nep-ent New Economics Papers
on Entrepreneurship
Issue of 2005‒01‒09
twelve papers chosen by
Marcus Dejardin
Facultés Universitaires Notre-Dame de la Paix

  1. The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike? By Constant, Amelie; Zimmermann, Klaus F.
  2. The Persistence of Regional New Business Formation-Activity over Time - Assessing the Potential of Policy Promotion Programs By Michael Fritsch; Pamela Mueller
  3. Venture Capital Investment and Labor Market Performance: New Empirical Evidence for OECD Countries By Belke, Ansgar; Schaal, Andreas
  4. Determinants of Entry in the Indian Manufacturing Sector By Basant Rakesh; Saha Subhendra Nath
  5. Geneses of labour market turnover: Job search and entrepreneurial aspirations on-the-job By Ari Hyytinen; Pekka Ilmakunnas
  6. Analyzing the Effectiveness of University Technology Transfer: Implications for Entrepreneurship Education By Donald S. Siegel; Phillip H. Phan
  7. Do Government Policies that Promote Competition Encourage or Discourage New Product and Process Development in Low and Middle-Income Countries? By George Clarke
  8. Micro and nanotechnology commercialization: balance between exploration and exploitation By WHC Knol
  9. Nanotechnology and business opportunities: scenarios as awareness instrument By Erik Knol
  10. Credit Constraints and Determinants of the Cost of Capital in Vietnamese Manufacturing By John Rand
  11. Firm Financing in India: Recent Risks and Patterns By Inessa Love; Maria Soledad Martinez Peria
  12. Creditos a PyMEs en Argentina: Racionamiento crediticio con oferta ilimitada de dinero By Agustin Filippo; Daniel Kostzer; Diego Schleser

  1. By: Constant, Amelie (IZA Bonn); Zimmermann, Klaus F. (IZA Bonn, University of Bonn and DIW Berlin)
    Abstract: This paper uses a state of the art three-stage technique to identify the characteristics of the self-employed immigrant and native men in Germany and to understand their underlying drive into self-employment. Employing data from the German Socioeconomic Panel 2000 release we find that self-employment is not significantly affected by exposure to Germany or by human capital. But this choice has a very strong intergenerational link and it is also related to homeownership and financial worries. While individuals are strongly pulled into selfemployment if it offers higher earnings, immigrants are additionally pushed into selfemployment when they feel discriminated. Married immigrants are more likely to go into selfemployment, but less likely when they have young children. Immigrants living with foreign passports in ethnic households are more likely self-employed than native Germans. The earnings of self-employed men increase with exposure to Germany, hours worked and occupational prestige; they decrease with high regional unemployment to vacancies ratios. Everything else equal, the earnings of self-employed Germans are not much different from the earnings of the self-employed immigrants, including those who have become German citizens. However, immigrants suffer a strong earnings penalty if they feel discriminated against while they receive a premium if they are German educated.
    Keywords: entrepreneurship, self-employment, occupational choice, immigrants, wage differentials
    JEL: J23 M13 J24 J61 J31
    Date: 2004–12
  2. By: Michael Fritsch; Pamela Mueller
    Abstract: We investigate regional differences in the level and the development of regional new business formation activity. There is a pronounced variance of start-up rates across the regions. The level of regional new firm formation is rather path-dependent so that changes are relatively small. The main factors determining the level of regional start-ups are innovation and entrepreneurship. These factors also seem to be responsible for changes in the level of regional new business formation. In addition, unemployment plays a role. Steering innovation and creating an entrepreneurial atmosphere could be an appropriate starting point for policy measures that try to promote start-ups. Our empirical evidence strongly suggests that such measures may have significant effect only in the long run.
    Keywords: New businesses, entrepreneurship, growth regimes, time lags
    JEL: M13 O1 O18 R11
    Date: 2005–01
  3. By: Belke, Ansgar (University of Hohenheim and IZA Bonn); Schaal, Andreas (University of Hohenheim)
    Abstract: Anglo-Saxon countries have been successful in the 1990s concerning labor market performance compared to the former role models Germany and Japan. This reversal in relative economic performance might be related to idiosyncracies in financial markets with bank-based financial markets as in Germany and Japan being possibly inferior to stockmarket based financial markets in turbulent times and when approaching the economic frontier. A cleavage is related to venture capital markets which are flourishing on Anglo- Saxon but not on German type financial markets. Venture capital is crucial for financing structural change, new firms and innovations and therefore possibly also nowadays for employment growth.
