1
Researching the differences between the previous labor market
status of different groups and their successfulness as a solo
self-employed, including mediation tests of motivation, financial
capital and innovation
Sander Douma
22 June 2015.
Master thesis
MSc. Small Business & Entrepreneurship
2
3 Table of contents
1. Introduction……….4
2. Literature review and hypotheses………...8
2.1 Solo self-employment………....8
2.2 Successfulness solo self-employed individuals……….8
2.3 Utility theory………..9
2.4 Financial capital and innovation framework of success………...10
2.5 Relationship between previous labour market status and successfulness………10
2.6 Mediating effect of factors on the relationship between previous labour market status and the successfulness as a solo self-employed……….13
2.6.1 Motivation………....13 2.6.2 Financial capital………...15 2.6.3 Innovation………...16 2.6.4 Conceptual model………...18 3. Methodology………...19 3.1 Data………...19 3.2 Measures………...19
3.2.1 Previous position on the labour market………..19
3.2.2 Successfulness solo self-employed……….20
3.2.3 Mediators………...20
3.2.4 Control variables……….21
3.2.5 Statistical method………...26
4. Results………....28
4.1 Descriptive analysis………28
4.2 Results of the direct relationship between previous status and success………28
4.3 Results with regard to mediating variables………32
4.3.1 Motivation……….33
4.3.2 Financial capital………....34
4.3.3 Innovation……….35
5. Discussion………..37
5.1 Conclusions with regard to different groups of solo self-employed………….37
5.2 Contributions to literature………..41
5.2.1 Utility theory……….41
5.2.2 Financial capital and innovation framework of success……… 42
5.3 Policy implications……….43
5.4 Limitations and future research……….45
References……….47
Appendix I: Mediating analysis………54
4 1.Introduction
More and different kinds of people choose solo self-employment (Meager and Bates, 2001). The number of solo self-employed people is growing in the Netherlands as well. The amount of businesses has grown from 600.000 to 1.400.000 in the period 1996-2015. 75% of this increase is due to solo self-employed individuals (ING,2015). The amount of this group of people is expected to continually increase in the upcoming years. ‘’ The solo self-employed are often taken to be individuals who earn no wage or salary but who derive their income by exercising their profession or business on their own account and at their own risk’’ (Parker, 2004, p.5). Furthermore, solo self-employed people do not have personnel. Solo self employment is an effective strategy for people to get or stay active on the labour market, to avoid unemployment or the opportunity to start a business which has potential to grow, innovate and creates employment. A lot of academic and political debates have dealt with this topic. Furthermore, a substantial amount of researchers examined it. Because of the growing importance of self-employment, it is important to know the consequences of it.
5
The question why people are motivated to start as an entrepreneur has received a lot of attention in the literature (Burket et al.2002; Segal et al.2005). Furthermore, the relationship between for example age, gender and unemployment with business growth is widely examined (Mata 1996; Persson 2004; Almus and Nerlinger 1999; Reid and Smith 2000). However, the topic concerning different groups of individuals and their successfulness as being solo self-employed has not been addressed in great detail in the literature. There is relatively little known about the differences between different suppliers of solo self-employment (former paid employees, former managers, students and unemployed people) and the corresponding successfulness of the groups. Therefore, this research is aimed at examining the characteristics of different groups of individuals who turn into self-employment and their successfulness as a solo self-employed.
Solo employment is central in this research, as this group is much larger than employed individuals with personnel. Considering the growing number of solo self-employment in the Netherlands and the mixed effects of job creation and job destruction, this topic is of societal importance. Data (ING,2015) show that solo self-employed individuals hardly contribute to national economic growth. They seem to be less ambitious with regard to growth than regular, larger companies. Therefore, it is important to get insight in the success factors of growth with regard to different groups of people. This will enable governments to adjust their solo self-employment policies and enables solo self-employed people to focus on certain factors in order to be successful.
6
Formally, the following research question will be addressed:
- How does an individual’s previous labour market status determine the successfulness as a solo self-employed?
By looking at the previous labour market status of current solo self-employed and their corresponding motivations and characteristics which lead to a certain degree of successfulness, this research is an addition to utility theory. Douglas and Shepherd (2000) argue that the decision to become a solo self-employed is a utility-maximizing career choice made by an individual. Individuals choose to become a solo self-employed if the total utility corresponding with solo self-employment (via income, independence, risk bearing etc.) is greater than the expected utility from other labour market statuses. Utility theory focuses on the behavior of consumers in product markets and the behavior of individuals as suppliers of labour in labour markets (Böckermann et al., 2011; Juster, 1990). Block et al. (2013) define utility as the pleasure that an individual derives from consuming a good. This research will show whether certain groups of individuals turn out to be more successful than other groups and focuses on the characteristics of these groups. Successfulness will be measured with both financial (net income) and non-financial (choice to remain self-employed) measures. The choice to remain solo self-employed in the future is a measure of job satisfaction. Job satisfaction is a subset of utility theory (Block et al., 2013). By looking at both financial measures and non-financial measures like job satisfaction, this research is able to compare the successfulness (utility) for different groups of individuals.
Furthermore, this research is an addition to the innovation and the financial capital framework of reaching growth and being successful. Innovation is often believed to be positively related to performance. However, Li and Atuahene-Gima (2001) describe this relationship as inconclusive and mixed. This research will show whether innovation is successful for different groups of people who transit to solo self-employment. Financial capital is an important factor which positively influences the likelihood of starting a business and of reaching growth (Storey & Greene, 2007). However, the impact of financial capital with regard to different groups of people who enter solo self-employment and their corresponding success is less clear. This research will contribute to this issue.
7
Honig 1998; Roper 1999; Capelleras & Greene 2008; Robson & Bennett 2000; Calvo 2006). These factors are influenced by the previous labour market status of individuals (Evans & Jovanovic 1989; Shane 2009). This research will examine the mediating effect of these factors on the relationship between the previous status of individuals and their successfulness as solo self-employed as well.
8 2. Literature review and hypotheses.
A theoretical framework will be provided in this section. First of all, a definition of solo self-employment and the successfulness of solo self-employed individuals will be given. Furthermore, utility theory and the financial capital and innovation framework of success will be discussed. Next to that, literature with regard to the direct relationship between the previous status on the labour market of the current solo self-employed and their successfulness as entrepreneurs and mediating variables will be dealt with.
