nep-ent New Economics Papers
on Entrepreneurship
Issue of 2005‒03‒20
seven papers chosen by
Marcus Dejardin
Facultés Universitaires Notre-Dame de la Paix

  1. Nascent and Infant Entrepreneurs in Germany: Evidence from the Regional Entrepreneurship Monitor (REM) By Wagner, Joachim
  2. What Makes Small Firms Grow? Finance, Human Capital, Technical Assistance, and the Business Environment in Romania By J. David Brown; John S. Earle; Dana Lup
  3. FDI, Allocation of Talents and Differences in Regulation By Giovanni Pica; José V. Rodríguez Mora
  4. Product entry in a fast growing industry: the LAN switch market By Roberto Fontana; Lionel Nesta
  5. Self-Enforcing Labour Contracts and the Dynamics Puzzle By Christian Calmès
  6. The Effects of Employment Protection on the Italian Labour Market By Adriana Kugler; Giovanni Pica
  7. Labour productivity, ICT and regions: The revival of Italian “dualism”? By Simona Iammarino; Cecilia Jona-Lasini; Susanna Mantegazza

  1. By: Wagner, Joachim (University of Lueneburg and IZA Bonn)
    Abstract: Based on data from a recent representative survey of the adult population in Germany this paper documents that the patterns of variables influencing nascent and infant entrepreneurship are quite similar and broadly in line with our theoretical priors – both types of entrepreneurship are fostered by the width of experience and a role model in the family, and hindered by risk aversion, while being male is a supporting factor. Results of this study using cross section data are in line with conclusions from longitudinal studies for other countries finding that between one in two and one in three nascent entrepreneurs become infant entrepreneurs, and that observed individual characteristics – with the important exception of former experience as an employee in the industry of the new venture - tend to play a minor role only in differentiating who starts and who gives up.
    Keywords: nascent entrepreneurs, infant entrepreneurs, Germany
    JEL: J23
    Date: 2005–03
  2. By: J. David Brown; John S. Earle; Dana Lup
    Abstract: Although the development of a new private sector is generally considered crucial to economic transition, there has been rather little empirical research on the determinants of startup firm growth. This paper uses panel data techniques to analyze a survey of 297 new small enterprises in Romania containing detailed information from the startup date through 2001. We find strong evidence that access to external credit increases the growth of both employment and sales. Taxes appear to constrain growth. The data suggest that entrepreneurial skills have little independent effect on growth, once demand conditions are taken into account, and there is only weak evidence for the effectiveness of technical assistance, and only when it is provided by foreign partners. A wide variety of alternative measures of the business environment (contract enforcement, property rights, and corruption) are tested, but none are found to have any clear association with firm growth.
    Keywords: Small Firms, Entrepreneurship, Microfinance, Business Environment, Romania
    JEL: M13 O16 O19 P26
    Date: 2004–05–01
  3. By: Giovanni Pica (University of Southampton, University of Salerno and CSEF); José V. Rodríguez Mora (Universitat Pompeu Fabra, CREA, CEPR, CES-ifo and IZA)
    Abstract: This paper presents evidence on the effect of countries proximity in regulation on bilateral FDI flows. By exploiting the OECD International Direct Investment Statistics and data on nationwide regulation levels, we find a significant negative effect of the absolute value of the difference between countries indexes of regulation on the associated bilateral flows of FDIs, controlling for each country regulation level. Motivated by this evidence, we build a model where agents are heterogeneous and differ in their abilities to be entrepreneurs or workers. Entrepreneurs may engage in FDIs, which entails incurring additional fixed costs, one of which is the cost of learning the foreign regulation. In this framework, more similar regulations foster FDI, raise wages, output and productivity. The increase in productivity is the consequence of very efficient foreign entrepreneurs driving out of the market inefficient local firms, improving the allocation of talent in the economy as a whole.
    Keywords: Multinational Firms, Heterogeneous Agents, Policy Harmonization
    JEL: E61 F23 F41
    Date: 2005–03–01
  4. By: Roberto Fontana (CESPRI, Bocconi University, Milan); Lionel Nesta (SPRU, University of Sussex)
