Employees? entrepreneurial human capital and firm performance

We introduce a new measure of human capital, defined as employees' former involvement in entrepreneurship. Such entrepreneurial human capital (EHC) complements traditional human capital measures accumulated through work experience and education. Using detailed longitudinal register data, we track the previous years of entrepreneurial experience for the population of employees in Swedish private sector firms. We provide evidence that higher EHC among employees is associated with significantly higher levels of firm productivity. The baseline result implies that a 10 % increase in employees being former entrepreneurs increases firm-level productivity by 3.9 %. Additionally, we provide evidence that heterogeneity in employees' previous entrepreneurial experience (e.g., the reason for entering and exiting entrepreneurship, type of venture, length of entrepreneurial experi-ences, and relatedness of technology) influences the impact of EHC on productivity. The results are shown to be robust to various estimation techniques, alternative definitions of EHC, and other performance measures.

Automated summary

We propose a new measure of human capital called entrepreneurial human capital (EHC), which takes into account employees' previous involvement in entrepreneurship. Using longitudinal register data, we find that higher EHC among employees is associated with significantly higher levels of firm productivity. We also find that the impact of EHC on productivity is influenced by heterogeneity in employees' previous entrepreneurial experience.