2.1 Solo self-employment.
There are a lot of definitions of self-employment. However, ‘’Self-employment jobs are those jobs where the remuneration is directly dependent upon the profits derived from the goods and services produced. The incumbents make the operational decisions affecting the enterprise, or delegate such decisions while retaining responsibility for the welfare of the enterprise (OECD 2000:191) turned out to be one of the clearest. Furthermore, there are different types of employment. One could be solo employed or one could be self-employed with some employees (Henley,2005). This research focuses on solo self-self-employed individuals. Kautonen et al. (2009) define solo self-employed people as those self-employed who work independently and do not employ other people. Therefore, the self-employed has a triple role in his business according to this definition, namely as worker, manager and business owner ( Romero & Martinez-Roman, 2012).
2.2 Successfulness solo self-employed individuals
9
individual is in business measures the survival of that individual’s business. Entrepreneurs who are more successful are longer in business than entrepreneurs who are not successful (Carrasco 1999; Pfeiffer & Reize 2000). Their success enables them to survive. On the other hand, successful entrepreneurs could also receive attractive offers from the labour market which could result in a transition from solo self-employment to paid employment. Another important non-financial measure of success is job satisfaction. Some entrepreneurs seem to measure success in terms of satisfaction and fulfillment, instead of financial measures like turnover (Buttner & Moore, 1997). Therefore, it is important to use both financial and non-financial measures of solo self-employment success.
2.3 Utility theory
10
2.4 Financial capital and innovation framework of success
Financial capital is an important factor with regard to the successfulness of a solo self-employed because easy access to financial capital facilitates growth (Moreno & Casillas, 2007). Cooper et al. (1994) state that solo self-employed individuals need to have a financial buffer in order to survive and to be successful. Having a financial buffer enables the solo self-employed to survive in bad times. However, it is less clear whether all or a few of (prospective) solo self-employed face problems with regard to having a financial buffer(Storey & Greene, 2007). Previous employers or employees are more likely to have built up a financial buffer, compared to unemployed people (Evans and Jovanovic,1989). Whether this is actually the case is rather uncertain. People who are made unemployed often receive a redundancy payment or other benefits which enable them to build up capital.
The relationship between innovation and performance is often believed to be positive (Roper, 1999). Geroski and Machin (1992) found that innovation resulted in increased sales and performance. However, others find negative or non-significant relationships with regard to innovation and performance (Hoffman et al. 1998; Coad & Rao 2008). Innovation is not a persistent activity for a lot of small scale businesses. A lot of small scale businesses turn out to be innovative for only a limited period, which means that being innovative in one period does not lead to being innovative in another period (Cefis 2003; Geroski et al. 1997). Furthermore, Storey and Greene (2010) state that there is a lot of uncertainty related to innovation. It often requires an investment, while it is not sure whether the innovation will work out and the investment will pay off. It could be concluded that there is still a lot of uncertainty with regard to the effect of innovation on performance.
2.5 Relationship between previous labour market status and successfulness as solo self- employed.
11
they start their own companies compared to people with working experience. The findings of Taylor (1999) confirm this. Taylor examined the successfulness of entrepreneurs by looking at their survival rates. The individuals with the highest survival rates, the fittest, were those with no previous unemployment experience. These individuals have at least some previous work experience and enter self-employment with some initial capital. The research of Robinson and Sexton (1994) showed similar results. They examined the relationship between previous work experience and the successfulness as an entrepreneur. Successfulness was measured by using the net earnings of the entrepreneur. The results show that entrepreneurs with more previous work experience are more successful compared to entrepreneurs with less or no work experience. Storey and Greene (2010) state that unemployed people are often more risk averse, which could lead to missing growth opportunities. Furthermore, unemployed people have in general lower levels of skills and abilities. This could mean that they are also less likely to become successful as an entrepreneur. Reid and Smith (2000) and Storey (1994) found a negative relationship between unemployment and firm performance. Performance was measured by objective items like turnover.
Furthermore, individuals with previous work experience could have knowledge of a specific sector. Burt (1993) states that having detailed knowledge of a sector allows an individual to develop a range of weak and strong ties. These ties could help the business in identifying opportunities. Johnson (2004) states that the most successful entrepreneurs pick those industries which are the best for a start-up, instead of those which are easiest to enter. Brüderl and Preisendörfer (1998) and Bosma et al. (2004) found a positive relationship between sectoral experience and firm performance. Therefore, individuals with previous work experience are more likely to be familiar with specific sectors which results in a greater likelihood of being successful.
Individuals with work experience could also have prior managerial experience. Prior managerial experience could be beneficial in order to successfully manage other people in the organization. However, this is not relevant in the case of solo self-employment. Moreover, Schutjens and Wever (2002) and Harada (2003) found a non-significant relationship between previous managerial experience and firm growth.
12
measures of success. Previously unemployed individuals and students have less or little work experience which negatively influences their likelihood of being successful as a solo self/employed. Formally I state:
Hypothesis 1a: Being previously an employer positively influences the successfulness as a solo self-employed.
Hypothesis 1b: Being previously a paid-employee positively influences the successfulness as a solo self-employed.
Hypothesis 1c: Being previously a student negatively influences the successfulness (financial) as a solo self-employed.
Hypothesis 1d: Being previously unemployed negatively influences the successfulness (financial) as a solo self-employed.
However, some entrepreneurs turn out to measure success in terms of non-financial items like satisfaction and fulfillment (Buttner & Moore, 1997). Unemployed individuals are much less happy than others (Clark & Oswald 1994; Winkelmann & Winkelmann 1998). employment provides individuals with high levels of self-determination and freedom. Self-employed individuals enjoy their independent position on the labour market, as they are not subjected to a hierarchy (Frey et al. 2004; Benz 2007). Hinz and Jungbauer-Gans (1999) examined the job satisfaction of individuals who started their own business. They compared the satisfaction of previously unemployed individuals with previously employed individuals. Their empirical analysis shows that previously unemployed individuals are slightly more satisfied compared to previously employed individuals. The same could apply for individuals who were previously students. Becoming an entrepreneur is more and more attractive to students because it is an alternative way of participating in the labour market without losing one’s independence (Martinez et al., 2007). Formally, I state:
Hypothesis 1e: Being previously unemployed positively influences the successfulness (non-financial) as a solo self-employed.
13
2.6 Mediating effect of factors on the relationship between previous labour market status of the solo self-employed and their successfulness as solo self-employed.
