We advance a theory of how organizational characteristics, in particular the structure of opportunity within organizations, shape the decision to become an entrepreneur. Established organizations play an important yet understudied role in the entrepreneurial process, because they shape the environment within which individuals may choose to enter self-employment. Yet, despite the fact that sociologists have long recognized that inequality within organizations plays an important role in career attainment and mobility, we lack an understanding of how it shapes the pursuit of entrepreneurial opportunities. We develop a formal model in which entrepreneurial choice is driven by differences in the arrival rate of various types of advancement opportunities. Entrepreneurship then arises as a result of matching processes between workers and employers, as well as the features of opportunity structures in paid employment. Analyses using Danish census data provide support for empirical implications derived from the model.
AdnerRonPolosLaszloRyallMichaelSorensonOlav. 2009. “The Case for Formal Theory.” Academy of Management Review34:201–208.
2.
AldrichHoward. 1999. Organizations Evolving. Newbury Park, CA: Sage.
3.
AlthauserRobert P.KallebergArne L.1990. “Identifying Career Lines and Internal Labor Markets within Firms.” Pp. 308–356 in Social Mobility and Social Structure, edited by BreigerR. L.Cambridge, UK: Cambridge University Press.
4.
AltonjiJosephWilliamsNicolas. 2005. “Do Wages Rise with Job Seniority? A Reassessment.” Industrial and Labor Relations Review58:370–97.
5.
ÅstebroThomasChenJingThompsonPeter. 2011. “Stars and Misfits: Self-Employment and Labor Market Frictions.” Management Science57:1999–2017.
6.
BaronJames N.BielbyWilliam T.1980. “Bringing the Firms Back In.” American Sociological Review45:737–65.
7.
BeckerGary S.1962. “Investment in Human Capital.” Journal of Political Economy70:9–49.
8.
BenzMatthias. 2009. “Entrepreneurship as a Non-Profit-Seeking Activity.” International Entrepreneurship and Management Journal5:23–44.
9.
BenzMatthiasFreyBruno S.2008. “The Value of Doing What You Like.” Journal of Economic Behavior and Organization68:445–55.
10.
BingleyPaulWestergård-NielsenNiels. 2003. “Returns to Tenure, Firm-Specific Human Capital and Worker Heterogeneity.” International Journal of Manpower24:774–88.
11.
BlanchflowerDavid G.2000. “Self-Employment in OECD Countries.” Labour Economics7:471–505.
12.
CamererColinLovalloDan. 1999. “Overconfidence and Excess Entry: An Experimental Approach.” American Economic Review89:306–318.
13.
CarnahanSethAgarwalRajshreeCampbellBenjaminFrancoApril. 2010. “The Effect of Firm Compensation Structures on Employee Mobility and Employee Entrepreneurship of Extreme Performers.” U.S. Census Bureau Center for Economic Studies, Paper No. CES-WP-10-06.
14.
CarrollGlenn R.HannanMichael T.2000. The Demography of Organizations and Industries. Princeton, NJ: Princeton University Press.
15.
CastillaEmilio. 2008. “Gender, Race and Meritocracy in Organizational Careers.” American Journal of Sociology113:1479–1526.
16.
CramerJan S.HartogJoopJonkerNicolevan PraagMiriam. 2002. “Low Risk Aversion Encourages the Choice for Entrepreneurship.” Journal of Economic Behavior and Organization48:29–36.
DustmannChristianMeghirCostas. 2005. “Wages, Experience and Seniority.” Review of Economic Studies72:77–108.
19.
ElfenbeinDaniel W.HamiltonBarton H.ZengerTodd R.2010. “The Small Firm Effect and the Entrepreneurial Spawning of Scientists and Engineers.” Management Science56:659–81.
20.
EvansDavid S.LeightonLinda. 1989. “Some Empirical Aspects of Entrepreneurship.” American Economic Review79:519–35.
21.
FarberHenry S.1994. “The Analysis of Interfirm Mobility.” Journal of Labor Economics12:554–93.
22.
FerberMarianne A.WaldfogelJane. 1998. “The Long-Term Consequences of Nontraditional Employment.” Monthly Labor Review121(5):3–12.
HalabyCharles N.2003. “Where Job Values Come From.” American Sociological Review68:251–78.
25.
HamiltonBarton. 2000. “Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment.” Journal of Political Economy108:604–631.
26.
HancockMickBagerTorben. 2001. Global Entrepreneurship Monitor: Danish National Report 2001. Odense, Denmark: Odense University Press.
27.
