The effect of human capital on the start-up and growth of entrepreneurial firms; evidence from Cote d'Ivoire

This paper analyses the factors which determine individuals' choice into self-employment and the determinants of entrepreneurial success measured in terms of firm growth. A unique data set is used containing personal data of wage workers and entrepreneurs and data on entrepreneurial firms active in the manufacturing sector in Cote d'Ivoire. Entrepreneurial activity is found to be undertaken by individuals who succeed in increasing their entrepreneurial abilities and reducing the risk of starting a business through a learning process that takes place through ageing, professional experience, and apprenticeship or,alternatively, formal education. The learning process takes place both before and after entry into the industry, as firms grow into a larger size. Firms of entrepreneurs with higher levels of formal education grow more successfully as entrepreneurs catch up for the initial loss of on- the-job training and reach higher levels of entrepreneurial efficiency. However,entrepreneurship and firm growth are strongly affected by failures in the labour markets and financial markets. These market imperfections result in high transaction costs with a negative impact on growth opportunities of finns.nrpages: 26status: publishe