Experience and Entrepreneurship: A Career Transition Perspective.

57 Pages Posted: 7 Aug 2013 Last revised: 6 Mar 2019

See all articles by Christopher I. Rider

Christopher I. Rider

Georgetown University, McDonough School of Business

Peter Thompson

Georgia Institute of Technology - Scheller College of Business

Aleksandra Kacperczyk

Massachusetts Institute of Technology (MIT); London Business School

Joacim Tåg

Research Institute of Industrial Economics (IFN)

Date Written: February 18, 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 career 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 motivate 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 entrepreneurial 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

JEL Classification: L26, D20, J20, M50

Suggested Citation

Rider, Christopher I. and Thompson, Peter and Kacperczyk, Aleksandra and Tåg, Joacim, Experience and Entrepreneurship: A Career Transition Perspective. (February 18, 2019). IFN Working Paper No. 970; Georgia Tech Scheller College of Business Research Paper No. 17-1. Available at SSRN: https://ssrn.com/abstract=2307002

Christopher I. Rider

Georgetown University, McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

HOME PAGE: http://chrisrider.info/

Peter Thompson

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St., NW
Atlanta, GA 30308-1149
United States

Aleksandra Kacperczyk

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Joacim Tåg (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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