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Although entrepreneurial market entry, through the start-up of new firms, has generated a substantial literature, there has been little formal modelling of the optimal timing of starting a firm. Yet research has shown that, in practice, the success of new firms can depend to a great degree on when they were started. Thus, it is valuable for potential entrepreneurs to wait for the right moment before starting a new firm.

UNU-WIDER Research Paper No. 2009/39, “When to Start a New Firm?: Modelling the Timing of Novice and Serial Entrepreneurs”, provides a theoretical model to determine the optimal time for starting a new firm.

Authors Thomas Gries (University of Paderborn) and Wim Naudé (UNU-WIDER) integrate insights from the real option theory with the theory on entrepreneurial market entry. An important and novel feature of their proposed model is that it allows the start-up timing decisions of novice and serial entrepreneurs to be distinguished.

The model may have practical value for refining policies towards start-ups, since the impact of entrepreneurs on economic growth and development may depend on them starting their firms at the optimal time.