Competence and commitment: employer size and entrepreneurial endurance

Abstract

Most entrepreneurs emanate from established firms, but the impact of these employment histories on entrepreneurial outcomes is poorly understood. We argue that work experiences in the prior firm shape both the entrepreneur's competence in and commitment to the entrepreneurial role. We focus on the effects of employer size on the prospective entrepreneur, and argue that employer size has a negative effect on both entrepreneurial competence and commitment. This implies that entrepreneurs from small firms should have superior economic performance and, for a given level of performance, be less likely to exit entrepreneurship. We find support for these predictions in analyses of entrepreneurs in a unique data set characterizing the Danish labor market.