"Venture Labor: A Nonfinancial Signal for Start-up Success"
|Date||30 November 2021|
|Location||Roeterseilandcampus - building M|
|Room||Amsterdam Business School, REC M4.02|
We examine an emerging phenomenon that talented employees leave successful entrepreneurial firms to join less mature ones. Using a unique person-level dataset and a comprehensive sample of private firms from the U.S. Census Bureau, we find that the presence of these “serial venture employees” positively predicts their new employers’ future success in terms of exit likelihoods, employment growth, venture capital investment, and innovation productivity. Consistent with a screening role played by such labor, the predictive power is stronger when serial venture employees have more information to screen their next employers, e.g., when they move from closer-by locations or same-industry jobs. By contrast, the predictive power is not stronger when these employees work for the start-ups for a longer time, suggesting that their potential nurturing role is unlikely a main channel for our results. Our paper sheds light on a previously underexplored pattern of inter-firm labor flow, which provides a nonfinancial yet value-relevant signal about young entrepreneurial firms for potential investors and stakeholders.
*Co-authored with J.He (University of Georgia), L. Lin (Clarkson University) and S. Ren (Chinese University of Hong Kong).
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