This part will discuss mediating variables which influence the relationship between the previous labour market position of current solo self-employed individuals and their successfulness as entrepreneurs. Motivation, financial capital and innovation are often mentioned in the literature as important factors which contribute to the success of entrepreneurs (Hinz & Jungbauer-Gans 1999; Honig 1998; Roper 1999; Capelleras & Greene 2008; Robson & Bennett 2000; Calvo 2006). Furthermore, the previous labour market status of a current solo self-employed individual influences these factors. Individuals with previous work experience have more financial capital than previously unemployed individuals (Evans & Jovanovic, 1989) and previously unemployed people turn out to act less innovative than previously employed individuals (Shane, 2009).
2.6.1 Motivation
Motivation is an important factor with regard to solo self-employment. There are a lot of reasons why individuals choose to become solo self-employed. Solo self-employment offers independence, as a response to high labour demand. Furthermore, individuals are attracted to the higher relative earnings generated in self-employment compared to employment (Taylor, 1996). Van Praag and Cramer (2001) found that individuals would transit to self-employment if the expected rewards surpass the wages of employment. In addition, the personal motivation of different groups of individuals might differ with regard to the choice of entering solo self-employment. Previously unemployed individuals might have a different motivation compared to previously employed individuals, and this difference could be a reason for different business performance (Hinz & Jungbauer-Gans, 1999). Therefore, motivation is an important factor. The previous position of individuals on the labour market could influence the motivation to become self-employed, which consequently influences the successfulness of the different solo self-employed individuals.
14
wealth and other positive outcomes (Segal et al., 2005). Research shows that the choice of individuals to enter entrepreneurship is primarily due to pull factors, instead of push factors (Keeble et al., 1992; Orhan and Scott, 2001).
By looking at this evidence I could conclude that there are differences between the different groups of individuals with regard to their motivation of becoming solo self-employed. Pull factors seem to be more related to individuals who were previously paid-employed or employer. These groups were employed in times before entering self-employment, which could indicate a favorable economic environment. Solo self-employment provides these groups with more independence and other perceived positive outcomes (Storey 1991; Meager 1992). On the other hand, unemployment reflects missing opportunities in the labour market. Consequently, the push factors of entering solo self-employment increase (Bögenhold, 1987). Therefore, individuals who were previously unemployed are more likely to be pushed into self-employment which often negatively influences performance (Hinz & Jungbauer-Gans, 1999). However, non-pecuniary motivation is an important determinant of the performance of the solo self-employed as well. These factors include the desire to become independent, reach fulfillment and enjoyment of the work (Blanchflower & Oswald, 1990). Non-pecuniary motives often negatively influence the success in terms of wealth creation (Cressy,1995). On the other hand, profit objectives as job satisfaction often increase as a result of these non-pecuniary motives of individuals (Burke et al., 2000). Therefore, individuals could be successful as solo self-employed considering non-financial measures of success. Students turn out to be more motivated to enter solo self-employment when having some work experience or prior entrepreneurial experience (Kent et al. 1989; Hills & Welsch 1986). These experiences influence the likelihood of being successful. Students are less likely to have these experiences which means that they are less likely to be financially successful. However, as with the previously unemployed individuals, students could seek independence or other pecuniary factors by entering solo self-employment. This could positively influence their non-financial successfulness by an increased job satisfaction. Formally, I state:
15
- Hypothesis 2b: Being previously paid-employed positively influences the motivation to become solo self-employed which positively influences the success as a solo self-employed.
- Hypothesis 2c: Being previously a student negatively influences the motivation to become solo self-employed which negatively influences the success (financial) as a solo self-employed.
- Hypothesis 2d: Being previously a student positively influences the motivation to become solo self-employed which positively influences the success (non-financial) as a solo self-employed.
- Hypothesis 2e: Being previously unemployed negatively influences the motivation to become solo self-employed which negatively influences the success (financial) as a solo self-employed.
- Hypothesis 2f: Being previously unemployed positively influences the motivation to become solo self-employed which positively influences the success (non-financial) as a solo self-employed.
2.6.2 Financial capital
16
Having a financial buffer positively influences the likelihood of long-term survival of entrepreneurs, according to Cooper et al. (1994).
Evans and Jovanovic (1989) state that people need time in order to build up the capital needed to start a business and for a financial buffer. Therefore, entrepreneurship is less likely to be an option for younger people and previous unemployed people. Younger people have had less time to build up the capital needed to start a business and will face difficulties with regard to borrowing money, considering their liquidity constraints. The same applies to previous unemployed people as well because they received less money than paid employees, and were therefore less able to build up a financial buffer. It could be concluded that previously employed people have a larger financial buffer than people with no work experience, like students and unemployed individuals. This group of people is expected to be more likely to be successful compared to previous students and unemployed individuals, for both financial and non-financial measures of success. Formally, I state:
- Hypothesis 3a: Being previously an employer positively influences financial capital which positively influences the success as a solo self-employed.
- Hypothesis 3b: Being previously paid-employed positively influences financial capital which positively influences the success as a solo self-employed.
- Hypothesis 3c: Being previously a student negatively influences financial capital which negatively influences the success as a solo self-employed.
- Hypothesis 3d: Being previously unemployed negatively influences financial capital which negatively influences the success as a solo self-employed.
2.6.3 Innovation
17
Rogers (1998) defined innovation as the process of introducing new ideas to the firm which result in increased firm performance. Rosenbusch et al (2011) state that small firms are often successful innovators, despite their resource constraints. Small firms which are innovative and focus on a specific niche could differentiate themselves from the competition and create better firm performance according to Porter (1980). Because of the limited size and the great amount of nimbleness of small firms, it is especially attractive for them to serve specific niches. Small firms can avoid price competition by offering highly innovative products. Furthermore, innovative products could facilitate firm growth by creating new market demand. If an innovative small firm enables it to protect the market from other competitors, the firm could strengthen its position in the industry. Moreover, the innovation might result in above average returns in that situation. Tan (2001) found that Chinese entrepreneurial firms acted more innovative than managers of larger enterprises. Entrepreneurs turned out to be more willing to take risky decisions compared to the managers which resulted in higher firm performance. Firm performance was measured by using profitability and sales growth. Furthermore, a meta-analysis of Rosenbusch et al. (2011) showed a positive relationship between innovation and performance in SMEs as well. They used a number of objective and subjective measures of performance in their study. Finally, Zhao (2005) examined the relationship between innovation and entrepreneurship qualitatively. His study found that innovation and entrepreneurship are positively related to each other and the interaction of both factors enables organizations to flourish. Zhao used the perspective of Carland et al. (1984) and Steward et al. (1998) with regard to differences between small business owners and entrepreneurs. They argued that small business owners have lower achievement motivation and risk taking compared to entrepreneurs, and are more inclined to innovation and change than entrepreneurs.
