Entrepreneurial Backgrounds, Human Capital and Survival in the Early Years after Start-Up

Abstract

We examine whether founders’ backgrounds influence new firm survival in the early years after start-up. We develop hypotheses linking founders’ backgrounds to pre-entry capabilities associated with entrepreneurial human capital, highlighting the cases of spin-offs and habitual entrepreneurs. In particular, the subject of unemployment-driven entrepreneurship is explored. We find that both general and specific human capital play a key role in enhancing the early survival chances of entrepreneurs who left their employment to found new firms (which we deem opportunity-based entrepreneurs), but have little effect on the early survival chances of unemployment-driven entrepreneurs (which we deem necessity-based entrepreneurs). We infer that pre-entry capabilities of entrepreneurs are a key factor for both opportunity discovery and implementation.