Seeing What You Believe in? Confirmation Bias and the Wages of Hybrid Entrepreneurs

Leveraging matched employer-employee data from Portugal between 1994 and 2009, we examine the effect of hybrid entrepreneurship experience on wages. Drawing from confirmation bias theory, we theorize and demonstrate an overall wage penalty associated with employee experience with hybrid entrepreneurship relative to peers. We further show, however, that when comparing with low performers, high performers (i.e., the top earners in the firm) earn a small but significant wage premium when engaging in hybrid entrepreneurship. Female employees are penalized significantly less than their male counterparts. After exploring various potential mechanisms, we find reduced bargaining power to be a main reason why hybrid entrepreneurs face a wage penalty. By implication, our results provide a meeting place for entrepreneurship, strategic human capital, and gender scholars.