Business & Management Studies

Abstract

An important question in economic development is who is responsible for creating more jobs: startups or established companies. Several researchers have claimed that entrepreneurs are responsible for most job creation, while others have found that it is the established companies. This becomes important in deciding which policy approaches to pursue: recruiting large companies to relocate with different financial and economic inducements or by relying on entrepreneurship. In this paper we perform a statistical analysis of job creation by entrepreneurs versus established companies. We use a data set that covers a larger time period than other studies, includes all industries and non-employers, and follows individual companies. We find that over the whole time period that established companies generated the greater number of jobs. However, in shorter time periods the entrepreneurs did. This may help in explaining some of the prior contradictory findings. But from a policy perspective, the findings suggest that both approaches are necessary.