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Experience and entrepreneurship: a career transition perspective

Journal

Industrial and Labor Relations Review

Subject

Strategy and Entrepreneurship

Authors / Editors

Rider C I;Thompson P;Kacperczyk A;Tag J

Publication Year

2019

Abstract

We cast entrepreneurship as one of three career choices – remaining with one’s employer, changing employers, or engaging in entrepreneurship – and theorize how the likelihood of entrepreneurship evolves over one’s career. We empirically demonstrate an inverted U-shaped relationship between accumulated experience and entrepreneurship across various industries and jobs. Despite detailed ca-reer history data and job displacement shocks that eliminate the current employer choice, we highlight the difficulty of inferring the mechanism underlying the observed relationship. These analyses moti-vate a formal career transitions model in which employer-specific and general skills accumulate with experience but potential employers observe only total skill. The upshot of our model is that entrepre-neurial career transitions vary with two relative costs: (1) to an individual of forming a business and (2) to a potential employer of utilizing the individual’s employer-specific skills. We discuss how this model contributes new insights into entrepreneurial careers.

Keywords

Entrepreneurship; Employee mobility; Experience

Available on ECCH

No


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