Michael S. Dahl

Are You Experienced? Prior Experience and the Survival of New Organizations

This paper investigates the relationship between the level of pre‐entry experience of managers and founders, and the survival of their new firms. Using a comprehensive dataset covering the entire Danish labor market from 1980 to 2000, we are able to trace prior activities of all employees working in all Danish start‐ups with at least one employee. We examine whether spin‐offs from surviving parents, spin‐offs from exiting parents or other start‐ups are more likely to survive. Moreover, we investigate whether firms managed and founded by teams with higher levels of industry‐specific experience have a higher chance of surviving. We find that spin‐offs from a surviving parent and to a lesser degree industry‐specific experience positively affects the likelihood of survival. We also find that spin‐offs from a parent that exits are less likely to survive than either spin‐offs from surviving parents or other start‐ups.

Home Sweet Home: Entrepreneurs' Location Choices and the Performance of Their Ventures

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). This paper was accepted by Gerard P. Cachon, organizations.

Organizational Change and Employee Stress

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. This paper was accepted by Jesper Sorensen, organizations.

The Social Attachment to Place

Many theories either implicitly or explicitly assume that individuals readily move to places that improve their financial well-being. Other forces, however, offset these tendencies; for example, people often wish to remain close to family and friends. We introduce a methodology for determining how individuals weigh these countervailing forces, and estimate how both financial and social factors influence geographic mobility in the Danish population. Our results suggest that individuals respond to opportunities for higher pay elsewhere, but that their sensitivity to this factor pales in comparison to their preferences for living near family and friends.

Are Firm Growth Rates Random? Analysing Patterns and Dependencies

Using Danish firm data covering almost 9000 observations, we find significant proof that firm growth cannot be considered as a simple Gibrat growth process. Key variables, such as size, age, geographical location and industry structure are tested against firm growth rates in turnover and employment. Besides running the regressions on all observations, we also consider and find highly interesting patterns in an industry context. Thus, we conclude that firm growth cannot be considered idiosyncratic. Firm growth is highly dependent on industry and geography.

Fatherhood and Managerial Style How a Male CEO’s Children Affect the Wages of His Employees

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.

In Sickness and in Wealth Psychological and Sexual Costs of Income Comparison in Marriage

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 partners’ mental and physical health in ways that affect decisions on marriage, divorce, and careers. This article 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 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.

Geography, Joint Choices and the Reproduction of Gender Inequality

We examine the extent to which the gender wage gap stems from dual-earner couples jointly choosing where to live. If couples locate in places better suited for the man’s employment than for the woman’s, the resulting mismatch of women to employers will depress women’s wages. Examining data from Denmark, our analyses indicate that (1) Danish couples choose locations with higher expected wages for the man than for the woman, (2) the better matching of men in couples to local employers could account for up to 36 percent of the gender wage gap, and (3) the greatest asymmetry in the apparent importance of the man’s versus the woman’s potential earnings occurred among couples with young children and where the male partner accounted for a larger share of household income before the potential move.

Patterns and Collaborators of Innovation in the Primary Sector: A Study of the Danish Agriculture, Forestry and Fishery Industry

Based upon a large-scale survey and case studies of innovation we explore patterns of innovation activities in the Danish agricultural, forestry and fishery industries. Our primary focus areas are the sources and capabilities of innovation. We demonstrate that despite the fact that this industry is often regarded as low-tech there are still substantial innovation activities going on. Around 23 per cent of the 640 firms surveyed had product and/or process innovation, 24 per cent had other types of innovation. A total of 46 per cent had some type of innovation. Firms delivering directly to end-users were more likely to be innovative than those delivering to the processing or wholesale links of the value chain. Many of the innovative firms had no collaboration on innovation, and respondents generally claim that stimuli for innovation were primarily internal. We also demonstrate that the industry has a very well developed extended knowledge base, which is a vital source of information and knowledge for innovation. This may explain why traditional survey instruments do not fully capture the external sources of innovation.

The effects of becoming an entrepreneur on the use of psychotropics among entrepreneurs and their spouses.

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.