Skill Variety, Innovation and New Business Formation
AbstractWe extend Lazear's theory of skills variety and entrepreneurship in three directions. First, we provide a theoretical framework linking new business creation with an entrepreneur's skill variety. Second, in this model we allow for both generalists and specialists to possess skill variety. Third, we test our model empirically using data from Germany and the Netherlands. Individuals with more varied work experience seems indeed more likely to successfully start up a new business and that being a generalist does not seem to be important in this regard. Finally, we find that innovation positively moderates the relationship between having varied experiences, and being successful in starting up a new business. Our conclusion is that entrepreneurs with more varied work experience are more likely to introduce innovations that have not only technical, but also commercial value. Our findings support the notion that entrepreneurship can be learned.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7889.
Length: 38 pages
Date of creation: Jan 2014
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Find related papers by JEL classification:
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-01-24 (All new papers)
- NEP-CSE-2014-01-24 (Economics of Strategic Management)
- NEP-ENT-2014-01-24 (Entrepreneurship)
- NEP-INO-2014-01-24 (Innovation)
- NEP-KNM-2014-01-24 (Knowledge Management & Knowledge Economy)
- NEP-LMA-2014-01-24 (Labor Markets - Supply, Demand, & Wages)
- NEP-SBM-2014-01-24 (Small Business Management)
- NEP-TID-2014-01-24 (Technology & Industrial Dynamics)
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