Organizational Change and Employee Stress – Out now

Michael S. Dahl

This article analyzes the relationship between organizational change and employee health. It illuminates the potentially negative outcomes of change at the level of the employee. In addition, it relates to the ongoing debate over how employees react to and respond to organizational change. I hypothesize that change increases the risk of negative stress, and I test this hypothesis using a comprehensive panel data set of all stress-related medicine prescriptions for 92,860 employees working in 1,517 of the largest Danish organizations. The findings suggest that the risk of receiving stress-related medication increases significantly for employees at organizations that change, especially those that undergo broad simultaneous changes along several dimensions. Thus, organizational changes are associated with significant risks of employee health problems. These effects are further explored with respect to employees at different hierarchical levels as well as at firms of different sizes and from different sectors.

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The effects of becoming an entrepreneur on the use of psychotropics among entrepreneurs and their spouses

Michael S. Dahl, Jimmi Nielsen (Unit for Psychiatric Research, Aalborg Psychiatric Hospital, Aarhus University Hospital) and Ramin Mojtabai (Department of Mental Health, Johns Hopkins Bloomberg School of Public Health)

Aims: Entering entrepreneurship (i.e. becoming an entrepreneur) is known to be a demanding activity with increased workload, financial uncertainty and increased levels of stress. However, there are no systematic studies on how entering entrepreneurship affects the people involved.

Methods: The authors investigated prescriptions of psychotropics for 6,221 first-time entrepreneurs from 2001—2004 and their 2,381 spouses in the first two years after becoming entrepreneurs in a matched case-control study using linked data from three Danish national registries: The Danish database for Labor Market Research, the Danish Entrepreneurship database and the Danish Prescription database.

Results: Entrepreneurs were more likely to fill prescriptions at pharmacies for sedatives/hypnotics (adjusted odds ratio (AOR): 1.45 [95% CI: 1.26—1.66], p < .0001). However, they were less likely to fill prescriptions for antidepressants (AOR: 0.74 [95% CI: 0.59—0.92] p = 0.007). Spouses of these entrepreneurs were also more likely to fill prescriptions for sedatives/hypnotics (AOR: 1.36 [95% CI: 1.10—1.67], p = 0.005). No difference in prescription of antidepressants was found for spouses.

Conclusions: This study showed that there was a significant relation between entering entrepreneurship and receiving prescriptions for sedative/hypnotics both among the entrepreneurs themselves and their spouses, suggesting that entering entrepreneurship may be associated with increased stress for both the entrepreneurs and their families.

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Home Sweet Home: Entrepreneurs’ Location Choices and the Performance of Their Ventures

Michael S. Dahl and Olav Sorenson

Entrepreneurs, even more than employees, tend to locate in regions in which they have deep roots (‘home’ regions). Here, we examine the performance implications of these choices. Whereas one might expect entrepreneurs to perform better in these regions because of their richer endowments of regionally-embedded social capital, they might also perform worse if their location choices rather reflect a preference for spending time with family and friends. We examine this question using comprehensive data on Danish startups. Ventures perform better – survive longer and generate greater annual profits and cash flows – when located in regions in which their founders have lived longer. This effect appears substantial, similar in size to the value of prior experience in the industry (i.e. to being a spinoff).

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The Devil Dwells in the Tails: A Quantile Regression Approach to Firm Growth – Out now

Toke Reichstein, Michael S. Dahl, Bernd Ebersberger and Morten B. Jensen

This paper explores the firm growth rate distribution in a Gibrat’s Law context. The aim is to provide an empirical exploration of the determinants of firm growth. The work is novel in two respects. First, rather than limiting the analysis to focus on the conditional mean growth level, we investigate the complete shape of the distribution. Second, we show that the differences in the firm growth rate process between large and small firms are highly circumstantial. That industry dynamics have a substantial influence on the relationship between firm size and firm growth. The data used includes more than 9000 Danish firms from manufacturing, services and construction. We provide robust evidence indicating that firm growth studies should be less obsessed with explaining means and instead look to other parts of the firm growth rate distribution.

Journal of Evolutionary Economics, Vol. 20, No. 2, pp. 219-231 (2010)

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Paper accepted for Social Forces

My paper with Olav Sorenson on the migration of blue collar workers has been accepted for publication in Social Forces, one of the World’s leading sociology journals. We introduce a new method for estimating the financial value of social factors and show how the location choice of blue collar workers depend strongly on social factors and less on financial incentives.

