Laid-off workers who become entrepreneurs because they cannot find meaningful employment with another company are known as entrepreneurs by necessity. The Wall Street Journal reports that these entrepreneurs by necessity are less likely to grow into large businesses than are entrepreneurs by choice (J. Bailey, "Desire-More Than Need-Builds a Business," The Wall Street Journal, May 21, 2001, p. B4). This article states that 89% of the entrepreneurs in the United States are entrepreneurs by choice and 11% are entrepreneurs by necessity. Only 2% of entrepreneurs by necessity expect their new business to employ 20 or more people within five years, whereas 14% of entrepreneurs by choice expect to employ at least 20 people within five years.
a. If an entrepreneur is selected at random and that individual expects that his or her new business will employ 20 or more people within five years, what is the probability that this individual is an entrepreneur by choice?
b. Discuss several possible reasons why entrepreneurs by choice are more likely than entrepreneurs by necessity to believe that they will grow their businesses.