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My first employee: an empirical investigation

Author

Listed:
  • Alex Coad

    () (University of Sussex
    European Commission, Joint Research Centre (JRC))

  • Kristian Nielsen

    (Aalborg University)

  • Bram Timmermans

    (Aalborg University
    Agderforskning
    Norwegian School of Economics)

Abstract

Abstract The challenge for solo entrepreneurs to add their first employee is arguably the single biggest growth event facing any growing firm. To understand how this event affects performance, and the antecedents of hiring, we analyse Danish matched employer–employee data. Those who hire enjoy superior sales outcomes in subsequent years, while the dispersion in profits increases. Furthermore, those that hire enjoy faster sales growth in the previous year, suggesting that sales growth precedes the first hire. Finally, we show that founders with a stronger profile in terms of education and previous income are more likely to increase profits, while the characteristics of the employee are less important. The latter finding is important from a job creation perspective, in light of the suggested sorting of more marginalized employees into new and established firms.

Suggested Citation

  • Alex Coad & Kristian Nielsen & Bram Timmermans, 2017. "My first employee: an empirical investigation," Small Business Economics, Springer, vol. 48(1), pages 25-45, January.
  • Handle: RePEc:kap:sbusec:v:48:y:2017:i:1:d:10.1007_s11187-016-9748-3
    DOI: 10.1007/s11187-016-9748-3
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    References listed on IDEAS

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    1. repec:sae:ilrrev:v:72:y:2019:i:5:p:1123-1148 is not listed on IDEAS
    2. Daniel Fackler & Michaela Fuchs & Lisa Hölscher & Claus Schnabel, 2019. "Do Start-ups Provide Employment Opportunities for Disadvantaged Workers?," ILR Review, Cornell University, ILR School, vol. 72(5), pages 1123-1148, October.
    3. Hausmann, Ricardo & Neffke, Frank M.H., 2019. "The workforce of pioneer plants," Research Policy, Elsevier, vol. 48(3), pages 628-648.
    4. Tommaso Ciarli & Mattia Di Ubaldo & Maria Savona, 2019. "Innovation and Self-Employment," SPRU Working Paper Series 2019-17, SPRU - Science Policy Research Unit, University of Sussex Business School.
    5. repec:iab:iabdpa:201818 is not listed on IDEAS
    6. repec:msn:rfjrnl:v:4:y:2019:i:7:p:32-40 is not listed on IDEAS
    7. repec:eee:jbrese:v:90:y:2018:i:c:p:107-122 is not listed on IDEAS
    8. Daunfeldt, Sven-Olov & Gidehag, Anton & Rudholm, Niklas, 2018. "Corporate tax evasion and unreported wages: The effect of compulsory staff registers," HUI Working Papers 129, HUI Research.

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