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4. Conclusions

Using data from the confidential and restricted-access Characteristics of Business

Owners (CBO) Survey, we provide some suggestive evidence on the underlying causes

of intergenerational links in self-employment and the related issue of how having a

family business background affects small business outcomes. Estimates from the CBO

indicate that more than half of all business owners had a self-employed family member

prior to starting their business. Conditional on having a self-employed family member,

less than half of small business owners worked in that family member's business

suggesting that it is unlikely that intergenerational links in self-employment are due

solely to the acquisition of general and specific business capital and that similarities

across family members in entrepreneurial preferences may explain part of the

relationship.

In contrast, estimates from regression models for small business outcomes

conditioning on business ownership indicate that having a self-employed family member

plays only a minor role relative to prior work experience in that family member's

business. We find that the coefficient estimates on the dummy variable indicating

whether the owner had a family member who owned a business are small and statistically

insignificant in all of the specifications for small business outcomes, except for the

closure probability equation. Working in this family member's business, however, has a

large, positive and statistically significant effect in all specifications. The inclusion of

controls for similar business work experience and management experience in the

regressions suggests that the positive coefficient estimates on working for a self-

employed family member are not simply capturing the effects of management experience

business.

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