice
entrepreneurs. A distinction has been made between general and spe-
cific human capital (Becker, 1975, 1993). General human capital is
generic to all types of economic activity (Castanias and Helfat, 2001),
and has traditionally been measured in terms of an individual’s age,
parental background, gender, and education (Becker, 1975; Cooper
et al., 1994; Cressy, 1996). The first three of these relate to demo-
graphic characteristics. They are given by birth and cannot be changed,
invested in or improved upon. Further, they reflect non-intellectual
elements of human capital. Although economic rents may not be
attributable to these elements of human capital, they may still have
an impact on outcomes. Demographic characteristics are used as prox-
ies for human capital when direct measures of human capital are not
available. When included alongside direct measures of human capital
(e.g., education) in a multivariate setting, however, these demographic
proxies may reflect non-human capital attributes. Caution is warranted
when interpreting the relationship between these demographic variables
and outcomes when direct measures of human capital are considered.
Nonetheless, in our review of the evidence (Section 5.1) we include
discussion of these variables to reflect debates within the emerging
literature.

4.1 The Theoretical Case 329
Among more direct and intellectual measures of general human cap-
ital, education is one of the most frequently examined (Becker, 1975).
Education can be an important source of knowledge, skills, problem-
solving ability, discipline, motivation, and self-confidence (Cooper
et al., 1994). These attributes enable highly educated entrepreneurs
to cope better with problems. Managerial work experience, in addi-
tion, is a key indicator of human capital and if gained by an individual
in a context where they were not an entrepreneur may be a dimension
of general human capital (Castanias and Helfat, 2001).
In contrast to general human capital, specific human capital has a
more limited scope of applicability. Specific human capital may lose its
value outside its particular domain. A number of dimensions of human
capital may be particularly specific to the entrepreneurship context. In
practice, it may be difficult to establish which aspects of human capital
lose their value outside entrepreneurial contexts. We use the general-
specific distinction as an expositional tool and follow the distinctions
used in the literature (Cooper et al., 1994; Gimeno et al., 1997; Davids-
son and Honig, 2003; Ucbasaran et al., 2008a).
Direct entrepreneurial experience gained by business ownership
experience can contribute to entrepreneurship-specific human capital
(Stuart and Abetti, 1990; Gimeno et al., 1997; Chandler and Hanks,
1998). Entrepreneurs can demonstrate entrepreneurial, managerial, and
technical skills that are applicable to entrepreneurial activity (Penrose,
1959; Chandler and Hanks, 1998). These skills are often highly corre-
lated with entrepreneurs’ perceptions of their skills in these functional
areas. Entrepreneurial skills focus upon the perceived ability to cre-
ate, identify, and exploit opportunities. Managerial skills relate to the
ability to manage and organize people and resources. While techni-
cal skills focus upon technical expertise. Repeated business ownership
experience may contribute to the development of these skills. An expe-
rienced serial or portfolio entrepreneur owning a business in the same
sector as their previous/current venture, may be able to identify what
is required to earn profits in the selected market more clearly than
novice entrepreneurs. Obstacles to subsequent business start-up and
purchase as well as barriers to business development (i.e., the liabili-
ties of newness and small firm size) may be circumvented by habitual

330 The Case for Distinguishing Between Different Types of Entrepreneurs
entrepreneurs who can attain developmental milestones quicker (Starr
and Bygrave, 1991).
Habitual entrepreneurs may have gained important resource-
acquisition skills. Entrepreneurial experience can also add to human
capital through enhanced reputation and better understanding of the
requirements of finance institutions. For example, they may have
improved access to financial institutions such as banks, venture cap-
italists and informal investors, and obtain funds on better terms
(Wright et al., 1997a,b; Alsos et al., 2006). Enhanced human capi-
tal from entrepreneurial experience may, in addition, be interrelated
with greater social capital associated with broader and deeper networks
(Shane and Khurana, 2003). As a result, some habitual entrepreneurs
may benefit from business proposals being presented to them by other
existing and/or potential entrepreneurs. It appears that entrepreneurs
can leverage their human capital to gain access to a predictable uninter-
rupted supply of critical resources (such as financial and social capital)
(Cooper et al., 1994; Greene and Brown, 1997). This discussion suggests
that habitual entrepreneurs with prior business ownership experience
are generally more able to accumulate (and utilize) additional human
capital as well as other types of capital. These entrepreneurs, therefore,
need to be distinguished from novice entrepreneurs.
4.1.1.3 Dominant Logic and Cognition
Reuber and Fischer (1999) have asserted that the “dominant logic” of
the entrepreneur is an important component of his/her human capital.
They describe a dominant logic as an information funnel through
which the entrepreneur’s attention is filtered. This information funnel
is akin to the entrepreneur’s cognition (Baron, 1998; Forbes, 1999).
Cognitive theory is concerned with how incoming sensory stimulation
(i.e., information) is “transformed, reduced, elaborated, recovered,
and used” (Neisser, 1966, p. 4). Differences in cognitive processes may
explain individual differences in behavior and performance. Cognitive
theories, therefore, can help us understand how individuals make sense
of their experiences. The cognitive characteristics (i.e., in terms of
their attitudes and how they think, process information and learn)

4.1 The Theoretical Case 331
of habitual and novice entrepreneurs may differ. These cognitive
characteristics may influence subsequent actions and performance
(Westhead et al., 2005b).
Cognitive theories, including prototype theory, expert information
processing theory, and information processing theory (Glaser and Chi,
1988; Fiske and Taylor, 1991; Baron, 2004) suggest that experience
can shape an individual’s cognition. Habitual entrepreneurs can also
learn from the feedback from entrepreneurial experience to adjust their
judgment (Jovanovic, 1982; Minniti and Bygrave, 2001; Politis, 2005).
By evaluating carefully the ‘’feedback” from earlier ventures (Nystrom
and Starbuck, 1984), habitual entrepreneurs, can create a dynamic
cycle of learning. Experience can influence an individual’s capacity to
acquire and organize complex information. It provides a framework
for processing information and can allow experienced entrepreneurs
to foresee and take advantage of disequilibrium profit opportunities
that they proactively (or reactively) identify (Kirzner, 1973; Kaish
and Gilad, 1991). Highly experienced decision-makers (i.e., experts)
can manipulate incoming information into recognizable patterns, and
are then able match the information to appropriate actions (Lord and
Maher, 1990). Further, experience-based knowledge can create “cog-
nitive pathways” which, when followed, can lead to greater creativity
(Amabile, 1997).
Habitual entrepreneurs who have multiple experiences to draw upon
may be more likely to rely on information processing based on heuris-
tics than novice entrepreneurs. Heuristics are simplifying strategies
(or mental short cuts) used to make strategic decisions, especially in
complex situations when complete information is not available. Novice
entrepreneurs may have fewer experience-related benchmarks (or men-
tal short-cuts) to draw upon. Therefore, inexperienced individuals are
more likely to adopt more analytical or systematic information process-
ing styles (Gustafsson, 2006). Heuristic-based information processing
has the advantage of speed. It also enables individuals to make deci-
sions that allow them to exploit successfully brief windows of oppor-
tunity (Tversky and Kahneman, 1974). Without heuristic-based logic,
the identification and pursuit of new opportunities can become over-
whelming and costly. Further, a reliance of heuristics can reduce the

332 The Case for Distinguishing Between Different Types of Entrepreneurs
burden of cognitive processing, which can allow the decision-maker to
concentrate on novel or unique material (Hillerbrand, 1989). Habitual
entrepreneurs who rely on heuristic information processing may iden-
tify more creative and innovative opportunities.
On the downside, heuristic-based information processing is less
accurate than information processing techniques that are more sys-
tematic and thorough. Habitual entrepreneurs may display an over-
reliance on heuristic principles and decision-making processes, which
may not necessarily be appropriate in new situations, especially in
changing environments (Das, 1981; Prahalad and Bettis, 1986). Some
habitual entrepreneurs may thus be prone to some of the biases asso-
ciated with heuristic decision-making (Kahneman et al., 1982; Bazer-
man, 1990). As a result, experience may be associated with liabilities
as well as assets (Starr and Bygrave, 1991). For example, some expe-
rienced individuals may think that they know enough (Baron, 1998);
infer too much from limited information because they want to confirm
prior beliefs; become constrained by what is familiar to them (Rabin,
1998); and become overconfident in their judgments (Shanteau, 1992;
Simon et al., 2000). When entrepreneurs utilize what they have learnt
from their past experiences, it becomes harder for them to notice and
react to new factors, recognize industry, technology or market changes,
and to modify heuristics that worked in the past (Rerup, 2005). Expe-
rienced habitual entrepreneurs may thus attempt to repeat the same
“recipes” in changed circumstances (Wright et al., 1997a). Experience
and the feeling of “knowing how it is done” can be a barrier to new and
potentially useful perspectives. This “liability of staleness” (Starr and
Bygrave, 1991) may influence the entrepreneurial process by impairing
the entrepreneur’s ability to identify new business opportunities and/or
to develop business models and strategies for exploiting these oppor-
tunities (Mosakowski, 2002). Because of previous business success or
failure, some habitual entrepreneurs may experience hubris or denial,
respectively (Simon et al., 2000). An entrepreneur’s previous invest-
ments and repertoire of routines constrain future behavior (Minniti
and Bygrave, 2001). Some habitual entrepreneurs may continue to focus
upon interpersonal relationships used in the past. Further, they may
employ existing resources and knowledge in the new venture, thereby

4.1 The Theoretical Case 333
reducing the tendency to acquire context relevant resources (Alsos,
2007). This liability of “sameness” may hinder their ability to change
(Starr and Bygrave, 1991) and adapt to changing external environmen-
tal conditions. The latter entrepreneurs may not be able to adjust their
interaction and learning patterns to the demands of their new business
ventures. Finally, some experienced habitual entrepreneurs, who are
over-confident or who have failed in their previous venture(s) may not
have accumulated sufficient resources, thereby reducing their ability
and/or the flexibility to choose appropriate business opportunities a
second time.
Consistent with cognitive theories, the liabilities of business owner-
ship experience suggest that habitual entrepreneurs may only imper-
fectly adjust their judgment in their subsequent ventures. The value
of experience depends on the knowledge gained as well as how this
knowledge is subsequently used. What is required is mindful use of
prior experience (Rerup, 2005), and an ability to detect when it might
be necessary to switch from heuristic information processing to a more
systematic approach with reference to a new decision task (Ucbasaran,
2004). Recently, Gustafsson (2006) explored the mindsets of expert
entrepreneurs (i.e., entrepreneurs with no less than seven to ten years
of experience since their first start-up). She noted that experts demon-
strated greater awareness of the nature of a decision task (e.g., level of
uncertainty involved in opportunity identification), and they were able
to match their cognitive processes to the task in-hand. It should be
noted that while experienced habitual entrepreneurs have the poten-
tial to become expert entrepreneurs, experience is a necessary but not
a sufficient condition for becoming an expert (Neale and Northcraft,
1989). Expertise implies that an individual has developed metacog-
nition, that is, knowledge about an individual’s cognitive processing,
including awareness of thinking resources and skills that culminate in
the ability to direct the learning process (Hillerbrand, 1989; Metcalfe
and Shimamura, 1994). Metacognitive knowledge may enable a habitual
entrepreneur to avoid cognitive biases in their decision-making, which
may arise when an individual inappropriately applies a heuristic to
reach a decision (Bazerman, 1990). Despite this additional require-
ment for an individual to qualify as an expert, it is possible that

334 The Case for Distinguishing Between Different Types of Entrepreneurs
some habitual entrepreneurs who have the benefit of prior business
ownership experience to leverage will exhibit the information process-
ing that resembles that of experts.
As highlighted in Section 2, habitual entrepreneurs are hetero-
geneous. A distinction has been made between serial and portfolio
entrepreneurs. While there is growing empirical evidence to suggest
that these two groups of habitual entrepreneurs are distinct in terms
of their personal characteristics and activities (Westhead et al., 2003a,
2004, 2005a,b,c; Ucbasaran et al., 2006a), the conceptual arguments
for this distinction have received less attention. This conceptual dis-
tinction can be justified with regard to Schein’s (1978) theory of career
anchors. Schein explored the career anchors reported by self-employed
individuals. A career anchor is defined as “the pattern of self-perceived
talents, motives, and values [which] serves to guide, constrain, stabilise
and integrate the person’s career” (Schein, 1978, p. 127). A distinction
was made between two career anchors: the autonomy/independence
anchor (i.e., a desire for freedom from rules and the control of oth-
ers) and the entrepreneurship anchor. The latter anchor focuses on
the creation of something new, involving the motivation to overcome
obstacles, the willingness to run risks, and the desire for personal
prominence. An autonomy-oriented individual may be more likely to
be driven by the desire to have freedom from control by others, and
is likely to be involved in one venture at a time (Katz, 1994). Serial
entrepreneurs are often motivated by autonomy, independence and an
interest in gaining and maintaining control (Wright et al., 1997a). To
maintain a position of control, serial entrepreneurs may feel a greater
need for information and are less reliant on heuristic-based thinking.
In contrast, individuals with an entrepreneurship anchor are driven
by the opportunity recognition process and/or wealth creation (Katz,
1994). The latter entrepreneurs tend to be involved in multiple ven-
tures simultaneously. This latter group can be regarded as portfolio
entrepreneurs. Involvement in multiple ventures suggests that the lat-
ter entrepreneurs do not require complete information to the same
extent as serial entrepreneurs who seek to maintain control. Portfo-
lio entrepreneurs may, therefore, be more strongly associated with a
heuristic mode of information processing.

4.1 The Theoretical Case 335
4.1.1.4 Summary
Entrepreneurs with prior business ownership experience (i.e., habit-
ual entrepreneurs) may have had more opportunities to develop
their human capital (general human capital and particularly
entrepreneurship-specific human capital). Habitual entrepreneurs may
have learnt from their previous business ownership successes and mis-
takes. Alternatively, they may have developed a number of decision-
making biases (i.e., liabilities) that hinders their ability successfully to
identify and exploit subsequent opportunities. Habitual entrepreneurs
associated with exposure to multiple business ownership experiences
will cite “dominant logic” or cognitive profiles that differ from those
cited by novice entrepreneurs. In this review, we assume that an
entrepreneur’s cognitive profile is a dimension of entrepreneurship-
specific human capital. Differences in the demographic, general, and
specific human capital profiles of entrepreneurs may lead to varia-
tions in the behavior and performance outcomes reported by novice,
habitual, serial, and portfolio entrepreneurs. In Section 5.1, the empir-
ical profiles of novice and habitual entrepreneurs as well as novice,
serial, and portfolio entrepreneurs are summarized with reference to
these themes. Whilst appreciating that there is considerable overlap
between the human capital and the cognitive approaches, we intimated
above that the two perspectives have contrasting underlying assump-
tions. The next section explores the implications of these differences
with regard to the behavior of novice and habitual entrepreneurs as
well as the performance contributions made by novice and habitual
entrepreneurs.
4.1.2 Expected Differences in Behavior and Performance
Numerous theoretical approaches to entrepreneurship have been pro-
posed with the purpose of explaining what entrepreneurs do, how
they behave, and the outcomes of their actions (Ucbasaran et al.,
2001). Despite recent conceptual progress, many empirical studies have
reported limited success in explaining entrepreneurial behavior and pro-
cesses (i.e., those relating to imagination, creativity, innovativeness,
opportunity identification, pursuit and exploitation, the assemblage

336 The Case for Distinguishing Between Different Types of Entrepreneurs
and leveraging of resources to ensure business formation/purchase and
development, etc.).
Opportunity-based conceptualizations of entrepreneurship
(Venkataraman, 1997; Ardichvili et al., 2003) have more recently
been presented to address the limitations of previous approaches.
Accordingly, it has been argued that entrepreneurship research should
focus on explaining the entrepreneurial process, which is largely viewed
as involving the identification and exploitation of opportunities (Shane
and Venkataraman, 2000). Explanations of opportunity identification
and exploitation have focused on the role of knowledge as well as
the acquisition and processing of information by the entrepreneur
(Venkataraman, 1997; Fiet, 1996). Given differences in the human
capital and cognitive mindsets of novice and habitual entrepreneurs
proposed in the previous section, it is reasonable to expect differences
in the behavior of these two groups of entrepreneur in terms of
opportunity identification and exploitation. Further, given differences
in the endowment of knowledge, novice, and habitual entrepreneurs
may search for different quantities and types of information with a
view to identifying and exploiting opportunities. If novice and habitual
entrepreneurs behave differently in the way they utilize information
and identify opportunities, this may shape entrepreneur and venture
performance.
4.2 The Policy Case
Policy-makers recognize that the entrepreneurial function is a vital
component in the process of national and regional economic growth
(Baumol, 1968; Casson, 1982; Reynolds et al., 1994; Organisation for
Economic Co-Operation and Development (OECD), 1998; Department
of Trade and Industry (DTI), 2004). New business formation con-
tributes to job generation, innovation, competitiveness, lower prices
and personal and societal wealth creation (Reynolds et al., 1994; Acs
and Audretsch, 2003; Acs and Storey, 2004). The objectives of policy
may relate to growth in employment and/or improved innovation and
competitiveness. Enterprise policy aims to increase employment and
other associated goals such as integrating certain ethnic minorities who

4.2 The Policy Case 337
may otherwise have problems entering the labor market (Storey, 1982,
1994; DTI, 2004). Innovation policy aims to increase the innovativeness
of the economy and as a result improve productivity, income levels, and
rates of return on investment. To encourage new firm formation and
business development, Government may provide “hard” (i.e., financial
assistance and premises) and/or “soft” assistance (i.e., education and
training) to enable entrepreneurs and firms to address obstacles (or
“market failures”) (i.e., access to external finance, advantages of large
firms, compliance costs, and the inability of new and small firms to
pay for external support) (Bridge et al., 2003; DTI, 2004). Interven-
tion is associated with costs and the benefits of the intervention should
not solely accrue to the recipients (i.e., supported entrepreneurs and
firms). Intervention may lead to the problem of “government failure”
(i.e., Government funding supports entrepreneurs and firms that do not
require it and whose behavior is not positively affected by the assis-
tance) (Johnson, 2007). Rather, intervention should address areas of
“market failure” where public initiatives contribute to additionality by
encouraging actions that would not otherwise have been undertaken
(i.e., input additionality), contributing to better results than would
otherwise have been achieved (i.e., output additionality), or changing
behavior in a desired direction (i.e., behavior additionality) (OECD,
2003; 2006).
There is, however, some scepticism surrounding the value of “exter-
nal assistance” to new and small firms (Bridge et al., 2003). To the
neo-classical economist, if market failure exists, it is only a temporary
phenomenon that will eventually disappear. If it is not temporary, it
is not a market failure, and trying to address it will not result in a
net benefit. Further, Flynn (1993) has warned that schemes support-
ing new firm formation may encourage negative selection (i.e., non-
survival attributes being transferred to the next generation of firms),
and the survival of competitively weak organizations. Subsidies may
bring about a major bias in the process of market selection that ham-
pers post-entry scale adjustment of new firms (Santarelli and Vivarelli,
2007). Conversely, Ferguson and Ferguson (1994) have asserted that
neo-classical economic theory is an inappropriate basis for public pre-
scriptions. The case for enterprise/industry/technology policy depends

338 The Case for Distinguishing Between Different Types of Entrepreneurs
on uncertainty, imperfect information and — as a result — the presence
of transactions costs. Support for entrepreneurship has manifested itself
in various forms (Bridge et al., 2003; Johnson, 2007). British govern-
ment policy, for example, has moved from encouraging new firm forma-
tion (Westhead and Moyes, 1992), and the growth in self-employment
(Storey, 1994), toward supporting growing firms (Storey, 1994; West-
head, 1995), and more recently to a more balanced policy agenda
(Gavron et al., 1998; DTI, 2004). To maximize returns on public policy
investments, attempts have been made to “target” external support
to “winning firms,” that is, businesses with significant wealth creation
potential (Storey, 1994). Surprisingly, the characteristics and behav-
ior of “winning entrepreneurs” have been relatively neglected. It may,
however, be more appropriate to consider the entrepreneur as the unit
of analysis (Birley and Westhead, 1993; Scott and Rosa, 1996).
If support for entrepreneurship is to be effective, it is vital that issues
relating to the entrepreneurial process are well-understood (Westhead
and Wright, 1999; Ucbasaran et al., 2001; Westhead et al., 2004, 2005c).
The accumulation and utilization of “entrepreneur/entrepreneurial
team” resources and skills, rather than solely “business” resources and
skills, can provide fresh insights into the entrepreneurial process (Tay-
lor, 1999). While, the “firm” rather than “entrepreneur” has tradi-
tionally been the focus of much policy attention, some recognition of
the importance of the individual entrepreneur is emerging (DTI, 2004;
Lundstr¨om and Stevenson, 2004).
In considering the entrepreneur as a unit of policy analysis, it is nec-
essary to appreciate that entrepreneurs are not a homogeneous entity
with regard to their human capital profiles, motivations, resources,
behavior, and performance. An increase in the number (stock) of busi-
nesses in an economy may not necessarily be a reliable indicator of
the development of entrepreneurship. This is because different types of
entrepreneur own both new and established businesses. Policy-makers
and practitioners monitoring the growth in the supply of new firms
need to be aware that habitual (i.e., serial and portfolio) entrepreneurs
with business ownership experience own a sizeable proportion of new
firms (see Section 3). Studies that judge the scale of entrepreneurship
in terms of the number of new firms, but ignore the scale of serial and

4.2 The Policy Case 339
portfolio entrepreneur activity may over-estimate the gross number of
entrepreneurs, and under-estimate the contribution made by particular
types of entrepreneur (Westhead and Wright, 1999).
Additionality considerations relating to government support
schemes imply that support should be targeted to those entrepreneurs
or projects that are able to generate the greatest incremental increase
in returns, however those returns might be defined (OECD, 2006; John-
son, 2007). If superior business performance is generally recorded by
firms owned by serial and portfolio entrepreneurs rather than novice
entrepreneurs, there might be a case to provide policy support and
assistance to serial and portfolio entrepreneurs, particularly if the
objective of support is to maximize returns on investments. Moreover, if
inexperienced novice entrepreneurs report poorer entrepreneur and/or
firm performance, there is a case to encourage them to adopt some
of the skills and the behavioral characteristics of experienced habitual
entrepreneurs.
If, however, serial and portfolio entrepreneurs’ firms generally
under-perform, there is a policy choice either to divert scarce resources
away from these entrepreneurs; or to develop policies that ensure the
survival of firms owned by them. In the latter case, policy-makers may
benefit from understanding the barriers to learning and provide appro-
priate training that enables entrepreneurs to learn from failure and
start successful firms next time around. Further, if the objective of
policy is to increase the pool of entrepreneurs, assistance might be tar-
geted away from successful serial and portfolio entrepreneurs toward
novice and nascent entrepreneurs seeking to address obstacles to busi-
ness development, as well as business opportunity identification and
exploitation.
Of course, if habitual entrepreneurs are already on average more
successful, it might be questioned why policy support is needed. If
the incremental benefits from supporting habitual entrepreneurship are
greater than for nascent or novice entrepreneurs, there may be a case for
facilitating and encouraging their activities. Experienced entrepreneurs
have been found to have stronger intentions toward new business for-
mation and greater abilities to carry out the business start-up process
and establish a new firm (Alsos and Kolvereid, 1998). Encouraging

340 The Case for Distinguishing Between Different Types of Entrepreneurs
experienced entrepreneurs to start new businesses may be supported
with weaker incentives. The latter encouragement may, however, be
more effectively provided through the tax system rather than through
direct subsidies to entrepreneurs and firms.
External support is primarily provided at the level of the individual
entrepreneur during the business start-up process. After the business
initiation hurdles have been addressed and the business has com-
menced trading, external support for enterprise becomes more focused
on the needs of different types of businesses (i.e., high-technology
firms, exporting firms, etc.). There may be a need to focus upon the
entrepreneur, rather than the firm alone, throughout all stages of the
entrepreneurial process. Certain types of entrepreneur may require spe-
cific (and customized) types of assistance. For example, it may be more
appropriate to support habitual entrepreneurs if the policy aim is to
promote innovation (evidence relating to this point is provided below).
On the other hand, it may be appropriate to support and promote
habitual ethnic (or female) entrepreneurs as role models if the aim is to
provide access to the labor market for special and/or under-represented
groups (DTI, 2004). Analysis of the heterogeneity of entrepreneurs may
contribute toward the development of policies tailored to different types
of entrepreneur, rather than the provision of broad “blanket” policies
to all types of entrepreneur, irrespective of need or ability (Westhead
et al., 2003a, 2005c).
An understanding of habitual entrepreneurs has implications for the
investment behavior of financial institutions. Financial institutions and
professional advisers (i.e., accountants, lawyers, management consul-
tants, etc.) tend to be aware that they have different types of customers,
and some customers may be more “risky” than others. They may be
prepared to provide additional advantages to customers who have a
proven track record of success (i.e., successful habitual entrepreneurs).
As highlighted earlier, prior business ownership experience may not be
an appropriate indicator of subsequent superior firm performance. The
liabilities and assets of prior business ownership experience need to be
considered by practitioners such as financial institutions. Some habit-
ual entrepreneurs may become over-confident in their abilities, and
less attentive to subsequent venture development and wealth creation.