Link to abstract, DOI link to paper

The Migration of Technical Workers – Out now

Michael S. Dahl and Olav Sorenson

Using panel data on the Danish population, we estimated the revealed preferences of scientists and engineers for the places in which they choose to work. Our results indicate that these technical workers exhibit substantial sensitivity to differences in wages but that they have even stronger preferences for living close to family and friends. The magnitude of these preferences, moreover, suggests that the greater geographic mobility of scientists and engineers, relative to the population as a whole, stems from more pronounced variation across regions in the wages that they can expect. These results remain robust to estimation on a sample of individuals who must select new places of work for reasons unrelated to their preferences—those who had been employed at establishments that discontinued operations.

Michael S. Dahl and Olav Sorenson (2010) “The migration of technical workers”,Journal of Urban Economics, Vol. 67 (1), pp. 33-45 [DOI Link]

The Embedded Entrepreneur – Out now

Michael S. Dahl and Olav Sorenson

Using comprehensive data on the Danish population, this paper examines the determinants of entrepreneurs’ choices of where to locate their new ventures. Our findings suggest that entrepreneurs place much more emphasis on being close to family and friends than on regional characteristics that might influence the performance of their ventures when deciding where to locate those businesses. Two factors could explain our findings: On the one hand, entrepreneurs may simply value proximity to family and friends. On the other hand, these relationships may help them to assemble the assets and to recruit the personnel that they need to succeed in their ventures. Our results suggest that the former plays the greater role in entrepreneurs’ location choices.

Update, May 28: Received the EMR Best Paper Award for 2009

Michael S. Dahl and Olav Sorenson (2009) “The embedded entrepreneur”, European Management Review, Vol. 6, pp. 172-181 [DOI Link] – Download here

The Social Attachment to Place

Michael S. Dahl and Olav Sorenson

Many theories either implicitly or explicitly assume that individuals readily move to locations that improve their financial well being. Other forces, however, counteract these tendencies; for example, people often wish to remain close to family and friends. We introduce a methodology for determining how individuals weight these countervailing forces, and estimate how both financial incentives and social factors influence the probability of geographic mobility in the Danish population from 2002 to 2003. Our results suggest that individuals respond to opportunities for higher pay elsewhere, but that their sensitivity to this factor pales in comparison to their preferences for living near family and friends.

Social Forces, Vol. 89, No. 2, December 2010, DOI link to paper

Are You Experienced? Prior Experience of Managers and the Survival of New Organisations

Michael S. Dahl and Toke Reichstein

This paper investigates the relationship between the experiences of managers and the likelihood of survival of their new firms. We take advantage of a comprehensive data-set covering the entire Danish labour market from 1980-2000. This is used to trace the activities of top ranked members of new firms prior to the founding and follow the fate of their firms after the founding.

Michael S. Dahl and Toke Reichstein (2007), “Are You Experienced? Prior Experience and the Survival of New Organizations“, Industry and Innovation. Vol. 14, No. 5, pp. 497-511. ISSN: 1366-2716. [DOI Link]

Social networks in the R&D process: the case of the wireless communication industry around Aalborg, Denmark

Michael S. Dahl and Christian Ø. R. Pedersen (now Christian R. Østergaard)

Whether social networks diffuse knowledge across firm boundaries has been the topic of much debate. To inform these theories, this article considers two questions. First, who has contacts across firm boundaries? And second, when do these relations diffuse knowledge? Our empirical evidence comes from a survey of 346 engineers in the wireless communication industry around Aalborg in Northern Denmark. Our analysis finds that social contact between these engineers is frequent and is used to diffuse knowledge that receivers find useful. More experienced engineers are more likely to receive valuable knowledge from their networks. These findings show that the long-term relationships, which are more likely based on trust and reputation, are also more likely to be a channel valuable knowledge.

Michael S. Dahl and Christian Ø. R. Pedersen (2005), “Social Networks in the R&D Process: The Case of the Wireless Communication Industry Around Aalborg, Denmark”, Journal of Engineering and Technology Management. Vol. 22, No. 1-2, pp. 75-92. ISSN: 0923-4748. [DOI Link]