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Instrumental Value Theory and the Human Capital of Entrepreneurs

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  • Eli Gimmon
  • Jonathan Levie

Abstract

Given the contribution of Schumpeterian entrepreneurship to technological progress and well-being, the accuracy of investment decisions by venture capitalists is a societal issue. Venture capitalists find the human capital of entrepreneurs difficult to assess. This paper employs instrumental value theory to assess the impact of different human capital factors on the performance of new ventures. A meta-analysis of 29 previous empirical studies that examined the effect of founder's human capital on new venture performance suggested that instrumental value theory holds promise as a guide for research on entrepreneurs' human capital and new venture performance. It could also help venture capitalists to make better investment decisions, benefiting society in general.

Suggested Citation

  • Eli Gimmon & Jonathan Levie, 2009. "Instrumental Value Theory and the Human Capital of Entrepreneurs," Journal of Economic Issues, Taylor & Francis Journals, vol. 43(3), pages 715-732.
    • Handle: RePEc:mes:jeciss:v:43:y:2009:i:3:p:715-732
    DOI: 10.2753/JEI0021-3624430307
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    Cited by:

    1. Xinming Ge & Jinbo Wang, 2022. "A Meta-Analysis of the Relationship between Financing Efficiency and Entrepreneurial Vitality: Evidence from Chinese College Students," Sustainability, MDPI, vol. 14(17), pages 1-22, August.
    2. Gimmon, Eli & Levie, Jonathan, 2010. "Founder's human capital, external investment, and the survival of new high-technology ventures," Research Policy, Elsevier, vol. 39(9), pages 1214-1226, November.
    3. Samagaio, Antonio & Rodrigues, Ricardo, 2016. "Human capital and performance in young audit firms," Journal of Business Research, Elsevier, vol. 69(11), pages 5354-5359.

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