Earnings Effects of Entrepreneurial Experience: Evidence from the Semiconductor Industry

Earnings Effects of Entrepreneurial Experience: Evidence from the Semiconductor Industry

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Article ID: iaor20131107
Volume: 59
Issue: 2
Start Page Number: 286
End Page Number: 304
Publication Date: Feb 2013
Journal: Management Science
Authors:
Keywords: entrepreneurs, semiconductor manufacturing, California
Abstract:

Although previous studies have examined the rewards available to individuals inside entrepreneurial firms, entrepreneurial experience may provide rewards that are independent of the entrepreneurial context. Building on human capital theory, this study provides theoretical explanations for the effects of experience at a start‐up on earnings across an individual's career and then examines these implications in the context of California's semiconductor industry. Comparing the career trajectories of employees who join start‐ups with a matched control group of comparable workers without start‐up experience, I perform a counterfactual analysis and find that start‐up experience in this context has a persistent positive effect on earnings that extend outside the entrepreneurial environment. The results from the matched sample are consistent with the development and revelation of valuable general human capital through entrepreneurial experience and suggest that the rewards to entrepreneurship are not limited to just the rewards available inside entrepreneurial firms.

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