Entrepreneurs, even more than employees, tend to locate in regions in which they have deep roots. Here, we examine the performance implications of these choices. Whereas one might expect entrepreneurs with deep roots to perform better because of their richer endowments of 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 the Danish population. Entrepreneurs’ ventures perform better – survive longer and generate greater cash flows and cumulative profits – when they locate in regions in which they have deep roots (‘home’ regions). This effect appears substantial, similar in magnitude to the value of having prior experience in the industry entered (i.e. specific human capital).

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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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This paper analyzes the relationship between core organizational change and the health of employees to illuminate the potential negative outcomes of change at the employees level. It relates to the ongoing debate over how employees react and respond to organizational change. I hypothesize that change increases the risk of negative stress, and I test this hypothesis using unusually comprehensive panel data on all stress-related medicine prescriptions for 92,980 employees in 1,526 of the largest Danish organizations. I find that the risk of receiving stress-related medication increases significantly for employees at organizations that change, especially those that undergo broad simultaneous changes to multiple core organizational structures. This illustrates that organizational changes are associated with significant risks of employee health problems, which could lead to organizational destabilization. These effects are further examined for employees at different levels of the organization and at firms of different sizes and from different sectors. I find that certain types of change appear less harmful and that some even significantly reduce stress.

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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]