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Skill Variety, Innovation and New Business Formation

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Author Info

  • Hessels, Jolanda

    ()
    (Erasmus University Rotterdam)

  • Brixy, Udo

    ()
    (Institute for Employment Research (IAB), Nuremberg)

  • Naudé, Wim

    ()
    (Maastricht University)

  • Gries, Thomas

    ()
    (University of Paderborn)

Abstract

We 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 Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7889.

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Length: 38 pages
Date of creation: Jan 2014
Date of revision:
Handle: RePEc:iza:izadps:dp7889

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Related research

Keywords: entrepreneurship; start-ups; human capital; innovation; skills;

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References

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  1. Silva, Olmo, 2006. "The Jack-of-All-Trades Entrepreneur: Innate Talent or Acquired Skill?," IZA Discussion Papers 2264, Institute for the Study of Labor (IZA).
  2. Gries,Thomas & Naudé, Wim, 2010. "Entrepreneurship and Human Development: A Capability Approach," Working Paper Series wp2010-68, World Institute for Development Economic Research (UNU-WIDER).
  3. Dean Karlan & Martin Valdivia, 2011. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 510-527, May.
  4. Stuetzer, Michael & Goethner, Maximilian & Cantner, Uwe, 2012. "Do balanced skills help nascent entrepreneurs to make progress in the venture creation process?," Economics Letters, Elsevier, vol. 117(1), pages 186-188.
  5. Erik Hurst & Benjamin Wild Pugsley, 2011. "What do Small Businesses Do?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(2 (Fall)), pages 73-142.
  6. Vesa Kanniainen & Panu Poutvaara, 2007. "Imperfect Transmission of Tacit Knowledge and other Barriers to Entrepreneurship," CESifo Working Paper Series 2053, CESifo Group Munich.
  7. J. Wagner, 2003. "Testing Lazear's jack-of-all-trades view of entrepreneurship with German micro data," Applied Economics Letters, Taylor & Francis Journals, vol. 10(11), pages 687-689.
  8. Wagner, Joachim, 2003. "Are Nascent Entrepreneurs Jacks-of-All-Trades? A Test of Lazear's Theory of Entrepreneurship with German Data," IZA Discussion Papers 911, Institute for the Study of Labor (IZA).
  9. Simon, Mark & Houghton, Susan M. & Aquino, Karl, 2000. "Cognitive biases, risk perception, and venture formation: How individuals decide to start companies," Journal of Business Venturing, Elsevier, vol. 15(2), pages 113-134, March.
  10. Rui Baptista & Murat Karaoez & Joana Mendonca, 2007. "Entrepreneurial Backgrounds, Human Capital and Start-up Success," Jena Economic Research Papers 2007-045, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  11. Toft-Kehler, Rasmus & Wennberg, Karl & Kim, Phillip, 2013. "Practice Makes Perfect: Entrepreneurial-Experience Curves and Venture Performance," Ratio Working Papers 210, The Ratio Institute.
  12. Edward P. Lazear, 2004. "Balanced Skills and Entrepreneurship," American Economic Review, American Economic Association, vol. 94(2), pages 208-211, May.
  13. Stuetzer, Michael & Obschonka, Martin & Davidsson, Per & Schmitt-Rodermund, Eva, 2013. "Where do entrepreneurial skills come from?," MPRA Paper 48274, University Library of Munich, Germany.
  14. Stuetzer, Michael & Obschonka, Martin & Schmitt-Rodermund, Eva, 2012. "Balanced skills among nascent entrepreneurs," MPRA Paper 37524, University Library of Munich, Germany.
  15. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
  16. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
  17. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521728355, Fall.
  18. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-48, August.
  19. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
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