nep-ent New Economics Papers
on Entrepreneurship
Issue of 2005‒03‒13
ten papers chosen by
Marcus Dejardin
Facultés Universitaires Notre-Dame de la Paix

  1. Does Self-Employment Reduce Unemployment? By David B. Audretsch; Roy Thurik; Andre van Stel; M.A. Carree
  2. The Missing Link By Zoltan J. Acs; Bo Carlsson; Pontus Braunerhjelm; David B. Audretsch
  3. Agglomeration economies and entrepreneurship: testing for spatial externalities in the Dutch ICT industry By Erik Stam; Frank G. van Oort
  4. The determinants of occupational choice in Colombia : an empirical analysis By Guillaume Destré; Valentine Henrard
  6. Internet Entrepreneurship: Networks and Performance of Internet Ventures In China By BAT BATJARGAL
  7. Network Triads: Transitivity, Referral and Venture Capital Decisions in China and Russia By BAT BATJARGAL
  8. Is innovation persistent at the firm Level . An econometric examination comparing the propensity score and regression methods By Emmanuel Duguet; Stéphanie Monjon
  9. Comparative advantage and heterogeneous firms By Andrew Bernard; Stephen Redding; Peter Schott
  10. Quality of Institutions, Credit Markets and Bankruptcy By Christa Hainz