4.2 The Policy Case 341
Others may have failed to learn from prior business ownership experi-
ences. Examination of habitual entrepreneurs in relation to other less
experienced novice entrepreneurs may aid insights into the process of
wealth creation that may also benefit practitioners (Rosa, 1998; West-
head and Wright, 1999).
In the following section, the evidence base relating to novice, habit-
ual, serial, and portfolio entrepreneurs is discussed. Building on this
evidence base and assuming an interventionist stance, a case for more
balanced support toward novice, serial, and portfolio entrepreneurs is
suggested in Section 6.

5
Empirical Evidence
There are examples of studies highlighting habitual entrepreneurs in the
1970s and 1980s. Over the last decade, the number of studies focusing
on habitual entrepreneurs and the serial and portfolio sub-types has
increased substantially. A summary of published articles relating to
habitual entrepreneurship is presented in Table 5.1. This table does
not present an exhaustive list of all published articles, and not all the
themes explored in the presented studies are highlighted. The purpose
of this section is to provide an overview of the literature relating to
habitual entrepreneurship.
The early studies generally measured the prevalence of the habitual
entrepreneur phenomenon. Until the late 1990s, there was a relative
dearth of empirical evidence relating to the resources and behavior
of habitual entrepreneurs. Several studies that are more recent have
detected statistically significant differences between novice and habit-
ual entrepreneurs, as well as between novice, serial, and portfolio
entrepreneurs with regard to their profiles and the firms they own. Dif-
ferences have been noted with regard to their personal backgrounds and
motivations, their human capital profiles, cognitive mindsets, access
to resources, opportunity identification and exploitation processes, as
342

343
Table 5.1 Summary of the research questions explored in habitual entrepreneur studies.
Type of study Method
Research questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Lamont (1972) Behavior differences
between first and
second time
entrepreneurs.
Reasons for
performance
differences.
No specific
theoretical
perspective
stated.
X X Data from
technology-
based
enterprises
24 Descr.
statistics
Firm characteristics:
Experienced entrepreneurs
have learned. Experience
is reflected in product
orientation, substantial
initial financing, and
balance of business skills.
Ronstadt
(1988)
Prevalence of habitual
entrepreneurs.
Characteristics of
entrepreneurial
careers.
Hypotheses/
propositions
derived
without linkage
to specific
theoretical
perspectives.
X X Database
College
alumni,
practicing/ex-
entrepreneurs
1,537
Descr.
statistics
Prevalence:
Substantial number of
multiple venture
entrepreneurs.
Second venture often created
early in entrepreneurial
career.
The existence of a corridor
principle: The act of
starting a new venture
allows an entrepreneur to
see new opportunities.
Entrepreneur performance:
Multiple ventures associated
with longer
entrepreneurial careers.
Stuart and
Abetti
(1990)
Impact of
entrepreneurial
and management
experience on early
business
performance.
No specific
theoretical
perspective
stated.
X X Personal
interviews
with chief
executives of
new technical
ventures
52 Factor
analysis,
general
linear
model
Firm performance:
Entrepreneurial experience
measured with regard to
the number of previous
new venture involvements
and the level of the
management role played
in such ventures were
significantly associated
with superior early
business performance.
(Continued)

344 Empirical Evidence
Table 5.1 (Continued).
Type of study Method
Research questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Schollhammer
(1991)
The incidence
of multiple
entrepreneurs.
The impact of
experience on
new venture
performance.
Industry relatedness
of multiple
ventures.
No specific
theoretical
perspective
stated.
X X Survey 138 Descr. statistics,
correlations
Prevalence:
Multiple entrepreneurs were
highly prevalent but the
incidence rate declined
rapidly. Successive venture
formations were generally in
the same or a related
industry as the prior
venture.
Firm performance:
The two year survival rate
of multiple venture
initiatives was lower than
for single venture initiatives.
Successful prior experience
improved the survival rate,
while prior failures reduced
the survival rate.
Unrelated diversification
of successive venture
initiatives tended to
improve subsequent venture
performance.
Dyke et al.
(1992)
The impact of seven
dimensions of
owner expe-
rience on firm
performance.
No specific
theoretical
perspective
stated.
X X Survey among
businesses
from five
industries
386 Multiple
regression
Firm performance:
Number of previous start-ups
positively related to
superior performance.
Number of years of previous
business ownership not
related to performance.
Industry differences in
relationships between
experience and performance.
(Continued)

345
Table 5.1 (Continued).
Type of study Method
Research questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Birley and
Westhead
(1993)
Differences in
characteristics
between habitual
and novice
entrepreneurs.
No specific
theoretical
perspective
stated.
X X Postal survey.
Matched
samples
284 Bivariate
analyses,
discriminant
analysis
Entrepreneur characteristics:
Habitual entrepreneurs started
younger, reported heroes as
role models and relied upon
financial support from
family and friends.
Firm performance:
No differences regarding
performance.
Kolvereid and
Bullv˚ag
(1993)
Differences between
novice and
experienced
business founders
with regard
to personal
characteristics,
resource
acquisition ability,
and business
performance.
No specific
theoretical
perspective
stated.
X X Postal survey 209 (24%) Descr. statistics
Chi-sq.
Entrepreneur characteristics:
Experienced founders were
more resourceful than
novices.
Experienced founders tend to
get involved in more
complicated environments
with regard to their new
businesses.
Firm performance:
No differences regarding
performance.
Starr et al.
(1993)
Negative and positive
consequences of
entrepreneurial
experience to
subsequent
ventures.
No specific
theoretical
perspective
stated.
X X Case studies
based on IPO
prospectuses
and media
exposure
3 Comparative
descriptives
Process performance:
Different types of process
milestone achievements
linked to prior entre-
preneurial experience,
including fund raising
capacity and initial start-
up resources, time required
to achieve milestones,
resource expenditures,
returns to investors and the
entrepreneur’s personal
investment and financial
gains.
(Continued)

346 Empirical Evidence
Table 5.1 (Continued).
Type of study Method
Research questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Reuber and
Fischer
(1994)
The role of expertise
in the relationship
between experience
and performance.
Situated
learning
approach.
X X Postal survey,
biotech/
telecom firms
304 Correlations,
multiple
regression
Firm performance:
Owners’ expertise was more
strongly correlated with
firm performance than
owners’ experience.
Experience associated with
superior performance.
Scott and
Rosa
(1997)
Rosa and
Scott
(1999b)
Assessed the
quantitative
importance of
multiple business
ownership to new
firm formation.
No specific
theoretical
perspective
stated.
X X Dunn &
Bradstreet
data for new
Scottish
firms, Survey
data,
Registry of
Scottish high
growth
companies
7,316
600
209
Descript.
statistics
Prevalence:
Multiple business owners
highly prevalent across
business types, and
substantial linkages
between businesses.
Firms owned by multiple
owners were generally
incorporated and larger.
Men were more likely to be
multiple business owners.
Motivation:
A significant number of new
companies were part of
growth strategies rather
than de novo start-ups.
(Continued)

347
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Wright et al.
(1997b)
The role of serial
entrepreneurs
to the venture
capitalist
industry.
Hypotheses/
proposi-
tions
derived
without
linkage to
specific
theoretical
perspec-
tives.
X X Postal survey
of venture
capitalists.
Postal survey
of venture
capitalists
with expe-
rience of
serial entre-
preneurs
55 (48.7%)
23 (57.5%)
Bivariate and
multivariate
analyses
Resources:
Venture capitalists infrequently
funded previously funded
entrepreneurs, but they used serial
entrepreneurs as consultants
or to lead management buy-ins.
Variations among venture
capitalists with regard to how they
valued entrepreneurial experience.
Some indication that the venture
capitalists assessed both assets and
liabilities of entrepreneurial
experience.
Firm performance:
No evidence of superior performance
cited by serial entrepreneurs
relative to novice entrepreneurs.
Wright et al.
(1997a)
Motivations and
characteristics
of types of
serial
entrepreneurs.
The role of
professional
advisers and
financiers
reported
by serial
entrepreneurs.
No specific
theoretical
perspective
stated.
X X In-depth
interviews
with serial
entrepreneurs
13 Motivation:
Motivations varied between first and
subsequent ventures with there
being implications for subsequent
managerial behavior and entry
mode.
Search processes varied across serial
entrepreneurs and reflected
differences in motivation.
Firm performance:
Performance of subsequent ventures
was either positively or negatively
linked to prior experience.
Resources:
The role of active investors changed
between the first and subsequent
ventures.
(Continued)

348 Empirical Evidence
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Alsos and
Kolvereid
(1998)
Business gestation
processes of
novice, serial
and parallel
business
founders.
Probability of
starting a
business.
Weick’s (1979)
theory of
organizing.
X X Telephone
survey of
nascent
entrepreneurs
identified by
household
screening
159 Bivariate
analyses
Start-up process
Differences between the types of
founders related to the number of
activities undertaken and the
timing of these activities.
Entrepreneur performance:
Parallel founders were more likely to
succeed in establishing a new
business as compared to serial
and novice founders. Serial
founders were more likely to give
up the start-up effort than novice
and parallel founders.
Carter
(1998)
Enumeration of
enterprises
created by
farmers.
Characteristics of
portfolio,
diversified, and
monoactive
farm owners.
No specific
theoretical
perspective
stated.
X X Postal survey of
farm owners
296
(29.6%)
Bivariate
analyses
Prevalence:
High prevalence portfolio
entrepreneurship in the farm
sector, particularly among
younger and better trained farm
owners.
Additional business activities can be
viewed as a continuum from
diversification to ownership of a
portfolio of businesses.
Entrepreneur characteristics:
Portfolio farm owners were younger
and better trained in agriculture,
management, marketing and
finance.
Firm characteristics:
There was an increase in strategic
complexity within the businesses
owned by the portfolio group.
(Continued)

349
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Rosa (1998) Creation/
acquisition of
multiple
ventures as
entrepreneurial
process versus
management
process of
diversification.
Characteristics
of processes.
Relationship
between prior
entrepreneurial
experience and
performance.
No specific
theoretical
perspective
stated.
X X Case studies.
Personal
interviews
and sec-
ondary data
23 Business
genealogies,
Life history
analyses
Entrepreneur characteristics:
Identified dimensions of habitual
entrepreneurs: Background and
nature of habitual entrepreneur,
nature of venture stared,
strategies used to create and
manage businesses. Business
clusters were complex and often
involved partnerships between
owners.
Behavior:
No consistent link between type
and entrepreneurial behavior.
Process/strategies:
The process of multiple business
ownership was generally an
entrepreneurial one.
Strategies were variable and diverse
in building business clusters, but
entrepreneurial diversification
predominated.
Westhead
and
Wright
(1998a)
Characteristics
and behavioral
differences
between
novice, serial,
and portfolio
founders.
Hypotheses/
propositions
derived
without
linkage to
specific
theoretical
perspectives.
X X Postal survey 621 Bivariate
analyses
Discriminant
analysis
Entrepreneur characteristics:
Habitual entrepreneurs not a
homogeneous group: Differences
between portfolio and serial,
founders with regard to parental
background, work experience,
age at first business start-up,
motivation, attitudes to
entrepreneurship and sources
of funds utilized.
Firm performance:
No performance differences between
types of founders.
(Continued)

350 Empirical Evidence
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Westhead
and
Wright
(1998c)
Characteristics and
performance
of novice, serial,
and portfolio
entrepreneurs in
rural and urban
areas.
Hypotheses/
propositions
derived
without
linkage to
specific
theoretical
perspectives.
X X Postal survey 621 Bivariate
analyses
Discriminant
analysis
Entrepreneur characteristics:
Several differences between novice,
serial, and portfolio
entrepreneurs regarding personal
background, work experience,
motivations, personal attitudes
and financing. More differences
between the entrepreneur types
in urban than in rural areas.
Firm performance:
No performance differences between
types of founders in rural and
urban areas.
Carter
(1999)
Incidence of
portfolio
entrepreneurship
in the farm
sector.
Contribution of
portfolio farmers
to enterprise and
employment
creation.
No specific
theoretical
perspective
stated.
X X Postal survey of
farm owners
296
(29.6%)
Descr.
statistics
Prevalence:
Many farmers were involved in a
wide range of entrepreneurial
activities.
Outcomes:
Additional business activities made
a substantial contribution to
both the number of enterprises
and employment creation
in rural areas.
(Continued)

351
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Rosa and
Scott
(1999a)
Diversification as
a growth
strategy.
Types of
diversification
strategies.
No specific
theoretical
perspective
stated.
X X Case studies.
Personal
interviews
and sec-
ondary data
23 Business
genealogies,
Life history
analyses
Strategies:
Several diversification strategies
were identified among
high-growth firms, indicating
that growth was associated with
the formation of multiple
businesses. The most successful
entrepreneurs pursued related
diversification. Unrelated
diversification was associated
with hobbyist kinds of diversion
or with succession plans. Some
business clusters were built by
investor entrepreneurs who also
became managerially involved in
the firms in which they invested.
Cluster growth was linked to
new business creation rather
than acquisition of existing
firms. Survivalist diversification
(i.e., diversification out of
trouble) was cited.
Behavior:
Serendipity played a role in
opportunity identification among
expansion motivated
entrepreneurs who were
consciously open to new business
activities. Entrepreneurs faced
with difficulties were more
proactive in seeking out
diversification opportunities.
(Continued)

352 Empirical Evidence
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Carter
(2001)
Differences between
farmers
regarding their
propensity to
participate in
additional
business activi-
ties: Differences
between mono-
active farmers,
structural
diversifiers and
portfolio
business owners.
No specific
theoretical
perspective
stated.
X X Postal survey of
farm owners
296
(29.6%)
Descr.
Statistics
Multivariate
analysis
Entrepreneur characteristics:
Portfolio business owners were
younger and better trained in
agriculture, management,
marketing, and finance than
monoactive farmers. They were
more positive to new market
opportunities, had stronger
appreciation and sensitivity to
customer needs, and were more
willing to engage in new ventures.
Firm characteristics:
Increased strategic complexity in
businesses owned by portfolio
owners. They owned larger farms
and additional businesses.
Iacobucci
(2002)
Assessed the
importance of
business groups
in the Italian
manufacturing
sector.
Causes of growth
through business
group formation.
No specific
theoretical
perspective
stated.
X X Database of
manufactur-
ing firms.
Survey of
business
groups
424
21
Descr.
statistics
Prevalence:
Business groups were widely present
among firms in Italy.
Strategy/motivation:
Business group formations were
frequently the result of the firm’s
growth policy, and were less often
result of entrepreneurial dynamics
or capital accumulation process of
the entrepreneur/family.
Low degree of diversification in
business activities of groups and
high coherence in their growth
processes.
Entrepreneurial dynamics were more
important in early stages.
(Continued)

353
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Alsos et al.
(2003)
What are the
motivations of
farmers starting
new business
activities, and
how are
differences in
motivation
related to the
characteristics of
the new business
venture?
Opportunity
based view
Resource
based view
Rural sociology
view.
X X Personal
in-depth
interviews
16 portfolio
farmers/
farm house-
holds
Entrepreneur and firm
characteristics:
Heterogeneity among farm-based
entrepreneurs. Three types of
farm-based entrepreneurs were
identified based on their main
motivation for starting
additional business activities:
The pluriactive farmer, the
resource exploiting entrepreneur
and the portfolio entrepreneur.
The three types differed in terms
of how the process of identifying
and exploiting new business
opportunities is carried through
and the outcomes of this process.
Haynes
(2003)
The relationships
among prior job
dissatisfaction,
the use of
entrepreneurial
and other types
of experience
and outcomes.
Hypotheses/
propositions
derived
without
linkage to
specific
theoretical
perspectives.
X X Telephone
interviews
with business
founders
195 Bivariate
analyses
Resources:
Experienced entrepreneurs who
stayed in the same sector were
more likely to have leveraged
their prior experience. Their
businesses reported were larger
in terms of initial employee size
and they used multiple sources
of capital, and exhibited a
corporate form.
Firm performance:
New ventures owned by experienced
entrepreneur reported higher
sales levels.
(Continued)

354 Empirical Evidence
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Pasanen
(2003)
Prevalence of
multiple
entrepreneurs
among successful
firms in
peripheral
locations.
Characteristics
of firms owned
by multiple
entrepreneurs
and single
business owners.
No specific
theoretical
perspective
stated.
X X Postal survey 100 Bivariate
analyses
Prevalence:
Successful firms were frequently
owned by multiple
entrepreneurs.
Firm characteristics:
Multiple entrepreneur firms
reported higher levels of growth.
Multiple entrepreneur firms were
highly prevalent among
innovative growth firms.
Firms in the entrepreneur’s
portfolio may or may not be
related.
Ucbasaran
et al.
(2003c)
Differences between
habitual and
novice
entrepreneurs
with regard to
opportunity
identification
behavior.
No specific
theoretical
perspective
stated.
X X Postal survey of
independent
firms
773 (17.9%) Bivariate
analyses
Behavior:
Habitual entrepreneurs identified
more opportunities and more
innovative opportunities. They
were more likely to have used
information from financiers,
employees, and consultants.
Habitual entrepreneurs were
more likely to cite the following
attitudes to opportunity
identification: opportunities
emerged in connection with
problems, that one opportunity
led to another, and they enjoyed
opportunity search.
(Continued)

355
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Ucbasaran
et al.
(2003b)
Links between prior
business
ownership
experience and
information
search behavior
and business
opportunity
exploitation.
Differences
between habitual
starter and
habitual acquirer
entrepreneurs.
Human capital
perspective.
X X Case studies 8 Behavior:
Prior business ownership was
associated with resource
accumulation, information
search and opportunity
recognition behavior. The links
differed between habitual
starters and habitual acquirers.
Resources:
Business ownership experience
related human capital was
associated with assets and
liabilities. Entrepreneurs
increased their human capital if
they learnt from their
experience. Differences between
habitual starters and habitual
acquirers.
Westhead
et al.
(2003a)
Compared novice,
serial and
portfolio
entrepreneurs
with regard to
financing
resources,
organizational
skills, and firm
performance.
Resource-based
view.
X X Postal survey of
independent
firms
354 (12.2%) Bivariate
analyses
Resources:
Portfolio entrepreneurs had more
diverse experience and more
resources than either serial or
novice entrepreneurs. They also
gave greater importance to
certain organizational skills as
well as toward managerial
competence and human capital
resources.
Firm performance:
Portfolio entrepreneurs reported
higher business growth.
(Continued)

