|
on Entrepreneurship |
|
Issue of 2005‒05‒07
seven papers chosen by Marcus Dejardin Facultés Universitaires Notre-Dame de la Paix |
| By: | John Armour; Douglas Cumming |
| Abstract: | Entrepreneurs, catalysts for innovation in the economy, are increasingly the object of policymakers’ attention. Recent initiatives both in the UK and at EU level have sought to promote entrepreneurship by reducing the harshness of the consequences of personal bankruptcy law. Whilst there is an intuitive link between the two, little attention has been paid to the question empirically. We investigate the link between bankruptcy and entrepreneurship using data on self employment over 13 years (1990-2002) and 15 countries in Europe and North America. We compile a new index of the level of how ‘forgiving’ personal bankruptcy laws are, reflecting the time to discharge. This measure varies over time and across the countries studied. We show that bankruptcy law has a more statistically and economically significant effect on self employment rates relative to GDP growth, MSCI stock returns, and a variety of other legal and economic factors. The results have clear implications for policymakers. |
| Keywords: | Personal Bankruptcy Law, Entrepreneurship |
| JEL: | K35 M13 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp300&r=ent |
| By: | Andy Cosh; Douglas Cumming; Alan Hughes |
| Abstract: | This paper investigates the internal versus external financing decisions among 1900 early stage privately held UK firms in 1996-1997. We study the factors that affect rejection rates in applications for outside finance among the different types of investors, taking into account the non-randomness in a firm’s decision to seek outside finance. The data support the traditional pecking order theory; firms with greater capital expenditures / profits are more likely to seek finance and apply for more external finance. The data further indicate growth oriented firms are much more likely to apply for external finance. There are some differences in the internal versus external financing of female and male founder CEO firms, but these differences are largely attributable to growth orientation. Firms in industries with a greater proportion of larger competitors are less likely to obtain all of their desired outside capital. The data also indicate banks are less likely to finance completely new startups, while venture capital funds are more likely to finance innovative and growth orientated firms. Overall, the data do not indicate the presence of a capital gap in entrepreneurial finance; rather, firms seeking capital are able to secure their requisite financing from at least one of the many different available sources. |
| Keywords: | Entrepreneurial Finance, Capital Gaps, Pecking Order, Adverse Selection, Gender |
| JEL: | G21 G22 G23 G24 G31 G32 G35 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp301&r=ent |
| By: | Clara Cardone; Maria-Jose Casasola; Margarita Samartin |
| Abstract: | Small and medium-sized companies are extremely important for the Spanish economy. However, they face difficulties when trying to obtain financing (credit rationing). As a result, and given their limited possibilities to obtain finance in the capital market, they turn to the credit market, which is the main provider of funds for such companies. The main aim of this study is to provide an insight into the banking relationships that are developed in this market and their impact on credit rationing. Previous literature has studied this situation by focusing on price rationing and quantity rationing. This study furthers research into banking relationships by examining the effects that these relationships may have on compensation demanded for debt and the relationship with long-term credit rationing. After studying 386 SMEs listed in the Spanish Guide of Exporting Companies, the main conclusions drawn were as follows: i) SMEs working with larger numbers of financial entities and with longer relationships with these entities enjoy better access to credit; ii) SMEs that develop banking relationships by contracting financial products manage to reduce their credit costs; iii) SMEs that have longer banking relationships with banking entities benefit from better long-term credit conditions; and iv) the maintenance of banking relationships through the rendering of services reduces bank requirements in terms of guarantees in credit applications. |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wbrepe:wb052806&r=ent |
| By: | Uwe Cantner (University of Jena, Faculty of Economics); Kristina Dreßler (University of Jena, Faculty of Economics); Jens J. Krüger (University of Jena, Faculty of Economics) |
| Abstract: | This paper investigates how the survival of firms over the industry life cycle is affected by different kinds of knowledge, namely post-entry experience, pre-entry experience, and knowledge acquired by innovative activity. Therefore, a statistical survival analysis is performed for the German automobile industry over the period 1886- 1939 which applies a new approach that links instrumental variable estimation with the Cox regression. The main results are that all three knowledge components exert a significantly positive effect on the survival of firms. Furthermore, innovative activity is able to compensate for lacking pre-entry or post-entry experience, completely in accord with Schumpeterian creative destruction. |
| Keywords: | firm survival, patents, innovation, automobile industry, hazard rates |
| JEL: | L10 L62 O33 C41 |
| Date: | 2005–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:jen:jenasw:2005-05&r=ent |
| By: | Guido Fioretti (University of Bologna) |
| Abstract: | A simple agent-based model of business units lending money to one another is sufficient to understand on what conditions avalanches of bankruptcies may arise. The model highlights the consequences of specialisation into money lending as well as the impact of preferential lending relations. |
| Keywords: | Financial Fragility, Avalanches of Bankruptcies, Agent-Based Models |
| JEL: | G |
| Date: | 2005–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0505002&r=ent |
| By: | Konstantine Pashev (Andrew Young School of Policy Studies, Georgia State University) |
| Abstract: | This paper studies the challenges of raising tax compliance in the small business sector in transition economies, drawing from the experience of Bulgaria. It identifies the elements of tax design and enforcement that discriminate against the small business and drive non-compliance. It argues that these drivers are related mainly to the disproportionate tax burden of compulsory social insurance contributions and income taxation of sole proprietors, as well as to the higher compliance costs faced by the small business in Bulgaria. In this framework it studies Bulgarian experience with two presumptive taxes - the patent tax and the minimum insurance income thresholds - and discusses the opportunities and costs of their optimization. |
| Keywords: | tax compliance, transition economies, Bulgaria |
| Date: | 2004–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ays:ispwps:paper0510&r=ent |
| By: | Lionel Nesta (SPRU, University of Sussex); Vincent Mangematin (INRA, University Pierre Mendes-France) |
| Abstract: | We analyse the changing contribution of networks to the innovative performance of 30 pharmaceutical companies from 1989 to 1997. Count data models show that collaborations with universities and biotechnology companies are important determinants of the firms' innovative performance, but their respective contributions diverge when industry matures. Larger firms enjoy a significant size advantage and in-house research activities are highly significant. Returns to scale in research are decreasing over time while the size advantage is increasing. The changing contribution of networks to knowledge production suggests that these are phase-specific, which has substantial managerial and policy implications. |
| Keywords: | pharmaceutical industry, biotechnology, innovative processes, networks |
| JEL: | O31 D85 |
| Date: | 2005–04–26 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:114&r=ent |