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Author: Tumlinson, Justin
Resulting in 2 citations.
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Hegde, Deepak Tumlinson, Justin |
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Asymmetric Information and Entrepreneurship Working Paper, Social Science Research Network, October 2018. Also: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2596846 Cohort(s): NLSY79 Publisher: Elsevier Keyword(s): Earnings; Educational Attainment; Entrepreneurship; NCDS - National Child Development Study (British) Why do individuals become entrepreneurs? We argue that information asymmetries and the quest to maximize pecuniary returns produce entrepreneurs. In our model, individuals signal their hidden ability to employers (e.g., via educational qualifications). However, signals are imperfect and individuals with greater ability than their signals convey to employers become entrepreneurs. Empirical analysis of two longitudinal samples of U.S. and U.K. residents supports the model's predictions that (i) entrepreneurs have higher ability than employees with comparable signals, (ii) employees have better signals than equally able entrepreneurs, and (iii) entrepreneurs' earnings are higher and exhibit greater variance than employees' with similar signals. |
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Bibliography Citation
Hegde, Deepak and Justin Tumlinson. "Asymmetric Information and Entrepreneurship." Working Paper, Social Science Research Network, October 2018. |
| 2. |
Hegde, Deepak Tumlinson, Justin |
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Information Frictions and Entrepreneurship Strategic Management Journal published online (17 September 2020): DOI: 10.1002/smj.3242. Also: https://onlinelibrary.wiley.com/doi/10.1002/smj.3242 Cohort(s): NLSY79 Publisher: Wiley Online Keyword(s): Armed Forces Qualifications Test (AFQT); Cognitive Ability; Cross-national Analysis; Earnings; Educational Attainment; Entrepreneurship; NCDS - National Child Development Study (British) Permission to reprint the abstract has not been received from the publisher. Why do individuals become entrepreneurs? Why do some succeed? We propose two theories in which information frictions play a central role in answering these questions. Empirical analysis of longitudinal samples from the U.S. and the U.K. reveal the following patterns: (i) entrepreneurs have higher cognitive ability than employees with comparable education, (ii) employees have better education than equally able entrepreneurs, and (iii) entrepreneurs. earnings are higher and exhibit greater variance than employees with similar education. These, and other empirical tests support our asymmetric information theory of entrepreneurship that when information frictions cause firms to undervalue workers lacking traditional credentials, workers' quest to maximize their private returns drives the most able into successful entrepreneurship. |
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Bibliography Citation
Hegde, Deepak and Justin Tumlinson. "Information Frictions and Entrepreneurship." Strategic Management Journal published online (17 September 2020): DOI: 10.1002/smj.3242.
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