Do Entrepreneurs Matter?
Sascha O. Becker
University of Warwick; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Institute for the Study of Labor (IZA); Ifo Institute for Economic Research
Hans K. Hvide
University of Bergen - Department of Economics; University of Aberdeen - Business School; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)
January 31, 2013
CESifo Working Paper Series No. 4088
In the large literature on firm performance, economists have given little attention to entrepreneurs. We use deaths of more than 500 entrepreneurs as a source of exogenous variation, and ask whether this variation can explain shifts in firm performance. Using longitudinal data, we find large and sustained effects of entrepreneurs at all levels of the performance distribution. Entrepreneurs strongly affect firm growth patterns of both very young firms and for firms that have begun to mature. We do not find significant differences between small and larger firms, family and non-family firms, nor between firms located in urban and rural areas, but we do find stronger effects for founders with high human capital. Overall, the results suggest that an often overlooked factor - individual entrepreneurs - plays a large role in affecting firm performance.
Number of Pages in PDF File: 44
Keywords: entrepreneurship, firm performance, human capital
JEL Classification: D210, D240, J230, L110, L250, G390
Date posted: February 6, 2013