The Control of High-Skill Labor and Entrepreneurship in the Early US Semiconductor Industry

Studies of entrepreneurship increasingly focus on the context of entrepreneurship, rather than on the characteristics of the entrepreneur. Arguing that the inability of particular firms to control high-skill labor is responsible for a critical component of contemporary entrepreneurship—technologically based spin-offs—the author provides a theoretical basis for the effects of career dynamics on entrepreneurship. A theory of entrepreneurship, drawing on human capital theory, skills–opportunity theory, and internal labor-market theory, links declines in firm market share to a disequilibrium in labor-market matches. That imbalance leads to the breakdown of control and the consequent generation of spin-offs. Combining theory with qualitative and quantitative evidence, support is drawn from a study of the US semiconductor industry from its beginning until its early maturity in the mid-1970s.