Self-employed or Employing Others? Pre-Entry Capabilities, Entrepreneurial Action, and the Learned Resourcefulness of Microcredit Firm Founders

We survey 612 entrepreneurs who are members of microcredit programs across three developing countries to examine the determinants of firm employment. We find that for opportunity-motivated entrepreneurs, a greater number of employees are predicted by pre-entry means (managerial skill, pre-planning, and business expertise) with these relationships mediated by differentiation-related innovation. We find that necessity-motivated entrepreneurs do not seek innovation as a means to growth. Rather their efforts to increase firm employment are enhanced by a set of learned repertoires which we identify as resourcefulness. Specifically, we find behavioral resourcefulness and social resourcefulness increased the likelihood of higher firm employment for necessity-motivated entrepreneurs while financial resourcefulness was not significant.