No. 936 - Necessity entrepreneurship, financial literacy and business performance: evidence from an international survey
Our work studies the differences between 'necessity' entrepreneurs, who start a business because they perceive their job market prospects as grim, and 'opportunity' entrepreneurs, who have a business idea they want to pursue. We assess whether the two kinds of entrepreneurs differ in terms of financial literacy and whether these differences help to explain their business outcomes. We use data from an OECD survey on enterprises' financial and digital competencies in Italy, Brazil, Mexico and the Netherlands for 2020.
On average, necessity entrepreneurs are less financially literate than opportunity entrepreneurs; socio-demographic characteristics can only explain a minimal part of this gap. The lower financial literacy of necessity entrepreneurs is associated with their worse business performance during the pandemic crisis.
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