The knowledge economy is a key driver for economic growth and generating employment, and new firms are a main source for high dynamics in the industry. This article focuses on the significance of single-person businesses in the knowledge economy. In particular, we analyse to what extent single-person start-ups grow in the first years after market entry, thus contributing to growth in employment, and which factors determine the probability to remain a single-person firm. The analysis rests on data collected in four different surveys of young firms in the knowledge economy in Austria and Germany founded in the period 1995 to 2005. The share of single-person start-ups is 38 percent in Austria, which is slightly higher than in Germany (34 percent). After 7 years of business activity, every second single-person start-up kept its status in either of the countries. Single-person start-ups are more likely to remain alone if they belong to the IT or media business, if they do not conduct in-house R&D, if they did not receive public funding, and if they started their business as a non-incorporated firm. Besides, there are entrepreneur-related factors, which increase the probability to remain a single-person firm: Women, mature entrepreneurs and non-graduates are more likely to stay alone.
Metzger, Georg and Christian Rammer (2007), Ein-Personen-Gründungen in der Wissenswirtschaft: Wer bleibt alleine? - Ein Vergleich zwischen Österreich und Deutschland, Wirtschaftpolitische Blätter 3/2007, 425-444. Download