L8

Question 1

Sumarize “Survival of the fittest? Entrepreneurial human capital and the persistence of underperforming” (Gimeno, Folta, Cooper, Woo)

Answer 1

Sumarize “Survival of the fittest? Entrepreneurial human capital and the persistence of underperforming” (Gimeno, Folta, Cooper, Woo)

Question 2

Drivers of exit decision (survival of fittest)

Answer 2

Opportunity cost of tied down resources
Expectation on future earnings (general human capital + firm specific capital)
Value of non-financial gains (psychic income ≈ non pecuniary income)
Non owners interest groups pressure on decision

Question 3

According to survival of fittest, what affect performance and what affects threshold?

Answer 3

Education, management experience, supervisory experience, similar business have positive effect on economic performance
Intrinsic motivation, parents owned business, age of entrepreneur do not affect performance but have positive effect on threshold

Question 4

According to survival of fittest, exit will happen when:

Answer 4

economic performance is lower than sum of future earning, non-financial gains minus non-owners pressure and opportunity cost

Question 5

Sumarize “Shooting Stars? Uncertainty in Hiring Entrepreneurs”

Answer 5

Uncertainty in hiring entrepreneur leads to wage penalty
More likely for entrepreneurs from upper tail wage distribution before entrepreneurial activity (stars)
More likely for entrepreneurs who exited quickly
More likely for entrepreneurs hired by small employers

Question 6

Why wage penalty in every aspect according to “shooting stars”

Answer 6

Quick exits are less informative
Costlier for small firm to replace employee
The consequences of bad performance in a higher position is much larger than in a lower position

Question 7

Implications of “shooting star”

Answer 7

Failing rapidly is worse

More caution for highly paid employees but good for low paid