Entrepreneurship turnover and endogenous returns to ability
AbstractThis paper proposes a model of entrepreneurial turnover highlighting a non-monotone relationship between technological change and ability-biased sorting into entrepreneurial types. Entrepreneurial decisions are examined in a two-stage model under uncertainty in which entrepreneurs decide to abandon a project and start a new venture depending on technological change and on ability. We show that technological change affects the quality distribution of entrepreneurship by increasing the ex-ante number of entrepreneurs undertaking the most efficient projects and decreasing the post-entry number of entrepreneurs of low-quality firms who choose to continue their initial business. A higher rate of technological change is therefore likely to induce a cleansing effect on entrepreneurial activity and to alter the market perception of business creation.
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Bibliographic InfoPaper provided by HAL in its series Post-Print with number halshs-00522814.
Date of creation: 2008
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Publication status: Published, Economic Modelling, 2008, 25, 4, 585–604
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00522814/en/
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Entrepreneur entry and exit; Technological change; Selection; Stigma;
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- André van Stel & José Maria Millán & Concepcion Roman, 2013. "Investigating the impact of the technological environment on survival chances of employer entrepreneurs," Scales Research Reports, EIM Business and Policy Research H201208, EIM Business and Policy Research.
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