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The Quality of Entrepreneurs

Listed author(s):
  • Hvide, Hans K

What determines the quality of entrepreneurs? To address this question, the paper proposes a simple model of the interaction between individual workers’ decision to become entrepreneurs and established firms’ effort to keep their best workers and ideas. The main prediction from the model is that larger firms produce entrepreneurs of higher quality than smaller firms. I also find that, making firm size endogenous, stronger property rights protection makes the optimal firm size larger. Using novel and unique Norwegian data, I obtain results that are consistent with previous employer size exerting a noticeable influence on entrepreneurial performance. For example, increasing previous employer size from the 25 percent quartile to the 75 percent quartile increases yearly operating returns on assets by 6 percentage points.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4979.

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Date of creation: Mar 2005
Handle: RePEc:cpr:ceprdp:4979
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  28. Hvide, Hans K & Leite, Tore, 2004. "Capital Structure under Imperfect Enforcement," CEPR Discussion Papers 4757, C.E.P.R. Discussion Papers.
  29. Beck, Thorsten & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2002. "Financial and legal constraints to firm growth - Does size matter?," Policy Research Working Paper Series 2784, The World Bank.
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