18
and start as an entrepreneur (Shane,2009). Furthermore, Storey and Greene (2010) state that there is a lot of uncertainty related to innovation. It often requires an investment, while it is not sure whether the innovation will work out and the investment will pay off. Current solo self-employed people who were paid employee or employer as their previous labour market status, are more likely to have the financial resources which enable them to act innovative, compared to students and unemployed individuals. Therefore, they are expected to behave more innovative and they are more likely to be successful (financial and non-financial) than the other groups. Formally, I hypothesize:
- Hypothesis 4a: Being previously an employer positively influences innovative behavior which positively influences the success as a solo self-employed.
- Hypothesis 4b: Being previously paid-employed positively influences innovative behavior which positively influences the success as a solo self-employed.
- Hypothesis 4c: Being previously a student negatively influences innovative behavior which negatively influences the success as a solo self-employed.
- Hypothesis 4d: Being previously unemployed negatively influences innovative behavior which negatively influences the success as a solo self-employed.
2.7 Conceptual model
The following model depicts the previous mentioned relationships and hypotheses:
H1
H2
H3
H4
Figure 1: Conceptual model
Previous position on the labour market
19 3. Methodology
3.1 Data
The panel data used are taken from the ZZP (solo self-employment) Panel from the Netherlands. This panel studies solo self-employed individuals from the Netherlands during the period 2010-2013. A total of 9780 respondents filled in the questionnaires. The panel is used to get insight in characteristics of the self-employed and the development of their businesses. The same respondents were asked to fill in the questionnaire twice a year, for a period of three years, which enables me to methodologically and statistically perform longitudinal analyses on the individual level.
The panel focuses on a specific form of self-employment, namely solo self-employment. Solo self-employed people are defined in the panel as people who: independently perform activities; have no personnel; are the only owner of the company; work at least 15 hours a week for the company; has no assistance from family with the fulfillment of the main activities; indicate that labour is the main product of their company, and no goods. Entrepreneurs who fit with the first five characteristics but who indicate that goods are the main product of their company, are called entrepreneurs without personnel in the panel. A limited group of these people participates in the panel and is seen as a control group.
3.2 Measures
3.2.1 Previous position on the labour market
20 3.2.2 Successfulness solo self-employment
This research focuses on explaining variations in the successfulness of different groups of solo self-employed individuals. Successfulness could be measured in a number of ways. Millán et al. (2014) measure entrepreneurial success by looking at the survival of the entrepreneur’s business and by using the earnings of an entrepreneur. Both objective and subjective measures could be used to measure success (Storey & Greene, 2010). Objective measures are very reliable. On the other hand, Davidsson (1994) states that subjective factors contain growth relevant information which is not captured by objective measures. Furthermore, Storey and Greene (2010) state that the use of multiple measures gives a more complete view of the success of a business. Therefore, it is decided to use both objective and subjective measures.
Net monthly income is an objective financial measure which is used in this research. Net monthly income is measured with a 6-item scale from the Panel, ranging from less than 1.250 Euros a month to more than 5.000 Euros a month. A willingness to remain solo self-employed is used as a subjective non-financial measure of success. The Panel used a 2-item scale with answers ranging from preference to remain self-employed to preference to transit to paid employment. 8101 respondents indicated their monthly net income, while 7597 indicated whether they are willing to remain solo self-employed in the future.
3.2.3 Mediators
21
the respondent choses that factor. 8724 self-employed individuals indicated whether they have a financial buffer or not. Five different questions with regard to innovation were used from the ZZP Panel. The questions are about product en process innovations and whether innovations were new to the firm or new to the market. Respondents could indicate whether certain innovations were present in their business or not, yes/no questions. A descriptive analysis showed that product- and process innovations are the most important types of innovation in the Panel. 6060 individuals answered this question. Therefore, these two forms of innovation are used in this research.
3.2.4 Control variables
This section will deal with general factors which influence the relationship between previous labour market status and current successfulness as solo self-employed and the corresponding moderators. These factors need to be controlled for in this research.
Gender
A number of studies have examined the influence of gender on the probability of entering self-employment and the relationship with successfulness. Successfulness is often measured by growth in the literature. Females turn out to be less likely to enter self-employment, compared to males. However, there seems to be an increasing tendency that females enter self-employment (Luber & Leicht, 1998). Some researchers focus on subjective differences between males and females. Langowitz and Minniti (2007) found that women are more likely to be nascent entrepreneurs if they perceive that they have the necessary abilities and knowledge. On the other side, they are less likely to enter self-employment if they fear failure. This is in line with the findings of Verheul and Thurik (2001). They examined Dutch entrepreneurs and found that women were more averse to risk taking. Another interesting finding related to gender, is regarding education. Female entrepreneurs with higher levels of education turn out to be more likely to enter self-employment than males with a similar education (Cowling & Taylor,2001). In addition to this, Wellington (2006) found that self-employment is greater amongst highly educated women.
22
showed that women would only like to reach a certain size of their business, and no further. Therefore, growth is limited for them.
Respondents of the ZZP Panel could indicate whether they are male or female. Gender is recoded into dummies, which equal 1 for males and 0 for females.
