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.
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 language | English |
|---|---|
| Publication date | 2015 |
| Number of pages | 33 |
| Publication status | Published - 2015 |
| Event | The DRUID Society Conference 2015: The Relevance of Innovation - LUISS Business School, Rome, Italy Duration: 15 Jun 2015 → 17 Jun 2015 Conference number: 37 http://druid8.sit.aau.dk/druid/registrant/index/login/cid/16 |
Conference
| Conference | The DRUID Society Conference 2015 |
|---|---|
| Number | 37 |
| Location | LUISS Business School |
| Country/Territory | Italy |
| City | Rome |
| Period | 15/06/2015 → 17/06/2015 |
| Sponsor | LUISS Guido Carli - Libera Università Internazionale degli Studi Sociali Guido Carli |
| Internet address |