UCL School of Management welcomes Florence Honoré, Wisconsin University, to host a research seminar discussing: The Small Firm Effect or the First Firm Effect? Examining the Transitions to Entrepreneurship Using Spanish Administrative Data.
Prior work showed that employees’ current organisational context relates to their likelihood to become entrepreneurs. Specifically, the size of the employer is often considered a key predictor of entrepreneurship. While prior research focused on the job immediately preceding the transition to entrepreneurship, it remains unclear whether the first job influences young workers’ entrepreneurial transitions. We use a rich employer-employee linked dataset to study how the first employer’s size influences the next employers’ size and subsequent entrepreneurial transitions. We adopt an instrument to show the causal effect of the first employer size. We find that the first employer size affects the likelihood of entrepreneurial transitions. We conduct additional tests suggesting that young workers who start their career in small and medium firms (as opposed to micro and large firms) are more likely to accumulate a variety of job experiences that leads to a later entrepreneurial transition. Overall, this study contributes to the literature on nascent entrepreneurs and young workers’ career trajectory.