Matching of Individuals for Start-Ups: A Test of the O-Ring Theory
In this paper I analyse how individuals match for for the purpose of setting up a new firm. As a theoretical basis I use the O-ring theory introduced by Kremer (1993) and applied to new firms by Fabel (2004). The O-ring theory predicts that individuals segregate between firms according to their level of ability. Further, the theory implies that a higher average ability level within firms is positively related to both the number of individuals and capital per head. Using a rich employer-employee data set on the whole population of Danish firms founded in 1998 most of the predictions of the O-ring theory are rejected. I find that individuals do not match with individuals with the same level of ability. Furthermore, ability and firm size turn out to be negatively correlated. There is only some support for the hypothesis concerning the positive relationship between ability and capital per head.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: L 7,1; D - 68161 Mannheim|
Web page: http://www.zew.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Susana Iranzo & Fabiano Schivardi & Elisa Tosetti, 2008.
"Skill Dispersion and Firm Productivity: An Analysis with Employer-Employee Matched Data,"
Journal of Labor Economics,
University of Chicago Press, vol. 26(2), pages 247-285, 04.
- S. Iranzo & F. Schivardi & E. Tosetti, 2006. "Skill dispersion and firm productivity: an analysis with employer-employee matched data," Working Paper CRENoS 200617, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- Iranzo, Susana & Schivardi, Fabiano & Tosetti, Elisa, 2006. "Skill Dispersion and Firm Productivity: An Analysis with Employer-Employee Matched Data," CEPR Discussion Papers 5539, C.E.P.R. Discussion Papers.
- Susanna Iranzo & Fabiano Schivardi & Elisa Tosetti, 2006. "Skill dispersion and firm productivity; an analysis with employer-employee matched data," Temi di discussione (Economic working papers) 577, Bank of Italy, Economic Research and International Relations Area.
- Milgrom, Paul & Roberts, John, 1995. "Complementarities and fit strategy, structure, and organizational change in manufacturing," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 179-208, April.
- Philipp Koellinger, 2008.
"Why are some entrepreneurs more innovative than others?,"
Small Business Economics,
Springer, vol. 31(1), pages 21-37, June.
- Koellinger, Ph.D., 2007. "Why Are Some Entrepreneurs More Innovative Than Others?," ERIM Report Series Research in Management ERS-2007-024-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
- Grossman, Gene & Maggi, Giovanni, 1998.
"Diversity and Trade,"
CEPR Discussion Papers
2005, C.E.P.R. Discussion Papers.
- John M. Abowd & Francis Kramarz & David N. Margolis, 1994.
"High Wage Workers and High Wage Firms,"
NBER Working Papers
4917, National Bureau of Economic Research, Inc.
- Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- David Margolis, 1995. "High Wage Workers and High Wage Firms," Post-Print halshs-00378229, HAL.
- John M. Abowd & Francis Kramarz & David N. Margolis, 1994. "High-Wage Workers and High-Wage Firms," CIRANO Working Papers 94s-23, CIRANO.
- John M. Abowd & Francis Kramarz & David Margolis, 1999. "High Wage Workers and High Wage Firms," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00353892, HAL.
- Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Universite de Montreal, Departement de sciences economiques.
- Charles Brown & James L. Medoff, 1989.
"The Employer Size-Wage Effect,"
NBER Working Papers
2870, National Bureau of Economic Research, Inc.
- Timothy Dunne & Lucia Foster & John Haltiwanger & Kenneth R. Troske, 2004. "Wage and Productivity Dispersion in United States Manufacturing: The Role of Computer Investment," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 397-430, April.
When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:7502. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.