Diffusers of Entrepreneurship

Posted: 22 Mar 2021

See all articles by Sean Cao

Sean Cao

Georgia State University - J. Mack Robinson College of Business

Jie He

University of Georgia - Department of Finance

Zhilu Lin

Clarkson University - Department of Economics and Finance

Xiao Ren

The Chinese University of Hong Kong, Shenzhen; Shenzhen Finance Institute

Date Written: January 26, 2021

Abstract

We examine an emerging phenomenon that talented employees leave successful entrepreneurial firms to join less mature ones. Using a unique person-level dataset and a comprehensive sample of private firms from the U.S. Census Bureau, we find that these “entrepreneurial diffusers”, by potentially passing on entrepreneurial knowledge and institutional wisdom, can enhance their new colleagues’ innovation productivity and help their new employers successfully exit. We further find that these diffusers are motivated by an entrepreneurial culture that prizes risk-taking rather than by the prospect of monetary gain. Finally, the departure of entrepreneurial diffusers contributes to the well-documented long-run IPO underperformance in accounting and stock returns. Our paper offers new insights into a labor market channel of the cross-firm diffusion of entrepreneurship, which is critical to the sustainability of a vibrant entrepreneurial ecosystem.

Keywords: Entrepreneurship, Diffusion, IPOs, Sell-outs, Innovation, Human Capital

JEL Classification: G32, G34, J24, J63, M13

Suggested Citation

Cao, Sean S. and He, Jie and Lin, Zhilu and Ren, Xiao, Diffusers of Entrepreneurship (January 26, 2021). Available at SSRN: https://ssrn.com/abstract=3773366

Sean S. Cao

Georgia State University - J. Mack Robinson College of Business ( email )

P.O. Box 4050
Atlanta, GA 30303-3083
United States

Jie He

University of Georgia - Department of Finance ( email )

B318 Amos Hall
Terry College of Business, University of Georgia
Athens, GA 30602-6253
United States

Zhilu Lin

Clarkson University - Department of Economics and Finance ( email )

Potsdam, NY 13699
United States

Xiao Ren (Contact Author)

The Chinese University of Hong Kong, Shenzhen ( email )

Shenzhen Finance Institute ( email )

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