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The Quality of Entrepreneurs

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  • Hvide, Hans K.
Abstract
What determines the quality of entrepreneurs? To address this question, the paper proposes a simple model of the interaction between individual workers? decision to become entrepreneurs and established firms? effort to keep their best workers and ideas. The main prediction from the model is that larger firms produce entrepreneurs of higher quality than smaller firms. I also find that, making firm size endogenous, stronger property rights protection makes the optimal firm size larger. Using novel and unique Norwegian data, I obtain results that are consistent with previous employer size exerting a noticeable influence on entrepreneurial performance. For example, increasing previous employer size from the 25 percent quartile to the 75 percent quartile increases yearly operating returns on assets by 6 percentage points.

Suggested Citation

  • Hvide, Hans K., 2005. "The Quality of Entrepreneurs," CEPR Discussion Papers 4979, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4979
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    More about this item

    Keywords

    entrepreneurship; Ipp; Start-ups; Property rights; Private benefits;
    All these keywords.

    JEL classification:

    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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