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Ex ante career preferences and sorting into startup employment

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LC 400, 5 Metro Tech Center, Brooklyn, NY 11201

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Entrepreneurship scholars and policy makers pay increasing attention to individuals who join entrepreneurial ventures as employees. Established firms also recognize the importance of attracting an innovative and entrepreneurial workforce. It is not clear, however, why some people join startups while others work for established firms. We examine the extent which individuals’ initial employment outcomes are explained by career preferences expressed prior to entry into the labor market. Using panel data on 2,284 individuals observed during graduate school and again in fulltime employment, we find strong evidence of preference-based sorting. At the same time, labor market factors including the limited availability of startup jobs and work visa requirements constrain preference-based sorting into startup employment. As a result, a large share of individuals with entrepreneurial career preferences end up in established firms, and they are subsequently more likely to leave for startup employment. While startups pay on average less than established firms, we find little evidence of compensating differentials or ability-based sorting. We discuss implications for entrepreneurship research as well as for the management of human capital, firm performance, and public policy.



Bio: Michael Roach is the J. Thomas and Nancy W. Clark Assistant Professor of Entrepreneurship. Professor Roach’s research examines the career paths of science and engineering doctorates, with a particular emphasis on careers in entrepreneurship and the founding teams of university-based start-ups. He also investigates the role of industrial scientists in firm innovation, firms’ use of university research in industrial R & D, and firm patenting activities with implications for science and innovation policy. Professor Roach was awarded the Kauffman Foundation Junior Faculty Fellowship in Entrepreneurship Research, and his research is funded by grants from the National Science Foundation. His research has been published in Management Science, Research Policy, Science and PLoS ONE.


Prior to joining Cornell in 2014, he was on the faculty at Duke University’s Fuqua School of Business and the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School. Professor Roach received his Ph.D. in Strategy from Duke University and a Bachelor of Business Administration in Decision Sciences from Georgia State University. He co-founded an educational software company while in high school and pursued an early career as an entrepreneur for eight years before beginning his undergraduate and doctoral studies. He also founded a mobile medical diagnostic application business related to his undergraduate research and remains deeply passionate about all things technology entrepreneurship.

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