JovanovicBoyan. 1979a. “Job Matching and the Theory of Turnover.” Journal of Political Economy87:972–90.
28.
JovanovicBoyan. 1979b. “Firm-Specific Capital and Turnover.” Journal of Political Economy87:1246–60.
29.
KlepperStevenSleeperSally. 2005. “Entry by Spinoffs.” Management Science53:616–31.
30.
LazearEdward P.2009. “Firm-Specific Human Capital: A Skill-Weights Approach.” Journal of Political Economy117:914–40.
31.
LazearEdward P.OyerPaul. 2013. “Personnel Economics.” Pp 479–519 in Handbook of Organizational Economics, edited by GibbonsR.RobertsJ. D.Princeton, NJ: Princeton University Press.
32.
MarchJames C.MarchJames G.1978. “Performance Sampling in Social Matches.” Administrative Science Quarterly23:434–53.
33.
MarxMatt. 2011. “The Firm Strikes Back.” American Sociological Review76:695–712.
34.
McClellandDavid C.1961. The Achieving Society. Princeton, NJ: Nostrand.
MüllerWalterArumRichard. 2004. “Self-Employment Dynamics in Advanced Economies.” Pp. 1–35 in The Re-Emergence of Self-Employment, edited by ArumR.MüllerW.Princeton, NJ: Princeton University Press.
37.
NagypalEva. 2007. “Learning By Doing vs. Learning about Match Quality: Can We Tell Them Apart?”Review of Economic Studies74:537–66.
38.
Organization for Economic Cooperation and Development (OECD). 1997. OECD Employment Outlook 1997. Paris: OECD.
39.
PetersenTrondSaportaIshak. 2004. “The Opportunity Structure for Discrimination.” American Journal of Sociology109:852–901.
40.
PrendergastCanice. 1993. “The Role of Promotion in Inducing Specific Human Capital Acquisition.” Quarterly Journal of Economics108:523–34.
41.
RuefMartin. 2010. The Entrepreneurial Group: Social Identities, Relations and Collective Action. Princeton, NJ: Princeton University Press.
42.
SaxenianAnnaLee1994. Regional Advantage: Culture and Competition in Silicon Valley and Route 128. Cambridge, MA: Harvard University Press.
43.
ShaneScott. 2003. A General Theory of Entrepreneurship: The Individual-Opportunity Nexus. Northampton, MA: Edward Elgar Publishing.
44.
SimonHerbert. 1957. “The Compensation of Executives.” Sociometry20:32–35.
45.
SørensenAage B.1977. “The Structure of Inequality and the Process of Attainment.” American Sociological Review42:965–78.
46.
SørensenJesper B.2007a. “Bureaucracy and Entrepreneurship: Workplace Effects on Entrepreneurial Entry.” Administrative Science Quarterly52:387–412.
47.
SørensenJesper B.2007b. “Closure and Exposure: Mechanisms in the Intergenerational Transmission of Self-Employment.” Research in the Sociology of Organizations25:83–124.
48.
SørensenJesper B.FassiottoMagali A.2011. “Organizations as Fonts of Entrepreneurship.” Organization Science22:1322–31.
49.
SørensenJesper B.SorensonOlav. 2007. “Corporate Demography and Income Inequality.” American Sociological Review72:766–83.
50.
SpilermanSeymour. 1977. “Careers, Labor Market Structure and Socioeconomic Achievement.” American Journal of Sociology83:551–93.
51.
Statistics Denmark. 2012. Integrated Database for Labor Market Research (IDA). Retrieved January 30, 2013 (http://www.dst.dk/declarations/1013).
52.
StevensMargaret. 2003. “Earnings Functions, Specific Human Capital, and Job Matching: Tenure Bias Is Negative.” Journal of Labor Economics21:783–805.
53.
TopelRobert. 1991. “Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority.” Journal of Political Economy99:145–76.
54.
UtterbackJames. 1996. Mastering the Dynamics of Innovation. Boston: Harvard Business School Press.
55.
VeumJonathan. 1995. “Sources of Training and Their Impact on Wages.” Industrial and Labor Relations Review48:812–26.
56.
WeedenKim A.2002. “Why Do Some Occupations Pay More Than Others?” American Journal of Sociology108:55–101.
57.
WhiteHarrison. 1970. Chains of Opportunity: System Models of Mobility in Organizations. Cambridge, MA: Harvard University Press.
58.
XuHongweiRuefMartin. 2004. “The Myth of the Risk Tolerant Entrepreneur.” Strategic Organization2:331–55.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