356 Empirical Evidence
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Alsos and
Kaikkonen
(2004)
Identification of
types of
opportunity
generation
processes.
In what way is prior
knowledge and
experience of the
entrepreneur
related to types
of processes?
Opportunity
based view of
entrepreneur-
ship
X X Personal
in-depth
interview
59 opportunity
generation
processes
identified
from
interview with
31 farmers/
farm house-
holds
Opportunity identification:
Four types of opportunity
identification processes were
identified based on two
dimensions: active search or
passive serendipity, and
objective discovery or
subjective creation.
Differences between the types of
processes were found with
relation to the source of
opportunity, the use of prior
knowledge, the extent of
innovation, the markets
approached and the growth
potential of identified
opportunities.
Carter et al.
(2004)
Prevalence,
contextual
factors and
strategic use of
multiple income
sources and
portfolio
activities.
Types of
entrepreneurs
differentiated by
degree of
engagement in
portfolio
activities.
No specific
theoretical
perspective
stated.
X X Postal survey of
business
owners
18,561
(14.3%)
Latent
class
analysis
Prevalence:
Multiple income sources were
across the business size
spectrum and across all
industry sectors.
Circumstances and context
shaped the functions of
multiple income sources.
Motivation:
Portfolio activities used as a
mechanism to facilitate
growth and wealth
accumulation or survival.
Multiple incomes facilitated
business entry and exit as well
as business stability.
(Continued)

357
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Westhead
et al.
(2004)
Differences between
novice, serial and
portfolio
entrepreneurs.
Implications for
policy.
No specific
theoretical
perspective
stated.
X X Postal survey 354 (12.2%) Bivariate
analyses
Policy:
Novice, serial, and portfolio
entrepreneurs cited human
capital profile and behavior
differences. Practitioners
should consider targeting
resources toward serial and
portfolio entrepreneurs who
have the desire and ability to
be significant wealth and job
creators. Need to address
barriers to subsequent
business ownership by serial
and portfolio entrepreneurs.
Iacobucci and
Rosa
(2005)
Explore group
formation
through
entrepreneurial
diversification:
The direction of
growth and
diversification as
well as the
relationship
between
diversification
policy and
business group
formation.
No specific
theoretical
perspective
stated.
X X Secondary
data of
independent
large firms
66 Descr.
statistics
Strategy:
The running of a group of
companies by the same
entrepreneur was not only
induced by the geographical
extension of their operation
and by diversification. It was
also encouraged by the
differentiation policy aimed at
serving different market
segments within the same
sector. This is different from
the diversification policy of
large, managerial firms.
(Continued)

358 Empirical Evidence
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Westhead
et al.
(2005a)
Differences between
novice, serial,
and portfolio
entrepreneurs
with regard to
their decisions,
actions,
performance and
aspirations.
Reuber and
Fischer’s
founders’
experience
conceptual
framework
X X Postal survey 354 (12.2%) Bivariate
analysis
Behavior:
Portfolio and serial entrepreneurs
used more information
sources, and they used their
prior business ownership
experience to leverage
information from networks.
Differences in search and
opportunity recognition
behavior. Experienced
entrepreneurs focused more
on customer needs and
claimed that they more alert
to additional business
opportunities. Portfolio
entrepreneurs identified more
opportunities.
Entrepreneur performance:
Portfolio entrepreneurs compared
to novice entrepreneurs drew
more money out of their
businesses. The intention to
establish/acquire an
additional business in the
future was more frequently
cited by portfolio
entrepreneurs.
(Continued)

359
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Westhead
et al.
(2005b)
Assets and liabil-
ities of prior
business
ownership
experience cited
by serial and
portfolio
entrepreneurs.
Differences in
cognition
reported by
novice, serial and
portfolio
entrepreneurs.
Cognitive theory
Human capital
perspective
X X Postal survey 354 (12.2%) Bivariate
analysis
Resources:
No differences between serial and
portfolio entrepreneurs with
regard to the assets and
liabilities of prior business
ownership. Portfolio
entrepreneurs cited more
equity partners than novice
and serial entrepreneurs.
Entrepreneur characteristics:
Some differences between novice,
serial and portfolio
entrepreneurs with regard to
attitudes to entrepreneurship.
Portfolio entrepreneurs perceived
themselves as being more
creative and innovative than
novice entrepreneurs. No
differences between serial and
portfolio entrepreneurs with
regard to creativity and
innovation.
(Continued)

360 Empirical Evidence
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Westhead
et al.
(2005c)
Differences between
novice, serial
and portfolio
entrepreneurs
with regard to
characteristics,
behaviors and
performance
contributions.
No specific
theoretical
perspective
stated.
X X Postal survey 354 (12.2%) Bivariate
analyses
Entrepreneur characteristics:
Portfolio entrepreneurs had more
diverse experiences. They were
more motivated by the challenge
of starting a business and less by
personal prospects. A larger
proportion of firms owned by
portfolio entrepreneurs were team
starts. Portfolio entrepreneurs
were more innovative but they
cited less joy in starting new
businesses.
Behavior:
Portfolio entrepreneurs used a wider
range of information sources and
identified more opportunities.
They cited more positive
attitudes towards opportunity
identification.
Resources:
Portfolio entrepreneurs acquired
more initial financial capital than
serial and novice entrepreneurs,
but invested a lower share of
personal savings than serial
entrepreneurs. They were less
likely than novice entrepreneurs
to perceive that financing was
easy. Portfolio entrepreneurs were
more likely to focus on
organizational skills.
Firm performance:
Portfolio entrepreneurs offered more
attractive growth prospects than
other entrepreneurs.
(Continued)

361
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Alsos and
Carter
(2006)
Extent of resource
transfer from the
farm business
into new venture.
Influence of resource
richness of the
farm on resource
transfer.
Association between
resource transfer
and new venture
performance.
Resource-based
view
X X Postal survey 207 Multi-
variate
analysis
Resources:
Extensive resource transfer between
farm and new venture,
particularly if new venture is
farm related. Higher extents of
resource transfer if farm is
resource rich.
Resource transfer is positively and
negatively associated with
profitability, depending on type
of resources transferred. Transfer
of more general physical
resources is associated with
better profitability, while
transfer of specific
organizational and knowledge
resources is associated with
poorer profitability.
Alsos et al.
(2006)
Do novice, serial and
portfolio
entrepreneurs
differ when it
comes to their
ability to identify
opportunities and
acquire resources
when starting a
new business?
Do such differences
lead to different
performance in
new businesses
started by novice,
serial and
portfolio
entrepreneurs?
No specific
theoretical
perspective
stated.
X X Postal survey
Telephone
follow up
interviews
410/354 Multivariate
analysis
Resources:
Serial and portfolio entrepreneurs
acquire more financial capital,
are more often part of a start-up
team and identify more
opportunities than novice
entrepreneurs.
Firm performance:
Serial and portfolio entrepreneurs
achieve higher early growth in
their businesses in terms of sales
turnover and employment
compared to novice
entrepreneurs. When resource
access is controlled for, no
differences in early firm growth
are detected between the three
types of entrepreneurs.
(Continued)

362 Empirical Evidence
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Eesley and
Robert
(2006)
What factors
condition the
likelihood
that an
entrepreneur
starts a
second firm?
Human capital,
social
capital, and
financial
capital
X X Survey of
alumni from
MIT
1,789 entre-
preneurs
Univariate
and
Hazard
Rate
Analysis
Entrepreneurs with highest
probability of starting a second
venture start first firm soon after
graduation, are divorced,are in an
R&D intensive industry, first firm
was acquired and raised initial
capital for first firm from business
angels and have greater access to
financial resources;
Entrepreneurial experience
increases likelihood of success as
measured by firm revenues.
Gompers
et al.
(2007)
Are successful
entrepreneurs
more likely
to succeed in
their next
ventures than
first-time
entrepreneurs
and
entrepreneurs
who have
previously
failed?
Schumpeterian
(skill) versus
Knightian
(risk/luck)
theories of
entrepreneur-
ship
X X X Archival data
on Venture
backed
serial entre-
preneurs
9,932 entre-
preneur-
company
pairs of
which 1,124
serials
Univariate,
probit,
OLS,
WLS
Successful entrepreneurs are more
likely to succeed in their next
ventures than first-time
entrepreneurs and entrepreneurs
who have previously failed,
suggesting performance
persistence is at least in part
attributable to skill and not just
luck. Successful serial
entrepreneurs do not achieve
higher valuations than other
entrepreneurs. VC funds investing
in successful serial entrepreneurs
have higher returns. A company
started by a serial entrepreneur
with successful track record is
more likely to succeed if funded
by a top-tier VC or one in the
lower tier; suggesting previously
successful entrepreneurs derive no
benefits from value added services
of more experienced VCs.
(Continued)

363
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Wiklund and
Shepherd
(2008)
What factors
influence the
choice of business
founders to create
additional
independent
organizations for
entrepreneurial
activity or to
undertake it
internally within
existing firms?
What organizing
modes are used by
entrepreneurs of
new businesses?
Resource-based
view; human
and social
capital
theory
X X Mail survey 2,253 Probit;
Heckman
2-step
analysis
Characteristics and resources:
Founders with higher
education, habitual
founders, business network
membership, and links with
support agencies more likely
to engage in portfolio
entrepreneurship; habitual
founders more likely to use
and independent firm for
organising entrepreneurship
than novices who tend to
organize portfolio
entrepreneurship within
their existing firm.
Mosey and
Wright
(2007)
How do differences in
human capital
derived from
entrepreneurial
experience of
academic
entrepreneurs
(nascent, novice,
habitual)
influence ability
to develop social
capital that can
address barriers
to venture
development?
Human and
social capital
theory
X X Interviews and
archival
24 academic
entrep-
reneurs & 18
business
development
officers
Networks:
Habitual entrepreneurs have
broader social networks and
more effective in developing
network ties to gain equity
finance and management
knowledge. Nascent and
novice entrepreneurs likely
to encounter structural
holes between scientific
research networks and
industry networks,
constraining ability to
recognize opportunities and
gain credibility for their
fledgling ventures.
(Continued)

364 Empirical Evidence
Table 5.1 (Continued).
Type of study Method
Research
questions
Theoretical
perspectives
Quant.
Qual.
Longit.
Cr.-sec
Data collection
method
Valid
sample size
Type of
analysis Key findings
Hsu (2007) How does prior
entrepreneurial
experience
influence
likelihood of
receiving VC
finance and affect
venture valuation?
Human and
social capital
theory
X X Survey of
applicants
to an entre-
preneurship
laboratory
program
149 Univariate,
probit,
OLS
Prior founding experience,
especially financially
successful experience
increases likelihood of VC
funding via a direct tie and
level of venture valuation.
Bengtsson
(2007)
What determines
repeat relation-
ships between
entrepreneurs
and VCs?
Asymmetric
information
and
relationship
banking
X X Archival 4,998 serial
entrepreneurs
Univariate
and
probit
Failed serial entrepreneurs
more likely than successful
serial entrepreneurs to get
funding from the same VC
that funded their first
venture; repeat relationships
more likely if entrepreneur’s
start-up is similar to
previous start-up, if VC is
older and if start-up located
outside California.
Number of empirical studies in total 39 Summary method issues
Number of quantitative studies 31
Summary theoretical perspectives Number of qualitative studies 8
Number of studies with specified theoretical perspective 12 Number of cross-sectional studies 33
Number of studies with no specific theoretical perspective stated 27 Number of longitudinal studies 6
Abbreviations: Quant = Quantitative study, Qual = Qualitative study, Longit = Longitudinal study, Cr.sec = Cross-sectional study.
∗
Empirical studies published in journals or as book chapters. A Google scholar search was used to identify studies, using the following search terms: habitual
entrepreneur, serial entrepreneur, portfolio entrepreneur, multiple entrepreneurs, multiple business owners, repeat entrepreneur, ownership experience and
entrepreneurial experience.

5.1 Human Capital Profile Differences 365
well as entrepreneur and firm performance. Table 5.1 shows that most
studies have keyed into issues relating to the human capital profiles
of entrepreneurs, the behavior of entrepreneurs, and the performance
contributions of firms and entrepreneurs. In this section, the evidence
base is discussed with regard to these three key broad themes.
Tables 5.1 and 5.2 indicate the methods used in studies of habitual
entrepreneurship (Alsos, 2007). Entrepreneurship scholars have sug-
gested that old and new research questions should be explored with
reference to a variety of data sources and methods (Hofer and Bygrave,
1992; Westhead and Wright, 2000; Davidsson, 2003). Theoretically
grounded and longitudinal studies that test hypotheses have been called
for (Chandler and Lyon, 2001). Most habitual entrepreneurship stud-
ies have used quantitative methods and cross-sectional information has
generally been gathered. Relatively few qualitative and mixed method
studies have been conducted. Data and method issues relating to future
studies are raised in Section 7.8.
5.1 Human Capital Profile Differences
In this section, differences between novice and habitual entrepreneurs
as well as between novice, serial, and portfolio entrepreneurs are dis-
cussed with regard to their demographic characteristics (i.e., gender,
age, and parental background), together with their general (i.e., edu-
cation and managerial experience) and specific human capital profiles
(i.e., entrepreneurial team experience, motivations, perceived skills, and
cognitive mindsets).
5.1.1 Demographic Characteristic: Gender
Women are generally associated with lower levels of human capital
with regard to education and training outputs (Becker, 1993). Some
women with narrower education and employment experience profiles
may have had fewer opportunities to develop relevant contacts, skills,
and resources to identify and exploit business opportunities (Cooper
et al., 1994). During their study of novice and habitual indepen-
dent firm founders, Kolvereid and Bullv˚ag (1993) noted that very few
women became habitual entrepreneurs. (Rosa and Hamilton, 1994), in

366 Empirical Evidence
Table 5.2 Summary of the habitual entrepreneur studies focusing upon firm and entrepreneur performance.
Study Sub-samples Performance measures Findings
British SARI
Birley and
Westhead
(1993)
Novice and habitual
founders.
Sales level, percentage increase in sales,
level of profitability, percentage
increase in profit, and assessed profit
performance relative to competitors.
No statistically significant difference between novice and habitual
founders.
Westhead and
Wright (1998a)
Novice, serial, and
portfolio founders.
Sales level, percentage increase in sales,
level of profitability, percentage
increase in profit, assessed profit
performance relative to competitors,
exporters, umber of total employees
(nominal and standardized) at
start-up and time of survey, and
standardized absolute employment
change.
No statistically significant differences between the three types
of founders.
Westhead and
Wright (1998c,
1999)
Rural and urban areas.
Novice, serial, and
portfolio
entrepreneurs.
Sales revenue, sales revenue change,
profitability, profitability change,
performance relative to competitors,
and percentage of sales exported.
No statistically significant differences between the three types
of founders in the rural sample and the urban sample.
Norwegian SARIE
Kolvereid and
Bullv˚ag (1993)
Novice and portfolio
founders.
Full time employment at start-up and
time of survey, employment growth,
sales level, percentage sales growth,
percentage profit growth and
assessed profit performance relative
to competitors.
No statistically significant differences between the two types
of founders.
Scottish habitual entrepreneurs study
Westhead et al.
(2003a)
Novice, serial, and
portfolio
entrepreneurs.
Gross sales (1996 and 1999), absolute
and percentage change in gross sales
and the same measures standardized
by business age, percentage of gross
sales exported, and weighted
subjective performance score.
Number of full time and total employees
(1996 and 2001), absolute and
percentage employment change, as
well as the same measures
standardized by business age.
Portfolio entrepreneurs reported significantly higher gross sales
(1996/1999) and standardized gross sales (1996) than novice
and serial entrepreneurs, as well as higher standardized gross
sales (1999) and greater absolute change in gross sales and
standardized gross sales than novice entrepreneurs. No
statistically significant differences with reference to the other
measures. Portfolio entrepreneurs reported significantly higher
employment (1996 nominal and 2001 nominal/ standardized)
for both full-time and total employees, as well as higher
absolute and percentage employment growth (nominal and
standardized, full-time and total) than other entrepreneurs.
(Continued)

5.1 Human Capital Profile Differences 367
Table 5.2 (Continued).
Study Sub-samples Performance measures Findings
Westhead et al.
(2004)
Novice, serial, and portfolio
entrepreneurs.
Amount drawn out of business by
entrepreneur previous 12 months and
self-reported change in standard
of living.
Portfolio entrepreneurs were more likely to have drawn
more than £75,000 and less likely to have drawn less
than £5,000 out of the business compared to novice
entrepreneurs. No significant differences in reported
change in standard of living.
Westhead et al.
(2005c)
Novice, serial, and portfolio
entrepreneurs.
Gross sales, change in gross sales, absolute
and percentage employment change,
amount drawn out by entrepreneur, and
perceived profit performance relative
to competitors.
Portfolio entrepreneurs reported significantly higher
gross sales, employees and employee growth than
other entrepreneurs, and significantly higher sales
growth than novice entrepreneurs. Portfolio
entrepreneurs were more likely to have drawn more
than £75,000 out of their surveyed businesses, and
to rate their performance higher than competitors
compared to novice entrepreneurs.
British habitual entrepreneurs study
Ucbasaran et al.
(2006b)
Novice, serial, and portfolio
entrepreneurs.
Habitual entrepreneurs with previous
failure and habitual entrepreneurs
with previous success.
Weighted performance based on
importance attached to 6/12
performance indicators and the level
of satisfaction with each of these
indicators. Absolute and relative
employment change, absolute and
relative sales change, profit relative to
competitors, money taken out of the
businesses, as well as absolute and
standardized by the number of
businesses.
Differences related to some of the performance
measures, but in total no support for hypotheses
suggesting that habitual entrepreneurs performed
better than novice entrepreneurs, nor that portfolio
entrepreneurs performed better than serial
entrepreneurs.
Norwegian study of new business start-ups
Alsos and
Carter (2006)
Novice, serial, and portfolio
entrepreneurs
Early business growth based on annual
sales turnover.
Early business growth in employees (ln).
Serial and portfolio entrepreneurs obtained larger early
business growth in their new businesses in terms of
sales turnover and employment. When resource
access is controlled for in multivariate model, no
differences in early business growth between the
types of entrepreneurs are sustained.
Norwegian study on farm owners
Rønning and
Kolvereid (2006)
Diversified farmers, portfolio farmers
with farm-related enterprises,
portfolio farmers with non farm-
related enterprises and farmers
with external employment.
Gross annual household income. Portfolio farmers with non-farm related enterprises
and farmers with external employment reported
significantly higher household income than
other respondents.
(Continued)

368 Empirical Evidence
Table 5.2 (Continued).
Study Experience measure Performance measures Findings
Studies reporting entrepreneurial experience as independent variable
Stuart and Abetti
(1990)
Entrepreneurial experience:
composite measure
including involvement in
previous ventures, number
of ventures started, number
of successful ventures, and
the role played in such
ventures.
Standardized composite measure including
sales growth, employment growth,
profitability and productivity.
Standardized composite measure including
meeting plan, employee satisfaction,
overall evaluation of progress,
survivability of the firm, ability to
attract capital and cash flow.
Entrepreneurial experience was significantly associated
with performance.
Dyke et al. (1992) Entrepreneurial experience:
The number of years of
business and ownership
experience prior to owning
the current firm.
Start-up experience: The
number of previous
businesses which the owner
helped to start.
Annual total sales, number of full time
employees, annual income, profit
growth, and employment growth.
Separate analysis for industry sectors revealed:
Food retail: Entrepreneurial experience correlated with
employment growth.
Food wholesale: Entrepreneurial experience correlated
with number of employees and employment growth.
Start-up experience correlated with total sales and
number of employees.
Food manufacturing: Entrepreneurial experience
correlated with total sales and annual income.
Start-up experience correlated with employment
and profit growth.
Furniture manufacturing: No significant correlations.
Computer services: Entrepreneurial experience
correlated with annual income. Start-up experience
correlated with total sales, number of employees and
annual income.
Reuber and
Fischer (1994)
Start-up experience: The
number of firms in total the
owner has helped to start.
Weighted subjective performance scores
relating to financial, international, sales
and overall performance. Percentage
change in number of employees, total
sales, and annual income.
Positive significant correlations between start-up
experience and weighted financial performance and
employment growth. No significant correlations with
the other performance measures.
Haynes (2003) Entrepreneurial experience
(yes/no).
Annual sales. ANOVA tests showed significant relationship between
entrepreneurial experience and annual sales.
Delmar and Shane
(2004)
Start-up experience.
Number of previous start-ups.
Hazard of disbanding. New ventures pursued by more experienced firm
founders had a lower hazard of disbanding than new
ventures pursued by less experienced founders. Each
prior start-up undertaken by a venture team reduced
the hazard of disbanding by 22%.

5.1 Human Capital Profile Differences 369
addition, found that a larger proportion of male rather female owner-
managers owned more than one business. A survey of entrepreneurs in
rural (i.e., businesses located in an area with less than 10,000 people)
and urban areas conducted in Great Britain by Westhead and Wright
(1998c) found that over 86% of novice, portfolio, and serial founders
with surveyed businesses located in rural areas were male. Westhead
et al., detected that habitual founders of firms in urban areas were sig-
nificantly less likely to be female than was the case for novice urban
founders. In contrast, Westhead et al. (2003b) failed to detect any sig-
nificant differences between novice, serial, and portfolio entrepreneurs
in Scotland with regard to the gender of the respondents. Over four-
fifths of the respondents in each of the entrepreneur groups were male.
5.1.2 Demographic Characteristic: Age
Age is strongly associated with more diverse work experience (Aldrich,
1999). Work experience can enable more mature individuals to accumu-
late attitudes and skills required for careers in entrepreneurship (Bates,
1990; Cooper et al., 1994). As found elsewhere (Birley and West-
head, 1993), Kolvereid and Bullv˚ag (1993) noted that habitual founders
started their first business at a younger age than novice founders. Sup-
porting this viewpoint, Westhead and Wright (1998c) found that port-
folio and serial founders with surveyed firms located in rural areas were
significantly younger than novice rural founders when they started their
first firms with little difference reported between the average ages of
the two types of habitual founders. However, at the time of the survey,
Westhead and Wright detected that novice and portfolio rural founders
were significantly younger than serial rural founders. As found with
respect to their rural sample, Westhead and Wright noted that port-
folio and serial urban founders were significantly younger than novice
urban founders when they started their first businesses, with little dif-
ference detected between the two types of habitual urban founders.
Westhead et al. (2003b) compared the ages of surveyed entre-
preneurs at the time of the survey in Scotland. No statistically sig-
nificant differences were recorded between novice, serial, and portfolio
entrepreneurs with regard to their current age.

