December 5, 2021


Only The Finest Women

The macroeconomic footprint of the Elons

Elon Musk is the (co-)founder of Tesla, SpaceX, Neuralink and The Monotonous Corporation and was earlier associated in companies this kind of as Zip2, PayPal or OpenAI. His latest enterprises have created an believed 110,000 jobs and, at the time of writing, Forbes rated him as the richest man or woman on the earth. Serial entrepreneurs are not restricted to the well-recognised illustrations this sort of as Elon Musk, Sir Richard Branson or Oprah Winfrey serial entrepreneurship is popular.

Business dynamism has very long been recognised as a important driver of combination results, with startups and young corporations playing a especially vital part (e.g. Haltiwanger 2012). Seemingly small adjustments to the numbers and development possible of startups may well leave big and persistent footprints on the mixture economic climate (see e.g. Clementi and Palazzo 2016, Sedláček and Sterk 2020). Therefore, knowledge the sources of company overall performance is of macroeconomic value and can aid notify coverage.

In a latest paper (Félix et al. 2021), we argue that entrepreneurs on their own are crucial determinants of organization performance. Our primary resource of information is a exclusive administrative dataset from Portugal, the Quadros de Pessoal. The unusual edge of the Quadros de Pessoal is that it permits us to website link person enterprise proprietors to their firms and observe equally person owners and the general performance of their firms over time. Employing this dataset, we document how companies of serial business owners compare to all other, ‘regular’ corporations and how crucial they are for mixture results, which includes best money inequality.

The serial entrepreneur premia

We start by defining serial entrepreneurship as the simultaneous ownership of several companies. Making use of this categorisation, we present that about 18% of all businesses are owned by serial entrepreneurs. In addition, the sectoral composition of serial entrepreneurship suggests that it occurs all over the entire economic system and is not an obscure attribute of only a few industries.

Next, we estimate ‘serial entrepreneur premia’ – the average big difference in a unique attribute (e.g. development or measurement) involving serial business owners and regular companies. We find that companies of serial business owners are about 60% much larger, approximately 25% less most likely to shut down, grow about 35% a lot quicker, and are 34% a lot more successful as opposed to regular corporations.

In addition, these premia are present all through firms’ life cycles. Determine 1 delivers a glimpse at some of these discrepancies. In particular, it plots typical agency measurement and exit fees by firm age, distinguishing concerning serial business owners and standard enterprises. The determine plainly demonstrates the excellent overall performance of serial entrepreneurs’ corporations above their whole everyday living cycles.

Determine 1 Organization dimensions and exit fees by age: Serial entrepreneur and common companies

Supply: Félix et al. (2021).

Finally, we also doc that this team of firms alone accounts for extra than one particular-third of mixture work generation and productivity progress. Specified that they depict fewer than one-fifth of all corporations, these values further more underscore their excellent effectiveness and value for the aggregate financial state.

Assortment compared to mastering

But what lies guiding the exceptional functionality of serial-entrepreneur companies? A single way to think about these dissimilarities concerning companies is that serial business owners are ‘better’ at functioning enterprises – for example, because of to innate identity features or favourable family backgrounds (e.g. Lindquist et al. 2016, Dalton et al. 2019). An choice check out is that organization proprietors step by step study (e.g. Guiso et al. 2016) or that their corporations are ‘lucky’ throughout the training course of their firms’ procedure (e.g. Hvide and Melling 2019). 

The difference in between this kind of ex-ante and ex-put up heterogeneity is essential not only for comprehension combination outcomes (e.g. Pugsley et al. 2018) but also for plan design and style (e.g. Lindquist et al. 2016).

To handle the earlier mentioned, we explicitly distinguish between ‘first’ and ‘subsequent’ organizations of serial business people. Very first corporations are the extremely very first companies serial business people have, i.e. right before proudly owning many firms and – efficiently – right before becoming labeled as a serial entrepreneur. 

Comparing the functionality of the initial firms of serial business people, their subsequent businesses, and common companies lets us to gauge the extent to which the excellent performance of serial-entrepreneur corporations relative to common enterprises is current from the onset (i.e. also for initially firms of serial business owners) or develops only little by little above time (i.e. only for subsequent firms of serial business people).

In our details, we observe that the very first and subsequent organizations of serial business owners have pretty comparable dynamics, substantially outperforming normal companies (Determine 2). Our outcomes, therefore, position to (variety on) ex-ante heterogeneity as a essential supply of serial entrepreneurs’ good results, alternatively than understanding or favourable ex-put up shocks.

Determine 2 Organization measurement and exit premiums by age: Typical firms and initial and subsequent corporations of serial business owners

Source: Félix et al. (2021).

As a subsequent move, we make use of the point that the Quadros de Pessoal dataset involves quite a few observable qualities of company owners. Estimating the contributions of particular person proprietor traits reveals that age and in particular training (e.g. Choi et al. 2021) can account for above 20% of the approximated premia. Even so, this continue to leaves a substantial chunk of the estimated differences concerning serial-entrepreneur and regular corporations unexplained, paving an avenue for long term investigate.

Serial entrepreneurship and major money inequality

Last but not least, we investigate the job serial business people participate in for top rated income inequality (defined as the share of profits accounted for by the top 10% earners). We borrow a basic analytical framework of entrepreneurship and inequality from Jones and Kim (2018) and lengthen it for the presence of serial business owners. In this framework, we display with pencil and paper that the prevalence of serial entrepreneurs boosts revenue inequality. 

The intuition is easy – the possession of a number of corporations serves, among the other issues, as a diversification of small business threat. Consequently, serial business owners enjoy, on typical, extended durations throughout which their (many) corporations continue being in operation. This, in change, supplies them with an possibility to mature their cash flow for extended.

We generalise this framework even more to permit for serial entrepreneur premia in business dimensions, expansion and exit and estimate this model by matching a vary of times in the Quadros de Pessoal dataset. Our outcomes recommend that, whilst serial business people stand for fewer than 3% of all business enterprise proprietors, they account for 10–20% of top profits inequality.

Concluding remarks

A large human body of analysis strives to comprehend the sources, and combination repercussions, of company-amount advancement. Our results lead to these experiments by pointing to the purpose of business people by themselves as important drivers of firms’ results. 

Our success serve two unique reasons. Initially, independently our results can be made use of to evaluate, establish, and parametrise (macroeconomic) models with heterogeneous firms which have obtained in great importance in current yrs. Second, our effects illustrate that learning serial entrepreneurship is not an obscure study specialized niche but can assistance further more our knowledge of crucial financial concerns.

Also, we imagine that our benefits open up up several avenues for foreseeable future exploration. Ought to existing state-of-the-artwork macroeconomic models with heterogeneous firms include the chance of serial entrepreneurship and, if so, how? Do companies of serial business people react to shocks and policies in the very same way as all other enterprises? Does serial entrepreneurship open up the doorway to novel, as of but unexplored, policy steps?

Therefore, even though Elon Musk by yourself has more than 61 million followers on Twitter, we assume that serial entrepreneurs are entitled to additional consideration continue to.


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Clementi, G L, and D Palazzo (2016), “Entry, exit, firm dynamics, and combination fluctuations”, American Economic Journal: Macroeconomics 8(3): 1–41.

Dalton, M, S Pekkala Kerr and W Kerr (2019), “Entrepreneurial personalities”,, 6 September.

Félix, S, S Karmakar and P Sedláček (2021), “Serial business owners, the macroeconomy and leading revenue inequality”, CEPR Dialogue Paper 16449.

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