  1. By: David B. Audretsch; Roy Thurik; Andre van Stel; M.A. Carree
    Abstract: This paper investigates the dynamic interrelationship between self-employment and unemployment rates. On the one hand, unemployment rates may stimulate start-up activity of self-employed. On the other hand, higher rates of self-employment may indicate increased entrepreneurial activity reducing unemployment in subsequent periods. These two effects have resulted in considerable ambiguities about the interrelationship between unemployment and entrepreneurial activity. This paper introduces a two-equation vector autoregression model capable of reconciling these ambiguities and tests it for data of 23 OECD countries over the period 1974-2002. The empirical results confirm the two distinct relationships between unemploy-ment and self-employment, i.e. "refugee" and "entrepreneurial" effects. We also find that the "entrepreneu-rial" effects are considerably stronger than the "refugee" effects.
    Keywords: entrepreneurship, Gibrat's Law, self-employment, unemployment
    JEL: L11 M13
  2. By: Zoltan J. Acs; Bo Carlsson; Pontus Braunerhjelm; David B. Audretsch
    Abstract: The intellectual breakthrough contributed by the new growth theory was the recognition that investments in knowledge and human capital endogenously generate economic growth through the spillover of knowledge. Endogenous growth theory does not explain how or why spillovers occur. The missing link is the mechanism converting knowledge into economically relevant knowledge. This paper develops a model that introduces a filter between knowledge and economic knowledge and identifies entrepreneurship as a mechanism that reduces the knowledge filter. A cross-country regression analysis over the period 1981-2001 provides empirical support for the model. We conclude that public policies facilitating knowledge spillovers through entrepreneurship may be an important new approach to promoting economic growth.
    Keywords: Endogenous growth, knowledge, innovation and entrepreneurship
    JEL: O10 L10
  3. By: Erik Stam; Frank G. van Oort
    Abstract: Although there is growing evidence on the role of agglomeration economies in the formation and growth of firms, both the concepts of agglomeration economies and entrepreneurship tend to be ambiguously defined and measured in the literature. In this study, we aim to improve the conceptualisations and measures of agglomeration economies and entrepreneurship. Indicators of agglomeration economies are analysed in clearly defined urban regimes on three spatial scales in the Netherlands - national zoning, labour market connectedness, and urban size. This is done in order to uncover their effect on two entrepreneurial phases in the firm life cycle - new firm formation and the growth of incumbent firms in the relatively new ICT industry in the Netherlands. In comparison with new firm formation, the growth of incumbent firms is not so much related to spatial clustering of the ICT industry and other localized sources of knowledge economies associated with urban density. Instead, knowledge as an input for growth of incumbent firms is associated with more endogenous (firm internal) learning aspects, reflected by a significant correlate with R&D-investments. Also the effect of local ICT firm competition differs between the two types of firms: a positive effect on new firm formation, but a negative effect on incumbent firm growth. In general, agglomeration economies have stronger effects on the formation of ICT firms than on the growth of ICT firms.
    Keywords: agglomeration economies, spatial externalities, entrepreneurship, location, urban regimes, ICT industry
    JEL: D21 L25 L63 L86 M13 O18 R12 R30
  4. By: Guillaume Destré (TEAM); Valentine Henrard (TEAM)
    Abstract: This economic study focuses on the determinants of self-employment / wage-work choice using a large sample of Colombian men. The econometric model is based on simultaneous determination of the choice of employment status and potential earnings, it accounts for self-selectivity. Our major findings are : (1) relative potential earnings are the main determinant of occupational choice. (2) Unlike previous studies of self-employment choice, we find a negative selection bias into self-employment. It suggests that in Colombia the decision of becoming independent might be constrained. (3) The differences in potential earnings between the two sectors are mostly due to unobserved factors.
    Keywords: Self-employment; occupational choice; labour markets; Colombia
    JEL: J23 J24 O12
    Date: 2004–05
    Abstract: This study examines the impact of entrepreneurs’ network structure and knowledge homogeneity/heterogeneity of their network members on product development, and revenue growth of software ventures in China and Russia. The empirical data are composed of structured interviews with 159 software entrepreneurs in Beijing and Moscow. The study found that structural holes and knowledge heterogeneity affect positively product diversity in interactive ways. The study also found that knowledge homogeneity accelerates product development. Product development speed enhances revenue growth in the long term. However, the combination of speed with dense and homogeneous networks harms revenue growth over time. The effects of structural holes and knowledge heterogeneity on product diversity and revenue growth over time are more salient in Russia due to the unique institutional, social, and cultural conditions present in the country.
    Keywords: networks, knowledge, entrepreneurs, software, China, Russia.
    JEL: M13 D85 L14 L25 P27
    Date: 2005–02–01
    Abstract: This article examines the contingent value of entrepreneurs' networks to survival likelihood of Internet ventures, and the dynamics of entrepreneurs' networks over time. The empirical data are composed of the longitudinal surveys of 94 Internet ventures in Beijing, China. The study found the positive and the negative contingent effects of structural holes on the survival likelihood of new firms. The study found that networking skills of entrepreneurs are associated positively with the changes in networks over time. Improved social skills lead to greater firm legitimacy.
    Keywords: Structural holes, human capital, Internet, entrepreneurship, China
    JEL: M13 D85 L14 L25 P27
    Date: 2005–02–01
    Abstract: This article examines effects of dyadic ties and interpersonal trust on referrals and investment decisions of venture capitalists in the Chinese and Russian contexts. The study uses the postulate of transitivity of social network theory as a conceptual framework. The findings reveal that referee-venture capitalist tie, referee-entrepreneur tie, and interpersonal trust between referee and venture capitalist have positive effects on referrals and investment decisions of venture capitalists. The institutional, social and cultural differences between China and Russia have minimal effects on referrals. Interpersonal trust has positive effects on investment decisions in Russia.
    Keywords: Transitivity, triads, referral, venture capital, China, Russi
    JEL: G24 D85 M13 P27
    Date: 2005–02–01
  8. By: Emmanuel Duguet (Université de Bretagne et EUREQua); Stéphanie Monjon (EUREQua)
    Abstract: At the macroeconomic level, the persistence of technological change allows sustainable growth. But do the innovations come from the same set of firms or from a continous renewal of innovators ? On this point, the assumptions underlying the endogenous growth models differ and innovation persistence at the macroeconomic level can be supported by different firm-level behavioral assumptions. The aim of this article is threefold. Firstly, we evaluate a measure of the degree of innovation persistence at the firm level. Secondly, we analyze the factors underpinning the innovation persistence by testing the theoretical explanations that have been proposed in the literature. Lastly, we examine the robustness of the standard econometric methods used in innovation economics. We show that the persistence of innovation is strong at the firm level and that the right theoretical modeling depends on the size of the firm. While the smallfirms reveals strong learning-by-doing effects in the production of innovation, the persistence of innovation in the large firms relies on the persistence of formal research and development investments.
    Keywords: Community innovation surveys; creative destruction; innovation; learning-by-doing; matching; persistence; propensity score; research and development
    JEL: C14 O31 O32
    Date: 2004–07
  9. By: Andrew Bernard (Institute for Fiscal Studies and Dartmouth University); Stephen Redding (Institute for Fiscal Studies and University College London); Peter Schott (Institute for Fiscal Studies and Yale University)
    Abstract: This paper presents a model of international trade that features heterogeneous firms, relative endowment differences across countries, and consumer taste for variety. The paper demonstrates that firm reactions to trade liberalization generate endogenous Ricardian productivity responses at the industry level that magnify countries' comparative advantage. Focusing on the wide range of firm-level reactions to falling trade costs, the model also shows that, as trade costs fall, firms in comparative advantage industries are more likely to export, that relative firm size and the relative number of firms increases more in comparative advantage industries and that job turnover is higher in comparative advantage industries than in comparative disadvantage industries.
    JEL: F11 F12 L11
    Date: 2004–07
  10. By: Christa Hainz
    Abstract: The number of firm bankruptcies is surprisingly low in economies with poor institutions. We study a model of bank-firm relationship and show that the bank’s decision to liquidate bad firms has two opposing effects. First, the bank receives a payoff if a firm is liquidated. Second, it loses the rent from incumbent customers that is due to its informational advantage. We show that institutions must improve significantly in order to yield a stable equilibrium in which the optimal number of firms is liquidated. There is also a range where improving institutions may decrease the number of bad firms liquidated.
    Keywords: Credit markets, institutions, bank competition, information sharing, bankruptcy, relationship banking.
    JEL: G21 G33 K10
    Date: 2005–02–01

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