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Entrepreneurship turnover and endogenous returns to ability

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Author Info

  • Patricia Crifo

    (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, Université Catholique de Louvain - Université Catholique de Louvain)

  • Hind Sami

    ()
    (COACTIS - Université Lumière - Lyon II : EA4161 - Université Jean Monnet - Saint-Etienne)

Abstract

This 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 Info

Paper provided by HAL in its series Post-Print with number halshs-00522814.

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Date of creation: 2008
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Publication status: Published, Economic Modelling, 2008, 25, 4, 585–604
Handle: RePEc:hal:journl:halshs-00522814

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00522814/en/
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Related research

Keywords: Entrepreneur entry and exit; Technological change; Selection; Stigma;

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Cited by:
  1. 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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