Workplace Flexibility and Entrepreneurship

By AGARWAL Sumit and SING Tien Foo, National University of Singapore

SONG Changcheng, Singapore Management University

ZHANG Jian, Hong Kong Baptist University

One of the ongoing IREUS research projects is on the study of entrepreneurships following the introduction of the Home Office Scheme (HOS) in 2011. The research team comprising Sumit Agarwal and Tien Foo Sing from NUS, Song Changcheng from Singapore Management University and Zhang Jian from Hong Kong Baptist University. The study shows that the HOS has effectively promoted business creation activities, especially those businesses permitted to operate in residential properties.

Working at home benefits workers with low fixed costs and the ability to engage in joint market and household production. IREUS research team evaluates a large-scale reform in Singapore that allows the possibility of business creation at one’s residential property and study whether the option of home-based entrepreneurship spurs entrepreneurial activities. Difference-in-difference estimate shows that the reform leads to a significantly higher level of business creation. The effect is more pronounced for low-income individuals, implying that financial constraint is a barrier for firm creation. Additional new firms in response to the reform have a higher survival rate, choose industries with higher productivity and lower risk. The reform also encourages entrepreneurs to become serial entrepreneurs, and they open a larger business with similar survival rate for their second firm. These results show that the home office scheme effectively spurs entrepreneurial activities and attracts more entry into self-employment without significantly lowering the average quality of the pool. We also exploit the regional variation in the residential land density to assess the impact on aggregate economic outcomes. Regions more exposed to the reform experience higher rate of price growth.

Working Paper

Workplace Flexibility and Entrepreneurship

 

Media Coverage

Press Release

“NUS Business School study: Home-based entrepreneurship promotes firm creation and serial entrepreneurship especially for HDB owners”

 

 

“Home Office Scheme pushed home-based businesses to grow 23%: study”, Singapore Business Review, 7 March 2019

 

 

The story was reported by Singapore Business Review on 7 March 2019 (https://sbr.com.sg/residential-property/news/home-office-scheme-pushed-home-based-businesses-grow-23-study), and Professor Sumit Agarwal was also interviewed on radio FM89.5on the Money Mind on the theme “Having the Right Focus” by Channel News Asia on 25 March 2019 (https://www.channelnewsasia.com/news/video-on-demand/money-mind-fy1819/having-the-right-focus-11376052)