370 Empirical Evidence
5.1.3 Demographic Characteristic: Parental Background
The entrepreneur may externally access human capital. Curran et al.
(1991) detected individuals whose parents were owners of small firms
tended to follow their parent’s footsteps, and subsequently became busi-
ness owners themselves. With regard to their rural sample, Westhead
and Wright (1998a) found that a larger proportion of serial rather
than portfolio and novice founders were drawn from a professional
parental background. A larger proportion of rural portfolio founders,
rather than novice and serial rural founders, came from a managerial
parental background. However, no statistically significant differences
were detected between the three groups of urban founders with regard
to their parental background.
Westhead et al. (2003b) noted that a larger proportion of portfolio
entrepreneurs in Scotland, rather than serial or novice entrepreneurs,
reported that one of their parents had experience as business owners.
Consequently, a relatively higher proportion of portfolio entrepreneurs
had access to the knowledge, financial resources, and/or social networks
generally more available to individuals drawn from business owner-
ship parental backgrounds. Respondents were also asked to indicate
the occupation of the parent who had been the main income earner.
No statistically significant differences were recorded between novice,
serial, and portfolio entrepreneurs with regard to the occupation of the
parental main income earner.
5.1.4 General Human Capital: Education
Supporting the evidence presented by Donckels et al. (1987), Kolvereid
and Bullv˚ag (1993) found habitual entrepreneurs, and specifically port-
folio entrepreneurs, in Norway were more likely to have obtained
higher education qualifications. Westhead and Wright (1998a) reported
that while there was no difference in the education level of
novice entrepreneurs and serial entrepreneurs, portfolio entrepreneurs
reported higher levels of education than the other two types of
entrepreneurs. Also, Westhead and Wright (1998c) explored the pro-
files of entrepreneurs in rural and urban areas in Great Britain. With
regard to the rural sample of founders, they detected no significant

5.1 Human Capital Profile Differences 371
differences between novice, serial, and portfolio rural founders in terms
of their education level. However, with reference to their urban sample
of founders they found that portfolio urban founders were significantly
more likely to have obtained a postgraduate university degree than
novice and serial urban founders. Conversely, Westhead et al. (2003b)
did not detect any significant differences between the education levels
of novice, serial, and portfolio entrepreneurs in Scotland. Ucbasaran
et al. (2006a) noted a similar finding with reference to a British sam-
ple of novice, serial, and portfolio entrepreneurs. Recently, Eesley and
Robert (2006) detected that the early timing of initial firm start-up
after graduation was more strongly associated with repeat (or habit-
ual) entrepreneurship than an entrepreneur’s level of education.
5.1.5 General Human Capital: Managerial Experience
The nature of previous work experience can have a profound influence
upon a potential entrepreneur’s decision to establish/own a business,
as well as its location, characteristics, and performance (Cooper, 1981).
Gimeno et al. (1997) have argued that the level of attainment in previ-
ous jobs is important. The development of a portfolio of businesses, as
in the case of portfolio entrepreneurs, suggests a need for greater man-
agerial skills than might be expected in the case of novice and serial
entrepreneurs. It is generally assumed that portfolio entrepreneurs are
more likely to have had a managerial or an executive professional posi-
tion immediately prior to the start-up of the surveyed business (Don-
ckels et al., 1987).
Westhead and Wright (1998c) found no statistically significant dif-
ferences among novice, portfolio, and serial founders in rural areas in
Great Britain with regard to their employment position prior to the
start-up of the surveyed business. Over 49% of rural founders in each
of the three groups had held managerial or professional positions. Sim-
ilarly, no significant difference was recorded with regard to the number
of organizations the three types of rural founders had worked for prior
to the start-up of surveyed businesses. Westhead and Wright (1998c),
in addition, compared the work experiences of founders with surveyed
firms located in urban areas in Great Britain. Contrary to expectation,

372 Empirical Evidence
they detected that novice urban founders were not significantly less
likely than portfolio and serial urban founders to have held a man-
agerial or professional position prior to the start-up of the surveyed
businesses. However, Westhead and Wright (1998c) found that habit-
ual urban founders, particularly serial founders, had worked for more
organizations before the start-up of the surveyed firms than novice
urban founders.
Westhead et al. (2003b) explored the managerial backgrounds of
entrepreneurs in Scotland. A statistically significant difference was
detected between novice, serial, and portfolio entrepreneurs in terms
of their job status immediately before starting/owning the surveyed
business (i.e., because serial and portfolio entrepreneurs had managed
their previous business). Most notably, a larger proportion of portfo-
lio entrepreneurs, rather than novice and serial entrepreneurs, reported
that their last job had been a managerial position. A larger proportion
of serial entrepreneurs, rather than other entrepreneurs, indicated that
they had been self-employed prior to gaining an equity stake in the
surveyed business. They also detected that habitual entrepreneurs, par-
ticularly serial entrepreneurs, had worked in more organizations on a
full-time basis than novice entrepreneurs. Similarly, Ucbasaran et al.
(2006a) noted managerial experience differences between entrepreneurs
in Great Britain. Portfolio and serial entrepreneurs reported higher lev-
els of managerial human capital than novice entrepreneurs with regard
to the number of organizations worked for and the highest job status.
5.1.6 Specific Human Capital: Entrepreneurial
Team Experience
An entrepreneur can compensate for his/her personal human capital
deficiencies by attracting other individuals with more diverse human
capital to join the entrepreneurial ownership team (Ucbasaran et al.,
2003a). Attracting additional equity partners into the entrepreneurial
team can enable a solo entrepreneur to accumulate human capital.
A partner may be able to offer a wider range of skills and knowledge as
well as financial resources. The team aspect of entrepreneurship may be
important in providing the resources and skills needed to establish and

5.1 Human Capital Profile Differences 373
maintain ownership stakes in multiple businesses (Slevin and Covin,
1992). The resources required to develop a portfolio of businesses
suggest that portfolio entrepreneurs may require contributions from
a greater number of partners than do serial or novice entrepreneurs.
Portfolio entrepreneurs may be able to establish and own multiple
businesses because they use partners, whereas novice and serial
entrepreneurs may establish and/or own a business without a partner.
Partners can reduce some of the liabilities associated with firm newness
and small size. They can provide legitimacy to a business principally
owned by a serial entrepreneur, whose reputation may have been
tarnished due to a prior business ownership failure. In addition, part-
ners can provide successful (and unsuccessful) habitual entrepreneurs
with a greater depth of expertise, as well as access to wider
networks.
Westhead and Wright (1998c) found with regard to their sample of
rural founders in Great Britain, that a significantly larger proportion
of habitual rural founders reported that they had established their new
businesses with an additional shareholder or partner. This significant
difference was not detected with regard to the urban sample of founders.
Alsos et al. (2006) noted that serial and portfolio founders rather than
novice founders in Norway more frequently cited team start-ups. West-
head et al. (2003b) detected that firms in Scotland owned by portfolio
entrepreneurs had more equity partners than firms owned by novice
or serial entrepreneurs. In order to avoid biases resulting from previ-
ous experience, and increase their awareness in decision-making, many
portfolio entrepreneurs preferred to be a “team”, rather than a “solo”
owner of a private firm. Portfolio entrepreneurs who have equity stakes
in two or more businesses may use partners as a means of delegating
responsibility, as well as gaining access to a greater depth of exper-
tise and broader networks. Recently, Ucbasaran et al. (2006a) detected
that portfolio entrepreneurs in Great Britain more frequently cited the
prevalence of team ownership to start or purchase surveyed businesses
(34%, 36%, and 41% cited by novice, serial, and portfolio entrepreneurs,
respectively). Despite this evidence, we know little about the extent
to which habitual entrepreneurs maintain the same partners from one
venture to the next, and the reasons why changes occur.

374 Empirical Evidence
5.1.7 Specific Human Capital: Motivations
Gimeno et al. (1997) suggest that the motivations for establishing a new
venture can be viewed as a component of venture-specific human cap-
ital. The initial reasons leading to the ownership of a business can, in
part, influence the development trajectory of a business (O’Farrell and
Hitchins, 1988; for a dissenting view see Birley and Westhead (1994)).
Motivations may, therefore, have an impact on the behaviors and strate-
gies selected by different types of entrepreneurs.
Scholars have detected a diverse range of motivations cited by
habitual entrepreneurs; a desire for independence and autonomy and
the desire for (personal) wealth creation (Wright et al., 1997a) and
motivations related to the operation of an existing business (i.e.,
need for more income and the desire to grow the business activities)
(Alsos and Carter, 2006). Rosa and Scott (1999a) interviewed habitual
entrepreneurs regarding “how” and “why” each business was added
to the business group. The motivations cited related to the wish to
diversify into a new market; to spread risk or to overcome potential
adversity; business creation as a challenge or a hobby; to protect a new
area or brand name; to ring fence a geographical diversification; to ring
fence risk; to add value to existing ventures owned by the entrepreneur;
to assist a friend or relative; to launder money; profits and/or family
assets; to avoid paying taxes; and to cut costs and enhance internal effi-
ciencies. Iacobucci (2002) explored the reasons why some entrepreneurs
start a group of businesses. The three main reasons were the firm’s
growth policy, entrepreneurial dynamics, and capital accumulation on
the part of the entrepreneur or his/her family. (Carter and Ram, 2003,
p. 375) concluded that motivations for portfolio entrepreneurship can
“range from entrepreneurs who invest in several sectors at once and
who are thus able to move their capital between various enterprises as
the market conditions require; to small scale traders who diversify their
economic activities to cover both productive and distributive functions;
to the only survival strategy available to marginal businesses.”
Motivations cited by habitual entrepreneurs for owning businesses
can also change over time. While independence is a strong reason for
starting a first business, a variety of other more materialistic reasons

5.1 Human Capital Profile Differences 375
may come to the fore when an entrepreneur establishes (or purchases)
a subsequent business (Donckels et al., 1987). Other evidence, how-
ever, suggests monetary gain may become less important in subse-
quent ventures (Wright et al., 1997a). This is because owners of second
or latter ventures generally desire less risky ventures. Further, Wright
et al. (1997a) detected that habitual entrepreneurs continually cited the
desire/need to work independently and to build a larger organization.
With reference to survey evidence from Great Britain, Westhead
and Wright (1998a) found that the reasons leading to start-up var-
ied both between the type of entrepreneur, and the type of locality
where the surveyed business was located. No significant differences
were reported among novice, serial, and portfolio rural founders with
regard to dimensions of autonomy. However, portfolio rural founders
were markedly more likely than novice and serial rural founders to have
started their businesses for wealth and/or welfare reasons. In addition, a
significantly smaller proportion of serial rather than portfolio or novice
rural founders reported they had established their businesses to obtain
tax benefits.
Westhead and Wright (1998c) failed to detect any significant differ-
ences between novice, serial, and portfolio urban founders with regard
to wealth reasons leading to business start-up. They, however, found
that novice and portfolio urban founders were significantly more likely
than serial urban founders to emphasize autonomy reasons. Habit-
ual urban entrepreneurs, particularly, serial founders were significantly
more likely than novice urban founders to have suggested that they
started the business in order to develop an idea for a product. Portfo-
lio and novice urban founders were significantly more likely than serial
founders to have reported that they were taking advantage of an oppor-
tunity that appeared. A significantly larger proportion of portfolio
urban founders rather than novice and serial urban founders reported
that they were seeking tax benefits. Novice urban founders were signif-
icantly more likely than portfolio urban founders to have emphasized
that they started a business to achieve something, and to get recogni-
tion for it. Habitual urban entrepreneurs, particularly serial founders,
were more likely than novice urban founders to have reported starting
a business to continue a family tradition.

376 Empirical Evidence
Westhead et al. (2003b) monitored the motivations cited by novice,
serial, and portfolio entrepreneurs in Scotland. In line with the wealth
creation expectations of policy-makers and practitioners, a larger
proportion of portfolio entrepreneurs, rather than novice or serial
entrepreneurs, reported generating personal wealth as the main rea-
son leading to business ownership. Portfolio entrepreneurs were also
more likely than novice entrepreneurs to suggest that they were moti-
vated by the desire to be challenged by the problems and opportunities
presented by business ownership. Conversely, portfolio entrepreneurs
were less likely than other entrepreneurs to suggest that they had been
unemployed, and they were less likely than novice entrepreneurs to
report that they had started a business in order to have greater flexi-
bility in their personal life. Serial entrepreneurs were more likely than
novice entrepreneurs to cite that they wanted to control their own
time, but they were less likely than novice entrepreneurs to report
that they had an equity stake in a business to continue a family
tradition.
Ucbasaran et al. (2006a) found that serial entrepreneurs in Great
Britain reported independence to be a significantly more important
motive than portfolio entrepreneurs. This finding supports the view
raised in Section 4.1.1.3, which suggested that serial entrepreneurs and
portfolio entrepreneurs have different career anchors.
5.1.8 Specific Human Capital: Perceived Skills
Recent work on capabilities of the firm suggests the need to supplement
the stock-based view of capital/resources with a more process-oriented
view (Teece et al., 1997). At the individual level, it has been suggested
that the entrepreneur must demonstrate skills in three functional areas:
entrepreneurial, managerial, and technical (Penrose, 1959; Chandler
and Jansen, 1992). The self-perceived skills of the entrepreneur can also
be an indication of their human capital. Self-perceptions of skills can be
gathered from entrepreneurs. Evidence suggests a strong relationship
between perceived and actual skills (Gist, 1987).
Westhead et al. (2003b) compared the perceived skills cited by serial
and portfolio entrepreneurs in Scotland. Portfolio entrepreneurs were

5.1 Human Capital Profile Differences 377
more likely than novice entrepreneurs to agree that one of their great-
est strengths was organizing resources and co-ordinating tasks as well
as the ability to supervise, influence, and lead people; to delegate effec-
tively, and to seize high quality business opportunities usually requiring
an immersion in a particular market. They were more likely than other
entrepreneurs to agree that one of their greatest strengths was achieving
results by organizing and motivating people, and that the problem was
not identifying the idea but to obtain capital and other resources. Also,
portfolio entrepreneurs were more likely than novice entrepreneurs to
consider that they had a special alertness to spotting opportunities.
Portfolio entrepreneurs were more likely than novice entrepreneurs to
report that they enjoy just thinking about and/or looking for new
business opportunities, and that new business opportunities arise in
connection with a solution to a specific problem. In addition, portfo-
lio entrepreneurs were more likely than other entrepreneurs to describe
themselves as opportunistic, and able to spot opportunities better than
professional analysts.
Serial entrepreneurs were more likely than novice entrepreneurs to
agree that one of their greatest strengths was identifying goods and
services that people want, and that they accurately perceive unmet
customer needs. In addition, serial entrepreneurs were more likely than
portfolio entrepreneurs to suggest that their greatest strength was
expertise in a technical or functional area. Serial entrepreneurs were
more likely than novice entrepreneurs to suggest new business oppor-
tunities arise in connection with a solution to a problem.
Alsos et al. (2003) found that portfolio farm-based entrepreneurs
in Norway reported significantly higher entrepreneurial abilities than
farmers with no other business activities. Controlling for other dimen-
sions of human capital, Ucbasaran et al. (2006b) found that habitual
entrepreneurs in Great Britain were associated with lower levels of
perceived technical skill than novice entrepreneurs. Further, port-
folio entrepreneurs were associated with significantly higher levels
of managerial skill than serial entrepreneurs. This finding comple-
ments the evidence relating to managerial experience presented in
Section 5.1.5.

378 Empirical Evidence
5.1.9 Specific Human Capital: Cognitive Mindsets
As discussed in Section 4.1.1.3, the “dominant logic” of the
entrepreneur is an important component of his/her stock of experience.
Reuber and Fischer (1999) describe a dominant logic as being an infor-
mation funnel through which the entrepreneur’s attention is filtered.
This information funnel is akin to the entrepreneur’s cognition (Baron,
1998; Forbes, 1999). The cognitive characteristics of entrepreneurs may
shape their attitudes and behavior.
Westhead et al. (2005b) identified differences in the attitudes to
entrepreneurship cited by novice, serial, and portfolio entrepreneurs
in Scotland. Experienced entrepreneurs, particularly portfolio
entrepreneurs, reported higher levels of agreement with the statement
“I find the process of starting a business very daunting” than novice
entrepreneurs. Conversely, novice entrepreneurs reported higher levels
of agreement with the statement “I have a short attention span”
than serial entrepreneurs. Also, novice entrepreneurs reported higher
levels of agreement with the statement “external advice is crucial
for the growth of this business” than serial entrepreneurs. Serial
and portfolio entrepreneurs reported higher levels of disagreement
than novice entrepreneurs with the following statements: “I feel I
can predict and adapt to changing environmental circumstances”;
“I enjoy the early stages of building a business”; and “I frequently
try to establish/develop new contacts.” Further, serial entrepreneurs
reported higher levels of disagreement with the statement “I like to be
aware of all the decisions made about this business and have the final
say” than novice entrepreneurs.
In addition, Westhead et al. (2005b) also found that portfolio
entrepreneurs were more creative than novice and serial entrepreneurs.
Portfolio entrepreneurs were particularly likely to be more creative
than novice entrepreneurs. Significantly larger proportions of both
serial and portfolio entrepreneurs than novice entrepreneurs reported
they had either “used new ways of managing and developing person-
nel,” and/or “developed new ways of managing quality control and
R&D.” Also, significantly larger proportions of portfolio entrepreneurs
than novice entrepreneurs had “developed new structures, systems, or

5.1 Human Capital Profile Differences 379
procedures in your organization”; “found a new market or employed
a new marketing strategy in an existing market”; and/or “found
new ways of dealing with government and other external agencies.”
Significantly smaller proportions of novice and serial entrepreneurs
than portfolio entrepreneurs indicated they had “found new ways of
managing finance.”
A third area of difference demonstrated by Westhead et al. (2005b)
was that portfolio entrepreneurs were more innovative than novice
entrepreneurs. Larger proportions of portfolio entrepreneurs than
novice entrepreneurs, reported they were innovative with regard to
the introduction of “a new product or a new quality of an existing
product”; “a new method of production or modified an existing
method”; and/or “a new culture especially through the induction
of innovative people at the lower levels.” A larger proportion of
portfolio entrepreneurs than serial entrepreneurs reported differences
in innovation only in respect of having “introduced a new culture
especially through the induction of innovative people at the lower
levels.”
As discussed in Sections 4.1.1.2 and 4.1.1.3, business ownership
experience can be associated with both assets and liabilities (Starr and
Bygrave, 1991). Westhead et al. (2003b) monitored the assets and lia-
bilities of prior business ownership experience cited by serial and port-
folio entrepreneurs in Scotland. Both portfolio and serial entrepreneurs
reported that building a reputation; developing expertise in running
an independent business; being able to exploit opportunities more eas-
ily; understanding the bank lending process more easily; and obtaining
finance more easily were assets of prior business ownership experience.
While serial and portfolio entrepreneurs see obtaining finance more eas-
ily as an asset, it may actually be a liability. As the entrepreneur devel-
ops a track record, allowing him/her to possibly obtain finance easier,
unrealistic risk-return performance expectations regarding the venture
may be made, creating the “liability of priciness” (Starr and Bygrave,
1991). The availability of resources or easier access to resources in sub-
sequent ventures may also mean that subsequent ventures built with
large amounts of capital may be subject to the “liability of costliness”
(Starr and Bygrave, 1991).

