Preparation Behaviors' Affecting Young Entrepreneurs' Start-up Survival in Korea: A Focus on the Mediation Effects of Job-Satisfaction and Person-Job Fit

Background/Purpose: Due to the continued economic depression in Korea, many young people have started micro-enterprises as an alternative to seeking employment. However, young people tend not to have enough entrepreneurial preparation as the start-ups are often involuntary. Consequently, the survival rate of youth-owned micro-enterprises is only 30% within 5 years, which is lower than the rate for adult-owned enterprises, 58%. More importantly, their low survival rate can be a high risk that forces the youth into defaulting on their debt or joining low-income groups. To promote higher survival rates of youth-owned enterprises, this study explored preparation behavior factors affecting the survival rates through emotional job factors, and suggested relevant policies.

Methods: The data used in this study came from the Youth Panel (YP) that is a longitudinal research for young people aged 15-29 all over country. The seventh YP in this study sample included 260 people who continued their businesses or not until the ninth year. For structural equation model (SEM), AMOS 20.0 was used and the dependent variable was survival or not. The independent variables in this study included education, motivation, previous start-up experience, and entrepreneurial training as the planned behavior perspectives. The intervening variables were a internal job_satisfaction including social contribution, self-development and prospects; and a external job_satisfaction including income and stability as motivation-hygiene theory; and person-job fit.

Results: First, the results showed that the preparation behaviors’ that directly determined survival were motivation, experience and entrepreneurial training excluding only education. Motivation and experience had positive effects, in the case of entrepreneurial training, there were also negative effects, which meant that trained youth entrepreneurs had lower survival rates. Second, to explore the mediation effects, education, which had no direct effect, had an indirect effect on survival through internal job_satisfaction, while motivation, which had direct appeared, appeared to have an indirect effect through internal job_satisfaction. However, entrepreneurial training and experience, which had direct effects on survival, did not show any indirect effects.

Conclusions and Implications: On the basis of the research, the relevant policies for promoting the survival of youth-owned businesses are as follows. First, there were different survival effects depending on whether or not the start-up was by voluntary entrepreneurship. The recent increase in the necessity of start-ups (involuntary entrepreneurship) produced a higher risk of business failure. Thus, policies that focus on the necessity of youth start-ups for economic reasons should be established immediately. Second, experiences that had a positive effect on survival should be encouraged, including opportunities for similar indirect experiences such as one-to-one business mentoring and entrepreneurial simulations. Third, because of the negative effects of training on the current survival rates, entrepreneurial training programs should be improved. The research revealed that trained youth entrepreneurs were more vulnerable, and so training programs have to be reformed to be more useful for solving practical   field issues. Finally, internal job_satisfaction factors such as social contribution, self- development and prospects were more important for youth entrepreneurs. Therefore, supporting system and methods for start-ups should be designed to reflect this.