Desperate Entrepreneurs: No Opportunities, No Skills

Promoting entrepreneurship has become an important policy strategy in Europe in the hope to stimulate the crisis-shaken economy. In this paper, we caution against undue expectations. Using data from the Global Entrepreneurship Monitor, we find that a considerable proportion of the new entrepreneurs start a business despite a negative perception of business opportunities as well as lack of confidence in their own entrepreneurial skills. We extend existing entrepreneurship theories to account for this phenomenon. Testing the hypotheses derived from our model, we find that these people turn to entrepreneurship due to lack of other options to enter the labour market.