Age
There has been a lot of research with regard to the relationship between age and entering self-employment and the success as a self-employed. Bates (1995) showed that the likelihood of entering self-employment increases with age, it is peaking around an age of 40 years and is then leveled out. Middle-aged individuals turn out to have the greatest likelihood to reach growth for their businesses (Storey & Greene,2004). Young people often lack business experience and access to capital. On the other hand, older workers often have business experience and better access to financial resources. However, older individuals may lack energy and commitment which is needed for self-employment. Moreover, they may earn more income as wage workers. Meager and Bates (2001) state that stability in self-employment increases with age. The youngest entrepreneurs are most likely to leave, while the oldest are less likely to leave self-employment. Furthermore, their empirical analysis showed that the likelihood of being in the lowest income level was higher for younger people. Being older increases the likelihood of falling into the highest income group. Moreover, they found that having less than five years workforce experience increases the likelihood of falling in the lowest income group. Younger people are more likely to have less workforce experience. I could conclude that older entrepreneurs have a higher probability of becoming successful entrepreneurs compared to their younger counterparts. This is in line with the findings of Storey (1994) who found that middle-aged entrepreneurs were most successful. Therefore, they are more attractive for the labour market as wage workers. However, the evidence from Meager and Bates indicates also that older workers are less likely to leave self-employment. Respondents of the panel were asked to fill in their age. These values range from....GGG Education
23
accumulation of new knowledge and the adaption to new situations (Weick,1996). The proposition that education positively influences has been widely supported empirically for the performance and income of entrepreneurs (Bates, 1990; Burke et al.,2000;Cooper et al., 1994; Davidsson and Honig, 2003). Furthermore Van der Sluis et al. (2005) conducted a meta-analysis with regard to this topic. 86 studies were identified in their research, which linked education to a measure of entrepreneurial performance, for example survival or growth. Their findings indicate that the years of education are positively related to earnings as an entrepreneur. Moreover, Robinson and Sexton (1994) found that education increases both the likelihood of becoming self-employed and the successfulness as a self-employed individual. Successfulness is measured in terms of earnings. Furthermore, education is not only acknowledged for its productive effect (Millán et al., 2014). It has value as a signal of productive ability in those markets without complete information as well (Spence, 1973). This could lead to higher successfulness as well because entrepreneurs could use their education as a signal towards suppliers or customers (Parker and Van Praag, 2006; Backes-Gellner and Werner, 2007).
Therefore, I could conclude that education positively influences the successfulness of self-employed people. However, there are differences in the level of education with regard to the different suppliers of self-employment. It is likely that managers/employers have a higher level of education compared to regular paid employees. Both groups are likely to have higher levels of education than unemployed. Unemployed people have often less skills and abilities ( Storey and Greene, 2010). Furthermore, students have a high level of education. However, Robinson and Sexton (1994) showed that people with higher education and some work experience are more successful than people with only a high education. Therefore, I expect previous managers/employers to have the highest probability of being successful as a solo self-employed given their education. The second group consists of previous paid employees and students and the final group of previously unemployed.
24 Sector
There turns out to be a difference between the level of entrance in different sectors and a difference in successfulness with regard to sectors. Self-employment rates are very high in the service sector. Entry barriers and the minimum efficient scale are lower in the service sector compared to for example the manufacturing sector. Therefore, entry in the service sector is easier for entrepreneurs (Parker,2009). These service-sector activities mainly have a low-margin. Furthermore, entrepreneurs have a high likelihood to be present in larger, more profitable and more segmented industries and markets (Hause & Du Rietz,1984). Construction and agriculture are the sectors which have the highest likelihoods of entry into self-employment. Moreover, these sectors have the lowest likelihood of exit. The lowest likelihoods of entry are in manufacturing and extractive sectors (Meager & Bates,2001). Meager and Bates empirically examined data for a large group of entrepreneurs and were looking for the effects of transitions to and from self-employment on income. They found that banking and finance were sectors in which entrepreneurs ,who were in the highest income group, were especially active.
The sector in which the solo self-employed individuals are active is measured by using a 7-item scale with different sectors. The most important sectors turned out to be: agriculture, construction, transport, trading and services. These different groups were separated and recoded into dummies, which equal 1 if the solo self-employed is active in the specific sector. Legal form
25
suppliers and customers about the credibility of the business. On the other hand, Chittenden and Sloan (2006) showed that non-incorporation can result in tax advantages for the business owner as compared to incorporation which could result in higher retained profits and ,therefore, higher rates of investments and growth. However, the impact of incorporation on growth is generally believed to be positive (Brixy & Kohaut 1999; Aidis & Van Praag 2007; Sleuwaegen & Goedhuys 2002; Brüderl & Preisendörfer 2000).
The legal form of the solo self-employed their businesses is measured by using a 3-item scale question with the following answers: limited liability company, non-incorporated company and other legal form. All three legal forms are recoded into dummies which equal 1 if the respondent selected that specific sector.
The following variable description table describes the most important variables in this research:
Variable Description Table
Variable Description
Dependent variables
Monthly income This variable ranges from 1 to 6. Different income categories Choice of remaining self-employed Dummy equals 1 for YES
Independent variables Previous labour market status
Employed Dummy equals 1 for previously employed individuals Employer Dummy equals 1 for previous employers
Student Dummy equals 1 for previous students
Unemployed Dummy equals 1 for previously unemployed individuals Mediating variables
Financial capital
Financial buffer is sufficient Dummy equals 1 if YES Innovation
Product innovation Dummy equals 1 for product innovation Process innovation Dummy equals 1 for process innovation Motivation
26
Continued
Variable Description Table
Variable Description
Control variables
Gender Dummy equals 1 for males
Legal form
Limited liability Dummy equals 1 for limited liability company Non-incorporated Dummy equals 1 for non-incorporated company
Other form Dummy equals 1 for other form
Educational level
University Dummy equals 1 for University
Sector
Agriculture Dummy equals 1 for agriculture Construction Dummy equals 1 for construction Trading Dummy equals 1 for trading Services Dummy equals 1 for services
Transport Dummy equals 1 for transport
Year dummies 4 dummies equalling 1 for the different years
Table 1 Description of variables 3.2.5 Statistical method
Simple linear regressions are used in order to test the direct relationship between the previous labour market status of an entrepreneur and the different measures of success. In order to test whether the three ‘’mediating’’ variables are really mediating variables, four statistical steps are followed. First, the independent variable needs to affect the mediator significantly. Secondly, the independent variable significantly affect the dependent variable. Furthermore, the mediator has a significant unique effect on the dependent variable. Finally, the effect of the independent variable on the dependent variable declines with the integration of the mediating variable in the model. These steps informally show whether a variable is a mediating variable. Sobel (1982) developed a statistical tool in order to test mediation more formally. This tool is based on the following equation: z-value = a*b/SQRT(b2*sa2 + a2*sb2),
27
28 4. Results
The results of the research will be discussed in this section. First, table 3 provides a table with correlations and descriptive statistics. Furthermore, the results of the different regression tests will be provided.
