Human capital and entrepreneurial success: A meta-analytical review

doi:10.1016/j.jbusvent.2009.09.004

Journal of Business Venturing

Volume 26, Issue 3, May 2011, Pages 341-358

https://doi.org/10.1016/j.jbusvent.2009.09.004 Get rights and content

Abstract

The study meta-analytically integrates results from three decades of human capital research in entrepreneurship. Based on 70 independent samples (N = 24,733), we found a significant but small relationship between human capital and success (r_c = .098). We examined theoretically derived moderators of this relationship referring to conceptualizations of human capital, to context, and to measurement of success. The relationship was higher for outcomes of human capital investments (knowledge/skills) than for human capital investments (education/experience), for human capital with high task-relatedness compared to low task-relatedness, for young businesses compared to old businesses, and for the dependent variable size compared to growth or profitability. Findings are relevant for practitioners (lenders, policy makers, educators) and for future research. Our findings show that future research should pursue moderator approaches to study the effects of human capital on success. Further, human capital is most important if it is task-related and if it consists of outcomes of human capital investments rather than human capital investments; this suggests that research should overcome a static view of human capital and should rather investigate the processes of learning, knowledge acquisition, and the transfer of knowledge to entrepreneurial tasks.

Section snippets

Executive summary

For more than three decades entrepreneurship researchers have been interested in the relationship between human capital – including education, experience, knowledge, and skills – and success. A number of arguments suggest a positive relationship between human capital and success. Human capital increases owners' capabilities of discovering and exploiting business opportunities. Human capital helps owners to acquire other utilitarian resources such as financial and physical capital, and it

The concept of human capital

Human capital theory was originally developed to estimate employees' income distribution from their investments in human capital (Becker, 1964, Mincer, 1958). The theory has been adopted by entrepreneurship researchers and has stimulated a considerable body of directly related research (e.g., ⁎Chandler and Hanks, 1998, ⁎Davidsson and Honig, 2003, ⁎Gimeno et al., 1997, ⁎Rauch et al., 2005a) and led to an even larger number of studies that include human capital into their prediction models of

Selection criteria

We focused on studies defining entrepreneurship as business ownership and active management (Stewart and Roth, 2001). To be included in the meta-analysis, studies were required to report a correlation between an indicator of human capital and a measure of entrepreneurial success or a statistic that allowed the transformation into a correlation measure. The success measure needed to address the entrepreneurial firm in order to ensure a consistent level of analysis. We considered indicators that

Results

Our results supported Hypothesis 1 which proposed a positive overall relationship between human capital and success (Table 4). The sample size weighted and reliability corrected overall effect across studies was r_c = .098. Moreover, the boundaries of the 95% confidence were r = .059 and r = .093 (Table 4), indicating that the overall effect was significant. File drawer analysis according to Rosenthal (1979) indicated a required number of K = 5778 studies with zero effects to make the effect

Discussion

We integrated over 30 years of human capital research in entrepreneurship in our meta-analysis; the analysis is based on 70 studies with an overall sample size of 24,733. The magnitude of the population effect between human capital and entrepreneurial success was estimated to be r_c = .098. Thus, we can conclude that there is an overall positive relationship between human capital and entrepreneurial success. However, this effect is low given the high amount of attention the concept of human capital

Conclusion

This meta-analysis provides a useful estimate of the true relationship between human capital and entrepreneurial success. The overall effect size was .098. While this effect size is small by statistical standards (Cohen, 1977), it is as high as, for instance, the correlation between planning and success (r = .10; Brinckmann et al., 2010). While traditional statistical reasoning may argue against the practical importance of such correlations, these correlations may well have important

Acknowledgements

The study was partially supported by the “Psychological Factors of Entrepreneurial Success in China and Germany” (FR 638/23-1) a grant of the German Research Foundation (Deutsche Forschungsgemeinschaft).

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²: References marked with an asterisk indicate studies in the meta-analysis.

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