The model developed in this paper draws on human capital theory to explain how newly founded business ventures achieve long-term growth and reduce their chances of failure. Using a sample of 201 business start-ups and assessing growth and venture failure over a period of 12 years, we found that general and specific human capital lead to growth and failure in different ways. More specifically, we found that the effect of general human capital on failure was mediated by growth. Unexpectedly, specific human capital was not related to growth and had direct negative effects on business failure.

human capital theory
dx.doi.org/10.1111/j.1540-6520.2011.00487.x, hdl.handle.net/1765/31354
ERIM Top-Core Articles
Entrepreneurship: Theory and Practice
Accepted manuscript, first published online 24 October 2011
Erasmus Research Institute of Management

Rauch, A.J, & Rijsdijk, S.A. (2013). The Effects of General and Specific Human Capital on Long-Term Growth and Failure of Newly Founded Businesses. Entrepreneurship: Theory and Practice, 37(4), 923–941. doi:10.1111/j.1540-6520.2011.00487.x