The entrepreneurship fountain of youth: Younger management ranks generate more entrepreneurs

The present paper argues and tests the proposition that firms with older top and middle managers produce fewer entrepreneurs, because these firms offer less chances to their employees to enter managerial positions that provide valuable experience for entrepreneurship (rank effect theory). Empirical work using linked employer-employee microdata for Portugal support this. The rank effect is stronger in firms with older top managers. Employees who progress slower into managerial ranks are not pushed into entrepreneurship but are more likely to take on jobs as employees in other firms. Overall, our results suggest that firms with younger management ranks offer more chances for workers to enter managerial positions and, therefore, spawn more entrepreneurs.