Risk, Balanced Skills and Entrepreneurship

This paper proposes that risk aversion encourages individuals to invest in balancedskill profiles, making them more likely to become entrepreneurs. By not havingtaken this possible linkage into account, previous research has underestimated the impactsboth of risk aversion and balanced skills on the likelihood individuals chooseentrepreneurship. Data on Dutch university graduates provides evidence which supportsthis contention. It thereby raises the possibility that even risk-averse peoplemight be suited to entrepreneurship; and it may also help explain why prior researchhas generated mixed evidence about the effects of risk aversion on selection into entrepreneurship.