Scientists and engineers in small firms are far more likely than their large firm counterparts to enter entrepreneurship. We label this phenomenon the small firm effect and explore its origins. In particular, we identify four classes of explanations for the small firm effect--preference sorting, ability sorting, opportunity cost, and the possibility that workers in small firms develop entrepreneurial human capital--and examine the empirical evidence for each. We find that preference sorting does play a role in generating the small firm effect: small firms attract those with prior preferences for autonomy who are similarly drawn into entrepreneurship. Similarly, ability sorting plays a role: those who ultimately become entrepreneurs may be drawn first to small firms because they offer tighter pay-for-performance links and can subsequently improve their expected earnings by becoming entrepreneurs, or because the skills required for success in small firms are also valuable in entrepreneurship. Evidence suggests that although those with the very least to lose do enter entrepreneurship with greater frequency, opportunity cost has at best a modest role to play in explaining the small firm effect. Finally, we interpret evidence that prior experience in small firms predicts positive performance outcomes in the early stages of entrepreneurship as suggesting that workers in small firms may develop entrepreneurial human capital that makes them better entrepreneurs. This effect may be largest among those of high ability.entrepreneurship, employee mobility, human capital, small firms, spawning

Consumers respond positively to products tied to charity, particularly from sellers that are relatively new and hence have limited alternative means for assuring quality. We establish this result using data from a diverse group of eBay sellers who "experiment" with charity by varying the presence of a donation in a set of otherwise matched product listings. Most of charity's benefits accrue to sellers without extensive eBay histories. Consistent with charity serving as a quality signal, we find fewer customer complaints among charity-intensive sellers.

Consumers consistently express a willingness to favor socially responsible firms, but will they actually pay more for products linked to charitable donations, green production, and similar activities? To answer this question, we analyze a novel data set that matches identical products sold on eBay via charity and non-charity auctions. Items sold through charity auctions have prices that are 6% higher, on average, than those in non-charity auctions. Bidders appear to value charity auction revenue as a public good, as they submit bids relatively early within charity auctions, which stimulates other bidders to bid more aggressively.

Organization scholars have highlighted the value of relationships in fostering effective exchange, suggesting that repeated exchange creates a relational asset with latent value derived from elevated social connections, norms, and simple expectations of exchange continuity. Yet the empirical evidence supporting such claims remains largely indirect. As a consequence, few studies have been able to directly examine how contextual factors shape the accumulation of this relational asset or define its value in application. We directly measure the value of relationships between suppliers and a large buyer, using the buyer’s choices in Internet-enabled procurement auctions to estimate the degree to which stronger relationship histories with suppliers increase willingness to pay for high-volume commodity-like parts. Our setting also allows us to examine how this willingness to pay for relationships is shaped by the social context in which they develop and by the exchange context in which they are subsequently deployed, while minimizing the confounding influence any private individual interests have on the choice of exchange partners. Our empirical analysis suggests that, even for commodity parts, prior repeated exchange between firms constitutes a valuable relational asset. We also find evidence that suggests that both social mechanisms and incentive considerations underpin the value of relational capital. Further, we find that relational capital exhibits more value when exchange hazards are greater.

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