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Business owners, employees, and firm performance

Author

Listed:
  • Mika Maliranta

    (The Research Institute of the Finnish Economy ETLA & University of Jyväskylä)

  • Satu Nurmi

    (Statistics Finland & The Research Institute of the Finnish Economy ETLA)

Abstract

The novel Finnish Longitudinal OWNer-Employer-Employee (FLOWN) database was used to analyze how the characteristics of owners and employees relate to firm performance as determined by labor productivity, survival, and employment growth. Focusing on the role of the employment history, the results show that previous experience in a high-productivity firm strongly predicts high productivity and probability of survival for the entrepreneur’s new firm. This can be interpreted as evidence of knowledge spillovers through labor mobility of both the owners and the employees. The results also show that the owner’s high education in a technical field is positively related to firm performance. Different findings for owner-entrepreneurs and pure owners suggest that the definition of entrepreneurship matters.

Suggested Citation

  • Mika Maliranta & Satu Nurmi, 2019. "Business owners, employees, and firm performance," Small Business Economics, Springer, vol. 52(1), pages 111-129, January.
    • Handle: RePEc:kap:sbusec:v:52:y:2019:i:1:d:10.1007_s11187-018-0029-1
    DOI: 10.1007/s11187-018-0029-1
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    More about this item

    Keywords

    Entrepreneurship; Ownership; Firm performance; Human capital; Diffusion of knowledge;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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