    Keywords: labor markets, venture capital, unemployment, new economy, panel data analysis
    JEL: E22 E24 E44 G24 G32
    Date: 2004–12
  4. By: Basant Rakesh; Saha Subhendra Nath
    Abstract: Since 1991, the Indian economy has experienced major structural and policy changes. These changes were expected to reduce barriers to entry and increase competition. While anecdotal evidence seems to support the contention that contestability of various product markets in India has increased in recent years, due to easier entry conditions, no study has attempted a detailed empirical analysis of the same. In exploring the determinants of entry, two specific contributions are made: one, heterogeneity of potential entrants is recognized; two, appropriate econometric techniques are used for estimating the relationships. In the context of the emerging needs to study determinants of entry in the current Indian context and the research gaps, the study (1) identifies key factors that determine entry into the Indian manufacturing sector; (2) explores the difference in the factors that determine entry of different types of entrants and different modes of entry; and shows that it is analytically useful to distinguish between the impact of various causal factors on the incidence vis-à-vis extent of entry into a sector. While achieving the above objectives, the paper provides insights that will be useful for policy makers and managers designing strategies for incumbents and potential entrants.
    Date: 2005–01–05
  5. By: Ari Hyytinen (Research Institute of the Finnish Economy ETLA); Pekka Ilmakunnas (Helsinki School of Economics)
    Abstract: In this paper we study the labour market behavior of employed individuals that have entrepreneurial aspirations in addition to aspirations to switch job. We analyze empirically these two “search processes” side-by-side and report three main findings: First, neither entrepreneurial aspirations nor aspirations to switch job are uncommon, but only few are engaged in both search processes. Second, the two processes are not alike: It is more difficult to empirically explain entrepreneurial aspirations than aspirations to switch job. Only few observable characteristics of the employed are related to both processes. Varied experience and job dissatisfaction are directly related to the probability of having entrepreneurial aspirations and aspirations to switch job, while job tenure is inversely related to them. Finally, the two processes are not conditionally independent. Unobservable heterogeneity common to many non-searchers drives this result.
    Keywords: entrepreneurship, job search, experience, job satisfaction
    JEL: J
    Date: 2005–01–04
  6. By: Donald S. Siegel (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA); Phillip H. Phan (Lally School of Management & Technology, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA)
    Abstract: We review and synthesize the burgeoning literature on institutions and agents engaged in the commercialization of university-based intellectual property. These studies indicate that institutional incentives and organizational practices both play an important role in enhancing the effectiveness of technology transfer. We conclude that university technology transfer should be considered from a strategic perspective. Institutions that choose to stress the entrepreneurial dimension of technology transfer need to address skill deficiencies in technology transfer offices (TTOs), reward systems that are inconsistent with enhanced entrepreneurial activity, and education/training for faculty members, post-docs, and graduate students relating to interactions with entrepreneurs. Business schools at these universities can play a major role in addressing these skill and educational deficiencies, through the delivery of targeted programs to technology licensing officers and members of the campus community wishing to launch startup firms.
    JEL: M13 D24 L31 O31 O32
    Date: 2004–12
  7. By: George Clarke (World Bank)
    Abstract: Previous work has shown that firms in low and middle-income countries in Eastern Europe and Central Asia that feel greater pressure to innovate from their competitors are more likely to introduce new products and services than firms that do not feel pressure (Carlin and others 2001; World Bank 2004). However, competition also appears to affect innovation in other ways. In particular, firms in these countries that face greater price competition appear to be less likely to innovate than other firms (Carlin and others 2001). Clarke assesses how competition and trade policy affect these different aspects of competition and, consequently, assesses their net impact on innovation. He finds that reducing tariffs and enacting and enforcing competition laws modestly increases both the pressure that firms feel regarding innovation and the level of price competition in the domestic economy. The net impact that lower tariffs have on new product and process development appears to be negative but small—for the most part the opposing effects cancel out. In contrast, stricter competition laws and better enforcement of those laws appear to increase the likelihood of new product and process development, especially when competition is treated as endogenous to innovation. This paper—a product of the Growth and Investment Team, Development Research Group—is part of a larger effort in the group to understand the determinants of competition.
    Keywords: Industry; International Economics; Private Sector Development
    Date: 2005–01–03
  8. By: WHC Knol (Qeam)
    Abstract: Innovative materials, components, and systems based on micro and nanotechnologies are recognized as promising growth innovators. The coming years the commercialization of micro and nanotechnology will be extended, but in order to commercialize micro and nanotechnology successfully, besides exploration a parallel focus should be aimed at exploitation. This paper presents in a brief and non-exhaustive manor a theoretical introduction and two company introductions related to exploitation and exploration focus embedded in the innovation development process to commercialize customer-oriented applications. A balanced approach between exploration and exploitation within organizations business, technological, and scientific domain could sharpen micro and nanotechnology companies into sustainable competitive market-driven enterprises.
