Human capital investments as sources of skills: An analysis at different entrepreneurship phases

Abstract

Background: Entrepreneurs need entrepreneurial skills to run their businesses. Skills can come from various sources, and the usage of the sources of skills can vary according to the different entrepreneurship phases. Aim: Adopting a human capital theory perspective, this study determined the specific human capital investments as sources of skills needed by entrepreneurs across the different entrepreneurship phases. The sources of skills included work experience, formal education, entrepreneurship education and entrepreneurship experience. Setting: Entrepreneurs at the different entrepreneurship phases which are nascent (entrepreneurs with ventures less than 3 months in existence), new business (entrepreneurs with ventures with more than 3 months but less than 3.5 years in existence) and established business (entrepreneurs with ventures more than 3.5 years in existence). Method: The study employed a survey research design. An online questionnaire was used to collect the data. Results: The results show that the sources of skills are used differently across the entrepreneurship phases. As entrepreneurs start businesses, in the nascent phase, the use of human capital investments (especially formal education) as a source of skills declines, thus creating a need to acquire more entrepreneurship-specific investments. In addition to acquiring skills from human capital investments, entrepreneurs learn skills from people in their social networks and self-taught skills which are used differently across the different entrepreneurship phases. Conclusion: The findings indicate that the human capital investments are dynamic and change over time as the entrepreneurship phases unfold. Because there are different sources of skills for each entrepreneurship phase, entrepreneurs need to be treated according to their phases.