Human Capital as a Source of Innovative and Growth-Oriented Entrepreneurship: An Exploratory Study

Abstract

In this study we examine the role of human capital on the nature of entrepreneurial activities pursued in an economy. We suggest that to maximize expected utility, individuals with high actual human capital, those with higher education and labour market experience, seek greater compensation from entrepreneurship. This induces them to pursue forms of entrepreneurship that have the potential to maximize long term utility from their occupation choice decision. However, to deviate from a set career path and undertake the risk of entrepreneurship, such individuals need perceived human capital, the self-confidence that one´s high actual human capital can be fruitfully applied in the pursuit of an entrepreneurial career.We hypothesize that those with both high actual human capital and perceived human capital are more likely to pursue innovative and growth oriented entrepreneurship. We use a sample of nascent entrepreneurs collected following the Global Entrepreneurship Methodology (GEM). The main contribution of our study to provide empirical evidence on feedstock that generates quality entrepreneurial activities in an economy.