سرمایه گذاری در سرمایه انسانی، ایجاد شرکت جدید و سرمایه گذاری ریسک پذیر
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|4855||2010||26 صفحه PDF||سفارش دهید||محاسبه نشده|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Financial Intermediation, Volume 19, Issue 4, October 2010, Pages 483–508
This paper studies the relation between firm investment in general human capital, new firm creation and financial development for new firm financing, such as the existence of a venture capital industry. On one hand, firm investment in general human capital leads employees to generate new innovative ideas for starting their own firm. Since employees need a venture capitalist to start their new firm, firm investment in general human capital encourages the creation of venture capitalists by increasing the need for their services, such as providing advice and monitoring. On the other hand, as new firm financing becomes available, firms’ willingness to invest in general human capital increases, and as a by-product, the creation of employee-founded and venture capital-backed new firms increases in the economy. Hence, our model provides a rational explanation for the emergence of new firms created by employees of established firms, which represents one of the most common type of new firms in many industries.
There is mounting evidence that established firms represent one of the most important source for the creation of new firms in the economy. For example, Bhide (1994) finds that 71% of entrepreneurs found their start-ups by replicating or modifying an idea they encountered at their previous employment. Garvin (1983) documents that firms started by a former employee of an established firm are the most prevalent source of entrepreneurial start-ups especially in high-tech and human capital intensive sectors. In the disk drive industry, for example, many of the start-ups were created by the employees of IBM, including Century Data, Memorex, Pertec and Storage Technology Corporation. This industry experienced a very high rate of entry by start-up firms and an extremely rapid rate of innovation from 1956 to 1997 (Christensen, 1993). Gompers et al. (2005) provide further evidence on the role of established firms in the creation of employee-founded new firms. This paper documents that public firms located in Silicon Valley and Massachusetts contribute to the creation of new firms by training, educating and preparing their employees for entrepreneurship. In addition, the paper finds that 45% of all entrepreneurs in venture capital backed start-ups comes from publicly traded established firms. Similarly, Beckman et al. (2002) argue that most start-ups are founded by people who have spent many years working for established firms. This evidence raises interesting questions: What explains the emergence of employee-founded firms where employees of established firms depart their current firm to start their own firm? How do established firms benefit from encouraging innovation activity in their organization if it results in the loss of their valuable employees? How do established firms contribute to and benefit from financial development such as the existence of an active venture capital industry? This paper addresses these questions by modeling the relation between firm investment in general human capital, new firm creation and financial development for new firm financing. In the model, firm value depends on employee-generated innovations where the employee exerts costly effort to generate innovative ideas. The employee faces a classic hold-up problem where he shares the payoff from his innovations with his firm ex post, and hence, underinvests in innovation effort ex ante. The firm decides whether or not to invest in general human capital of its employee. Human capital investment provides the employee with the option to leave the firm and to start his own firm, and increases his rent extraction ability from his current firm. Hence, investment in general human capital mitigates the extent of the hold-up problem, and leads to greater employee incentives ex ante to exert effort. The firm benefits from its human capital investment since stronger employee incentives translate into greater probability of firm specific innovations. However, human capital investment is also costly for the firm for two reasons. The first is that it introduces the possibility for the employee to generate general innovations, which fall outside the core business of the firm. The employee with such an innovation leaves his current firm to start his new firm. Hence, the firm bears the cost of losing its employee. The second cost is that since the investment provides the employee with an outside option of leaving his current firm to start his new firm, this outside option lowers the firm’s ex post rents from firm specific innovations. When the benefit of the investment in terms of stronger employee incentives outweighs its costs, the firm finds it optimal to invest in general human capital. If the firm chooses not to invest in general human capital, it does not lose its employee, but this comes at the cost of weaker employee incentives and lower firm specific innovation probability. Our paper also suggests that firm investment in general human capital may have a positive effect on the availability of start-up financing such as an active venture capital industry. Investment in general human capital leads employees to generate new business ideas for starting their own firm. Since employees need a venture capitalist (VC) to start their firm, investment in general human capital increases incentives to become a VC by increasing the supply of employees in need for a VC. Similarly, and perhaps less intuitively, it becomes more desirable for firms to invest in general human capital when the level of financial development for new firm financing increases. The intuition behind this interaction is that having access to new firm financing makes it more desirable for employees to exert effort, generate a new business idea and start their own firm. This increases ex ante incentives (effort level) of the employees, some of whom end up generating firm specific innovations and staying with the firm. As a result, availability of start-up financing has a positive effect on the likelihood of firm specific innovations and on firms’ willingness to invest in general human capital. Hence, in our model, financial development in terms of availability of new firm financing and firms’ willingness to invest in general human capital are complementary to each other. This result is related to the idea in Hellmann (2007) who discusses how external factors such as obstacles to start a new firm, property right protections and availability of new firm financing affect established firms’ policies towards employee innovations. Hellmann (2005) focuses specifically on the relation between the availability of VC financing and established firms ex post response to employee-generated innovations. In a self-enforcing low entrepreneurship equilibrium, employees of established firms are unlikely to leave their firm. Hence, the incentives for VCs to locate in areas closer to established firms or to acquire human capital and expertise useful for starting new firms turn out to be low, feeding back into employees’ willingness to stay with their current firm. This, in turn, makes it easier for established firms to keep their employees focused on their core tasks, with a further positive effect on the likelihood of employees to stay with their firm. A similar line of reasoning shows the existence of a self-enforcing high entrepreneurship equilibrium where a higher