Sorting into entrepreneurial teams

Edoardo M Accabi, Andrea Alati, Luca Mazzone and Marta Morazzoni
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Edoardo M Accabi: University of Mannheim
Andrea Alati: Bank of England
Luca Mazzone: University of Montreal
Marta Morazzoni: University College London and CEPR

No 1209, Bank of England Staff Working Paper series from Bank of England

Abstract: This paper studies how entrepreneurs sort into founding teams and how team composition shapes the firm distribution. We develop a theory of career choice and team formation in which skill complementarities make team entrepreneurship attractive for agents with unbalanced skill profiles, while talent similarity makes teaming preferable to other career options. Using matched employer-employee and balance-sheet data from Portugal, we show that teams combining similar talent with diverse specializations create larger, more productive, and longer-lived firms; yet founders with dissimilar skills are less likely to start firms together. We calibrate the model to reproduce these patterns and use it to quantify the cost of imperfect founder matching. Counterfactuals show that reducing founders’ biased exposure reallocates activity from low-productivity solo firms toward more productive teams. An optimal-assignment benchmark reveals that even unbiased random search leaves substantial gains unrealized because high-surplus matches fail to form.

Keywords: Entrepreneurship; sorting; search frictions. (search for similar items in EconPapers)
JEL-codes: J24 L25 L26 (search for similar items in EconPapers)
Pages: 113
Date: 2026-10-09
New Economics Papers: this item is included in nep-ent and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:023785

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