Early growth, limited persistence: User entrepreneurship and firm employment growth

This study examines how firms founded by user entrepreneurs differ from other entrepreneurial ventures in their employment growth over time. Using establishment-level data from the 2014 Rural Establishment Innovation Survey linked to the Longitudinal Business Database, we distinguish firms founded by user entrepreneurs from those founded by conventional entrepreneurs and business owners. To account for the skewed distribution of firm growth, we estimate quantile regression models of five-year employment growth rates. The results show that firms founded by user entrepreneurs experience stronger employment growth during their first five years, particularly in the middle-to-upper portion of the growth distribution, but this advantage weakens as firms mature. These findings underscore the potential value of timely support from entrepreneurial ecosystem organizations, such as incubators and accelerators, to help user-founded firms translate their early growth momentum into sustained growth.