    Abstract: We provide empirical evidence on market positioning by firms, in terms of market niche, distance from technological frontier and dispersion. We focus on the switch industry, a sub-market of the Local Area Network industry, in the nineties. Market positioning is a function of the type of firms (incumbents versus entrants), market size and contestability and firm competencies. We find that incumbents specialise in high-end segments and disperse their product in a larger spectrum of the market. Instead, entrants focus on specific market niches. Market size, market contestability and firm competencies are also important determinants of product location.
    Keywords: switch industry, markets, competition, firm capabilities, product entry
    JEL: L11 L63
    Date: 2004–10–10
  5. By: Christian Calmès
    Abstract: To properly account for the dynamics of key macroeconomic variables, researchers incorporate various internal-propagation mechanisms in their models. In general, these mechanisms implicitly rely on the assumption of a perfect equality between the real wage and the marginal product of labour. The author proposes a theoretical validation of a micro-founded internal-propagation mechanism: he builds a model that features a limited-commitment economy, and derives endogenous self-enforcing labour contracts that produce a different linkage between the real wage and the marginal product of labour. The risk-sharing between the entrepreneur and the worker, both faced with enforcement problems, provides an admissible explanation of the prolonged comovements observed between consumption and labour. Since these co-movements are at the core of the persistence of the impulse response of output to exogenous technology shocks, this persistence can, in turn, be rationalized with the endogenous real rigidity emerging from the economy. The author shows that, in this framework, the persistence ultimately depends on the initial bargaining power and the magnitude of the risk-sharing.
    Keywords: Business fluctuations and cycles; Economic models; Labour markets
    JEL: E12 E49 J30 J31 J41
    Date: 2005
  6. By: Adriana Kugler (University of Houston, Universitat Pompeu Fabra, NBER, CEPR and IZA); Giovanni Pica (University of Southampton, University of Salerno and CSEF)
    Abstract: This paper uses the Italian Social Security employer-employee panel to study the effect of a reform that introduced a cost for unjust dismissals only for firms below 15 employees, while leaving firing costs unchanged for bigger firms. We find that the increase in dismissal costs decreased accessions and separations in small relative to big firms, the more so in sectors with higher employment volatility. Moreover, the reform reduced firms’ entry rates while increasing the exit rate. We also find evidence that higher EPL flattened employment policies over the cycle
    Keywords: Costs of Unjust Dismissals, European Unemployment, Firms’ Entry and Exit, Employment Volatility
    JEL: E24 J63 J65
    Date: 2005–03–01
  7. By: Simona Iammarino (SPRU, University of Sussex); Cecilia Jona-Lasini (Italian National Institute of Statistics (ISTAT), Rome, Italy); Susanna Mantegazza (Italian National Institute of Statistics (ISTAT), Rome, Italy)
    Abstract: Among the reasons underlying the slow economic convergence of some regions towards the national and the European Union average, the strong gap in technological endowment and innovation capacity has been indicated as one of the most important factors. The requirements of the current ‘knowledge-based economy’ and the contribution of Information and Communication Technology (ICT) to socio-economic change are very likely to have a significant impact upon regional differentials in the European Union. So far, however, it is rather unclear whether the new paradigm will spur greater socio-economic cohesion or, on the contrary, stronger territorial polarisation. This paper looks at the distribution of ICT-producing small and medium enterprises in Italy, comparing structural variables – in particular spatial and sectoral dimensions - with labour productivity levels. Ultimately, the objective is to shed some light on the role that ICT-producing firms might play with respect to regional gaps in the Italian economy, traditionally characterised by geographical polarisation and imbalances which are among the most striking in the “Europe of regions”. The first result of our analysis (carried out by using experimental micro data) is that a linkage seems to emerge between high labour productivity and the IT industry. This is in line with the insights of the economic theory of technical change, suggesting that IT-producing sectors are those where gains in productivity are by far the most evident. As expected, the geographical location of firms accounts for a good deal when looking at labour productivity levels across sectors, casting some concern on the development perspectives of the Italian regional divide.
    Keywords: regional development, Italy, Information and Communication Technology (ICT), small and medium enterprises, productivity
    JEL: R11 L63
    Date: 2004–11–10

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