nep-ent New Economics Papers
on Entrepreneurship
Issue of 2005‒06‒05
nine papers chosen by
Marcus Dejardin
Facultés Universitaires Notre-Dame de la Paix

  1. Entrepreneurship as a non-profit-seeking activity By Matthias Benz
  2. New Firms Evolving in the Knowledge Economy; problems and solutions around turning points. By E. Stam; E. Garnsey
  3. Venture Capital Investment Cycles: The Impact of Public Markets By Paul Gompers; Anna Kovner; Josh Lerner; David Scharfstein
  4. Factors Affecting University–Industry R&D Collaboration : The importance of screening and signalling. By Roberto FONTANA; Aldo GEUNA; Mireille MATT
  5. Multinationals and Plant Exit: Evidence from Chile By Roberto Alvarez; Holger Görg
  6. Pour une approche dialogique du rôle de l’entrepreneur / manager dans l’évolution des PME : l’ISO comme révélateur… By Frédéric CREPLET; TBlandine LANOUX
  7. On Growth and Development. By Enrico Colombatto
  8. The Microeconomic Evidence on Capital Controls: No Free Lunch By Kristin J. Forbes
  9. Organizational and Cognitive Duality of the firm with community concept By Frédéric CREPLET; Olivier DUPOUET; Francis KERN; Francis MUNIER

  1. By: Matthias Benz
    Abstract: It is typically assumed that people engage in entrepreneurship because there are profits to be made. In contrast to this view, this paper argues that entrepreneurship is more adequately characterized as a non-profit-seeking activity. Evidence from a broad range of authors and academic fields is discussed showing that entrepreneurship does quite generally not pay in monetary terms. Being an entrepreneur seems to be rather rewarding because it entails substantial non-monetary benefits, like greater autonomy, broader skill utilization, and the possibility to pursue one’s own ideas. It is shown how incorporating these non-monetary benefits into economic models of entrepreneurship can lead to a better understanding of the phenomenon.
    Keywords: entrepreneurship, self-employment, wage and return differentials, non-monetary work benefits, job satisfaction
    JEL: M13 J23 J31 J32 M54
  2. By: E. Stam; E. Garnsey
    Abstract: This paper explores and explains the emergence and growth of new firms in the knowledge economy. The resource-based view, capabilities approach, and evolutionary economics are used as a foundation for a developmental approach. The development of the firm is conceptualized in terms of processes that include opportunity recognition, resource mobilization, resource generation and resource accumulation, which lead to the development of competences and capital in a base made up of productive, commercial and financial resources. Problems originating within or outside the firm may deplete the productive, commercial and asset base, leading to turning points in the life course of these firms. These have negative consequences when problems are not solved, but positive consequences when they lead to new solutions and the development of new competence. The empirical study shows that even in an elite sample of young fast-growing firms, most firms face turning points in their life course, and thus do not grow in a continuous way. The study shows that quantitative growth indicators do not always reveal growth problems that have been faced by new firms. Some problems do not negatively affect the employment growth of the firm, and other problems are solved before growth stagnates. The qualitative analysis shows that young firms are almost always in disequilibrium: there is almost never a perfect match between the constituents of their resource base, between input resources and requirements for expansion. This explains why continuous growth is so unlikely. Although every firm seems to grow in a unique manner, there is evidence for the presence of a limited set of necessary mechanisms for the growth of (new) firms, which work out in particular ways given the specific context and history of these firms.
    Keywords: New firms, firm growth, theory of the firm, resource based view, firm life course, organizational crises, knowledge economy
    JEL: D21 D92 L23 M13 M21
  3. By: Paul Gompers; Anna Kovner; Josh Lerner; David Scharfstein
    Abstract: It is well documented that the venture capital industry is highly volatile and that much of this volatility is associated with shifting valuations and activity in public equity markets. This paper examines how changes in public market signals affected venture capital investing between 1975 and 1998. We find that venture capitalists with the most industry experience increase their investments the most when public market signals become more favorable. Their reaction to an increase is greater than the reaction of venture capital organizations with relatively little industry experience and those with considerable experience but in other industries. The increase in investment rates does not affect the success of these transactions adversely to a significant extent. These findings are consistent with the view that venture capitalists rationally respond to attractive investment opportunities signaled by public market shifts.
    JEL: G2
    Date: 2005–05
  4. By: Roberto FONTANA; Aldo GEUNA; Mireille MATT
    Abstract: This paper presents an empirical analysis of the determinants of research cooperation between firms and Public Research Organisations (PROs) for a sample of innovating small and mediumsized enterprises. The econometric analysis is based on the results of the KNOW survey carried out in seven EU countries during 2000. In contrast to earlier works that provide information about the importance of PROs’ research, we know how many collaborative projects a firm has had with PROs. This allows us to study the determinants of firms’ collaboration with PROs in terms of both the propensity of a firm to cooperate with a university (do they cooperate or not) and the extent of this cooperation (the number of collaborations). Two questions are addressed. Which firms cooperated with PROs? And what are the firm characteristics that might explain the number of collaborations with PROs? The results of our analysis point to two major phenomena. First, the propensity to forge an agreement with an academic partner depends on the ‘absolute size’ of the industrial partner. Second the openness of firms to the external environment, as measured by their willingness to search, screen and signal, significantly affects the development of cooperations with PROs. Our findings suggest that acquiring knowledge through the screening of publications and involvement in public policies positively affects the probability of signing an agreement with a PRO, but not the level of collaboration developed. In fact, firms that outsource research and development (R&D), and patent to protect innovation and to signal competencies show higher levels of collaboration.