4.1 Descriptive analysis
Table 2 provides the correlations between the different variables which are important in this research. The maximum correlation is -0.943 between having a non-incorporated business and a limited liability company. In addition to this, table 2 provides the main descriptive statistics. Moreover, the Appendix shows that the variance inflation factors (VIFs) are normally below 5. Only the control variables limited liability company and non-incorporated company sometimes have VIFs around 10. Therefore, multicollinearity does not seem a concern. 4.2 Results with regard to the direct relationship between dependent and independent variables.
The results of the direct relationship are provided in table 3. This table shows two models which represents the two dependent variables.
Previous employers
29 Correlations and Descriptives
Mean Std.dev. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
1.Monthly income 3.00 1.606
2. Desire to remain self-employed 0.87 0.336 0.205
3. Employer 0.06 0.246 0.041 0.016 4. Employed individual 0.78 0.412 0.078 0.001 -0.489 5. Student 0.07 0.252 -0.019 0.008 -0.071 -0.500 6. Unemployed 0.06 0.239 -0.140 -0.038 -0.065-0.479 -0.065 7. Motivation 0.798 0.401 0.167 0.189 0.025 0.050 -0.011 -0.092
8. Financial buffer is sufficient 0.16 0.363 0.124 0.071 0.079 -0.004 -0.015 -0.051 -0.001 9. Product innovation 0.28 0.448 -0.040 0.057 -0.035 0.001 0.029 0.024 0 -0.016 10. Process innovation 0.39 0.487 0.000 0.055 -0.032 0.023 0.017 -0.020 0 0.009 0.274 11. Age 48.30 10.61 -0.112 -0.033 0.130 -0.004 -0.135 0.008 -0.179 0.076 0.013 -0.055 12. Gender 0.72 0.451 0.325 0.016 0.084 0.012 0.004 -0.101 0.055 0.070 -0.082 -0.021 0.036 13.University 0.44 0.497 0.048 0.068 -0.066 0.019 0.028 0.019 -0.044 0.024 0.253 0.129 0.054 -0.168 14. Limited liability company 0.11 0.313 0.213 0.054 0.094 0.010 -0.030 -0.065 0.061 0.073 0.070 0.031 0.070 0.145 0.158 15. Not-incorporated 0.87 0.328 -0.217 -0.048 -0.101 -0.007 0.024 0.070 -0.088-0.066 -0.064-0.029 -0.071 -0.142-0.141 -0.943 16. Agriculture 0.09 0.299 0.001 0.025 0.100 -0.169 0.156 -0.057 0.087 0.056 -0.114-0.043 0.069 0.161 -0.223 -0.072 0.041 17. Construction 0.12 0.327 0.131 -0.020 -0.001 0.052 -0.049 -0.020 -0.018 0.006 -0.127-0.060 -0.090 0.197 -0.213 -0.021 0.028 -0.123 18. Trading 0.10 0.294 -0.134 -0.055 -0.001 0.012 -0.043 0.029 0.020 -0.041 -0.022 -0.024 -0.014-0.012-0.153 -0.036 0.036-0.108 -0.121 19.Transport 0.07 0.247 0.041 -0.014 0.028 -0.018 0.001 0.002 -0.010 0.003 -0.052 -0.046 0.005 0.084 -0.100 -0.032 0.023 -0.087-0.098 -0.086 20. Services 0.57 0.495 -0.061 0.032 -0.068 0.055 -0.028 0.035 -0.049 -0.015 0.189 0.096 0.022 -0.311 0.444 0.083 -0.067 -0.382 -0.429 -0.375 -0.305
30 Previous employed individuals
Hypothesis 1b states that being previously a paid-employee positively influences the successfulness as a solo self-employed. Regression analyses show that this hypothesis is partially accepted. The relationship between being previously paid employed and the monthly net income (t=5.907, p<0.001) is significant. However, the relationship with the desire to remain solo self-employed is not significant (t=-0.482, p>0.10). Furthermore, the relationship is negative, while a positive relationship was expected. It could be concluded that hypothesis 1b is only confirmed with regard to the financial measure of success.
Previous students
Hypothesis 1c states that being previously negatively influences the financial success of solo self-employed individuals, while hypothesis 1f states that the non-financial success is positively influenced by being previously a student. The regression results are consistent with hypothesis 1c, while hypothesis 1f is not confirmed. The relationship between previously being a student and the monthly net income is significantly negative (t=-2.963,p<0.01). Furthermore, the relationship between previous students and the desire to remain solo self employed is negative, instead of the expected positive relationship. However, this relationship is not significant (t=-0.255,p>0.10). Therefore, previous students are negatively related to financial success, while the relationship with non-financial success is not significant.
Previous unemployed individuals
Previous unemployed people are hypothesized to be negatively related to financial success (1d) and to be positively related to non-financial success (1e). The regression results are consistent with hypothesis 1d. Previous unemployed individuals are indeed negatively related to financial success (t=-8.179, p<0.01). However, the relationship with non-financial success is significantly negative(t=-1.933,p<0.10), while a positive relationship was expected. Therefore, it could be concluded that previously unemployed individuals are negatively related to both financial and non-financial success.
31
the agriculture, trading and service sector negatively influences the specific relationship. With regard to the non-financial measure of success, only education and limited liability company positively influence the successfulness of the solo self-employed, while age and being active in the trading sector negatively influences this factor.
Regression Analysis Direct Relationship
Model I Model II
Independent variables T-test SE T-test SE
Employer 1.291 0.072 1.674 0.017* Age -12.690 0.002*** -4.590 0.000*** Gender 24.596 0.042*** 1.065 0.010 University 7.793 0.040*** 4.930 0.009*** Limited liability company 1.653 0.168* 1.755 0.037* Non-incorporated company -3.105 0.161*** 0.563 0.035 Agriculture -3.711 0.100 1.117 0.023 Construction 0.373 0.095 -1.319 0.022 Trading -8.961 0.100*** -3.017 0.023*** Transport -1.177 0.106 -0.901 0.025 Services -4.096 0.086*** -0.780 0.020 Model I Model II
Independent variables T-test SE T-test SE
32
Model I Model II
Independent variables T-test SE T-test SE
Student -2.963 0.070*** -0.255 0.016 Age -12.936 0.002*** -4.392 0.000*** Gender 24.675 0.042*** 1.141 0.010 University 7.887 0.040*** 4.862 0.009*** Limited liability company 1.666 0.168* 1.771 0.037* Non-incorporated company -3.109 0.160*** 0.529 0.035 Agriculture -3.275 0.101*** 1.227 0.024 Construction 0.329 0.095 -1.305 0.022 Trading -9.004 0.100*** -2.998 0.023*** Transport -1.117 0.106 -0.858 0.025 Services -4.101 0.086*** -0.761 0.020 Model I Model II
Independent variables T-test SE T-test SE
Unemployed -8.179 0.074*** -1.933 0.018* Age -12.551 0.002*** -4.372 0.000*** Gender 24.109 0.042*** 1.025 0.010 University 7.808 0.040*** 4.852 0.009*** Limited liability company 1.711 0.167* 1.774 0.037* Non-incorporated company -2.945 0.160*** 0.571 0.035 Agriculture -3.870 0.100*** 1.170 0.023 Construction 0.379 0.095 -1.293 0.022 Trading -8.842 0.100*** -2.939 0.023*** Transport -1.143 0.105 -0.831 0.025 Services -4.071 0.086*** -0.727 0.020
Notes: Provided values are t-values and the standard errors, *0.1>p≥0.05; **0.05>p≥0.001;***p<0.01.