380 Empirical Evidence
As discussed earlier, prior business ownership experience may
reduce the motivation to work as hard as the previous venture, create a
fixation on previous success/failure, and reduce flexibility. Experienced
entrepreneurs may be subject to biases and blindspots that influence
their decisions and goals in subsequent ventures. Somewhat surpris-
ingly, both portfolio and serial entrepreneurs in Scotland were more
likely than novice entrepreneurs to report that they found the process
of starting a business very daunting and that they enjoyed the early
stage of building a business. Portfolio and serial entrepreneurs were,
however, more likely than novice entrepreneurs to disagree with the
statement that they could predict and adapt to changing environmen-
tal circumstances, suggesting that they did not suffer from an illusion
of control. We also noted earlier that entrepreneurs with prior busi-
ness ownership experience might develop the inertia of conventional
wisdom, which unless challenged by others, may result in “the liability
of staleness” (Starr and Bygrave, 1991). As evidence of this observa-
tion, serial entrepreneurs in Scotland appeared to be less likely than
novice entrepreneurs to recognize the importance of external advice for
growing their businesses.
While experience may aid the development of networks, experienced
entrepreneurs who favor familiar circles and customary relationships
over the unknown and obscure, may be stuck in routine patterns of
interpersonal interactions that hinder their ability to innovate, thereby
suffering from the “liability of sameness” (Starr and Bygrave, 1991).
Supporting this view, portfolio and serial entrepreneurs in Scotland
were more likely than novice entrepreneurs to disagree with the state-
ments that they frequently tried to establish new contacts.
5.2 Behavioral Differences
5.2.1 Acquisition of Resources
5.2.1.1 Finance
An entrepreneur’s previous business ownership experience can have
a profound influence on the amounts of initial capital, and types of
finance used during the launch period of a subsequent new or acquired

5.2 Behavioral Differences 381
business. Successful habitual entrepreneurs may be expected to have
larger amounts of personal capital, and greater access to external
sources of funds than novice entrepreneurs. Serial (and portfolio)
entrepreneurs may use funds from private business sales to invest in
subsequent ventures. A novice entrepreneur lacking an established
track record may have to rely upon internal sources of initial capital,
including personal savings and family and friends, to obtain an
ownership stake.
Habitual entrepreneurs with successful track records are generally
more credible than those who have failed first time around, and may
leverage their prior business ownership experience to obtain external
financial resources from banks and venture capitalists for their subse-
quent ventures (Wright et al., 1997a,b). Portfolio entrepreneurs who
have not exited from a venture(s) they have an ownership stake(s)
in may be able to leverage the internal financial resources from their
existing business(es) (Alsos and Kolvereid, 1998), and may make use
of finance from existing customers and suppliers. In contrast, serial
entrepreneurs may have accumulated funds from the sale of a previ-
ous business. However, a reluctance to be involved in projects which
may undermine their standing amongst the financial and business com-
munity, and a desire to invest a smaller proportion of their personal
wealth the second time around (Wright et al., 1997a) may mean that
some habitual entrepreneurs become risk averse over time. Venture cap-
italists make their investment decisions with regard to an individual’s
previous business ownership experience, as well as their motivation
and ability to succeed the next time around (Wright et al., 1997b).
Prior founding experience, especially financially successful experience,
increases the likelihood of venture capital funding via a direct tie, and
the level of venture valuation (Hsu, 2007). Eesley and Robert (2006)
detected those entrepreneurs with the highest probability of starting
a second venture had a first firm that had been acquired. In addi-
tion, they had previously raised initial capital relating to the first firm
from business angels, and they generally had greater access to finan-
cial resources. Evidence from the United States suggests that “failed”
serial entrepreneurs rather than “successful” serial entrepreneurs are
more likely to have obtained funding from the venture capital firm

382 Empirical Evidence
that funded their first venture (Bengtsson, 2007). In addition, evidence
suggests that a repeat venture capital relationship is more likely if an
entrepreneur’s start-up is similar to their previous start-up, if the ven-
ture capital firm is older, and if the business start-up is located outside
California.
Westhead et al. (2003a) found that, on average, portfolio
entrepreneurs in Scotland invested more total initial capital (and per-
sonal capital) to establish or purchase the surveyed businesses than
novice entrepreneurs. Portfolio entrepreneurs were able to leverage their
prior business experience to acquire more initial capital from exter-
nal sources (i.e., banks). Similarly, in a study of new business start-
ups in Norway, Alsos et al. (2006) found that portfolio and serial
founders invested significantly more money in their businesses than
novice founders at start-up. Westhead et al. (2003a) reported that a
larger proportion of portfolio entrepreneurs, rather than serial or novice
entrepreneurs, had used bank loans as part of their initial capital. How-
ever, portfolio entrepreneurs were less likely than novice entrepreneurs
to report that access to bank finance (and trade credit) was easy. On
average, serial entrepreneurs invested more total initial (and personal)
capital to establish or purchase the surveyed businesses than novice
entrepreneurs in Scotland. A larger proportion of serial entrepreneurs,
rather than novice entrepreneurs, had used personal savings and/or
a mortgage on their home as part of their initial capital. In terms
of the proportion of initial funds contributed by each source, serial
entrepreneurs, rather than other entrepreneurs, reported a higher pro-
portion of initial capital had been obtained from personal savings (i.e.,
potentially accumulated from the sale of an equity stake in a previous
venture). This evidence may be indicative that their first (previous)
venture had been a financial success. On the other hand, this finding
may be consistent with the views of venture capital firms that one of the
main reasons for not funding serial entrepreneurs in a subsequent ven-
ture relates to the inability of serial entrepreneurs to identify attractive
subsequent ventures (Wright et al., 1997b). Indeed, two-thirds of serial
entrepreneurs did not use bank loans as part of their initial capital for
the surveyed businesses.

5.2 Behavioral Differences 383
5.2.1.2 Information and Networks
An important aspect of entrepreneurship is the information search
processes exhibited by entrepreneurs leading up to the ownership of
(subsequent) businesses. Information represents a potentially valuable
resource for entrepreneurs, particularly with regard to opportunity
identification and exploitation (Casson, 1982; Alsos and Kolvereid,
1998; Shane, 2000).
Two perspectives relating to information search behavior have
been identified (Kaish and Gilad, 1991). On the one hand, search
by an entrepreneur is a means of optimizing performance. Inexpe-
rienced entrepreneurs who are less prepared may be more likely to
engage in extensive search (Woo et al., 1992). Conversely, more experi-
enced habitual entrepreneurs may be less likely to engage in proactive
search strategies because they can draw upon routines and responses
that worked well in the past. Fiet et al. (2000) argue that expert
entrepreneurs (defined as those who have demonstrated by their accom-
plishments that they possess specialized knowledge) will restrict their
initial scanning of the environment for opportunities. They will also
concentrate on searching within a more specific domain of venture ideas
based on routines that worked well in the past.
Alternatively, information search can be viewed as part of the pro-
cess of identifying or “noticing” opportunities (Kirzner, 1973) that are
present. Information search behavior of this type may be a function
of an individuals bounded rationality, or capacity to handle complex
information. Adherents of this perspective suggest that less experienced
novice entrepreneurs may conduct search routines that are narrower in
terms of the sources and amount of information. Individuals with no
prior business ownership experience have fewer benchmarks to assess
whether the information they have collected is appropriate to iden-
tify and exploit a business opportunity (Cooper et al., 1995). This is
because they will be less attuned to the variety and implications of sig-
nals in their environment. Entrepreneurs with limited experience may
use simplified decision-making methods to guide their search, while the
opposite may be the case with experienced entrepreneurs. This perspec-
tive suggests that novice entrepreneurs will be relatively less proactive
with regard to searching for information and business opportunities.

384 Empirical Evidence
Evidence on the information search practices of novice and habit-
ual entrepreneurs is mixed. Cooper et al. (1995) suggested that novice
entrepreneurs would search for less information, due to their limited
understanding of what is needed. Contrary to expectation, they found
that novice entrepreneurs, on average, sought more information than
habitual entrepreneurs. In contrast, Westhead et al. (2005a) found
that, on average, portfolio entrepreneurs in Scotland had used a wider
range of information sources than novice entrepreneurs. A larger pro-
portion of portfolio than novice entrepreneurs indicated that they had
used information from personal friends, magazines/newspapers, trade
publications, financiers, employees, technical literature, local enterprise
and development agencies, consultants and government sources. West-
head et al., detected that, on average, serial entrepreneurs used more
sources of information than novice entrepreneurs. A larger proportion
of serial than other entrepreneurs had used information from other busi-
ness owners. Moreover, a larger proportion of serial, rather than novice
entrepreneurs, reported that they had used information from customers
and clients, personal friends, financiers, employees, and technical litera-
ture. Ucbasaran et al.’s (2006a) study of entrepreneurs in Great Britain,
which controlled for several dimensions of an entrepreneur’s human cap-
ital, did not find a significant association between an entrepreneur’s
prior business ownership experience and the number of information
sources utilized, or the information search intensity.
Entrepreneurs may access valuable information without proactively
searching for it. Entrepreneurs’ social networks can provide access to
information as well as facilitate the identification of opportunities. Net-
work contacts can help expand the boundaries of the entrepreneur’s
thinking by offering access to knowledge and information, and may
in this way expose the entrepreneur to new venture ideas and oppor-
tunities (Hills et al., 1997; Singh et al., 1999). With each business
ownership experience, habitual entrepreneurs may develop contacts
that provide them with a flow of information relating to business
opportunities (Kaish and Gilad, 1991; Rosa, 1998), implying that they
may need to be less proactive in information search relative to novice
entrepreneurs. Having earned a reputation as a successful entrepreneur,
financiers, advisers, other entrepreneurs, and business contacts may

5.2 Behavioral Differences 385
present business proposals to some habitual entrepreneurs. Ronstadt
(1988) suggested that the best new venture opportunities could be
most often revealed only after an individual is already involved in a
venture. This is because once the venture has been initiated, greater
information becomes available about relevant contacts, viable markets,
product availability, and competitive resources. Similarly, McGrath
(1999) has argued that habitual entrepreneurs (particularly, portfo-
lio entrepreneurs) may be more likely to pursue ventures as a means
of gaining access to a wider range of “shadow options” (i.e., busi-
ness opportunities that had not been previously recognized) than other
entrepreneurs. Alsos et al. (2003) found that farmers in Norway who
identified opportunities based on the daily activities of the farm busi-
ness, were more likely to engage in the start-up of new business
activities. Recently, Wiklund and Shepherd (2008) detected that an
entrepreneur’s business networks and links with support agencies were
a significant predictor of habitual entrepreneurship. Consequently, the
nature (i.e., quality) and the amount of information (i.e., quantity)
should be considered.
Mosey and Wright (2007) develop theory relating to how differences
in the human capital derived from the entrepreneurial experience of
academic entrepreneurs influence their ability to develop social capital
that can address barriers to venture development. They identified three
types of academic entrepreneurs with differing levels of entrepreneur-
ship experience (i.e., nascent, novice, and habitual entrepreneurs).
Using a longitudinal study of 24 academic entrepreneurs in England,
they proposed that habitual entrepreneurs had broader social net-
works and were more effective in developing network ties to gain
equity finance and management knowledge. Conversely, less experi-
enced entrepreneurs were likely to encounter structural holes between
their scientific research networks and industry networks, constraining
their ability to recognize opportunities and gain credibility for their
fledgling ventures.
It appears that although evidence is mixed on the relationship
between business ownership experience and information search prac-
tices, habitual entrepreneurs do appear to have a relative advantage
with regard to networks and social capital.

386 Empirical Evidence
5.2.2 Opportunity Identification
Information can be seen as a necessary but insufficient condition for
the identification of business opportunities. The nature of the infor-
mation used and the ability to utilize information shape the ability
to identify a business opportunity. As intimated above, some types of
information are more likely to be used by habitual entrepreneurs. Fiet
et al. (2003) have argued that information specific to an opportunity
(e.g., knowledge of people, local conditions, and special circumstances)
is more valuable. Recently, Ucbasaran et al. (2008b) found that British
entrepreneurs who identified a larger number of business opportuni-
ties in a give period were significantly associated with the propensity
to use personal rather than professional information sources. Habit-
ual entrepreneurs can, therefore, accumulate and leverage personal and
specific information sources.
The ability to utilize information is important and can be viewed as
a key skill for entrepreneurs. An individual with information necessary
to identify an opportunity may not do so because of an inability to see
new means-ends relationships (Shane and Venkataraman, 2000). Gaglio
and Katz (2001) have argued that Kirzner’s alertness theory relates to
one extreme of an alertness continuum. The possibility of other points
on the alertness continuum needs to be considered. Prior business own-
ership experience may allow habitual entrepreneurs to be more alert
to opportunities than inexperienced novice entrepreneurs. Experience-
based knowledge can direct an individual’s attention, expectations, and
interpretations of market stimuli. Habitual entrepreneurs can lever-
age their experience-based knowledge to generate additional business
ideas as well as spot business opportunities that are ignored, or not
recognized by novice entrepreneurs (Gaglio, 1997). In line with these
views, Westhead et al. (2003b) found that a larger proportion of
novice entrepreneurs compared with serial or portfolio entrepreneurs
in Scotland had failed to identify (i.e., spot) any opportunities for
creating or purchasing a business within the last five years. More-
over, a larger proportion of serial rather than portfolio entrepreneurs
had failed to spot any opportunities. As expected, a significantly
larger proportion of portfolio entrepreneurs rather than serial or novice

5.2 Behavioral Differences 387
entrepreneurs had identified two or more opportunities. Among new
business founders in Norway, Alsos et al. (2006) also found that portfo-
lio and serial entrepreneurs had identified significantly more opportu-
nities than novice entrepreneurs. Further, portfolio entrepreneurs had
identified more opportunities than serial entrepreneurs.
Consistent with the above evidence, controlling for various dimen-
sions of human capital, Ucbasaran et al. (2008a,b) found that habitual
entrepreneurs in Great Britain identified significantly more opportuni-
ties for creating or purchasing a business in a given period than novice
entrepreneurs. Ucbasaran et al. (2008a) detected that entrepreneurs cit-
ing entrepreneurship-specific human capital, in particular business own-
ership experience, and perceptions of managerial and entrepreneurial
skills were associated with the identification and pursuit of a larger
number of opportunities. Entrepreneur demographic characteristics
were also significantly associated with opportunity identification and
pursuit. Most notably, younger and male entrepreneurs identified more
business opportunities. An entrepreneur’s general human capital profile
in terms of education was only weakly associated with the identification
of more business opportunities. They found that portfolio entrepreneurs
identified significantly more opportunities than serial entrepreneurs.
Ucbasaran et al. (2008a) also explored the relationship between the
number of businesses owned by habitual entrepreneurs and the subse-
quent number of business opportunities identified. Entrepreneurs with
more business ownership experience identified significantly more busi-
ness opportunities and more innovative opportunities, albeit at a dimin-
ishing rate. These findings support the view that experience may be
associated with both assets and liabilities. Up to a certain point (i.e.,
15 ventures), prior business ownership experience may be a valuable
resource for opportunity identification. Beyond this point, experience
may lead to biases. Individuals may believe that they already have suf-
ficient knowledge and they do not have to search for additional infor-
mation (Baron, 1998), and if information is sought there is a reliance on
familiar domains (Rabin, 1998). For example, habitual entrepreneurs
may rely too much on strong ties in the networks in which they are
embedded that encourage them to search for opportunities in familiar
domains, whereas the development of weak ties may enable them to

388 Empirical Evidence
expand their knowledge into new areas (Burt, 1992; Uzzi, 1996; Elfring
and Hulsink, 2003; Mosey et al., 2007).
Ucbasaran et al. (2008b) explored the relationship between the num-
ber of business opportunities in a given period and an entrepreneur’s
prior business “failure” experience. Habitual entrepreneurs who cited
higher levels of prior business failure experience (i.e., the total num-
ber of failed businesses they had owned as a percentage of the total
number of businesses they had owned up to the time of the survey)
identified significantly more business opportunities. However, habitual
entrepreneurs who reported that more than 20% of their businesses
had failed identified significantly fewer business opportunities. This evi-
dence supports the view that a certain amount of business failure can
encourage entrepreneurs to learn from their mistakes, and to put into
practice what they have learned. In addition, it lends support to the
view that business failure can be a traumatic event that can hinder
learning, as well as reduce an individual’s self-confidence and motiva-
tion to re-enter business ownership.
While the above evidence suggests that entrepreneurial experience
is positively associated with opportunity identification, it provides lim-
ited indication of the nature and quality of opportunities identified.
Using prototype theory, Baron and Ensley (2006) argue that habitual
entrepreneurs will be associated with different “business opportunity
prototypes” — their cognitive representation of the essential nature
of opportunities. They found that the business opportunity proto-
types of experienced entrepreneurs were more clearly defined, included
more dimensions, and that these dimensions were closely related to
actually starting and running new ventures. Specifically, experienced
entrepreneurs focused more on attributes that related to converting
identified opportunities into realized financial gains, such as manage-
able risk, meeting customers’ needs, and the generation of positive cash
flow. Experienced entrepreneurs cited awareness of opportunities as
well as threats in their evaluation of business opportunities. Conversely,
novice entrepreneurs were more focused on newness, novelty and “gut-
feelings” associated with opportunities. (Baron and Ensley, 2006, p. 10)
suggest that this may lead novice founders to be “cognitively dazzled”
by the novelty and perceived potential of their ideas, resulting in them

5.2 Behavioral Differences 389
failing to appreciate the many financial and business factors that affect
the successful exploitation of opportunities. One explanation for this
tendency offered by Baron and Ensley is that the business opportu-
nity prototypes of novice entrepreneurs may be shaped by stories in
the media, which tend to focus on successful entrepreneurs who have
created novel and unique businesses.
Ucbasaran et al. (2008b) detected that the latest business opportu-
nities exploited by habitual entrepreneurs tended to be associated with
higher levels of innovation. While this finding may appear contradic-
tory to Baron and Ensley (2006) work, it is important to note that the
latter study focused on how experienced entrepreneurs perceived and
evaluated opportunities. Although experienced entrepreneurs may pay
less attention to novelty and uniqueness, this does not necessarily mean
that the opportunities they identify and exploit are not novel. As knowl-
edge and experience are the raw materials necessary for creative ideas
(Sternberg, 1999), it is quite likely that the opportunities that habitual
entrepreneurs identify will be more innovative that those identified by
inexperienced entrepreneurs. Clearly, our understanding of the nature
of opportunities identified by habitual and novice entrepreneurs can
benefit from future research. We return to this issue in Section 7.
5.2.3 Opportunity Pursuit and Mode of Opportunity
Exploitation
5.2.3.1 Opportunity Pursuit
Not all identified opportunities are exploited (Shane and Venkatara-
man, 2000). Novice entrepreneurs may have identified and pursued
more than one business opportunity, but currently they have exploited
only one business opportunity. The opportunity pursuit stage is the
stage in between the identification and exploitation stages. During the
pursuit stage, the entrepreneur commits time and resources to reduce
uncertainty surrounding the identified opportunity. The entrepreneur
assesses the expected direct costs, potential opportunity costs, value
and returns associated with an identified opportunity.
The extent to which an individual invests time and resources into
pursuing (i.e., evaluating) an opportunity can be partly shaped by an

390 Empirical Evidence
entrepreneur’s human capital profile. Some entrepreneurs can lever-
age information, experience, and learning (Carroll and Moskowski,
1987) from prior business ownership experience to evaluate identi-
fied business opportunities. Experienced entrepreneurs who can reduce
the costs of exploitation might increase the probability of opportu-
nity pursuit (Shane and Venkataraman, 2000). As intimated above,
habitual entrepreneurs may identify better “quality” opportunities
(Ucbasaran et al., 2008b). It is, therefore, not unreasonable to assume
that the latter identified opportunities will be pursued. Some indi-
viduals with prior experience may expect to receive higher returns
on their subsequent investments. Habitual entrepreneurs with broader
knowledge bases and access to pools of resources may be better pre-
pared to exploit an opportunity once the opportunity has passed the
pursuit stage.
Entrepreneurs in Scotland who had identified an opportunity were
asked to report the number of opportunities they had pursued (i.e.,
committed time and financial resources) within the last five years. In
line with expectations, Westhead et al. (2003b) found that a signifi-
cantly larger proportion of novice entrepreneurs compared with serial or
portfolio entrepreneurs had failed to pursue any identified opportunity.
It was also detected that a significantly larger proportion of portfolio
entrepreneurs, rather than serial or novice entrepreneurs, had pur-
sued two or more opportunities. Similarly, Ucbasaran et al.’s (2006a)
British study found that habitual entrepreneurs, particularly portfolio
entrepreneurs, pursued a significantly higher proportion of identified
opportunities than novice entrepreneurs.
Alsos and Kolvereid (1998) investigated the activities conducted by
nascent entrepreneurs when trying to pursue an opportunity through
the start-up of a new business. They found significant differences
between portfolio, serial, and novice entrepreneurs relating to the num-
ber and timing of start-up activities as well as the propensity to succeed
in establishing a new business. Portfolio entrepreneurs undertook more
activities, but waited until the last part of the process before they
implemented costly activities. Portfolio entrepreneurs showed a signif-
icantly higher propensity to start businesses compared to serial and
novice entrepreneurs.

5.2 Behavioral Differences 391
5.2.3.2 Mode of Opportunity Exploitation
There is considerable heterogeneity among the exploitation modes
selected by entrepreneurs (Venkataraman and MacMillan, 1997; Shane
and Venkataraman, 2000; Ucbasaran et al., 2001). Firm creation (or
the de-novo firm start-up) is by far the most common mode of business
opportunity exploitation. Entrepreneurship can, however, involve the
exploitation of opportunities in existing organizations (Casson, 1982;
Cooper and Dunkelberg, 1986; Amit et al., 1993; Sharma and Chris-
man, 1999; Ucbasaran et al., 2001). The purchase of an existing business
and entrepreneurial activity within the confines of an existing busi-
ness (i.e., corporate entrepreneurship) represent two common forms of
opportunity exploitation involving existing businesses.
Compared with the establishment of a new firm, the purchase of
an existing business could be viewed as being less entrepreneurial
and risky (Cooper and Dunkelberg, 1986; Shook et al., 2003). This
view is simplistic and potentially misleading for several reasons. First,
Cooper and Dunkelberg (1986) focused on basic measures of motiva-
tions and attitudes to determine the extent to which an entrepreneur
was “entrepreneurial.” The behavior and outcomes associated with the
purchased businesses have attracted limited attention. Second, trans-
forming an existing business to exploit a new opportunity may involve
significant risks if the business brings along with it characteristics that
are difficult to change/adapt. For example, reputation and relationships
with various stakeholders (such as customers and employees) may be
difficult to change. The evidence base relating to management buy-
outs (MBOs) (which involve the purchase of an established business)
shows that purchased firms can exhibit highly entrepreneurial behav-
ior and outcomes (with regard to new product introductions, R&D
expenditure, goals, and strategies) under new owners (Wright et al.,
1992, 1995; Zahra, 1993). Robbie and Wright (1996) have asserted that
management buy-ins (MBIs) (i.e., where an outside management team
purchases an existing business) tend to be very risky, often requiring
considerable entrepreneurial initiative by the new owners. Doubt must,
therefore, be cast on the dated view that the exploitation of an oppor-
tunity through the purchase mode is less risky or entrepreneurial.

