entrepreneurship, a phenomenon we label the small firm effect. We explore the origins of this small firm effect, identify four classes … those with prior preferences for autonomy, who are similarly drawn into entrepreneurship. Similarly, ability sorting plays a …-for-performance links and are drawn to entrepreneurship for the same reason, or because the skills required for success in small firms are …

relatively weak. Entrepreneurship policy needs to target particular groups, including women and less experienced business owners …