Factors Influencing New-Business Formation: A Case Study of Northern Ireland

Abstract

This paper examines some of the factors which influence the creation of small businesses and the development of entrepreneurship in Northern Ireland. Particular attention is given to the investigation of the macroeconomic constraints on the process of new-business formation, which influence the decision of individuals to establish businesses themselves. Data on company registrations in Northern Ireland over the period 1951–1980 give some support to the proposition that new-business formation is a response to two sets of factors, ‘push’ factors and ‘pull’ factors. Push factors encourage an individual to leave paid employment (or more rarely unemployment) to establish his own business, and it is argued that the threat of unemployment is a significant factor in this decision. Pull factors operate in the opposite manner, making more attractive the opportunities and benefits of self-employment. Of particular interest in this respect is the apparent importance of upturns, or perceived upturns, in economic activity. On the basis of these findings, a number of suggestions for further more detailed research are made.