Skill Variety, Innovation and New Business Formation

Tinbergen Institute Discussion Paper 14-011/VII

38 Pages Posted: 21 Jan 2014

See all articles by Jolanda Hessels

Jolanda Hessels

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Udo Brixy

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Wim Naudé

RWTH Aachen University; IZA Institute of Labor Economics; Maastricht School of Management

Thomas Gries

University of Paderborn

Multiple version iconThere are 2 versions of this paper

Date Written: January 17, 2014

Abstract

We extend Lazear’s theory of skills variety and entrepreneurship in three directions. First, we provide a theoretical framework linking new business creation with an entrepreneur’s skill variety. Second, in this model we allow for both generalists and specialists to possess skill variety. Third, we test our model empirically using data from Germany and the Netherlands. Individuals with more varied work experience seems indeed more likely to successfully start up a new business and being a generalist does not seem to be important in this regard. Finally, we find that innovation positively moderates the relationship between having varied experiences, and being successful in starting up a new business. Our conclusion is that entrepreneurs with more varied work experience are more likely to introduce innovations that have not only technical, but also commercial value. Our findings support the notion that entrepreneurship can be learned.

Keywords: entrepreneurship, start-ups, human capital, innovation, skills

JEL Classification: L26, M13, J24, O31

Suggested Citation

Hessels, Jolanda and Brixy, Udo and Naudé, Wim and Gries, Thomas, Skill Variety, Innovation and New Business Formation (January 17, 2014). Tinbergen Institute Discussion Paper 14-011/VII, Available at SSRN: https://ssrn.com/abstract=2381886 or http://dx.doi.org/10.2139/ssrn.2381886

Jolanda Hessels (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Udo Brixy

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Wim Naudé

RWTH Aachen University ( email )

Templergraben 55
52056 Aachen, 52056
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Maastricht School of Management ( email )

Endepolsdomein 150
Maastricht, Limburg 6201 BE
Netherlands

Thomas Gries

University of Paderborn ( email )

Warburger St. 100
Paderborn, D-33098
Germany

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