Who Joins a Startup? Preferences, Ability, and Structural Constraints as Predictors of Startup Employment

Abstract

We examine the role of career preferences, ability, and structural constraints in explaining first-time employment in start-ups versus established firms. Using panel data on 2,243 U.S. science and engineering PhDs observed before and after entering the job market, we find that ex ante career preferences significantly explain who joins a startup, while ability plays a limited role. Many individuals who prefer to join startups prior to graduation take jobs in established firms, in part due to the limited availability of startup jobs and visa constraints. Interestingly, these individuals are more likely to leave their first position in established firms jobs to join a startup later in time. We discuss implications for founders, managers in established firms, as well as for future research and policy makers.

Co-authors: Michael Roach (Cornell), Henry Sauermann (ESMT Berlin & NBER)

Biography

Henry Sauermann is an associate professor of strategy (with tenure), who joined ESMT Berlin in May 2017. He is the first holder of the POK Pühringer PS Chair in Entrepreneurship. Since January 2018 Henry is the Director of the Institute for Endowment Management and Entrepreneurial Finance (IFEE). Previously he was an associate professor of strategy and innovation and the PhD Coordinator at the Scheller College of Business at the Georgia Institute of Technology.
Henry explores the role of human capital in science, innovation, and entrepreneurship. Among others, he studies how scientists’ motives and incentives relate to important outcomes such as innovative performance in firms, patenting in academia, or career choices and entrepreneurial interests. This stream of research also explores important differences in these mechanisms across organizational contexts such as industrial versus academic science or startups versus large established firms.

More info about Prof. Henry Sauermann