Entrepreneurship

TERM PAPER Research paper on the subject of whether it’s better, as a career choice, to be an entrepreneur or work for others

Is it better to be an entrepreneur or an employee?

Most of the academic research focuses on finding external factors or personal qualities that create entrepreneurs. In early academic papers emphasis has been on psychology and sociology, while more recent research is focusing more on economic perspective. Overall, entrepreneurs are a minority if compared to paid employees. There are most certainly more people who choose to work for someone else rather than attempt to be an entrepreneur. Reasons behind this career choice are very different. Most obvious reason for a rational person might be financial benefits. Research done by Hamilton (2000) shows that initial earnings as well as earning growth is much larger for paid employees in the first 10 years if compared to entrepreneurs, not even including fringe benefits. However, money is definitely not the only factor that affects the career choice when it comes to a decision, whether to become an entrepreneur or to go work for someone else. If entrepreneurs are perceived as utility-maximizing individuals, then independence, risk bearing, work effort, and perquisites associated with self-employment plays a very vital role in their career choice (Douglas and Shepher, 2000). In the following parts of this research paper, various benefits and shortcoming of being an entrepreneur will be discusses in order to answer the stated research question. Is it better to be an entrepreneur or a paid employee?
Personality undoubtedly is one of key consideration when choosing one’s career path. One of the most discussed topics is person’s risk aversion. Generally we assume that entrepreneurs are less risk averse, while those who try to avoid risks should work for others. Research