likelihood of employees departing their firms creates incentives for the VCs to locate closer to those employees, and at the same time, availability of VC financing increases the rate of employee departures from established firms. In other related work, Morrison and Wilhelm (2004) study the role of partnership in promoting mentoring of junior employees, and show that partnerships foster the formation of human capital. Michelacci and Suarez (2004) develop a theory of financial development where the stock market encourages business creation and innovation by allowing the recycling of “informed capital” possessed by expert financiers such as VCs. Our paper is related to Hellmann (2007) addressing the question of when employees become entrepreneurs. An employee, as a part of his daily activities, obtains new ideas, which fall outside his assignment in the firm. Once an employee generates such an idea, his firm chooses either to promote the employee’s idea or to block the idea by refusing to develop it. The firm’s optimal ex post response to the employee’s innovation determines whether the employee will leave the firm to start his own venture, or stay with the firm and develop his idea internally. Our paper complements the theory in Hellmann (2007) by focusing on the firm’s ex ante investment in general human capital as a driver of employee-founded new firms. Our paper is also related to the literature documenting that new firms created by the employees of established firms are the most important type of entrants, especially in high-tech industries (see, among others, Garvin, 1983, Klepper and Sleeper, 2005 and Franco and Filson, 2006). In these papers, new firms arise either as an outcome of employees imitating their firm’s know-how or employees randomly generating innovative ideas. In our paper, in contrast, rather than arising randomly or through employees imitating their employer’s knowledge, employee-founded firms emerge systematically as a by-product of established firms’ general human capital investment to promote firm specific innovations. A significant body of research, starting with the seminal work of Becker (1962), studies firm investment in firm specific and general employee human capital (see Acemoglu and Pischke, 1999a, for a review of this literature). Becker (1962) suggests that in perfect labor markets firms do not invest in general human capital of their employees since they face the risk of not capturing the return on their investment due to the possibility of losing their employees to other firms. However, empirical evidence documents that firms invest in general human capital, mostly in the form of training in general skills, and pay a portion the cost of this investment.1 Consistent with the empirical evidence, recent theoretical research shows that in the presence of labor market imperfections, such as asymmetric information and search costs, firms may invest in the general human capital of their employees.2 Our paper contributes to this literature by providing a new reason why firms may invest in general human capital despite the increased risk of losing their employees: investment in general human capital enhances employee incentives to exert effort by creating an outside option for the employee, with a positive effect on probability of firm specific innovations. Our paper is also related to the literature studying entrepreneurship activity. Landier (2005) studies an equilibrium model of entrepreneurship where the market’s perception of entrepreneurial failure is important in understanding the amount of entrepreneurship activity in the economy. Gromb and Scharfstein (2002) compare the organization of new ventures in start-ups (entrepreneurship) and in established firms (intrapreneurship). Intrapreneurship has the benefit of using information on failed entrepreneurs to redeploy them into other jobs. However, this worsens the incentives of the intrapreneurs since they know that failure is less costly in an established firm than in an entrepreneurial start-up. In our paper, established firms’ investment in general human capital increases the likelihood of employees departing to start their own firms, but this may be beneficial for established firms since it increases the likelihood of firm specific innovations, which could be interpreted as internal start-ups. The remainder of this paper is organized as follows. Section 2 describes the basic model. In Section 3, we analyze the model and derive the optimal human capital investment decision of the firm. In Section 4, we analyze several extensions and the robustness of the model. Section 4.1 examines the employee’s choice between staying inside the firm and leaving the firm, and shows that the results of the paper are robust in a setting where there is no distinction between firm specific and general innovations. Section 4.2 analyzes the effect of no-compete clauses on firm incentives to invest in general human capital and on the advancement of an active VC industry for new firm financing. Section 4.3 evaluates the robustness of the basic results in a setting where investment in general human capital allows the employee to exert effort specifically for firm specific and general innovations. Section 4.4 extends the model such that the firm has two employees, and shows that the incentives to invest in general human capital are stronger with two employees than with only one employee. Section 5 discusses the predictions of our model and Section 6 concludes. The proofs are presented in Appendix A.
نتیجه گیری انگلیسی
This paper provides a new reason for why established firms invest in general human capital despite the increased risk of losing their employees. Investment in general human capital leads to a greater employee surplus by enhancing the outside option of employees and by creating the possibility that employees generate new business ideas and start their own firm. The prospect of working for their own firm and capturing greater returns from doing so motivates employees to exert higher effort to generate innovative ideas. As long as there is some probability that employees generate firm specific innovations after investment in general human capital, higher employee effort may translate into higher likelihood of firm specific innovations, and the firm may benefit from investing in general human capital. This paper also studies an interaction between established firms’ willingness to invest in general human capital and the availability of new firm financing in the economy. On one hand, general human capital investment contributes to financial development for new firm financing by encouraging the creation of VCs who can help employees of established firms to start their new firm. On the other hand, as new firm financing becomes available, established firms’ willingness to invest in general human capital increases, and, as a result, the emergence of employee-founded new firms increases. Hence, our paper proposes an explanation for the emergence of new firms created by employees of established firms. In addition, it suggests that established firms’ investment in general human capital and the development of financial markets for new firm financing, such as the development of the venture capital industry, are complementary to each other. This result may help understand the regional emergence of innovative established firms, employee-founded new firms and venture capitalists, as observed in Silicon Valley. It may also explain relatively lower levels of new firm creation, lower level of innovation activity in established firms and less advanced venture capital industry in certain parts of Europe and Japan.