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My first employee: an empirical investigation

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journal contribution
posted on 2023-06-13, 14:29 authored by Alex Coad, Kristian Nielsen, Bram Timmermans
The challenge for solo entrepreneurs to add their first employee is arguably the single biggest growth event facing any growing firm. To understand how this event affects performance, and the antecedents of hiring, we analyse Danish matched employer-employee data. Those who hire enjoy superior sales outcomes in subsequent years, while the dispersion in profits increases. Furthermore, those that hire enjoy faster sales growth in the previous year, suggesting that sales growth precedes the first hire. Finally, we show that founders with a stronger profile in terms of education and previous income are more likely to increase profits, while the characteristics of the employee are less important. The latter finding is important from a job creation perspective, in light of the suggested sorting of more marginalized employees into new and established firms.

Funding

IRC; ESRC; ES/H008705/1

IRC; ESRC; ES/J008427/1

Brighton Fuse 2 (Brighton University lead); G1311; AHRC-ARTS & HUMANITIES RESEARCH COUNCIL; AH/L504026/1

History

Publication status

  • Published

File Version

  • Published version

Journal

Small Business Economics

ISSN

0921-898X

Publisher

Springer Verlag

Issue

1

Volume

48

Page range

25-45

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2016-06-21

First Open Access (FOA) Date

2017-03-02

First Compliant Deposit (FCD) Date

2016-06-21

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