    JEL: O P
    Date: 2005–01–03
  9. By: Erik Knol (Qeam)
    Abstract: For a few years now, nanotechnology has been recognised as a promising new growth innovator. This leads to a shift from the exploration of nanotechnology knowledge towards a phase of exploitation. The coming years this commercialisation of nanotechnology will be extended. Nanotechnology is a disruptive technology phenomenon, which leads to more difficulties in overseeing business opportunities. Additionally, the fact that high-tech small firms, especially those dealing with nanotechnology, are highly interested in developments in science and technology, begs the question how to stimulate the awareness for (new) business opportunities in nanotechnology within these firms. A promising strategy to stimulate learning and awareness of business opportunities in nanotechnology is the use of scenarios. These projections focused on uncertainty stretch the mental model of entrepreneurs and/or managers and have the ability to activate learning processes. This paper presents the (theoretical) fundaments of scenario usage in relation to the recognition of business opportunities in nanotechnology.
    JEL: L
    Date: 2005–01–03
  10. By: John Rand (Institute of Economics, University of Copenhagen)
    Abstract: This paper examines the extent to which borrowing constraints restrict firm access to credit and identifies individual, firm, and loan characteristics, which determine the cost of capital in Vietnamese manufacturing. Using direct information from a Vietnamese enterprise survey I show that 14 percent of the enterprises are credit constrained, and these enterprises would increase their debt holdings by 34 percent if borrowing constraints were relaxed. Moreover, it emerges that informal credit markets play an important role for fast growing firms. Enterprises do not appear to have the necessary time to go through the many administrative difficulties in the formal credit system if they want to "seize the day". Finally, collateralized loans face larger interest rates, explained by the significant influence of "policy lending" in Vietnamese credit markets.
    Keywords: financial markets; credit constraints; Vietnam
    JEL: O16 O53
    Date: 2004–12
  11. By: Inessa Love; Maria Soledad Martinez Peria (World Bank)
    Abstract: Using balance sheet information for nearly 6,000 firms between 1994–2003, Love and Martinez Peria investigate recent firm financing patterns in India. They document the overall use of debt and, in particular, the role of bank financing (short-term and long-term), trade credit, intra-business group borrowing, and foreign financing. The authors examine financing patterns over time and explore differences across firms by sector, age, ownership type, export orientation, and, in particular, size. In terms of trends, they find that while debt to asset ratios have been relatively stable, nominal debt growth has slowed down in recent years. At the same time, firms’ repayment capacity, as measured by the interest coverage ratio, has exhibited a U-shaped pattern falling during 1997–99 and recovering in recent years. Throughout the period of study, bank financing as a share of total debt has increased, while borrowing from nonbank financial institutions fell sharply. In terms of differences across firms, the most robust finding is that debt levels increase with firm size. Smaller firms have especially less debt relative to larger firms if they are young (below 10 years since incorporation), if they are in the manufacturing sector, and if they are located in Southern India. Furthermore, while the ratio of debt to assets has been relatively stable for large firms, the authors observe a significant decline for smaller firms. Overall, the findings presented provide suggestive (but not definite) evidence of stronger credit constraints for smaller firms. This paper—a product of the Finance Team, Development Research Group—is part of a larger effort in the department to study access to finance.
    Keywords: Domestic Finance
    Date: 2005–01–05
  12. By: Agustin Filippo (Universidad de Buenos Aires); Daniel Kostzer (Min. de Trabajo Universidad de Buenos Aires); Diego Schleser (Min. de Trabajo)
    Abstract: El sistema financiero argentino experimentó fuertes cambios durante la década de los noventa. Las nuevas reglas de la economía transformaron un sistema caracterizado por la “represión financiera” en otro, regido por el mercado y la competencia. Como resultado, aumentó la magnitud de los fondos intermediados, en un contexto de tasas de interés reales positivas e internacionalización de los flujos de capitales. La creciente articulación con las finanzas internacionales y la enunciación de nuevas modalidades de funcionamiento del sistema financiero hacían presagiar cambios significativos, tanto cuantitativos como cualitativos en la asignación de crédito al sector privado. Con el objetivo de examinar las condiciones de accesibilidad al crédito por parte de las empresas argentinas, este estudio avanzó en dos direcciones. Por un lado, fueron analizados los procesos de asignación de créditos que siguen los bancos comerciales. Por el otro, se estudiaron econométricamente las características de las empresas, a fin de detectar aquéllas que son exitosas en términos de acceso al crédito. Entre las conclusiones de este estudio, se muestra que el contexto de oferta casi ilimitada de dinero generado por las nuevas condiciones no fue acompañado de una mejor asignación del crédito a las empresas de menor tamaño relativo. Parecen ser válidos en el caso argentino, los criterios de racionamiento crediticio, descritos por la literatura económica.
    Keywords: firm loans, employment, crisis, Argentina, banks
    JEL: G
    Date: 2005–01–05

This nep-ent issue is ©2005 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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