College Student Startups and Employment Performance: Complements or Substitutes? Evidence from Korean Universities

This study analyzes the relationship between university graduates’ employment rates and its student startup activities to investigate whether they are complements or substitutes. We formulate 3 hypotheses that link university graduates’ employment rates and the number of student startups and their performance, controlling for universities’ several types of available resources to focus on the relationship between employability and startup activies. Data from 130 universities in South Korea ranging from 2017 to 2023 are utilized for the panel-data analysis. The findings of the research show that there is a significant relationship between a university graduates’ employment rates and its students’ business formation, indicating they are complementary. However, there is insufficient evidence to establish a significant relationship between a university graduates’ employment rates and job creation by student startups, despite the positive trend. The relationship between a university graduates’ employment rates and its student startups’ sales is positive and marginal significant. Our analysis holds important implications for both researchers and policy-makers regarding student startups in academic institutions. Recognizing the complementary relationship between university graduates’ employment prospects and student startups, efforts to integrate the startup support programs with employment support programs are needed. Since universities typically have separate programs for these different purposes, careful approaches should be implemented to ensure these programs address both objectives.