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Human capital and new venture performance: the industry choice and performance of academic entrepreneurs

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Abstract

New venture formation by academics has recently been recognized as an important source of knowledge spillover and technology transfer. However, the majority of studies have focused on the factors leading to academic entrepreneurship, while only few study the performance of these ventures. Moreover, this strand of the literature has focused solely on start-ups by university faculty. This study adds to these by including university graduates in the definition of academic entrepreneurs and controlling for the industry environment in which the new venture is founded; both aspects, which are recommended in recent studies. Longitudinal register data combined with responses from 1,151 first-time entrepreneurs in 2004 are used to explore the self-selection of individuals into certain industry environments and their subsequent performance—survival and growth—in the chosen environment. This study works from the hypothesis that university education (technical and non-technical) and industry experience increase new venture performance in high-profit and high-uncertainty industries, respectively, because of increased knowledge and skills; in addition, education and experience engender higher absorptive capacities and adaptability. The analysis controls for personal traits, social capital, and financial capital. Technical academics are found to perform better in both profitable and uncertain industries, whereas non-technical academics perform better only in profitable industries. Nevertheless, both types of academics are more likely to enter uncertain industries. The absorptive capacities of technical academics make these individuals particularly important in technology transfers to new ventures in unstable environments, which are important in developed economies.

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Notes

  1. This study does not provide further discussion regarding whether personality traits are strictly inborn, malleable until the age of approximately 30 or constantly affected by the environment.

  2. Only entrepreneurs behind businesses meeting the requirements of full-time equivalent employees and industry-specific turnover levels (both set by Statistics Denmark) are included. Furthermore, businesses initiated in the agricultural and energy sector are excluded because of the level of government regulation.

  3. The restriction in Cooper et al. (1994) is that at least two employees are added. Adding identical restrictions in this study resulted in only 68 growth entrepreneurs, which was found to be too low for the statistical analyses. However, a three-year time span for growth and no full-time equivalent correction in Cooper et al. (1994) are likely to reduce the difference in definition between the two studies.

  4. First, new firms not included in the accounting registers in IDA are excluded (turnover and employee requirements). Second, new firms in industries that do not exist throughout the entire period are excluded (industry classification change). Third, industries with fewer than 100 firms in one of the years are excluded (niche industries). Finally, two and three respondents are excluded because of extreme values for start-up year fixed assets and industry-mean fixed assets, respectively, based on information from IDA.

  5. A lower level of aggregation would be preferred for the latter variable (e.g., separating business science from the social sciences and humanities), but given the number of observations, the variable is binary.

  6. The PCA is performed on 1,151 observations (entrepreneurs) instead of 233 observations (industries). This indicates that the PCA on industry indicators is weighted by the number of start-ups in each industry.

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  1. Department of Business and Management, Aalborg University, Aalborg, Denmark

    Kristian Nielsen

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  1. Kristian Nielsen
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Nielsen, K. Human capital and new venture performance: the industry choice and performance of academic entrepreneurs. J Technol Transf 40, 453–474 (2015). https://doi.org/10.1007/s10961-014-9345-z

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