Can Former Entrepreneurs Sucessfully Compete in the Job Market?

Can former entrepreneurs compete successfully in today's market? A new study ex-business owners are penalized when it comes to winning job interviews based only on a resume submission in answer to a job advertisement. But from this side, we've seen plenty of success for MSPs who have sold their businesses and moved onto a new phase in their careers. Here are the details of the study and why those who sell may be a cut above.

Jessica Davis

July 30, 2013

3 Min Read
Can Former Entrepreneurs Sucessfully Compete in the Job Market?

Can former entrepreneurs put themselves back on the job market? Certainly there are some former managed services providers have gone onto successful careers as employees at vendor companies after selling their own businesses. And others have started new businesses. But re-entering the job market may not be so easy for some.

A new study from the Academy of Management shows that entrepreneurs who go back on the job market have a tougher time finding a new gig than other workers applying for the same jobs.  The AOC conducted a field experiment which revealed that former entrepreneurs received 63 percent fewer positive responses, such as invitations to job interviews, from potential employers than wage earner applicants received.

“Our results leave little doubt that entrepreneurs experience adverse treatment… The choice to become an entrepreneur can result in an involuntary lock-in, a factor that should be taken into account in planning one’s future career,” authors of the study wrote.

The organization attributed the results to  the following possible causes:

  1. Irrational discrimination;

  2. Qualities conducive to entrepreneurial success (for example, bias for risk-taking) differ from those conducive to success in traditional company careers; and

  3. Big companies require different social and political skills than small enterprises do.

What if you sold your business?

Now, your mileage may vary. The MSPs I know who have gone on to successful careers as employees have sold their businesses and worked their connections to find their next adventures. It’s not clear to me from the study whether the “entrepreneurs” who applied for jobs indicated to the potential employers whether they were successful in their businesses and sold them or whether they pulled the plug after an unsuccessful run at it.

How the researchers did their research

The field experiment was conducted over a period of two years. It consisted of sending pairs of resumes and cover letters to employers or recruitment agencies in response to actual job offerings. The experiment was conducted in the UK because job applications there don’t typically require anything beyond a resume or CV (as opposed to applications in other countries where references, certification documentation and other information is often required).

While the job postings were real, the applicants were fictitious – invented by the researchers conducting the study — and were evenly divided between male and female. Each pair of “applicants” was provided with equivalent education, work experience and professional affiliations.

Out of a total of 192 applications, 95 got no response and 75 got negative responses. Of the 22 positive responses (transmitted by e-mail or voice-mail messages), 6 were for applicants from the self-employed group and 16 for wage earners. Statistical analysis indicates this difference to be significant, with only a 2 percent probability that it is due to chance, according to the AOM.

The disparity between self-employed and wage earners was sharper among men than women. Of the 15 positive responses to male applicants, 12 went to wage earners and only 3 to self-employed; among women, the comparable numbers were 4 and 3.

Researchers will present the paper “Self-Employed But Looking: A Labor Market Experiment,” at the Academy of Management annual meeting in Orlando, Fla., Aug. 9-13.

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About the Author(s)

Jessica Davis

Jessica Davis is the former Content Director for MSPmentor. She spent her career covering the intersection of business and technology.  She's also served as Editor in Chief at Channel Insider and held senior editorial roles at InfoWorld and Electronic News.

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