392 Empirical Evidence
Chandler and Hanks (1994) suggested that businesses should
select strategies to generate rents based upon their resources. Sim-
ilarly, entrepreneurs should select a mode of exploitation that best
suits their human capital profile (Harvey and Evans, 1995). Habit-
ual entrepreneurs with experience and access to a broader range of
resources may have greater flexibility in deciding how to exploit an iden-
tified opportunity. Some habitual entrepreneurs can leverage their repu-
tation and track record to raise external finance, and/or they can invest
personal finds accumulated through the sale of a previously owned firm.
Entrepreneurs with prior experience of owning and managing a busi-
ness may be in a better position to implement change in a purchased
business compared with novice entrepreneurs. A portfolio entrepreneur
may purchase an additional business to enhance the performance of
other currently owned ventures (Rosa, 1998). However, some portfolio
entrepreneurs who are concerned about the co-ordination of firms they
own, may be able to ensure a better fit between these firms by start-
ing up a business, and moulding it to ensure that synergies across the
various firms owned can be reaped.
Ucbasaran et al. (2006a) monitored the new firm creation and pur-
chase modes of opportunity exploitation reported by entrepreneurs in
Great Britain. No significant differences were detected between novice
and habitual entrepreneurs, or between novice, serial, and portfolio
entrepreneurs with regard to the propensity to purchase an exist-
ing firm. An entrepreneur’s prior business ownership experience was
not significantly associated with the selected mode of opportunity
exploitation. Other dimensions of an entrepreneur’s human capital
(e.g., technical and managerial skills), however, were associated with
the selected mode.
Corporate entrepreneurship involves the creation of new combina-
tions of resources in existing firms (Sharma and Chrisman, 1999). Wik-
lund and Shepherd (2008) build on this notion and argue that habitual
entrepreneurship can occur within the confines of an existing business.
They conceptually and empirically separate the act of entrepreneurship
from the organization. The act of entrepreneurship is viewed as new
entry, which involves entering new or established markets with new or
existing goods or services (Lumpkin and Dess, 1996, p. 136). This can

5.2 Behavioral Differences 393
involve the creation of new business activities through the identification
and exploitation of opportunities (Davidsson, 2003; Alsos, 2007). The
creation of a new organization used for new entry represents the exter-
nal mode of organizing, whereas the offer by an existing organization
of a new product/service, a new product/value relation, or geographic
market expansion represent the internal mode of organizing (Lumpkin
and Dess, 1996; Davidsson, 2004). Wiklund and Shepherd (2008) found
that while 40% of entrepreneurs in their Swedish sample were habit-
ual entrepreneurs, 59% of these habitual entrepreneurs were involved
in entrepreneurship by adopting the internal mode of organizing. The
choice of the internal versus external mode of organizing was found to
be associated with an entrepreneur’s prior experience. Entrepreneurs
with prior start-up experience were more likely to opt for the external
mode of organizing than novice entrepreneurs. In line with Ucbasaran
et al. (2006a), this evidence suggests that an entrepreneur’s human cap-
ital profile can shape the selected opportunity exploitation mode. The
notion of habitual corporate entrepreneurship raises important issues
regarding its operationalization, and this issue is discussed below.
5.2.4 Organizational Strategies
The organizational practices reported by novice, serial, and portfolio
entrepreneurs offer insights into how they exploit opportunities. West-
head et al. (2003b) monitored the organizational strategies adopted
by firms owned by entrepreneurs in Scotland. Habitual entrepreneurs
(particularly, portfolio entrepreneurs) were significantly more likely to
emphasize innovation and growth. Portfolio and serial entrepreneurs
were both significantly more likely than novice entrepreneurs to indi-
cate “we emphasize the need to grow the business by using profits
generated by the business”; “we stress new products/services develop-
ments”; “we strive to be the first to have products available”; and “we
have developed lower production costs via process innovation.” Further,
habitual entrepreneurs, particularly portfolio entrepreneurs, were more
likely to report that “we emphasize the need to grow the business.”
Westhead et al. (2003b) detected that serial entrepreneurs were
significantly more likely than novice and portfolio entrepreneurs to

394 Empirical Evidence
report “we strive to form alliances with other businesses.” Portfolio
entrepreneurs were more likely than novice entrepreneurs to indicate
“we emphasize strict quality control”; “we strive to turn around poor
performance and develop a stronger business”; “we strongly emphasize
improvement in employee productivity and operations efficiency”; and
“we invest heavily in Research and Development (R&D).” In addi-
tion, portfolio entrepreneurs were more likely than novice or serial
entrepreneurs to report “we actively recruit the most talented peo-
ple”; “we invest heavily in providing formal job related training for our
employees”; “we engage in novel and innovative marketing techniques”;
and “we emphasize the need to grow the business by acquiring new
businesses.” Despite a number of similarities between serial and port-
folio entrepreneurs, this evidence suggests that portfolio entrepreneurs
were more likely to exhibit several skills that provide greater under-
standing surrounding “why” and “how” they own several businesses at
the same time. The fact that portfolio entrepreneurs own more than
one business may explain their greater focus on managerial compe-
tence and human capital resources, than serial or novice entrepreneurs.
In line with case study evidence (Rosa, 1998), this evidence supports
the view that portfolio entrepreneurs may develop synergistic relation-
ships between the ventures they own to gain competitive advantages for
individual ventures. Some portfolio entrepreneurs can utilize this dis-
tinct advantage to ensure the survival and development of ventures they
own. Alsos and Carter (2006) found that serial and portfolio founders in
Norway acquired more resources than novice founders during the start-
up phase with regard to financial and human resources (i.e., start-up
team). These favorable resource situations were associated with larger
early business.
Alsos and Carter’s (2006) study of farm-based portfolio
entrepreneurs in Norway identified an extensive transfer of various
types of resources from the existing farm business to the new ven-
ture. Both assets and liabilities were associated with this transfer. The
transfer of some types of resources was associated with improved prof-
itability, whilst other types of resources were associated with inferior
profitability. New firm competitive advantages were generally associ-
ated with the transfer of “general resources” (i.e., premises). However,

5.3 Performance 395
new firm performance was more mixed with the transfer of “context
specific resources” (i.e., production equipment, specific knowledge, and
networks). New firms associated with the latter resource transfers may
be associated with the “liability of staleness.” This liability can be
reduced by the acquisition of new and more suitable resources.
5.3 Performance
The view that firms owned by habitual entrepreneurs might report
superior levels of performance than novice entrepreneurs has encour-
aged research interest into habitual entrepreneurship. Recent stud-
ies have specifically explored firm performance differences between
novice and habitual entrepreneurs as well as between novice, serial
and portfolio entrepreneurs, but there remain relatively few stud-
ies. A summary of published articles relating to the links between
habitual entrepreneurship (as well as multiple business ownership and
entrepreneurial experience) and firm and entrepreneur performance are
presented in Table 5.2.
5.3.1 Firm Performance
No consistent association has been identified between an entrepreneur’s
prior business ownership experience and superior firm performance.
Cross-sectional studies have generally compared the performance of
the surveyed firm currently owned by novice, serial, and portfolio
entrepreneurs. Most studies have failed to gather information relat-
ing to the array of businesses owned by portfolio entrepreneurs. Conse-
quently, the full economic contribution made by portfolio entrepreneurs
relative to other types of entrepreneurs has not been adequately
assessed. Studies conducted by Carter (1999) and Rønning and
Kolvereid (2006) have, however, compared performance information
from all the firms currently owned by portfolio entrepreneurs engaged
in farming activities in the county of Cambridgeshire in England and
in Norway, respectively with a sample of novice entrepreneurs, that is
farmers with no other businesses. On the downside, the contributions
made by serial entrepreneurs were not assessed in these studies.

396 Empirical Evidence
Several studies have failed to detect any significant link between
prior business ownership experience and superior firm performance
(Birley and Westhead, 1993; Kolvereid and Bullv˚ag, 1993; Westhead
and Wright, 1998a,c). There is, however, some support for the view
that the performance of the newest businesses owned by habitual
entrepreneurs, particularly those owned by portfolio entrepreneurs, are
associated with superior levels of performance compared to new firms
owned by novice entrepreneurs (Westhead et al., 2003a,b, 2005b,c;
Alsos and Carter, 2006). Stuart and Abetti (1990) explored the rela-
tionship between an entrepreneur’s entrepreneurial experience (i.e.,
number of previous ventures and the role played in them) and business
profitability and growth. They found that superior firm performance
was significantly associated with respondents who cited high levels of
experience with reference to the selected composite performance mea-
sure. Reuber and Fischer (1994) detected positive associations between
start-up experience and superior firm performance in terms of financial
results and employment growth. Further, Haynes (2003) found a posi-
tive relationship between entrepreneurial experience and higher annual
sales. Dyke et al. (1992) conducted separate analyses for five industry
sectors and they noted positive relationships between entrepreneurial
experience and superior firm performance with regard to four out of five
sectors. Delmar and Shane (2004) detected that new ventures pursued
by more experienced firm founders had a lower hazard of disbanding
than new ventures pursued by less experienced founders. In particular,
prior start-up experience was found to reduce the hazard of completing
product development, of initiating marketing and promotion, and the
obtaining inputs.
In 1994, Dahlqvist et al. (2000) collected data from 7,256 new enter-
prises in Sweden. Firm survival and performance was subsequently
ascertained in 1997. A distinction was made between failure, marginal
survival, and high performance. The respondents citing prior start-up
experience were significantly less likely to cite marginal survival. More-
over, prior start-up experience was positively but not significantly asso-
ciated with high performance. Dahlqvist and Davidsson (2000) explored
links between entrepreneur profile characteristics reported in 1994 and
the employment and sales size and perceived performance of surviving

5.3 Performance 397
firms in 1997. Firms owned by entrepreneurs with prior start-up expe-
rience and those owned by portfolio entrepreneurs (termed parallel
entrepreneurs) reported significantly larger employment and sales sizes.
However, superior profit performance was not significantly associated
with entrepreneurs with start-up experience, or portfolio entrepreneurs.
A study of a representative sample of entrepreneurs in Scot-
land conducted by Westhead et al. (2003a, 2005a) detected several
size and performance differences between novice, serial, and portfo-
lio entrepreneurs. Reflecting a common weakness of studies focusing
upon portfolio entrepreneurs, the survey instrument utilized failed to
gather information on the characteristics and the performance of the
other business(es) in which portfolio entrepreneurs have ownership
stake(s) in. As a result, the full economic contribution of portfolio
entrepreneurs in Scotland was not assessed. The univariate analysis
conducted by Westhead et al. (2003a, 2005a) revealed that the average
sales revenues of businesses in 1999 owned by portfolio entrepreneurs
were larger than those owned by novice and serial entrepreneurs. On
average, businesses owned by portfolio entrepreneurs reported larger
absolute sales growth over the 1996 to 1999 period than those owned
by novice entrepreneurs. A larger proportion of portfolio rather than
novice entrepreneurs, reported that their current operating profit per-
formance was above average relative to competitors. Further, a larger
proportion of serial rather than novice entrepreneurs, reported that
their current profit performance was above average relative to com-
petitors. Supporting the finding relating to sales, portfolio entrepreneur
firms were larger than those owned by other entrepreneurs in terms of
total employment size in 2001. Moreover, portfolio entrepreneur firms,
on average, reported higher absolute and percentage total employment
growth over the 1996 to 2001 period, than firms owned by novice and
serial entrepreneurs. Additional analysis revealed that the top 4% of
fastest growing businesses owned by portfolio entrepreneurs in Scotland
generated 55% of gross new jobs created, while the comparable sub-
sample of firms owned by novice and serial entrepreneurs generated 44%
and 38% of gross new jobs, respectively. Evidence suggests with refer-
ence to the surveyed firms alone that portfolio entrepreneurs accounted
for more absolute employment growth than other entrepreneurs.

398 Empirical Evidence
Ucbasaran et al. (2006a) monitored the performance of a large and
representative sample of private firms in Great Britain. The multi-
variate regression analysis failed to detect any significant firm perfor-
mance differences between surveyed firms owned by novice, serial, and
portfolio entrepreneurs when other aspects of entrepreneurs’ human
capital, the environment and organizational characteristics were con-
sidered. Alsos et al. (2006) gathered survey information from a repre-
sentative sample of business start-ups in Norway. New firms owned by
novice founders reported significantly lower early new business employ-
ment growth than those owned by serial and portfolio entrepreneurs.
However, the latter difference was not detected when resource access
was considered within a multivariate regression framework. Conversely,
a recent study of MIT alumni found that entrepreneurial experience
increased likelihood of firm success with regard to reported sales rev-
enues (Eesley and Robert, 2006).
The performance of novice and serial entrepreneurs in England
was explored by Flores-Romero (2006). His analysis focused on self-
employed novice and serial entrepreneurs who at the time of the first
survey did not have any employees. Serial entrepreneurs were signif-
icantly more likely than novice entrepreneurs to have subsequently
employed people in their businesses. A notable contribution of this
study was the monitoring of the employment sizes of all businesses pre-
viously and currently owned by serial entrepreneurs. On the downside,
this study did not compare the performance of firms owned by portfolio
entrepreneurs against those owned by novice and serial entrepreneurs.
An important issue for venture capitalists is whether serial
entrepreneurs perform better than other types of entrepreneurs (Wright
et al., 1997a,b; Westhead and Wright, 1998a; Westhead et al., 2003a).
There is tentative evidence to suggest that serial entrepreneurs are more
likely to succeed in their next ventures than first-time entrepreneurs
(Gompers et al., 2007). Further, entrepreneurs that have previously
owned firms that have “failed” are subsequently more likely to own
superior performing firms. This evidence suggests that firm perfor-
mance is not solely shaped by luck alone. Serial entrepreneurs that
leverage accumulated skills can improve the performance of the firms
they subsequently own. Successful serial entrepreneurs do not achieve

5.3 Performance 399
higher valuations than other entrepreneurs but venture capital funds
investing in successful serial entrepreneurs are associated with higher
returns. A firm started by a serial entrepreneur with successful track
record is generally more likely to succeed if funded by a top-tier venture
capitalist or one in the lower tier. This evidence suggests that previ-
ously successful entrepreneurs derive no benefits from value added ser-
vices provided by more experienced venture capitalists (Gompers et al.,
2007).
5.3.2 Entrepreneur Performance
Due to the focus on “winning businesses” rather than “winning
entrepreneurs,” relatively few studies have monitored the performance
of habitual entrepreneurs with regard to entrepreneur performance indi-
cators. Entrepreneur performance can be assessed with regard to array
of indicators.
Westhead and Wright (1998c) noted that over 89% of novice, portfo-
lio, and serial founders with businesses located in either urban or rural
areas in Great Britain indicated they desired to grow their businesses.
They detected that portfolio rural founders were somewhat more likely
than other founders, especially novice rural founders, to have reported
that they wanted their businesses to grow in the future. Also, they
were more likely to have stated that they intended to increase the total
employment size of the surveyed businesses. These differences were,
however, not statistically significant.
Westhead et al. (2005a) monitored the performance of entrepreneurs
in Scotland. They found that a larger proportion of portfolio,
rather than novice entrepreneurs in Scotland, had drawn out more
than £75,000 during the previous 12 months. Similarly, Rønning and
Kolvereid’s (2006) study of farm owners in Norway found that portfo-
lio farmers with non-farm related enterprises and farmers with external
employment reported higher household income than other farmers.
Westhead et al. (2003b) asked habitual entrepreneurs whether they
were satisfied with the surveyed business in relation to their first busi-
ness. Over three-quarters of serial and portfolio entrepreneurs reported
that they were satisfied with the surveyed business. Similarly, no

400 Empirical Evidence
significant differences were detected between entrepreneurs with regard
to their standard of living today compared to when they first estab-
lished/owned the surveyed business. Irrespective of entrepreneur type,
over 49% of entrepreneurs stated it was good and above average (50%,
53%, and 66% of novice, serial and portfolio entrepreneurs, respec-
tively). An additional aspect of satisfaction relates to the willingness
to start or purchase a business again in the future. They detected
that a larger proportion of portfolio rather than novice and serial
entrepreneurs indicated that they intended to establish or purchase
an additional business.
Other studies have found a positive association between prior
entrepreneurial experience and the intention to start a business again
(Kolvereid and Isaksen, 2006; Stam et al., 2006). Flores-Romero and
Blackburn (2006), for example, noted that serial entrepreneurs fol-
lowing the closure of a business were markedly more likely to start
another business than novice entrepreneurs. Wright et al. (1997b) have
highlighted that the motivations for entrepreneurial activity may vary
between the first and subsequent ventures, partly depending on whether
the first venture had been successful in generating a significant capi-
tal gain.
The willingness to establish an additional venture may be shaped
by the reasons cited for the closure of the previous venture. An
entrepreneur who closed a business because a better opportunity pre-
sented itself might be more willing to start another business than an
entrepreneur who previously owned a business that closed due to busi-
ness “failure.” Some entrepreneurs can learn from a business “failure”
experience (McGrath, 1999). Conversely, the emotional effects associ-
ated with prior business “failure” may retard an individual’s subse-
quent ability to establish a further venture (Shepherd, 2003). Failure
at a specific task can reduce an individual’s belief in their ability
to successfully undertake that task in the future (Bandura, 1997).
Recently, Ucbasaran et al. (2006b) detected that habitual entrepreneurs
who had experienced “business failure” (i.e., closed a business due to
bankruptcy/liquidation/receivership or because the performance did
not meet expectations) did not report lower levels of confidence, nor did
they pursue fewer opportunities than those who had not experienced

5.3 Performance 401
“business failure.” Consistent with prospect theory, (Kahneman and
Tversky, 1979), habitual entrepreneurs who had experienced a “busi-
ness failure” pursued more opportunities than those who with no “busi-
ness failure” experience. Entrepreneurs with prior “business failure”
experience may perceive that they are in a loss situation. Prospect the-
ory suggests that when confronted with a loss situation, individuals
exhibit risk-seeking behavior. The latter individuals may pursue more
opportunities to “catch up.” Alternatively, if entrepreneurs view the
outcome of a venture as one of many (in the past, present or future),
they may adopt an options perspective (McGrath, 1999) whereby they
have “small bets” on more opportunities, and they accept that some
opportunities will fail.
Ucbasaran et al. (2006b) found that the relationship between hav-
ing experienced a “business failure” and overconfidence was moderated
by the number of successfully exploited opportunities. With reference
to entrepreneurs that reported prior “business failure,” the level of
overconfidence was higher for those who reported a high number of
exploited opportunities perceived to be “successes” than those who
reported few opportunities perceived to be “successes.” Entrepreneurs
with prior “business failure” experience who perceive their subsequent
firms to be successes can, therefore, accumulate the overconfidence
liability.

6
Policy and Practitioner Implications
A movement from a small firm’s policy agenda (DTI, 2004) toward
a more inclusive entrepreneurship policy agenda that places more
emphasis on the entrepreneur and the entrepreneurial team is appar-
ent (OECD, 1998; Westhead et al., 2003a, 2004, 2005c; Lundstr¨om and
Stevenson, 2004). Yet, despite the habitual entrepreneur phenomenon
being widespread, policy-makers and practitioners have been reluctant
to introduce initiatives that address barriers to enterprise and firm
development faced by experienced entrepreneurs. In order to maximize
returns on their investments at national and/or local levels, policy-
makers and practitioners may seek to encourage the development of
existing entrepreneurs firms (and firms), rather than solely to pro-
vide additional support to increase the supply of nascent entrepreneurs,
novice entrepreneurs and new firms (Global Entrepreneurship Monitor
(GEM), 2004; Westhead et al., 2004, 2005c).
The review of evidence presented here suggests that policy-makers
and practitioners need to appreciate more fully the needs, resources,
behavior, and contributions of various types of entrepreneur when they
are formulating policies (Westhead and Wright, 1998b, 1999). Rather
than provide “blanket support” to all entrepreneurs, irrespective of
402

403
their need or ability, there is a case to tailor support to each type of
entrepreneur (Westhead et al., 2004). This strategy may be useful also
for policy-makers concerned with rising business closure rates (Stokes
and Blackburn, 2001). There is an emerging view that the retention
of habitual entrepreneurs represents an important enterprise sustain-
ability issue (Westhead et al., 2004, 2005c). If the objective of policy-
makers is to maximize the returns from their investment (Bridge et al.,
2003), they may benefit from targeting their financial resources on
encouraging potential “winning businesses” (Storey, 1994), or “win-
ning entrepreneurs.”
Based on survey evidence from Scotland, Westhead et al. (2003a,b,
2004, 2005c) suggest that to maximize returns from investments, policy-
makers and practitioners should consider allocating resources to portfo-
lio entrepreneurs who are actively seeking to maximize wealth creation,
as well as job generation. An important issue here is that from a pol-
icy perspective there may be a need to reconcile the private (i.e., the
financial gains at the personal level for entrepreneurs and investors) and
social returns (i.e., the employment as well as the wealth and taxation
revenues generated) from habitual entrepreneurship.
Westhead et al. (2004) suggest that schemes should be introduced
to encourage the wider take-up and utilization of methods of best
business practice exhibited by portfolio entrepreneurs, most notably
with respect to facilitating access to business information. The benefits
derived from a previous business ownership experience were found to
be less clear for serial entrepreneurs. Initiatives, therefore, should be
designed to provide customized assistance to serial entrepreneurs. Serial
entrepreneurs who have owned a previously unsuccessful venture may
require special external support to ensure that they can learn from their
prior business ownership “failure.” There may also be a case to provide
both serial and portfolio entrepreneurs with “hard” financial incen-
tives through changes in the tax regime to encourage the investment
of profits, or funds realized from the sale of a business, into subsequent
ventures with growth potential.
In addition, there may be scope to develop schemes that encourage
novice entrepreneurs to take-up and exhibit the methods of best busi-
ness practice displayed by successful portfolio entrepreneurs. Schemes

404 Policy and Practitioner Implications
could be introduced to establish mechanisms that encourage networking
and information exchange between novice entrepreneurs and successful
portfolio entrepreneurs. Below, we focus on three areas where policy-
makers may tailor their support toward novice, serial, and portfolio
entrepreneurs.
6.1 Opportunity Identification
Habitual entrepreneurs may be particularly important to policy-makers
interested in promoting an “enterprise culture” (Della-Giusta and
King, 2006). Solely monitoring the number of new business start-
ups and the stock of businesses, however, may not adequately assess
the scale of an enterprise culture. Broader surrogate indicators of
entrepreneurial intensity need to be monitored. Studies, for exam-
ple, could monitor the opportunity identification behavior reported by
“types” of entrepreneurs. Currently, there is scant empirical relating
to whether some entrepreneurs identify more and/or better opportu-
nities. Nevertheless, the current evidence base (Section 5.2.2) suggests
that habitual entrepreneurs (particularly, portfolio entrepreneurs) iden-
tify more opportunities in a given period than novice entrepreneurs.
Most notably, Ucbasaran et al. (2008a,b) detected that entrepreneurs
with more business ownership experience identified significantly more
business opportunities and more innovative opportunities, albeit at a
diminishing rate. The latter more innovative opportunities may be asso-
ciated with significant long-term wealth creation potential, and have an
important role to play in meeting this objective of innovation policy.
Ucbasaran et al. (2008a) detected that an entrepreneur’s human
capital profile was significantly associated with the identification of
business opportunities. Higher levels of education, managerial skill,
entrepreneurial skill, and information search intensity were, for exam-
ple, associated with the identification of more business opportunities.
If one of the difficulties faced by serial entrepreneurs is in terms of
identifying (innovative and profitable) business opportunities, policy
initiatives to improve various aspects of their human capital could be
introduced. Further, serial entrepreneurs may identify more (innova-
tive and profitable) business opportunities if they have better access to
information and broader networks.

