Hiring entrepreneurs for innovation

Louise Lindbjerg and Theodor Vladasel ()

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Technical human capital improves firms' invention outcomes, but generating innovation revenue may require distinct skills in bringing new ideas to market. We argue that former founders are endowed with execution skills, a generalist ability to create and exploit market gaps by acquiring and mobilizing resources, so entrepreneurial human capital enhances innovation in established organizations. Combining register and Community Innovation Survey data from Denmark, we show that entrepreneur hires are associated with higher sales from new products and services. This result is driven by founder hires in middle management, a hierarchical position where broader decision rights and resource access increase execution skills' effectiveness. Founder hires are more tightly linked to innovation new to the firm or market, rather than world, consistent with our prediction that execution skills help bring incremental improvements to market, but do not necessarily generate radical innovation. Together, our findings suggest that entrepreneurial human capital may help firms appropriate a larger share of the value their knowledge generates.

Keywords: innovation; learning by hiring; entrepreneurship; execution skills; human capital; middle management (search for similar items in EconPapers)
JEL-codes: J24 L23 M12 M21 M51 (search for similar items in EconPapers)
Date: 2021-12
New Economics Papers: this item is included in nep-cse, nep-ent, nep-hrm, nep-ino, nep-lma, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Hiring Entrepreneurs for Innovation (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1811

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