Studies have consistently found that entrepreneurs who enter industries in which they have prior experience as employees perform better than others. We nevertheless know relatively little about what accounts for these differences. The presumed explanation has generally been that these entrepreneurs benefit from the knowledge that they gained in their former jobs. But they might also differ from other entrepreneurs on a variety of other dimensions: Preferential access to resources or differing motivations, for example, may account for their decisions to enter known industries instead of new ones. Combining novel data from a representative survey of entrepreneurs in Denmark with a matched employer- employee database of all residents in Denmark, we examined how entrepreneurs with prior industry experience differed from those without and the extent to which these differences could account for the performance premium associated with prior industry experience. We found that those with industry experience came from younger, smaller and more profitable firms, and that they recruited more experienced employees, worked harder and placed less value on having flexible hours. The recruitment of more experienced employees and the greater effort exerted appeared to account for at least some of the performance advantage associated with prior industry experience.

Accepted for Industrial and Corporate Change, Download on SSRN

As the percentage of wives outearning their husbands grows, the traditional social norm of the male breadwinner is challenged. The upward income comparison of the husband may cause psychological distress that affects both partners’ mental and physical health in ways that impact decisions on marriage, divorce, and careers. This paper studies this impact through sexual and mental health problems. Using wage and prescription medication data from Denmark, we implement a regression discontinuity design to show that men outearned by their wives are more likely to use erectile dysfunction (ED) medication than their male breadwinner counterparts, even when this inequality is small. Breadwinner wives suffer increased insomnia/anxiety medication usage, with similar effects for men. We find no effects for unmarried couples or for men who earned less than their fiancée prior to marriage. Our results suggest that social norms play important roles in dictating how individuals respond to upward social comparisons.

Out now in Personality and Social Psychology Bulletin, 39(3), pp. 359-374.

Motivated by a growing literature in the social sciences suggesting that the transition to fatherhood has a profound effect on men’s values, we study how the wages of employees change after a male chief executive officer (CEO) has children, using comprehensive panel data on the employees, CEOs, and families of CEOs in all but the smallest Danish firms between 1996 and 2006. We find that (a) a male CEO generally pays his employees less generously after fathering a child, (b) the birth of a daughter has a less negative influence on wages than does the birth of a son and has a positive influence if the daughter is the CEO’s first, and (c) the wages of female employees are less adversely affected than are those of male employees and positively affected by the CEO’s first child of either gender. We also find that male CEOs pay themselves more after fathering a child, especially after fathering a son. These results are consistent with a desire by the CEO to husband more resources for his family after fathering a child and the psychological priming of the CEO’s generosity after the birth of his first daughter and specifically toward women after the birth of his first child of either gender.

Out now in Administrative Science Quarterly, 57(4), pp. 669-693 (2012)

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 start-ups. 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 spin-off).

Management Science, June 2012, vol. 58 no. 6, pp. 1059-1071. 

Download here at Informs Online

We examine the extent to which the gender wage gap may depend on the fact that dual-earner couples must jointly choose a place to live and work. If couples systematically locate in places better suited for the advancement of the husband’s career than to the wife’s, those choices would then tend to depress the wages of married women relative to married men. Examining data from Denmark, our results suggest (i) that Danish couples weight men’s potential wage gains much more heavily than women’s in their decisions of whether to and where to move, (ii) that these intra-couple preferences may account for as much as 36% of the gender wage gap in Denmark, and (iii) that, ultimately, these differential weightings appear to reflect gender roles, to a large extent inherited from the wife’ parents. We therefore demonstrate that systematic gender inequality can emerge from unexpected places and processes.

Download working paper on SSRN

Read more about the paper

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.

Management Science, Vol. 53, No. 2, pp. 240-256 (2011) Download here [DOI Link]

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.

Scandinavian Journal of Public Health, Vol. 38, No. 8, pp. 857-863 (2010)

Download here [DOI Link]

From the EMR website:

EMR Best Paper Award – Annual Prize

We are delighted to announce the inauguration of an EMR ‘Best Paper Award’. The recipients are Michael Dahl and Olav Sorensen for their paper, ‘The Embedded Entrepreneur’, which appeared in Volume 6, Issue 3 of the Journal. The winners received a prize of €1000, and certificates were presented at the recent EURAM conference in Rome.

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).

Management Science, Vol. 54, in print (2012) – Available through Articles in Advance – Download here [DOI Link]