6.2 Information and Networks 405
6.2 Information and Networks
Alongside the quantity of information, the nature of the informa-
tion acquired may be important. Additional research is warranted to
explore whether individual external agencies can provide the appro-
priate information (i.e., depth and quality) required by entrepreneurs
seeking to identify and exploit business opportunities. Given the
importance of personal information sources, entrepreneurs may ben-
efit from additional network initiatives. Habitual entrepreneurs (espe-
cially portfolio entrepreneurs) may be able to work in collaboration
with novice entrepreneurs to facilitate business opportunity identifica-
tion and exploitation. Portfolio entrepreneurs generally identify more
business opportunities but they may have less spare time to pursue
them. Collaborative efforts, therefore, could be useful to ensure the
pursuit and exploitation of a larger number of business opportunities.
Recently, Mosey and Wright (2007) conducted in-depth interviews
with both academic entrepreneurs and business development officers in
England. They concluded that support initiatives, such as technology
transfer offices and proof of concept funds, all helped attract industry
partners to novice entrepreneurs. Most notably, they asserted that there
was no obvious substitute for business ownership experience to address
barriers to business formation and development. They recommended
that initiatives should be put in place, which encourage inexperienced
entrepreneurs to learn how to build relationships with experienced man-
agers and potential equity investors (Mosey et al., 2007).
6.3 Business “Failure” Experience
There is a continuing debate surrounding the issue of “failure” amongst
entrepreneurs. Ricketts (2006) noted that “failure” might reduce the
entrepreneur’s human capital, which can restrict an entrepreneur’s
ability to raise funds for future projects. However, this may be an
unduly negative view of “failure” (McGrath, 1999). Some commen-
tators have argued that as an alternative to many European models,
there is a need to consider the United States model where government
intervention is minimal and business “failure” (or “productive churn”

406 Policy and Practitioner Implications
(DTI, 2004)) is an acceptable part of life (Storey, 2004). Indeed, Sitkin
(1992) has argued that in an effort to understand its causes, “failure”
forces individuals to identify aspects of their thinking and behavior
that need to be modified. To promote the benefits of “productive
churn” the British government introduced the Enterprise Act (2002).
More lenient bankruptcy laws make it easier for entrepreneurs who
have “failed” to subsequently start and/or purchase businesses. With
respect to the United States, Gropp et al. (1997) found that in states
where bankruptcy laws were more generous, entrepreneurs faced
greater difficulties in raising funds. “Hard” financial incentives through
changes in tax regimes and bankruptcy laws may not promote the
most efficient use of public resources. Policy-makers should carefully
consider the wider implications of policy initiatives, such as relaxing
bankruptcy laws.
Policy-makers require further information to establish if “business
failure” experience is as valuable as some people believe. Experience
(positive or negative) may not be the best teacher. Indeed, the basic
premise of attribution theory (Zuckerman, 1979) is that individuals
have a tendency to attribute successes to themselves and failures to
external effects, inhibiting unbiased learning. Further, Shepherd (2003)
has asserted that the loss of a business through “failure” can cause the
feeling of grief. This can lead to a negative emotional response inter-
fering with the ability to learn from the events surrounding that loss.
To overcome biases associated with learning from experience (especially
“failure”), entrepreneurs may require guidance. Sitkin (1992), for exam-
ple, distinguished between “failure” and “intelligent failure.” Shepherd
(2004) has offered a number of suggestions and methods for helping
“students” effectively manage their response to “failure.” Various bod-
ies focusing on the training and skill development of entrepreneurs may
deploy these methods.

7
Future Research
The purpose of this review was to highlight the human capital, behav-
ior, and contribution differences reported by habitual entrepreneurs
relative to novice entrepreneurs. An objective of this review is to
encourage additional studies to provide fresh insights into the habit-
ual entrepreneur phenomenon. A more substantial evidence base could
be utilized by academics and practitioners who are seeking to under-
stand the aspirations and needs of the entrepreneur (rather than
solely the firm) throughout all stages of the entrepreneurial process,
and not just the creation of a new venture. To enable policy-makers
and practitioners to develop more appropriate policies toward differ-
ent “types” of entrepreneur, additional in-depth and careful multi-
disciplinary research needs to be conducted (Westhead and Wright,
1998a,b,c; Carter and Ram, 2003; Westhead et al., 2004, 2005c). The
scale and nature of novice, serial, and portfolio entrepreneurs needs to
be assessed with reference to representative and large sample empiri-
cal studies conducted in a variety of industrial, locational, and cultural
settings. Further, there is scope for both quantitative and qualitative
studies to refine and validate the themes explored in this review. A num-
ber of important gaps in the knowledge base need to be addressed.
407

408 Future Research
In this section, an agenda for further research is presented with regard
to the following broad themes: the nature of opportunities; informa-
tion search; leveraging human capital; entrepreneurial teams; measures
of habitual entrepreneurship; the role of the external environment; con-
texts for habitual entrepreneurship; and data and method issues.
7.1 The Nature of Opportunities
In the previous section, it was highlighted that habitual entrepreneurs
identify a greater number of business opportunities in a given period
than novice entrepreneurs. This evidence relates largely to the “quan-
tity” rather than the “quality” (i.e., nature and value) of the identified
opportunities. Additional research is warranted to explore the “qual-
ity” of opportunities identified by each “type” of entrepreneur. Debate
surrounds how the value of an opportunity should be assessed. In part,
this debate relates to the contrasting views surrounding what consti-
tutes an entrepreneurial opportunity. Shane and Venkataraman (2000,
p. 220) utilized Casson’s (1982) following definition of entrepreneurial
opportunities: “those situations in which new goods, services, raw mate-
rials, and organizing methods can be introduced and sold at greater
than their cost of production.” Conversely, Singh (2001) has asserted
that the latter definition represents a post-hoc view, based on criteria
stipulating profitability as a requirement for entrepreneurial opportu-
nities. Post-hoc approaches do not control for confounding factors (e.g.,
external environment, mode of exploitation, an entrepreneur’s human
capital profile, etc.), which can influence the performance of the iden-
tified and exploited business opportunity venture (i.e., the new firm
start-up or the purchased independent firm). Alternative ways of ex-
ante assessing business opportunities need to be considered. Fiet and
Migliore (2001) and Fiet et al. (2003) gathered responses from a panel
of experts (i.e., entrepreneurs, financiers, and academics) who were
asked to rank business ideas. Each business concept was assessed with
regard to whether it could create and sustain a competitive advantage.
The latter desirable approach is costly, extremely time-consuming, and
relies on the subjective opinions of panel members. In contrast, Chan-
dler and Hanks (1994) have designed a six-item scale to measure the

7.2 Information Search 409
quality of a business opportunity. This scale gathers the respondents
(i.e., entrepreneurs) view on the competitive environment and the ven-
ture’s ability to sustain a competitive advantage. However, this scale
does not assess whether the business opportunity from the outset had
the capacity to create a competitive advantage. An alternative way of
assessing the value of a business opportunity relates to the amount
of initial finance used to establish/purchase a venture (Cooper et al.,
1995). Cooper et al. (1994) have asserted that ventures with higher
levels/proportions of external financing can represent propositions that
are more promising because they have already passed the screening of
lenders and investors. The number of partners who establish/purchase
the business, in part, exhibits the more widely perceived viability of
the business. Finally, the innovativeness of an opportunity is being
increasingly used to gauge the wealth creating potential of business
opportunities (Fiet, 2002; Shepherd and DeTienne, 2005; Ucbasaran
et al., 2008b). Several measures should, therefore, be used to assess the
“quality” of business opportunities.
Future studies could also explore whether the motivations of
entrepreneurs change and how this impacts the nature of subsequently
identified, pursued, and exploited opportunities. Attitudes to risk expo-
sure reported by habitual entrepreneurs who have accumulated signif-
icant wealth (Wright et al., 1997a) could be assessed in relation to the
value of the opportunities they subsequently identify. Future studies
might usefully undertake direct comparisons of initial and subsequent
opportunity identification, pursuit and exploitation behavior reported
by each “type” of entrepreneur.
7.2 Information Search
Kirzner (1973) asserted that systematic search for information would
not lead to identification of an opportunity. Additional studies could
explore the links between an entrepreneur’s information search behavior
and their subsequent alertness to business opportunities. A distinction
can be made between systematic search for information compared with
behavior relating to scanning the informational environment with no
particular opportunity in mind (i.e., disparate information is joined

410 Future Research
together to generate a business idea). Future studies should moni-
tor habitual and novice entrepreneur behavior with regard to several
opportunity identification stages (i.e., scanning the informational envi-
ronment stage, the actual idea stage, and the systematic search stage to
refine the idea). Differences in the human and social capital profiles of
novice and habitual entrepreneurs may be associated with particular
approaches to information search (Davidsson and Honig, 2003). The
role of social capital may be especially important but the emerging
theme (Alder and Kwon, 2002) has been generally neglected by habit-
ual entrepreneur studies. On a positive note, entrepreneurs with prior
business ownership experience may develop social capital that facili-
tates reduced costs of information search for subsequent ventures. As
intimated above, successful habitual entrepreneurs with diverse social
capital can attract, screen and support business ideas by other individu-
als who do not have the necessary human and financial capital resources
to pursue and exploit an opportunity. On the downside, by becom-
ing embedded in networks with familiar contacts (i.e., “strong ties”)
(Uzzi, 1996; Elfring and Hulsink, 2003), some habitual entrepreneurs
may face a restricted opportunity set. Utilizing network bridges (Mosey
et al., 2007) to facilitate “weak ties” with new partners (or strangers)
(i.e., individuals who can supply appropriate resources and legitimacy)
can be used to address resource, operational and strategic barriers to
the identification and pursuit of more innovative and profitable busi-
ness opportunities. Additional research is, therefore, warranted that
engages in a more fine-grained exploration of the social capital of habit-
ual entrepreneurs and how social capital accumulation and leverage
changes (or why it does not change) from one venture to the next.
7.3 Leveraging Human Capital
Business ownership experience can be viewed as one aspect of an
entrepreneur’s human capital specific to entrepreneurship (Ucbasaran
et al., 2006a, 2008a). As noted earlier, there is some over-
lap between human capital and cognitive approaches. Traditionally,
human capital theory has assumed instrumental rationality and ratio-
nal choices, whilst cognitive theories relates to embodied and/or

7.3 Leveraging Human Capital 411
situated rationality. Assumptions of bounded rationality may allow for
better interaction between human capital theory and cognitive theo-
ries. Insights from both perspectives could provide a more informed
understanding of the habitual entrepreneur phenomenon, for example,
with regard to the following questions. To what extent do habitual
entrepreneurs differ from novice entrepreneurs in terms of how they
access and utilize information (rational or otherwise)? To what extent
do habitual entrepreneurs adapt the nature of their rational or other
behavior as they become more experienced?
There are further opportunities for exploring the general versus spe-
cific human capital distinction in the context of habitual entrepreneurs.
As discussed in Section 4.1.1.2, specific human capital may lose its value
outside the specific context in which it is acquired and applied. Yet, a
number of aspects of entrepreneurship or venture-specific human cap-
ital may retain their value in other domains, such as in managerial
positions in established organizations.
Business ownership experience may amplify the effects of general
aspects of human capital, such as education and managerial human
capital. There is a dearth of evidence relating to whether business own-
ership experience is a substitute, or a complement, to other dimensions
of general human capital. Possible substitutes for business ownership
experience need to be identified and considered. Chandler and Hanks’
(1998) study that explored the substitutability of human capital and
financial capital provides insights to guide future studies. Additional
studies could explore the interaction effects between business owner-
ship experience and other general and specific human capital variables.
The moderating (or mediating) role of prior business ownership expe-
rience needs to be considered in multivariate studies (Cohen et al.,
2003). Studies have explored the link between human and social cap-
ital (Davidsson and Honig, 2003). Additional research is warranted
to explore this issue with specific reference to habitual and novice
entrepreneurs.
In many cases, experienced entrepreneurs may have been able to
accumulate financial resources, or due to their track record are in a
better position to acquire funds (Wright et al., 1997a; Shane and Khu-
rana, 2003). Cressy (1996) has argued that human capital variables

412 Future Research
are associated with both superior start-up performance (measured
in terms of survival) and financial assets. It could be inappropri-
ately concluded that a firm’s initial finance is a determinant of subse-
quent firm performance, and that all start-ups are finance-constrained.
Cressy (1996) detected that an entrepreneur’s human capital profile
was the “true” determinant of firm survival. He argued that the associ-
ation between financial capital and firm survival was spurious. Further
research exploring the relative importance of human capital and finan-
cial capital in relation to alternative firm and entrepreneur performance
measures is warranted.
The reluctance by some venture capitalists to provide funds to
those entrepreneurs they have funded before (Wright et al., 1997b)
is an area worthy of additional analysis. Gaps in the knowledge base
relate to the extent to which venture capitalists change their contrac-
tual and monitoring arrangements for habitual entrepreneurs, and the
implications for opportunity identification and pursuit as well as sub-
sequent firm performance. Future studies, for example, could explore
the following questions. Does the nature of venture capitalist mon-
itoring become more lax if they appreciate the entrepreneur’s (or
entrepreneurial team’s) assets of prior business ownership experience?
Does the nature of venture capitalist monitoring become more sophis-
ticated in relation to more risky business opportunities pursued by
habitual entrepreneurs?
Finally, entrepreneur and firm performance warrants additional
research attention. Future studies need to monitor performance with
regard to an array of performance indicators. The “productivity” of
novice, serial, and portfolio entrepreneurs has been neglected. Future
productivity studies need to consider the “inputs” and “outputs” asso-
ciated with each “type” of entrepreneur.
7.4 Entrepreneurial Teams
The evidence base reviewed generally relates to surveys of firms. Sin-
gle respondents from surveyed firms (i.e., key informants) provided
information on their human capital profiles, behavior, (i.e., informa-
tion search and opportunity identification behavior), and contributions.

7.4 Entrepreneurial Teams 413
To address barriers to business formation (or purchase) and subsequent
firm development, some key entrepreneurs attract other individuals to
join the entrepreneurial team as equity stakeholders, either at start-
up (or purchase) and/or later on. Equity partners can provide both
complementary human capital as well as access to greater internal
financial resources (Ucbasaran et al., 2003a; Hayton and Zahra, 2005).
In Section 5.1.6, the prevalence of entrepreneurial team experience by
“type” of entrepreneur was highlighted. There is, however, a dearth
of in-depth information relating to the composition of entrepreneurial
ownership teams involving novice and habitual entrepreneurs. Studies
exploring “how” and “why” entrepreneurial team members join and
leave firms owned by novice, serial and portfolio entrepreneurs are war-
ranted (Ucbasaran et al., 2003a; Vohora et al., 2004; Vanaelst et al.,
2006). These processes will be difficult to discern from cross-sectional
studies. Comparative static quantitative studies and in-depth qualita-
tive longitudinal studies are required to provide fresh insights surround-
ing entrepreneurial team member stocks, flows, composition, power
dynamics, and processes. Habitual entrepreneurs may be more adept
at constructing teams with complementary skills. Future studies are
required to explore whether habitual entrepreneurs, in fact, establish
complementary teams. Studies could explore the following questions. Is
opportunity identification and evaluation carried out by one individual?
Are team members involved in all stages of opportunity identification,
evaluation, and exploitation? Are habitual entrepreneurs more likely
than novice entrepreneurs to recruit additional entrepreneurial team
members to address barriers to creativity and information search? Do
entrepreneurial teams associated with habitual entrepreneurs perform
better than those associated with novice entrepreneurs? What are the
learning differences reported by entrepreneurial teams associated with
novice and habitual entrepreneurs? What is the nature of interaction
between teams that include both habitual and novice entrepreneurs?
In particular, do habitual entrepreneurs assume a dominant role and
how does this affect the efficacy of the team?
A further issue concerns the extent to which habitual entrepreneurs
maintain the same team of partners in successive ventures. The
following questions warrant attention. To what extent do habitual

414 Future Research
entrepreneurs change their partners? Why do these changes occur?
Do they occur because of conflicts in the team or because individu-
als’ objectives begin to diverge? Are teams built to suit the oppor-
tunity/venture in question with respect to the human and financial
capital needed, thus resulting in different teams each time an oppor-
tunity is exploited? A related issue concerns the implications of team
member entry and exit as ventures owned by habitual entrepreneurs
develop.
7.5 Measures of Habitual Entrepreneurship
Additional measures of habitual entrepreneurship should be considered
in future studies. Cognitive dimensions of human capital (Busenitz and
Barney, 1997; Ucbasaran et al., 2003d) cited by habitual entrepreneurs
are worthy of more refined investigation. Variations in mindset (Sec-
tions 4.1.1 and 5.1.9) could be explored among sub-types of novice and
habitual entrepreneurs. Ucbasaran (2004) has made a conceptual dis-
tinction between “experienced” and “expert” habitual entrepreneurs as
well as between “pure” and “transient” novice entrepreneurs. “Pure”
novice entrepreneurs are a sub-type of novice entrepreneurs that will
remain one-time entrepreneurs because they have no intention of
becoming habitual entrepreneurs. Ucbasaran et al. (2006a) noted that
only 22% of novice entrepreneurs in their sample indicated an inten-
tion to establish or purchase a business in the future. Conversely, “tran-
sient” novice entrepreneurs represent a sub-type of novice entrepreneurs
who intend to become habitual entrepreneurs. Habitual entrepreneurs
can be split into “experienced” and “expert” entrepreneur sub-types.
“Experienced” habitual entrepreneurs associated with several liabilities
of prior business ownership experience may be unable to learn from
their prior business ownership experience. Most notably, they may be
associated with several cognitive biases (Section 5.1.10) that impair
their subsequent decision-making and behavior. Conversely, habitual
entrepreneurs who have accumulated assets from prior business owner-
ship exposures and have learnt from their mistakes (i.e., “intelligent fail-
ure”) will become “expert” habitual entrepreneurs. Additional research
is warranted to probe the reasons for cognitive differences between the

7.5 Measures of Habitual Entrepreneurship 415
four types of entrepreneurs. More importantly, research is required
to explore the implications of these contrasting cognitive profiles on
behavior (e.g., relating to identification and exploitation of innovative
and profitable opportunities).
Effective learning from experience may be shaped by “mindfulness”
(Rerup, 2005), which is the quality of collective attention that enables
entrepreneurs to minimize errors, remain vigilant, and respond effec-
tively to unexpected events (Langer, 1989; Weick et al., 1999). Mind-
fulness may enable habitual entrepreneurs to better anticipate and
respond to unexpected events and opportunities. However, mindfulness
can require costly investments in time and effort. In certain circum-
stances, such as less complex situations, the benefits of mindfulness may
be less apparent (Rerup, 2005). On the downside, too much mindfulness
may lead to “paralysis by analysis.” Entrepreneurs may need to exhibit
metacognition. As discussed above (Section 4.1.1), an individual’s cog-
nitive processing needs to include awareness of thinking resources and
skills. Awareness of one’s cognitive processes may allow individuals to
detect when it is necessary to “switch cognitive gears” (Louis and Sut-
ton, 1991) from mindfulness to mindlessness, or vice versa. Preliminary
evidence from Gustafsson (2006) points to expert entrepreneurs’ abil-
ity to switch between different modes of cognitive processing. Further
research is required to explore these issues with regard to each “type”
of entrepreneur. Studies that explore links between an entrepreneur’s
cognitive profile and superior firm (and entrepreneur) performance are
warranted. However, a methodological challenge relates to identifying
expert and experienced habitual entrepreneurs.
Guided by expert information processing studies in other domains,
Gustafsson (2006) defined an expert as a habitual entrepreneur who
had no less than seven to ten years of experience since the first business
start up. The wider applicability of the operationalized definition war-
rants additional research attention. Findings are needed with reference
to narrow and broad expert entrepreneur definitions. In addition, alter-
native definitions of “expertise” need to be considered. Future studies
could explore the cognitive and behavioral profiles of entrepreneurs
who have owned businesses for the same number of years but have
owned contrasting numbers of businesses. Further, a distinction could

416 Future Research
be made between the following three broad categories of business own-
ership experience: “success” (i.e., all prior businesses were “successes”),
“failure” (i.e., all prior businesses were “failures”), and “mixed” (i.e.,
a mixture of prior business “successes” and “failures”). The following
questions could be examined. Do the habitual entrepreneurs who have
owned more businesses exhibit different amounts and types of learn-
ing? Do habitual entrepreneurs in the prior business ownership “suc-
cess” category report different amounts and types of learning compared
with entrepreneurs in the “failure” and “mixed” categories? Do habit-
ual entrepreneurs in the prior business ownership “success” category
subsequently own businesses that report superior levels of entrepreneur
and firm performance (and productivity) than those owned by “failure”
and “mixed” category entrepreneurs? Studies relating to expert habit-
ual entrepreneurs may focus upon individuals who have owned three or
more successful businesses.
1
One of the potential problems with defin-
ing a habitual entrepreneur in terms of two business ownership experi-
ences is that it does not control for luck and external factors. Numerous
factors have been found to be associated with superior business perfor-
mance (Storey, 1994), and the element of luck cannot be discounted.
For example, an entrepreneur may have been successful due to factors
outside his/her control in the first business. An entrepreneur may use
the wealth generated by the first business to exploit a second business
opportunity. This second business may then be “protected” by a buffer
of financial resources accumulated with the luck associated with the
first business owned. The success of three businesses may, therefore, be
more likely to be attributable to the entrepreneur’s talent and expertise.
The wider relevance of the latter definition is, however, debatable. The
“rule of three” may be deemed somewhat arbitrary. Debate, in addition,
may surround the term “success” and dimensions of its measurement
relating to firm and/or entrepreneur performance indicators (see Sec-
tion 5.3). Additional research is warranted to explore the transforma-
tion of novice entrepreneurs into “transient” novice entrepreneurs (i.e.,
individuals considering serial or portfolio entrepreneurship for the first
1
Based on personal communication with James O. Fiet, professor of management and
director of the Institute for Entrepreneurial Research at the University of Louisville.

