New venture creation: innovativeness, speed-to-breakeven and revenue tradeoffs

We present a Schumpeterian growth model with new venture creation, under uncertainty, which explains the tradeoff between speed-to-breakeven, revenue-at-breakeven and relates this to the level of innovation. We then explore the tradeoffs between these outcomes empirically in a unique sample of 331 information and communication technology (ICT) ventures using a multi-input, multi-output stochastic frontier model. We estimate the contribution of financial capital and labor input to the outcomes and the tradeoffs between them, as well as address heterogeneity across ventures. We find that more innovative (and therefore more uncertain) ventures have lower speed-to-breakeven and/or lower revenue-at-breakeven. Moreover, for all innovativeness levels, new ventures face a tradeoff between speed-to-breakeven and revenue-at-breakeven. Our results suggest that it is the availability of proprietary resources (founder equity and labor) that helps ventures overcome bottlenecks in the innovation process, and we propose a line of research to explain the (large) unexplained variation in venture creation efficiency

Employment or Self-employment: A Dynamic Utility Maximizing Model

This article presents a dynamic utility maximizing model of career choice between self employment and employment that takes into consideration the differences among people in terms of their initial utility toward job attributes and the likely changes to those utility weights as they mature. These differences between people effect the choice of career that maximizes their utility and leads to five optimal career paths. This dynamic utility maximizing model helps increase our understanding of why some people become self employed but importantly why and when some self employed switch to employment