When do employees leave their job for entrepreneurship?

Abstract

Existing firms are argued to be an important source of new entrepreneurs. Yet, relatively little is known about the characteristics of firms that breed new entrepreneurs. We use a large linked employee-employer dataset to trace and characterize the types of firms which generate new entrepreneurs in Finland. We find that such transitions are rare and that smaller firms spawn new entrepreneurs more frequently than larger firms. We also find that firms' R&D intensity and, to a lesser extent, their productivity are negatively related to the probability that employees transit into entrepreneurship. These results are robust to controlling for a number of employee and employer attributes. © 2008 The editors of the Scandinavian Journal of Economics.