Entrepreneurial choice: a financial approach

Journal title ECONOMIA E POLITICA INDUSTRIALE
Author/s Pierpaolo Pattitoni, Barbara Petracci, Marco Savioli, Lorenza Zirulia
Publishing Year 2013 Issue 2013/3 Language Italian
Pages 21 P. 71-91 File size 290 KB
DOI 10.3280/POLI2013-003003
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Entrepreneurship and the creation of new businesses are two key drivers of economic growth and innovation of industries, regions and countries. The paper presents a model of entrepreneurial choice based on the modern portfolio theory. The model has been further developed to take account of the non-marketable nature of business opportunities, given that, traditionally, financial assets are treated as marketable. The extended model indicates that Jensen’s alpha influences the decision of whether or not to launch an entrepreneurial activity. However, Jensen’s alpha depends not only on the entrepreneurial opportunity and efficient portfolio returns, but also on their covariance. In other words, our model emphasizes the importance of factoring in the relationship between the entrepreneurial opportunity and the economy as a whole, an aspect that previous analyses have largely ignored.

Keywords: Entrepreneurship, portfolio choices, investment decisions

Jel codes: L26, G11

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Pierpaolo Pattitoni, Barbara Petracci, Marco Savioli, Lorenza Zirulia, La scelta imprenditoriale: un approccio finanziario in "ECONOMIA E POLITICA INDUSTRIALE " 3/2013, pp 71-91, DOI: 10.3280/POLI2013-003003