Firm Size and the Quality of Entrepreneurs

Hans Hvide

No 2004/9, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: A theory is proposed where the pay policy and size of established firms are determined together with individual workers' entrepreneurship decision. The main results are twofold. First, taking the firm size as given, larger firms tend to have less flexible wages and produce entrepreneurs of higher quality than small firms. Second, making firm size edogenous, we find that stronger property rights makes the optimal firm size larger (and the average quality of entrepreneurs higher). To illustrate the theory, we consider two sources of evidence: data on the quality of entrepreneurs from a survey of Stanford MBA alumnus, and the evolution of firm size in the U.S. Software Industry after a recent strengthening in software patent protection. Both hypotheses receive encouraging support.

Keywords: Entrepreneurship; Innovation; IPP; Private benefits; Property Rights; Spin-offs; Start-ups (search for similar items in EconPapers)
JEL-codes: L26 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2004-06-04
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Citations: View citations in EconPapers (2)

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