Entrepreneurial entry thresholds

Much of prior research recognizes that entry into entrepreneurship involves a comparison of expected economic returns in a venture to some threshold level of acceptable performance. Despite this recognition, theory commonly focuses on drivers of economic returns at the exclusion of threshold drivers. Moreover, typical empirical investigations of entry provide little insight into whether determinants influence expected returns, the required threshold, or both. Drawing from the Panel Study of Entrepreneurial Dynamics, we apply an empirical approach new to the entrepreneurial entry literature to investigate the drivers of both expected performance and the unobserved threshold, providing greater insight into the specific causal role of entry determinants.

► Determinants of entry operate through both expected performance and thresholds. ► Managerial experience increases expected performance while increasing thresholds. ► Entrepreneurial experience increases expected performance with no threshold effect. ► Experience diversity increases expected performance while lowering thresholds. ► Non-financial motive decreases thresholds with no expected performance effect.