Illegal entrepreneurship experience: Does it make a difference for business performance and motivation?

Ruta Aidis*, Mirjam van Praag

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review


Existing studies show a positive relationship between entrepreneurs' business performance and their conventional human capital as measured by previous business experience and formal education. In this paper, we explore whether illegal entrepreneurship experience (IEE), an unconventional form of human capital, is related to the performance and motivation of entrepreneurs operating legal businesses in a transition context. Using regression techniques on a sample of 399 private business owners in Lithuania, we find that, in general, IEE is significantly and positively associated with subjective measures of business motivation. Moreover, younger entrepreneurs benefit from their IEE in terms of business performance, indicating that they have been more successful than older entrepreneurs in transferring their IEE to a market oriented setting. In addition, IEE and business performance are positively related for entrepreneurs who started completely new legal businesses. Thus, our research partially supports the notion that prior experience in the black or gray market may signal and provide valuable human capital for legal enterprising.

Original languageEnglish
Pages (from-to)283-310
Number of pages28
JournalJournal of Business Venturing
Issue number2
Publication statusPublished - 1 Mar 2007
Externally publishedYes


  • Entrepreneurship
  • Human capital
  • Illegal entrepreneurship
  • Transition economy


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