Entrepreneurship, Human Capital, and Labor Demand: A Story of Signaling and Matching

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Abstract: Contrary to employees, there is no clear evidence that entrepreneurs' education positively effects income. In this study we propose that entrepreneurs can benefit from their education as a signal during the recruitment process of employees. This process is then assumed to follow a matching of equals among equals. Using rich data from Germany and Denmark we fully confirm a matching on qualification levels for high-skilled employees, partially for medium-skilled employees but not for low-skilled employees, suggesting that as skill levels of employees decrease it becomes equally probable that they work for different founders. Founder qualification is the most reliable predictor of recruitment choices over time. Our findings are robust to numerous control variables as well as across industries and firm age. Terms of use: Documents in

My first employee: an empirical investigation

“…Overall, not only is a strong founder profile important for attracting the first employee, but it is also important for the subsequent chance of high profits. This could be due to more talented founders being able to attract better employees, which is supported by Dahl and Klepper (2016) and Bublitz et al (2015). In addition, male founders are more likely to enjoy high post-hire profits.…”

“…Higher-quality entrepreneurs, or entrepreneurs that can signal high quality (e.g. based on education and previous entrepreneurial and work experience), are expected to attract betterquality employees into the organization (Bublitz et al 2015). The fact that a new venture survives the initial phases also has a signalling value; consequently, as demonstrated by Andersson and Wadensjo (2007), ''the probability of having employees increases with time spent in self-employment'' (Andersson and Wadensjo 2007, p. 616).…”

The organizational design of entrepreneurial ventures

“…However, there is a growing literature emphasizing other managerial practices, especially hiring. Indeed, scholars agree that attracting talented individuals when ventures are in a very early stage of development plays a crucial role in determining their success and growth, or failure (Bublitz, Nielsen, Noseleit, & Timmermans, ; Colombo, Piva, & Rossi‐Lamastra, ; Fairlie & Miranda, ; Vanacker & Forbes, ). In this area, bridging the individual and firm levels of analysis seems again a very promising research avenue.…”

Habitual entrepreneurs in the making: how labour market rigidity and employment affects entrepreneurial re-entry

“…Employed individuals will respond differently to regulatory rigidity primarily because the costs and benefits from occupational changes differ from those that are not employed (Amit et al 1995). Whilst being employed results in higher opportunity costs than not being employed when re-entering into entrepreneurship, having a job upon entry may also serve to alleviate liquidity constraints (Petrova 2012) and may signal ability since foregoing paid employment under strict labour market regulations is a decision likely to be well thought through (Bublitz et al 2015). We suggest that these factors make employed ex-entrepreneurs more likely to become habitual entrepreneurs.…”

“…Stable income from employment allows individuals to have a transition stage from part-time to full-time entrepreneurship and may serve to alleviate liquidity constraints in the early stage of the new venture (Colombo and Grilli 2007;Petrova 2012;Frid et al 2016). Furthermore, having paid employment sends signals of ability which is important for potential stakeholders when launching a new venture (Bublitz et al 2015). Empirical findings by Bosma and Schutjens (2009) and Ardagna and Lusardi (2010) support the notion that employment status plays a role in the decision of becoming an entrepreneur: unemployed individuals, students, and retired individuals are overall less likely to become entrepreneurs than employed individuals are.…”