Tournament in Workplace and Entrepreneurial Entry: The Interplay between Selection and Treatment Effects

Virgilio Failla, Francesca Melillo, Toke Reichstein

    Research output: Contribution to conferencePaperResearchpeer-review

    Abstract

    This paper examines how the extent of tournament in workplaces affects employees? likelihood of transitioning to entrepreneurship. In line with prior research, we use wage dispersion as proxy for tournament in the parent firm. We
    argue that the effect of tournament on employees? propensity to engage in entrepreneurship depends on parent firms? size. Using a unique matched employer?employee longitudinal dataset from Denmark, we find that when tournament is high, employees in small firms are less inclined to become entrepreneurs while the opposite is observed for employees in large firms. We ascribe this finding to an interaction between a selection effect ? entrepreneurial minded individuals self-select in small firms ? and a treatment effect ?workplaces with high tournament discourage these particular individuals from becoming entrepreneurs, revealing an unobserved preference for competition. The findings document the importance of labor market sorting processes for our understanding of the relationship between tournament and entrepreneurship and have implications for firms aiming at retaining entrepreneurial minded employees.
    Original languageEnglish
    Publication date2015
    Number of pages33
    Publication statusPublished - 2015
    EventThe DRUID Society Conference 2015: The Relevance of Innovation - LUISS Business School, Rome, Italy
    Duration: 15 Jun 201517 Jun 2015
    Conference number: 37
    http://druid8.sit.aau.dk/druid/registrant/index/login/cid/16

    Conference

    ConferenceThe DRUID Society Conference 2015
    Number37
    LocationLUISS Business School
    CountryItaly
    CityRome
    Period15/06/201517/06/2015
    SponsorLUISS Guido Carli - Libera Università Internazionale degli Studi Sociali Guido Carli
    Internet address

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