Mirjam van Praag in Svenska Dagbladet

Mirjam van Praag was interviewed for the Swedish newspaper Svenska Dagbladet when she visited Stockholm University for the Schumpeter lecture earlier this month.

You can find the article at their website (in Swedish).

Teaching Entrepreneurship

The Entrepreneurship Platform will host an event 8 October on the experiences and challenges related to teaching entrepreneurship.

Three experienced teachers will give their take on case based teaching, studio based teaching or simulation based teaching.

Find out more and sign up at: http://www.cbs.dk/cbs-event-da/2999/teaching-entrepreneurship

The Role of Role Models

In the discussion of what makes an entrepreneur, the role of role models is being investigated as an influential factor in the choice of career path. In this blog Mirjam van Praag gives a short account of the current research.

New Firm Performance and the Replacement of Founder-CEO

Founder turnover at high-tech and VC-backed startups is perceived, often by outside investors, as a rational response to an anticipated mismatch between entrepreneurs’ ability and the future of the business. But does the same logic apply to the vast majority of startups in the population that do not usually experience rapid transformational growth and have more autonomy to make their own founder-replacement decisions? To indulge our curiosities for the control dynamics of the typical small business and the forces governing business transfers, we investigate the causes and consequences of founder turnover among over 4,000 Danish startups.

This short video provides you with a teaser of this study and some intriguing findings that stand in sharp contrast to those drawn from the highly selected high-tech and VC-backed startups. Follow this link to see the video.

The Role of Nature vs. Nurture in the Creation of an Entrepreneur

In a newly published article in Journal of Economics, Mirjam van Praag asks the question Why entrepreneurial parents have entrepreneurial children. The research clearly shows that entrepreneurs often have been inspired by others to become entrepreneurs. More info on the article.

Earlier this year, US Time’s Money took up this issue under the heading Here’s a New Theory About Why People Become Entrepreneurs. Follow the link to read the article.

Asma Fattoum’s PhD thesis one of six finalists for the 2015 Wiley Blackwell Award for Outstanding Dissertation Research in Business Policy and Strategy

At the 2015 AOM conference in Vancouver, Asma Fattoum’s PhD thesis entitled “Three essays on the Rich vs. King dilemma faced by Founder CEOs at IPO” was selected by members of the Research Committee of the Academy of Management’s BPS Division to be one of six finalists for the 2015 Wiley Blackwell Award for Outstanding Dissertation Research in Business Policy and Strategy.

The thesis comprises three essays that investigate the king versus rich dilemma confronting founder-CEOs at IPO. Indeed, IPOs dilute founder-CEOs’ cash-flow rights, which may weaken their control over the firm. To prevent any loss of control, founder-CEOs can put in place defensive mechanisms such as dual-class shares, pyramid control structures and voting pact agreements. However, because defensive mechanisms may create opportunities for principal-principal agency costs, founder-CEOs implementing defensive mechanisms are likely to suffer financial penalties at IPO. Hence, founder-CEOs face a dilemma at IPO: Either (1) select the king alternative by putting in place defensive mechanisms and suffering financial penalty or (2) choose the rich alternative by not using defensive mechanisms and risking loss of control over the firm but securing higher firm valuation at IPO. This dilemma raises several theoretical and empirical questions, that I investigate respectively in three related essays: (1) the factors that make the king option more likely to be selected (2) The consequences of the king and rich alternatives on founder-CEOs wealth on the first days of IPO trading and (3) the long-term implications of the king and rich alternatives on founder-CEOs’ turnover, financial wealth as well as on firm dividend policy.

Go to Asma Fattoum’s website to find out more.

Serial Entrepreneurship, Learning by Doing and Self-selection

Vera Rocha is co-authoring this article on the lessons learned by serial entrepreneurs.

It remains a question whether serial entrepreneurs typically perform better than their novice counterparts owing to learning by doing effects or mostly because they are a selected sample of higher-than-average ability entrepreneurs. This paper tries to unravel these two effects by exploring a novel empirical strategy based on continuous time duration models with selection. We use a large longitudinal matched employer-employee dataset that allows us to identify about 220,000 individuals who have left their first entrepreneurial experience, out of which over 35,000 became serial entrepreneurs. We evaluate whether entrepreneurial experience acquired in the previous business improves serial entrepreneurs’ survival, after taking into account self-selection issues. Our results show that serial entrepreneurs are not a random sample of ex-business owners. Robustness tests based on the estimation of the person-specific effect, using information on individuals’ past histories in paid employment, confirm that serial entrepreneurs exhibit, on average, a larger person-specific effect than non-serial business owners. Moreover, ignoring serial entrepreneurs’ self-selection overestimates learning by doing effects.

Find the article here.

Entry and exit dynamics of nascent business owners

This paper co-authored by Vera Rocha reports a comprehensive study on the dynamics of nascent business owners using a unique longitudinal matched employer–employee dataset. We follow over 157,000 individuals who leave paid employment and become business owners during the period 1992–2007. The contributions of this paper are twofold. First, we analyze both entry and exit, identifying and characterizing different profiles of individuals leaving paid employment to become business owners, and distinguishing exits by dissolution from exits by ownership transfer. Second, we provide new evidence on how particular experiences in the labor market and entry modes shape the post-entry dynamics of nascent business owners. By differentiating between different entry and exit routes, this paper provides new evidence on different human capital patterns among nascent business owners and on key determinants of entrepreneurial survival. Our results suggest that different exit modes can be predicted by business owners’ entry route. Furthermore, different exit modes exhibit different duration dependence patterns according to the entry mode. Additionally, the paper shows that businesses started after a displacement episode are not necessarily less successful. Those individuals entering entrepreneurship after being displaced due to previous employer closure are found to persist longer.

Find the article here.