The Value of an Educated Population for an Individual's Entrepreneurship Success

35 Pages Posted: 1 Jun 2011 Last revised: 29 Oct 2014

See all articles by José María Millán

José María Millán

University of Huelva

Emilio Congregado

University of Huelva

Concepcion Roman

University of Huelva

Mirjam van Praag

University of Amsterdam - Department of Economics; Copenhagen Business School; Tinbergen Institute; IZA Institute of Labor Economics

Andre J. van Stel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

Date Written: January 30, 2011

Abstract

Human capital obtained through education has been shown to be one of the strongest drivers of entrepreneurship performance. The entrepreneur's human capital is, though, only one of the input factors into the production process of her venture. The value of other input factors, such as (knowledge) capital and labor is likely to be affected by the education level of the possible stakeholders in the entrepreneur’s venture. The education distribution of the (local) population may thus shape the supply function of the entrepreneur. Likewise, the demand function faced by the entrepreneur is also likely to be shaped by the taste, sophistication and thus the education level of the population in their role as consumers. In other words, a population with a higher education level may be associated with (i) a working population of higher quality; (ii) more and/or higher quality universities with a positive effect on research and development (R&D) and knowledge spillovers leading to more high tech and innovative ventures; and finally, (iii) a more sophisticated consumer market. Based on this, we formulate the following proposition: The performance of an entrepreneur is not only affected positively by her own education level but in addition, also by the education level of the population. We test this proposition using an eight years (1994-2001) panel of labor market participants in the EU-15 countries from which we select individuals who have been observed as entrepreneurs. We find strong support for a positive relationship between enrollment rates in tertiary education in country j and year t and several measures of the performance of individual entrepreneurs in that same country and year, including survival and the probability that an entrepreneur starts employing personnel and maintains as an employer for a longer period of time. An implication of our novel finding is that entrepreneurship and higher education policies should be considered in tandem with each other.

Keywords: entrepreneurship, performance, survival, personnel, education

JEL Classification: J21, J23, J24, L22, L26

Suggested Citation

Millan, Jose Maria and Congregado, Emilio and Roman, Concepcion and van Praag, Mirjam and van Stel, Andre J., The Value of an Educated Population for an Individual's Entrepreneurship Success (January 30, 2011). Journal of Business Venturing, Vol. 29, No. 5, 9/2014. Available at SSRN: https://ssrn.com/abstract=1853223 or http://dx.doi.org/10.2139/ssrn.1853223

Jose Maria Millan (Contact Author)

University of Huelva ( email )

Plaza de la Merced 11
Huelva, Huelva 21071
Spain
+34959217886 (Phone)

Emilio Congregado

University of Huelva ( email )

Departament of Economics
Plaza de la Merced, 11
Huelva, Huelva 21002
Spain

HOME PAGE: http://www.uhu.es/emilio.congregado

Concepcion Roman

University of Huelva ( email )

Huelva
Spain

Mirjam Van Praag

University of Amsterdam - Department of Economics ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4096 (Phone)
+31 20 525 4182 (Fax)

Copenhagen Business School ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

Tinbergen Institute

Gustav Mahlerlaan
Amsterdam
Netherlands

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Andre J. Van Stel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

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