This is the focus of a forthcoming article in Management Science by Serden Ozcan and Toke Reichstein. Conventionally the view has been that the bureaucratic nature of public workplaces inhibits the development of entrepreneurial abilities and the motivation to pursue entrepreneurial opportunities.

Ozcan & Reichstein nevertheless show that organizational context accounts only partially for the observed differences between the public and the private sector. A selection effect, taking place in the labor market, is the primary driver for the observed low rate of entrepreneurial transitions out of the public sector. Non-entrepreneurial individuals seek and are appointed to public sector positions. The analysis additionally shows that the length of public sector service limits the propensity to become an entrepreneur. Finally, the authors reveal that the public sector in fact also triggers entrepreneurial departures through dissatisfaction with work conditions. This effect raises concerns as it points to one of public sectors’ most pressing problems: The few entrepreneurial individuals that do find their way into public employment are frustrated by the context and thereby leave.

Ozcan and Reichstein trace the careers of almost 6000 American individuals over 30 years from the year at which they completed their education. The study is a duration model analysis in which the estimates are corrected for endogeneity brought about by the fact that the decision to join public service can hardly be considered independent from the decision to become self-employed. For further information please contact Serden Ozcan (soz.ino@cbs.dk) or Toke Reichstein (tr.ino@cbs.dk)