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Firm Size and the Quality of Entrepreneurs

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  • Hvide, Hans K.

    () (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

Abstract

A theory is proposed where the pay policy and size of established firms are determined together with individual workers' entrepreneurship decision. The main results are twofold. First, taking the firm size as given, larger firms tend to have less flexible wages and produce entrepreneurs of higher quality than small firms. Second, making firm size edogenous, we find that stronger property rights makes the optimal firm size larger (and the average quality of entrepreneurs higher). To illustrate the theory, we consider two sources of evidence: data on the quality of entrepreneurs from a survey of Stanford MBA alumnus, and the evolution of firm size in the U.S. Software Industry after a recent strengthening in software patent protection. Both hypotheses receive encouraging support.

Suggested Citation

  • Hvide, Hans K., 2004. "Firm Size and the Quality of Entrepreneurs," Discussion Papers 2004/9, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2004_009
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    File URL: http://hdl.handle.net/11250/163668
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    References listed on IDEAS

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    1. Anton, James J & Yao, Dennis A, 1994. "Expropriation and Inventions: Appropriable Rents in the Absence of Property Rights," American Economic Review, American Economic Association, vol. 84(1), pages 190-209, March.
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    Cited by:

    1. Muendler, Marc-Andreas & Rauch, James E. & Tocoian, Oana, 2012. "Employee spinoffs and other entrants: Stylized facts from Brazil," International Journal of Industrial Organization, Elsevier, vol. 30(5), pages 447-458.
    2. Matthias Benz, "undated". "Entrepreneurship as a non-profit-seeking activity," IEW - Working Papers 243, Institute for Empirical Research in Economics - University of Zurich.

    More about this item

    Keywords

    Entrepreneurship; Innovation; IPP; Private benefits; Property Rights; Spin-offs; Start-ups;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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