Table 3 Regression results direct effects.
4.3 Results with regard to mediating variables
33 4.3.1 Motivation
Previous employers
Previously being an employer is hypothesized (2a) to positively influence the motivation to become solo self-employed which consequently positively influences the success as a solo self-employed. This hypothesis is not confirmed in this research. The relationship between the motivation variable and both financial- (t=3.292,p<0.01) and non-financial success (t=4.835, p<0.01) is positive, which means that pull factors positively influence the success of solo self-employed individuals. The direct relationship between previously being an employer and financial success is not significant. Therefore, mediation cannot occur. Furthermore, the relationship between previous employers and the motivation variable is not significant. Therefore, there is no mediation with regard to the relationship between previous employers and non-financial success either.
Previous employed individuals
Previously paid employed individuals are hypothesized (2b) to positively influence the motivation to become solo self-employed which consequently positively influences their success as solo self-employed. The results of the research are only partially consistent with this hypothesis. Previous employers are positively related to the motivation variable (t=1.685, p<0.10) which means that this group is generally attracted to self-employment by pull factors. After adding the motivation variable in the model, the direct relationship between previously been employed and financial success becomes weaker, however not insignificant. A Sobel test (t=1.690, p<0.10) reveals that motivation is a partial mediator in this case. The direct relationship between previous employers and the desire to remain solo self-employed is insignificant, which means that mediation cannot occur. Therefore, the hypothesis is only confirmed with regard to the financial measure of success.
Previous students
34
relationship between previous students and the motivation variable is not significant (t=-0.575, p>0.10), which means that mediation cannot occur.
Previous unemployed individuals
Previous unemployed individuals are hypothesized (2e) to negatively influence the motivation to become solo self-employed which negatively influences the financial success as a solo self-employed. Furthermore, hypothesis 2f states that this previous labour market status positively influences the motivation to become a solo self-employed which positively influences the non-financial success as a solo self-employed. Hypothesis 2e is confirmed, while the opposite of hypothesis 2f is found. Previous unemployed individuals are negatively related to the motivation variable (t=-2.739, p<0.01), which means that these people are generally pushed into self-employment. The direct relationship between previous unemployed people and financial success weakens after adding the motivation variable to the model, but does not become insignificant. A Sobel test reveals that motivation is a partial mediator here (t=-2.109, p<0.05). The results of the analysis show that the motivation of previous students is negatively related to their desire to remain solo self-employed, instead of the expected positive relationship. Motivation is a partial mediator here as well (t=-2.382, p<0.05).
4.3.2 Financial capital Previous employers
35 Previous employed individuals
Being previously employed is hypothesized (3b) to positively influence financial capital which consequently positively influences the success as a solo self-employed. This hypothesis is not confirmed by the results of the regression analysis. The relationship between previously employed people and financial capital is not significant (t=-0.415, p>0.10). Moreover, the relationship is negative while a positive relationship was expected. Because of this, financial capital cannot a mediator with regard to the relationship between previous employed individuals and success.
Previous students
Individuals who were student before they transited to solo self-employment are hypothesized (3c) to have less financial capital which consequently negatively influences their success as a solo self-employed. The results of this research are not consistent with this hypothesis. The relationship between previous students and financial capital is not significant (t=-0.930, p>0.10). Mediation cannot occur in this situation, due to the insignificant relationship.
Previous unemployed individuals
Being previously unemployed is hypothesized (3d) to negatively influence financial capital which consequently negatively influences the success as a solo self-employed. This hypothesis is only confirmed with regard to non-financial success. Previous unemployed people are more likely to have no financial buffer (t=-3.211, p<0.01). However, adding this variable to the model of financial success, does not lead to a weakened direct effect between previously unemployed people and their monthly net income. This means that the financial capital variable is not a mediator. On the other hand, adding the financial capital to the non-financial success model leads to an insignificant direct relationship with regard to the desire to remain solo self-employment. A Sobel test confirms that financial capital is a mediator here (t=-3.028, p<0.01). Therefore, hypothesis 3d is only confirmed with regard to non-financial success of the solo self-employed.
4.3.3 Innovation Previous employers
36
of a self-employed individual (t=-2.622, p<0.01) and positively influences the desire to remain solo self-employed (t=2.884, p<0.01). On the other hand, process innovation negatively (not significantly) influences financial success (t=-1.315, p>0.10) and positively influences non-financial success (t=2.110, p<0.05). The relationship between previous employers and both product- (t=-0.790,p>0.10) and process innovation (t=-1.068, p>0.10) is not significant. Therefore, mediation cannot occur in this situation. Furthermore, the relationship is negative, while a positive relationship was expected. It could be concluded that previous employers are not more likely to act innovative which consequently positive influences their success.
Previous employed individuals
Hypothesis 4b states that previously employed people are more likely to act innovative which positively influences their success as a solo self-employed. This hypothesis is not confirmed by the results of the research. Previously employed people are negatively related to product innovation (t=-0.725, p>0.10) and positively related to process innovation (t=0.731, p>0.10). However, both relationships are not significant. Therefore, innovation is not a mediator with regard to the relationship between previously employed people and their success as a self-employed.
