Measuring Necessity Entrepreneurship: Challenges and Implications

Abstract – Over the past two decades, the dichotomy of necessity entrepreneurship (NE) versus opportunity entrepreneurship (OE) has become a prevalent framework driven by data from the Global Entrepreneurship Monitor (GEM). However, accurately measuring NE remains challenging due to the aggregated nature of these data and the lack of standalone, validated scales. In this study, we conducted two empirical investigations: the first attempted to measure NE and OE as separate constructs, revealing significant measurement issues; the second aimed to validate a single entrepreneurial motivation scale that incorporates elements of both NE and OE. Data were collected from entrepreneurs in Ghana and Côte d’Ivoire, utilizing a combination of surveys and in-person interviews. Our findings suggest that NE and OE are better conceptualized as existing along a continuum, rather than as distinct categories. The validated scale offers a more nuanced measurement tool, enhancing research accuracy and policy efficacy in transitioning individuals from NE to OE. By integrating both necessity and opportunity elements into a single scale, this research provides a foundation for more refined investigations into entrepreneurial behavior in developing contexts and highlights the need for future studies to consider the interplay of multiple motivational factors in shaping entrepreneurial outcomes.