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Selection and Serial Entrepreneurs


  • I am grateful to Peter Thompson for advice and exceptional encouragement. I also thank Thomas Hellmann, Chuck Eesley, Serguey Braguinsky, Denis Gregoire, John Walsh, and participants at the 1st NBER Entrepreneurship Research Boot Camp for helpful discussions on this research idea. Thoughtful comments from two anonymous referees are truly appreciated.


There is substantial evidence that serial entrepreneurs outperform de novo entrepreneurs. But is this positive association between prior experience and performance the result of learning by doing or of selection on ability? This paper proposes a strategy that combines the fixed-effects model and IV estimations to distinguish empirically selection effects from learning. Using panel data from the NLSY79, I find that selection on ability is the more important determinant of serial business formation and the early performance of new businesses. In contrast, the effects of learning by doing are apparent only when the analysis focuses on founding new startups in sectors closely related to entrepreneurs’ previous ventures.