Who Becomes a Successful Entrepreneur? The Role of Early Industry Exposure

52 Pages Posted: 20 Dec 2017 Last revised: 2 Dec 2020

See all articles by Hans K. Hvide

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)

Paul Oyer

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

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Date Written: December 14, 2017

Abstract

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

Suggested Citation

Hvide, Hans and Oyer, Paul, Who Becomes a Successful Entrepreneur? The Role of Early Industry Exposure (December 14, 2017). Stanford University Graduate School of Business Research Paper No. 18-4, Available at SSRN: https://ssrn.com/abstract=3088246 or http://dx.doi.org/10.2139/ssrn.3088246

Hans Hvide (Contact Author)

University of Bergen - Department of Economics ( email )

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University of Aberdeen - Business School ( email )

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Centre for Economic Policy Research (CEPR)

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Institute for the Study of Labor (IZA) ( email )

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Paul Oyer

Stanford Graduate School of Business ( email )

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National Bureau of Economic Research (NBER)

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