Selection and Serial Entrepreneurs
AbstractThis paper develops and tests a model that explains entry into serial entrepreneurship and the performance of serial entrepreneurs as the result of selection on innate ability. The model supposes that agents establish businesses with imperfect information about their entrepreneurial ability and the profitability of business ideas. Agents continually observe signals with which they update their beliefs, and this process eventually determines their next business choice. Selection on ability induces a positive correlation between entrepreneurial experience (measured by previous business earnings and founding experience) and serial business formation, as well as its subsequent performance. The predictions in the model are tested using panel data from the NLSY79. The analysis permits a distinction to be made between selection on innate ability and learning by doing.
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Bibliographic InfoPaper provided by Florida International University, Department of Economics in its series Working Papers with number 0913.
Length: 32 pages
Date of creation: Sep 2009
Date of revision:
Serial entrepreneurs; selection; ability; entrepreneurial experience; learning by doing.;
Find related papers by JEL classification:
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-17 (All new papers)
- NEP-CTA-2009-10-17 (Contract Theory & Applications)
- NEP-ENT-2009-10-17 (Entrepreneurship)
- NEP-HRM-2009-10-17 (Human Capital & Human Resource Management)
- NEP-SBM-2009-10-17 (Small Business Management)
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