Hybrid Entrepreneurship and Wage Dynamics

Using matched employer-employee data from Portugal between 1994 and 2009, we examine the relationship between hybrid entrepreneurship and employee wages. Based on confirmation bias theory, we theorize and demonstrate an overall wage penalty associated with an employee's experience with hybrid entrepreneurship relative to their peers. However, compared with low performers, high performers – meaning 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 for engaging in hybrid entrepreneurship. After exploring various potential mechanisms, we find reduced bargaining power to be a main reason why hybrid entrepreneurs incur a wage penalty. By implication, our results provide a meeting place for entrepreneurship, strategic human capital, and gender scholars.