Entrepreneurship and employment stability — Job matching, labour market value, and personal commitment

Virgilio Failla, Francesca Melillo, Toke Reichstein

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This paper challenges the conventional belief that entrepreneurship is an unstable career path. Using longitudinal matched employer–employee data from Denmark, the analysis reveals that a transition to entrepreneurship decreases individual's employment turnover tendency. Three explanations are identified and empirically explored: (i) job matching, (ii) labour market value, and (iii) personal commitment. Entrepreneurs appear to be more productive and thus better matched compared to wageworkers. However, they also appear to be locked in entrepreneurship because of their anticipated lower value in the labour market and because of their personal attachment to the venture. The counter-intuitive finding – entrepreneurship yields greater employment stability – only holds with respect to subsequent transitions to wagework and not for new venture founding. The results have implications for our understanding of entrepreneurial entry and labour market dynamics.

Original languageEnglish
Pages (from-to)162-177
Number of pages16
JournalJournal of Business Venturing
Issue number2
Early online date21 Jan 2017
Publication statusPublished - 1 Mar 2017


  • Employment turnover
  • Entrepreneurship
  • Job matching
  • Labour market value
  • Personal commitment


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