Do Entrepreneurs Matter?

Entrepreneurs strongly affect firm outcomes. We use deaths of several hundred entrepreneurs as a source of exogenous variation, and find large and sustained effects of entrepreneurs at all levels of the firm performance distribution. Entrepreneurs strongly affect performance of both very young firms and more mature firms, and across the firm size distribution. The results appear stronger in ‘dynamic’ industries with higher education level, larger R&D expenses and higher sales growth. The effects appear to be driven by entrepreneur specialness rather than leadership transition; the effects of death of entrepreneur-managers is economically and statistically stronger than the death of managers that are not entrepreneurs. Overall, entrepreneurs play a large and unique role not previously empirically documented.