Previous students
Students are believed (H4c) to act less innovative which negatively influences their success as a solo self-employed. Students turn out to be positively related to both product innovation (t=1.884, p<0.10) and process innovation (t=0.366, p>0.10). However, the last relationship is not significant. Therefore, process innovation cannot be a mediating variable. The direct relationship between previous students and their monthly net income becomes a bit weaker after adding the product innovation variable. However, a Sobel test indicates that this variable is not a mediator (t=-1.550, p>0.10). The relationship between previous students and non-financial success turned out to be insignificant, which means that mediation cannot occur. Hypothesis 4c cannot be confirmed given the results.
Previous unemployed people
37
(t=1.503,p>0.10) and negatively related to process innovation (t=-1.035,p>0.10). However, both relationships are insignificant. Therefore, mediation cannot occur in this situation. 5. Discussion
The final conclusions of this research will be provided in this section. Furthermore, the contributions to existing theories or frameworks will be discussed, as well as policy implications, limitations and directions for future research.
5.1 Conclusions with regard to the different groups of solo self-employed. Previous employers
Individuals who were previously employers were hypothesized to be positively related to success as a solo self-employed. The regression analyses showed that this relationship is not significant with regard to the financial measures of success. There is literature which suggests that previous employers are likely to be successful as solo self-employed. However, other literature suggests that having prior managerial experience or prior business ownership does not influence the likelihood of being more successful (Cooper et al. 1994; Storey 1994; Schutjens & Wever 2002; Capelleras & Greene 2008; Bosma et al. 2004). The main argument is that having prior business experience is not related to entrepreneurial talent (Jovanovic, 1982).
Motivation is not a mediator of the relationship between previous employers and success. The relationship between previous employers and the motivation variable is positive, though not significant. Meager (1992) states that individuals who were working before they entered solo self-employment are generally pulled to self-employment. This relationship is not proven in this research. Therefore, it could be concluded that previously been an employer does not automatically lead to a pull motivation with regard to entering solo self-employment.
38
Innovation was expected to positively influence the financial success of solo self-employed individuals (Thurik et al.,2008). However, product innovation is only positive related to non-financial success. The relationship with non-financial success is negative. On the other hand, the relationship between process innovation and financial success is not significant (negative) and the relationship with non-financial success is positive. Therefore, it could be concluded that innovation does not automatically lead to better performance. This is in line with Li and Atuahene-Gima (2001), who describe this relationship as inconclusive and mixed. Furthermore, the finding with regard to product innovation is consistent with the work of Roper (1999) and Freel and Robson (2000) who reported that product innovation negatively influences performance. Mediation does not occur with regard to the relationships between previous employers and financial- and non-financial success. Namely, previous employers are not significantly related to both forms of innovation. Moreover, the sign of the relationship is negative, which is not consistent with the findings of Shane (2009). Shane found that individuals who were working before they entered solo self-employment are positively related to innovative behaviour.
Previous employed individuals
Previous employed individuals are positively related to financial success as a solo self-employed. However, the relationship with the desire to remain solo self-employed is not significant. Moreover, this relationship turns out to be negative, while a positive relationship was expected. Bruce and Schuetze (2004) found that successful entrepreneurs are more likely to successfully return to the labour market, which means that they find a proper job. This could explain the negative sign of the relationship between previous employed people and the desire to remain solo self-employment.
39
The relationship between previously employed people and financial capital turned out to be insignificant, which means that mediation cannot occur. Furthermore, the sign of the relationship is negative, instead of the expected positive sign. Evans and Jovanovic (1989) state that people who were previously employed are likely to have a financial buffer. The results of this research cannot confirm their findings.
Previous employed people turn out to be not more likely to act innovative. The relationship between previously employed people and product innovation is negative, while the relationship with process innovation is positive. However, both relationships are not significant. According to Shane (2009) previous employed people act often innovative. The findings with regard to product innovation are not consistent with this. Storey and Greene (2010) state that there is a lot of uncertainty related to innovation. It often requires an investment, while it is not sure whether the innovation will work out and the investment will pay off. The results of this research showed that previously employed people are negatively (not significant) related to having a financial buffer. This could be an explanation for the negative sign of product innovation.
Previous students
Previous students are negatively related to financial success, as was expected in the theoretical framework. However, the relationship with non-financial success is not significant, and negative instead of the expected positive relationship. Students often have a lot of other opportunities in the labour market (Franke & Lüthje,2004) which could be an explanation for this issue. Furthermore, this research shows that push factors are more important for students compared to pull factors. Individuals who are pushed into self-employment generally perform worse and are more likely to transit to another labour market status (Hinz & Jungbauer-Gans, 1999) which could explain the negative sign of the relationship.
40
Having a financial buffer is not a mediator of the relationship between previous students and success as a solo self-employed. Namely, the relationship between previous students and having a financial buffer is not significant. The sign of the relationship is negative, which is in line with Evans and Jovanovic (1989). However, it could not be concluded that previous students are negatively related to having a financial buffer.
Previous students turn out to be positively related to both product- and process innovation. However, only the relationship with product innovation is significant. Students were expected to be negatively related to innovative behaviour, because of the heavy investments and risks related to innovation (Storey & Greene, 2010). A reason for this could be that this group of people is willing to take the risks and acts innovative in order to differentiate themselves from competitors (Tan, 2001). However, product innovation is not a mediator of the relationship between previous students and success, as the influence of the innovation variable is not strong enough.
Previous unemployed individuals
Previously unemployed individuals are negatively related to both financial- and non-financial success. The relationship between previously unemployed people and non-financial success was expected to be positive. However, the opposite is the case. The reason for this could be that the bad financial performance of these individuals negatively influences their satisfaction, which consequently leads to quitting self-employment (Bruce & Schuetze, 2004). Furthermore, the results of this research show that previously unemployed people are generally pushed into self-employment, which positively influences the likelihood of moving to another labour market status in the future (Hinz & Jungbauer-Gans, 1999).
41
A previous unemployment status is negatively related to having a financial buffer. Financial buffer is a mediator of the relationship between previously unemployed people and non-financial success, which is consistent with the literature. Having a non-financial buffer is not a mediator of the relationship between previously unemployed people and financial success as it does not weaken the direct effect between a previous unemployment status and the monthly net income.
Innovation is not a mediator of the relationship between previously unemployed people and their success as a solo self-employed. The relationship between a previous unemployment status and product innovation is positive, while the relationship with process innovation is negative. However, both relationships are not significant. Therefore, no further conclusions could be drawn from these results.
5.2 Contributions to literature 5.2.1 Utility theory
