Who Becomes a Successful Entrepreneur? The Role of Early Industry Exposure
52 Pages Posted: 20 Dec 2017 Last revised: 2 Dec 2020
Date Written: December 14, 2017
We show that exposure to an industry during upbringing is closely related to later-in-life entrepreneurial choices and success. A majority of male entrepreneurs start a firm in the same or a closely related industry as their fathers’ industry of employment. The probability of entrepreneurship in the exact same 5-digit sector as a father’s employment is much higher than in closely related sectors, indicating that the importance of exposure is especially great in narrowly defined skills and sectors. We then show that same-industry entrepreneurs outperform other entrepreneurs, making it less likely that the tendency is driven by simple awareness or preferences for working in that industry. In addition, fathers’ helping out is an unlikely mechanism, as the results hold for the subsample of entrepreneurs where the father is dead when starting the venture. Overall, exposure to specific industries during childhood drives entrepreneurial choices and creates entrepreneurial value.
Keywords: entrepreneurs, human capital, innovation
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