Human Capital and the role of concurrent job search for nascent entrepreneurs

An individual’s human capital affects both the opportunities available through starting a business as well as the opportunity costs of forgoing employment opportunities. Drawing on the notions of search, evaluation, and uncertainty costs from decision theory, we argue that an individual’s human capital shapes whether nascent entrepreneurship and/or employment enters an individual’s consideration set when they are facing a career transition. We further propose that the opportunity costs of employment opportunities will be more salient for nascent entrepreneurs when they are concurrently seeking a new job, thereby affecting the outcome of their start-up attempts. We find support for our core propositions using a novel longitudinal dataset of individuals facing career transition as nascent entrepreneurs, job seekers or both.