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Balanced Skills and the City: An Analysis of the Relationship between Entrepreneurial Skill Balance, Thickness and Innovation

  • Elisabeth Bublitz

    ()

    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

  • Michael Fritsch

    ()

    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

  • Michael Wyrwich

    ()

    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

Being a "jack-of-all-trades" increases the probability of running an entrepreneurial venture successfully; but what happens to "jack-of-few-trades" who lack sufficient skills? This paper investigates a possible compensation mechanism between balanced skills and cities, and how this compensatory measure relates to performance. Specifically, we test and find support for the idea put forward by Helsley and Strange (2011) that high market thickness, such as that found in cities, can compensate for a lack of entrepreneurial skill balance. The results indicate that entrepreneurs with low skill balance benefit more from locating in cities than their counterparts with high skill balance. Innovative firms do not differ from other businesses in this respect.

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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2013-010.

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Date of creation: 26 Feb 2013
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Handle: RePEc:jrp:jrpwrp:2013-010
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  1. Catherine Armington & Zoltan Acs, 2002. "The Determinants of Regional Variation in New Firm Formation," Regional Studies, Taylor & Francis Journals, vol. 36(1), pages 33-45.
  2. Fritsch, Michael & Brixy, Udo & Falck, Oliver, 2004. "The effect of industry, region and time on new business survival: A multi-dimensional analysis," Freiberg Working Papers 2004,04, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
  3. Michael Fritsch & Oliver Falck, 2007. "New Business Formation by Industry over Space and Time: A Multidimensional Analysis," Regional Studies, Taylor & Francis Journals, vol. 41(2), pages 157-172.
  4. Unger, Jens M. & Rauch, Andreas & Frese, Michael & Rosenbusch, Nina, 2011. "Human capital and entrepreneurial success: A meta-analytical review," Journal of Business Venturing, Elsevier, vol. 26(3), pages 341-358, May.
  5. Silva, Olmo, 2006. "The Jack-of-All-Trades Entrepreneur: Innate Talent or Acquired Skill?," IZA Discussion Papers 2264, Institute for the Study of Labor (IZA).
  6. Stuart S. Rosenthal & William C. Strange, 2003. "Geography, Industrial Organization, and Agglomeration," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 377-393, May.
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  8. Michael Fritsch & Alexandra Schroeter, 2011. "Why does the effect of new business formation differ across regions?," Small Business Economics, Springer, vol. 36(4), pages 383-400, May.
  9. David B. Audretsch, 1995. "Innovation and Industry Evolution," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011468, June.
  10. Bosma, Niels & Hessels, Jolanda & Schutjens, Veronique & Praag, Mirjam Van & Verheul, Ingrid, 2012. "Entrepreneurship and role models," Journal of Economic Psychology, Elsevier, vol. 33(2), pages 410-424.
  11. Erik Stam, 2006. "Why Butterflies Don’t Leave. Locational behaviour of entrepreneurial firms," Papers on Entrepreneurship, Growth and Public Policy 2006-20, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  12. Edward P. Lazear, 2004. "Balanced Skills and Entrepreneurship," American Economic Review, American Economic Association, vol. 94(2), pages 208-211, May.
  13. Michael Storper & Anthony J. Venables, 2004. "Buzz: face-to-face contact and the urban economy," Journal of Economic Geography, Oxford University Press, vol. 4(4), pages 351-370, August.
  14. Wagner, Joachim, 2004. "Are Young and Small Firms Hothouses for Nascent Entrepreneurs? Evidence from German Micro Data," IZA Discussion Papers 989, Institute for the Study of Labor (IZA).
  15. Daniel W. Elfenbein & Barton H. Hamilton & Todd R. Zenger, 2010. "The Small Firm Effect and the Entrepreneurial Spawning of Scientists and Engineers," Management Science, INFORMS, vol. 56(4), pages 659-681, April.
  16. Elisabeth Bublitz & Florian Noseleit, 2014. "The skill balancing act: when does broad expertise pay off?," Small Business Economics, Springer, vol. 42(1), pages 17-32, January.
  17. SATO Yasuhiro & TABUCHI Takatoshi & YAMAMOTO Kazuhiro, 2012. "Market Size and Entrepreneurship," Discussion papers 12002, Research Institute of Economy, Trade and Industry (RIETI).
  18. J. Wagner, 2003. "Testing Lazear's jack-of-all-trades view of entrepreneurship with German micro data," Applied Economics Letters, Taylor & Francis Journals, vol. 10(11), pages 687-689.
  19. Uwe Cantner & Maximilian Goethner & Michael Stuetzer, 2010. "Disentangling the Effects of New Venture Team Functional Heterogeneity on New Venture Performance," Jena Economic Research Papers 2010-029, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  20. Helsley, Robert W. & Strange, William C., 1991. "Agglomeration economies and urban capital markets," Journal of Urban Economics, Elsevier, vol. 29(1), pages 96-112, January.
  21. Ari Hyytinen & Mika Maliranta, 2008. "When Do Employees Leave Their Job for Entrepreneurship?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(1), pages 1-21, 03.
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  23. Joachim Wagner, 2006. "Are nascent entrepreneurs 'Jacks-of-all-trades'? A test of Lazear's theory of entrepreneurship with German data," Applied Economics, Taylor & Francis Journals, vol. 38(20), pages 2415-2419.
  24. Thakur, Sanjay Prasad, 1999. "Size of investment, opportunity choice and human resources in new venture growth: Some typologies," Journal of Business Venturing, Elsevier, vol. 14(3), pages 283-309, May.
  25. Ucbasaran, Deniz & Westhead, Paul & Wright, Mike, 2009. "The extent and nature of opportunity identification by experienced entrepreneurs," Journal of Business Venturing, Elsevier, vol. 24(2), pages 99-115, March.
  26. Dirk Oberschachtsiek, 2012. "The experience of the founder and self-employment duration: a comparative advantage approach," Small Business Economics, Springer, vol. 39(1), pages 1-17, July.
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