Entrepreneurs versus Incumbents

Who Creates the Better Jobs?

By Johan M. Kuhn, Nikolaj Malchow-Moller, Anders Sorensen

What are the characteristics of jobs in entrepreneurial firms as compared to jobs in incumbent firms? Even though this question has been addressed by many researchers before, this study - based on research conducted in Denmark - provides new evidence to the field by examining the entrepreneur as the organic new firm. The majority of studies have focused on entrepreneurs as measured by small or new firms. Organic new firms are defined here as new firms that are not the result of restructurings or organizing existing or additional activities in a formally new firm. Moreover, the book considers entrepreneurial firms by different types and distinguishes between growing and declining industry-region clusters. The results differ from the findings in the existing literature. Specifically, the book finds that, compared to incumbents, entrepreneurial firms have higher total factor productivity, are more skill intensive, and pay higher wages. The differences are more pronounced in growing clusters. Moreover, the results show important differences between different types of entrepreneurial firms. Specifically, spin-offs are found to enjoy the largest productivity advantage. The wage and skill premiums at the firm level disappear at the job level, as larger incumbents are both more skill intensive and pay higher wages than smaller incumbents. (Series: The Rockwool Foundation Research Unit - Study Paper - No. 101) [Subject: Labor Studies, Business]

Publication Date: 11/16/2015
Format: Paper
ISBN: 9788793119284