7.6 The Role of the External Environment 417
time), the transformation of “transient” novice entrepreneurs into serial
or portfolio entrepreneurs, and the movement of serial and portfolio
entrepreneurs across the two experienced entrepreneur sub-categories.
Longitudinal studies monitoring the “stock” of human capital skills
and experience of each “type” of entrepreneur, and the “flows” across
the entrepreneur categories would provide rich process and contextual
evidence (Westhead et al., 2005b).
7.6 The Role of the External Environment
Studies have explored the behavior of novice, serial, and portfolio in
rural (Carter, 1998; Alsos, 2007) and urban (Westhead and Wright,
1998c, 1999) environments. The profiles, behavior, and contributions
of habitual entrepreneurs (particularly, portfolio entrepreneurs) should
be considered within several institutional and regulatory contexts (Sax-
enian, 1994; Rosa, 1998; Westhead and Wright, 1998b; Carter and Ram,
2003).
Studies need to consider whether the creation and ownership of mul-
tiple businesses is shaped by the human capital profiles of entrepreneurs
alone. In some national and regional contexts, the taxation regime and
incentives, such as social security, may encourage some individuals to
pursue careers in entrepreneurship, and to own more than one busi-
ness at the same time. Additional research is warranted on whether
the taxation regime can retard (or encourage) the prevalence of habit-
ual entrepreneurship. Studies could also explore whether the taxation
regime influences the choice of serial rather than portfolio entrepreneur-
ship. Further, some entrepreneurs in transition economies decide not to
grow their ventures rapidly or decide to own a number of smaller scale
ventures to hide their personal wealth from the authorities or criminals.
Additional research is warranted to explore the dimensions of habitual
entrepreneurship in transition and developing economies.
Evidence suggests that entrepreneurship is more widespread in cer-
tain industries than others (Shane, 2003; Eesley and Robert, 2006;
Gompers et al., 2007). In highly dynamic and uncertain industries,
entrepreneurs may be faced with a higher risk of failure, or shorter
life-cycles for businesses. Individuals seeking to reduce their personal

418 Future Research
risk exposure may choose to establish/purchase several smaller sized
firms, which are easier to resource and manage (i.e., select that portfo-
lio entrepreneurship route). While some sector specific studies relating
to portfolio entrepreneurs have been conducted (Carter, 1998; Alsos,
2007), a fruitful line of further enquiry would be to explore how the
extent and nature of habitual entrepreneurship might differ across
industries. For example, Eesley and Robert (2006) detected that serial
entrepreneurs among MIT alumni were more likely in R&D intensive
sectors.
A further dimension of the external environment concerns the rela-
tive buoyancy of the macro-economic context. In the previous section,
we commented on the role of luck with regard to multiple business
ownership. In economic recessions, “luck” is likely to be a less frequent
determinant of a habitual entrepreneur’s performance. A strong reces-
sion selection environment could lead to the quick closure (or filtering
out) of inefficient new and established firms. Habitual entrepreneurs
with broader human and financial capital resources may own firms
that are better able to ride recessionary waves compared with novice
entrepreneurs with narrower skills and knowledge to leverage. Further
research is needed to analyze this issue.
7.7 Contexts for Habitual Entrepreneurship
In Section 2, business ownership was selected to justify the categoriza-
tion of “types” of entrepreneurs highlighted in Table 2.1. A distinction
was made between single business ownership (i.e., novice entrepreneurs)
and habitual multiple business ownership sequentially (i.e., serial
entrepreneurs) or simultaneously (i.e., portfolio entrepreneurs). Habit-
ual entrepreneurship can, however, occur in several contexts beyond
the establishment and ownership of a venture. An extended cat-
egorization of the nature of entrepreneurship is summarized in
Table 7.1.
In Section 2, we highlighted that business ownership can relate
to the creation of a new business (i.e., de novo business) as well
as the acquisition of an existing business. A distinction can, there-
fore, be made between entrepreneurship involving new business(es) as

7.7 Contexts for Habitual Entrepreneurship 419
Table 7.1 An extended categorization of novice and habitual entrepreneurship by type of
entrepreneur.
Multiple activity
Single activity Habitual entrepreneurs
Nature of entrepreneurship
Novice
entrepreneurs
Sequential
serial
entrepreneurs
Simultaneous
portfolio
entrepreneurs
Involving no
new legal
entity
Self-employment Novice
self-employed
Serial self-
employed
Portfolio self-
employed
Involving New De novo
business
Novice founders Serial founders Portfolio
founders
business(es) Spinout
(including
corporate &
university
spinouts)
Novice spinout
entrepreneurs
Serial spinout
entrepreneurs
Portfolio
spinout
entrepreneurs
Involving
existing
business(es)
Purchase
(including
buy-outs/
buy-ins)
Novice
acquirers
Serial acquirers
(e.g., sec-
ondary
MBOs/MBIs)
Portfolio
acquirers
(e.g.,
leveraged
build-ups)
Corporate
entrepreneur-
ship
Novice
corporate
entrepreneurs
Serial corporate
entrepreneurs
Portfolio
corporate
entrepreneurs
opposed to involving existing business(es). With reference to case study
evidence, Ucbasaran et al. (2003b) found notable differences between
“habitual acquirer” and “habitual starter” entrepreneurs with regard
to their motivations and strategies toward opportunity identification
and exploitation. Additional studies are required to explore the pro-
files, behavior, and contributions of “habitual acquirer” and “habitual
starter” entrepreneurs.
Existing organizations can generate new firms. The corporate
entrepreneurship phenomenon is attracting increasing research atten-
tion (Sharma and Chrisman, 1999). Several recent studies have drawn
attention to the formation of new spinout firms from universities based
on academic inventions (Shane, 2003; Vohora et al., 2004). A distinc-
tion can, therefore, be made between entrepreneurship involving new
business(es) which are de novo businesses as opposed to spinout firms
(including corporate and university spinouts). In particular, an area

420 Future Research
of research and policy concern has been the extent to which spinout
ventures are able to generate wealth, and how this can be achieved
(Lambert, 2003; Lockett and Wright, 2005; Wright et al., 2007). A key
distinguishing aspect relates to the notion that academics starting
businesses may have fewer skills and social capital to support firm
growth than those entrepreneurs emerging from a commercial environ-
ment. A further aspect concerns the quality of the support provided
to these entrepreneurs, and the potential need to bring in surrogate
entrepreneurs from outside the university in order to access the miss-
ing human capital required for commercial success (Franklin et al.,
2001; Mosey and Wright, 2007; Mosey et al., 2007). Limited work has
been conducted surrounding the opportunity identification behavior
reported by academic entrepreneurs (Vohora et al., 2004). Future stud-
ies need to explore whether academic entrepreneurs who create more
than one spinout experience beneficial learning effects. As the phe-
nomenon of academic entrepreneurship develops, there is a need for
further research that examines these issues. For example, do habit-
ual academic entrepreneurs drawn from a non-commercial environment
learn differently from habitual entrepreneurs drawn from a commercial
environment after controlling for other factors? Mustar et al. (2006),
Wright et al. (2007), and Rasmussen et al. (2006) have highlighted
that university institutional environments are diverse with respect
to their support for academic entrepreneurship. Recently, Mosey and
Wright (2007) examined the human and social capital of nascent,
novice, and habitual academic entrepreneurs. They suggest that in
this environment structural holes between academics and financiers
and professional managers appear to constrain novice entrepreneurs’
ability to gain entrepreneurial commitment, venture credibility and
venture reorientation. In contrast, habitual entrepreneurs have been
able to gain this knowledge though building network ties with equity
financiers, professional managers, industry partners, and potential cus-
tomers. Research colleagues have also been found to play an important
role: less experienced entrepreneurs value their research colleagues
as potential role models and more experienced entrepreneurs value
their colleagues as potential sources of technological opportunities.
Further research might usefully be undertaken that provides direct

7.7 Contexts for Habitual Entrepreneurship 421
comparisons between the social capital of habitual entrepreneurs in
university and non-university contexts. Additional research might ana-
lyze the extent to which there are complementarity and substitu-
tion aspects of the role of research colleagues, technology transfer
offices, and surrogate (i.e., external) entrepreneurs (Mosey et al.,
2007).
Habitual entrepreneurship can involve existing business(es) relating
to corporate entrepreneurship as well as the purchase of established
organization through a management buy-out (MBO) or management
buy-in (MBI). A further context where examination of the role of
human capital in the opportunity identification and pursuit process
is warranted concerns the case of secondary MBOs and MBIs. Sec-
ondary MBO/Is involve the refinancing and repurchase of an initial
MBO or MBI. In a secondary MBO, typically, some or all of the man-
agement team remain, increasing their equity stake significantly as the
original financiers are replaced by a new set (Wright et al., 2000). In
a secondary MBI, a new external team may be involved in the pur-
chase of an initial MBO or MBI. These transactions have become an
increasingly important part of the private equity and buy-out market
internationally (Centre for Management Buyout Research (CMBOR),
2005), and they are associated with several important policy and prac-
titioner implications. A central question concerns the identification of
the opportunity for creating further returns in the second deal, espe-
cially where the management and the initial set of financiers have taken
actions to generate gains in the first MBO or MBI. For example, in
the case of Maccess, the first MBO enabled management to estab-
lish the business as an independent entity after it had previously been
part of a larger group but the venture capital financiers imposed tight
restrictions on their ability to take entrepreneurial decisions. The sec-
ond MBO of Maccess enabled the same management team to obtain
a larger equity stake and more discretion to pursue growth opportu-
nities through acquisition (Robbie and Wright, 1990). However, these
actions created trading problems for the firm, which had to be rescued
and restructured with the senior management being replaced. The lat-
ter types of habitual entrepreneurs need to be considered carefully. For
example, are the opportunities in the second deal related mainly to

422 Future Research
the use of debt to fund the transaction, so that when this is reimbursed
through cash flows, the new owners can achieve significant gains? Alter-
natively, are the opportunities related to the identification of new areas
for organic growth that could not have been realized previously? A
related type of MBO or MBI concerns the leveraged build-up (LBU).
In these cases, entrepreneurs create a group of companies through a
series of acquisitions based on an initial MBO or MBI, with the pri-
vate equity financiers typically providing additional finance to enable
these purchases. This kind of portfolio entrepreneurship activity raises
interesting questions concerning the human capital and opportunity
identification behavior of the entrepreneurs concerned. To what extent
do these portfolios represent financial transactions where the opportu-
nity involves consolidating fragmented sectors to create a larger group
that can be subsequently sold? To what extent do the entrepreneurs
involved possess expertise in identifying, acquiring, and integrating
acquisitions versus expertise in growing businesses organically? To what
extent are the gains obtained due to creating economies of scale and
scope, or to arbitraging the difference between the typically lower pur-
chase price earnings multiple paid for a smaller firm, and the larger
exit price earnings multiple that can be obtained from selling a larger
group?
A final dimension that requires additional attention relates to the
issue of ownership. Some entrepreneurs select the self-employment
option. This form of entrepreneurship involves no legal entity.
Evidence suggests that some individuals have multiple periods of
self-employment activity (Flores-Romero, 2006; Flores-Romero and
Blackburn, 2006). There is some concern surrounding whether the
self-employment option actually captures entrepreneurial opportunity
identification and exploitation. There is a long-standing and widely
respected view that business ownership and entrepreneurial activity
are complementary (Hawley, 1907; Fama and Jensen, 1983). Recent
studies in the finance literature have generally regarded the start of a
new business as an indicator of habitual entrepreneurship (Gompers
et al., 2007).
However, some corporate entrepreneurship scholars argue that
entrepreneurship does not solely relate to business ownership (Guth

7.7 Contexts for Habitual Entrepreneurship 423
and Ginsberg, 1990; Stevenson and Jarillo, 1990). Indeed, Wright et al.
(1997a) have identified habitual corporate entrepreneurship in existing
firms. Wiklund and Shepherd (2008) have warned that a considerable
proportion of habitual entrepreneurship may be hidden if definitions of
habitual entrepreneurship include ownership as a requirement. While
more inclusive definitions of habitual entrepreneurship need to be con-
sidered that incorporate corporate entrepreneurship, there is a par-
allel problem that the extent of habitual entrepreneurship may be
overstated if the notion of corporate entrepreneurship is too broad.
This issue is linked with the wider unresolved debate concerning the
nature of entrepreneurship. The conceptual and empirical boundaries
of corporate entrepreneurship remain unclear. Moreover, the introduc-
tion of the emerging strategic entrepreneurship construct could add an
extra layer of complexity (and uncertainty) which could rather than
provide fresh and appropriate insights into the habitual entrepreneur
phenomenon. Debate will inevitably surround the operationalization
of habitual corporate entrepreneurship measures. For example, if geo-
graphic market expansion is considered as corporate entrepreneurship,
experienced marketing managers may fall within the scope of habit-
ual entrepreneurship. On the other hand, setting up new branches may
require entrepreneurial initiative (Birkinshaw, 2003). Further defini-
tional clarity is needed as well as consideration of the implications of
using different definitions of corporate entrepreneurship.
There is a need for further understanding of the factors influencing
the choice between habitual entrepreneurship activities within an exist-
ing enterprise, and the decision to undertake such activities through the
creation of a new venture. These factors may include the nature of the
institutional and legal environment that may provide greater incentives
to create a new legal entity, and issues relating to the remuneration of
individuals engaged in such activities. A second aspect relating to own-
ership concerns the focus of attention hitherto on privately owned firms.
Additional studies are warranted to explore the following questions. To
what extent are habitual entrepreneurs present in initial public offer-
ings (IPOs)? Are habitual entrepreneurs more likely to create firms
that float on a stock market?

424 Future Research
7.8 Methods and Data Issues
There are no comprehensive lists of novice, serial, and portfolio
entrepreneurs who have ownership stakes in independent private busi-
nesses or in other contexts. Information relating to independent firms is
more widely available. Studies discussed in this review generally relate
to information obtained from key informants (i.e., a decision-maker
who is generally a founder and/or the principal owner) in randomly
selected private firms. Efforts have been made to gather large and rep-
resentative samples of firms. After pilot studies (i.e., content and face
validity issues are considered), structured questionnaire survey instru-
ments have been administered to key informants in firms. These instru-
ments have allowed the subsequent identification of novice, serial, and
portfolio entrepreneurs. The inclusion of corporate entrepreneurs in the
definition of habitual entrepreneurship will, however, create even more
challenges to the identification of relevant populations and samples.
In many instances, questionnaire survey instruments were used to
gather information relating to entrepreneur and firm profiles as well
as surveyed venture performance. The information gathered from each
informant is, however, not compared with the responses made by other
equity holders in the surveyed firms (or entrepreneurial ownership
teams). Some doubts may, therefore, be cast surrounding the subjec-
tive statements reported by these key informants. The issue of common
method error bias in this area is now being appreciated (Ucbasaran
et al., 2008a,b). Future studies need to gather information from more
than one respondent in each surveyed firm (or entrepreneurial owner-
ship team). If possible, secondary data relating to firm performance
should be collected and compared with the “subjective” information
gathered by the questionnaire survey. The former “objective” infor-
mation is generally available for larger and more established limited
liability companies. Unfortunately, this evidence is not collected and
published relating to sole proprietorship and partnership legal forms
that are frequently selected by habitual entrepreneurs.
The operationalization of entrepreneur and firm behavior and
performance measures warrants further attention. Measures of
entrepreneurship in terms of firm start-up may be relatively clear.

7.8 Methods and Data Issues 425
However, measuring entrepreneurship in existing corporations or in
acquired businesses may be more problematical. This suggests a need
for more conceptually grounded behavioral measures of corporate
entrepreneurship, and an avoidance of convenience measures of strat-
egy that can be taken as proxies of entrepreneurship. Studies that
explore a single-item subjective scale relating to firm profitability, for
example, may provide biased results (Table 5.2). Gimeno et al. (1997)
demonstrated that entrepreneurs report different thresholds of perfor-
mance. Entrepreneurs with superior levels of human capital and higher
expectations for their ventures were more likely to exit from a business
at a given level of performance. There is, therefore, a need for valid and
reliable multi-item scales to be operationalized in quantitative studies
focusing upon the performance of novice and habitual entrepreneurs.
A further dimension of performance concerns the processes adopted
by novice and habitual entrepreneurs in realizing the gains from their
investments. First, there is a need for comparative examination of
the gains achieved when businesses owned by novice and habitual
entrepreneurs are sold, or floated on a stock market. Is there any evi-
dence to suggest that habitual entrepreneurs create businesses with
greater capital gains than those owned by novice entrepreneurs? To
what extent are habitual entrepreneurs able to generate greater gains
in their subsequent ventures? What influences these differences — is
it the nature of the opportunity, an entrepreneur’s general and specific
human capital profile, the motivations and skills of the entrepreneur,
access to resources, etc.? Second, there is a need to examine the pro-
cesses adopted by novice and habitual entrepreneurs in identifying and
pursuing particular realization routes. Third, there is a need to consider
what happens to novice and habitual entrepreneurs once the business
has been sold, or floated. Do entrepreneurs remain with the business or
leave, and over what time period? Wright et al. (1997a) provide some
initial qualitative evidence that some entrepreneurs remain with the
business when it is sold. Some of the latter entrepreneurs become disen-
chanted and leave to find another venture, or buy back the business they
have sold. Fourth, there is a need to investigate the linkages between the
previous and new ventures owned by portfolio and serial entrepreneurs,
including learning aspects, resource transfer, and synergies.

426 Future Research
This review has generally discussed evidence from cross-sectional
studies. Relatively few studies summarized in Table 5.1 were longitudi-
nal. Surveys provide information relating to the scale and nature of key
themes. On the downside, they have limited ability to capture details
relating to the “why” and “how” aspects surrounding a phenomenon.
Researchers concerned with exploring important process issues should
consider using a variety of qualitative methods of data collection and
analysis (Rosa, 1998; Ucbasaran et al., 2003b). Relatively few studies
summarized in Table 5.1 explored qualitative data. Case studies can
be used to examine each business owned by an entrepreneur and iden-
tify the motivations, opportunity identification process, and the perfor-
mance of business owned. Qualitative studies may provide insights into
the extent to which learning takes place between ventures owned by
habitual entrepreneurs. Notably, longitudinal case studies may help to
overcome problems of causality associated with cross-sectional studies.
Longitudinal studies offer the advantage of being able to estab-
lish causal relationships between an entrepreneur’s human capital pro-
file, entrepreneurial behavior and firm (and entrepreneur) performance.
Specifically, longitudinal studies monitoring the “stock” of skills and
experience of each type of entrepreneur, and the “flows” across the
entrepreneur categories (Table 7.1) would provide rich process and con-
textual evidence. For example, they could explore the characteristics
and skills associated with novice entrepreneurs who are able to trans-
form into serial or portfolio entrepreneurs. Studies, in addition, might
focus on the initiation processes leading to the ownership of subsequent
ventures by experienced entrepreneurs, and “why” they accept or reject
particular types of deals. Similarly, there is a need to understand “how”
serial and portfolio entrepreneurs learn from their previous business
ownership experiences. For the purposes of understanding wealth cre-
ation, there is a need to analyze the “quality,” rather than just the
“quantity” of prior business ownership experience. There is also a need
for research that analyses the total economic contribution of portfolio,
serial, and novice entrepreneurs to local and national economies.

8
Conclusions
This review has examined the emerging literature relating to habitual
entrepreneurs. Research in the area is moving beyond initial attempts
to describe the phenomenon. We are starting to see scholars offer-
ing theoretical frameworks (e.g., human capital based frameworks) for
the study of habitual entrepreneurship. These theoretical approaches
have been used to explore human capital, cognitive, behavioral, and
performance differences between novice and habitual (i.e., serial and
portfolio) entrepreneurs. The elaboration of areas for further research
suggests that studies are required to provide more informed under-
standing of habitual entrepreneurship, and the outcomes associated
with the phenomenon. Table 7.1 has highlighted that there is consider-
able heterogeneity in the nature of habitual entrepreneurship beyond
the ownership and creation of multiple new businesses. In particu-
lar, the nature of habitual entrepreneurship among acquirers, corpo-
rate entrepreneurs, multiple forms of self-employment, and comparisons
between these different modes of opportunity exploitation remain to
be examined and understood. Analysis of these areas would contribute
substantially to the distinctive notion of entrepreneurship as centring
on opportunity identification, pursuit, and exploitation.
427

428 Conclusions
Research is beginning to provide insights into how opportunity iden-
tification and pursuit improves with prior business ownership expe-
rience. Nevertheless, important gaps in the knowledge base remain
with respect to the “quality” (e.g., innovativeness and profitability)
of exploited opportunities, their market penetration and financial per-
formance, and the capital gains that are achieved. Extensive evidence
suggests that the prevalence of entrepreneurship (i.e., new firm cre-
ation) varies considerably throughout the world (Minniti et al., 2006).
Table 2.2 illustrated that a number of habitual entrepreneur and portfo-
lio entrepreneur studies have generally been conducted in several devel-
oped countries. Surprisingly, the links between institutional context
and extent and nature of habitual entrepreneurship are still relatively
neglected. Most notably, there is a need for additional studies to focus
on the habitual entrepreneur phenomenon in transitional and develop-
ing economies.
Finally, this review has indicated a number of areas where pol-
icy may be able to refine its support for entrepreneurship. This would
involve a general shift of policy and practitioner emphasis toward the
entrepreneur and not just the firm, and to broaden the focus to encom-
pass the development of firms (and entrepreneurs) and not just their
creation. We also need to know more about the nature and effects of
business ownership experience. Additional research attention is war-
ranted surrounding the following questions. In particular, how and
to what extent do entrepreneurs learn from their experiences? What
are the effects of previous business “failure” and “success” experiences
on the subsequent behavior of entrepreneurs and their firms? What are
the implications for the development of future policy support?

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