From Displacement to Successful Entrepreneurship? The Effect of Displaced Employees’ Human Capital on the Success of Their Startups

Silja Kulvik-Laine

Student thesis: Master thesis


This thesis focuses on the effects of displaced employees’ human capital on their startups. The approach of this thesis is motivated by the growing literature on the impact of human capital which, however, fails to isolate the effects of human capital developed specifically during employment at a single employer. At the same time, subsidiary closures are nowadays quite common (Berry, 2013; Mata & Freitas, 2012), and they can create an abundance of skilled workforce in a specific sector in the local labor market resulting in significantly increased unemployment (Neittaanmäki & Kinnunen, 2016). Furthermore, losing a job due to a subsidiary closure has been empirically found to have long-term, negative effects on an employee’s future earnings (Couch & Placzek, 2010). Entrepreneurship can be a valid way of continuing to utilize the human capital that displaced employees accumulated at an MNC, when the job market does not provide good opportunities for exploiting the human capital. These factors together prompted the following research question: • How does the human capital that a displaced employee has developed at an MNC contribute to the success of the employee’s startup? To answer this question, a theoretical framework is developed based on existing literature on human capital and entrepreneurship. Even though the theoretical predictions that are made based on the framework are not supported by the empirical results, they can guide future research in the area.

EducationsMSc in International Business and Politics, (Graduate Programme) Final Thesis
Publication date2016
Number of pages75
SupervisorsWolfgang Sofka