    Keywords: Public Research Organisations, University-Industry R&D cooperation, Openness.
    JEL: H4 L3 O3
    Date: 2005
  5. By: Roberto Alvarez (University of California, Los Angeles); Holger Görg (University of Nottingham, DIW Berlin and IZA Bonn)
    Abstract: This paper examines the link between multinational enterprises and plant exit in Chile. We investigate three main questions: are affiliates of foreign multinationals more likely to exit than domestic firms? Does the exit probability of multinationals depend on its export orientation?, and Does the presence of multinationals affect the survival of other firms in the economy? Our results show that foreign plants are more likely to exit the economy, controlling for other firm and industry characteristics, only during the late 1990s, a period when the Chilean economy experience a massive slowdown. Our data also suggest that only domestic market oriented multinationals responded to this negative shock by being more "footloose"; this is not true for multinational exporters. We also find that the presence of multinationals has a positive effect on plant survival in the early 1990s. This positive effect, however, is fully captured by productivity, once controlling for TFP in our exit regressions we do not find any further impact of multinational presence on a plant’s probability of exit.
    Keywords: exit, survival, multinationals, foreign direct investment, exporting
    JEL: F2 L6
    Date: 2005–05
  6. By: Frédéric CREPLET; TBlandine LANOUX
    Abstract: Les PME forment une catégorie d’entreprises synonymes des spécificités et de diversité. Après avoir adopté une méthodologie d’étude de ces entreprises, nous postulons que celles-ci peuvent utiliser des systèmes de gestion de la qualité de type ISO 9000 principalement comme guide. Dans cette perspective, nous avons émis l'hypothèse que l'adoption de tels systèmes jouait le rôle de catalyseur dans une stratégie de développement, ou plus généralement de transformation des PME. En complément, nous montrons que la PME doit détenir à sa tête un acteur bicéphale guidé par une vision entrepreneuriale, ayant aussi bien les caractéristiques du créateur, du coordonateur, que celle du facilitateur d’opportunités. Celui-ci est – selon les cas – unique ou multiple et possède comme principal objectif de faire évoluer son organisation en veillant à conserver une cohérence interne et une pertinence, vis-à-vis de l’environnement qui l’entoure. Notre démarche de recherche nous a conduit à utiliser d’une part plusieurs écrits théoriques en matière de PME, de systèmes qualité et plus généralement, sur des aspects d’ordre cognitif. D’autre part, forts des éléments avancés, nous avons confronté notre démonstration et ses premiers résultats à la réalité d’une entreprise : Newflooring. Cette entreprise, véritable PME internationale, nous offrait un terrain empirique a priori robuste au regard de la teneur de nos développements. Nous avons ainsi été amenés à rencontrer plusieurs des dirigeants de l’entreprise dans le cadre d’interview semi-directifs ainsi que certains cadres. Par ailleurs, nous avons eu accès à de nombreux documents provenant du système qualité. Le rapprochement de notre corpus théorique à une étude empirique nous a conduit à préciser les termes de la croissance de cette entreprise en faisant appel à plusieurs modèles théoriques. Il en ressort que ces derniers ne répondaient pas véritablement à la problématique de Newflooring. C’est donc dans cette esprit que nous avons introduit la dialogique de l’entrepreneur / manager et dégager plusieurs mécanismes cognitifs étant en rapport avec la réalité de cette entreprise. Notre travail de recherche montre donc le rôle joué par des systèmes qualité de type ISO 9000 dans le cadre du développement d’une PME. Il introduit également un acteur résolument « dual » : l’entrepreneur / manager, véritable agent de croissance combinant à la fois des compétences entrepreneuriales dans la construction d’une vision, que des compétences managériales ayant trait à l’organisation de l’entreprise. Les résultats de la confrontation empirique menée rejoignent nos propositions théoriques et présupposent d’autres phénomènes liés à la croissance des PME. Ces résultats doivent toutefois être nuancés dans la mesure où ils proviennent d’une seule investigation. Une démarche plus large devra être initiée pour affiner le corpus proposé ainsi que les premières conclusions affichées.
    Keywords: Création de connaissance – Vision entrepreneuriale – ISO 9000 – Management de la connaissance - PME
    JEL: L20 L21 L23 M11 M12 M13 M14
    Date: 2004
  7. By: Enrico Colombatto
    Abstract: Contrary to the mainstream view, the paper offers a subjectivist approach to growth and an institutional view of development. In particular, the term development regards the prevailing rules of the game and their effects on the key variables for economic activity to take off: property rights and entrepreneurship. And growth is deemed to be the result of favourable institutional environments where chances are exploited and individuals succeed in improving their living conditions. From a methodological standpoint it is then argued that the common attempts to measure growth provide at best crude evaluations of the efforts to acquire purchasing power, but hardly measure well-being. From a normative perspective, the role of growth-enhancing government intervention is thus questioned. Doubts are also raised with respect to the recent and increasing literature on institutional design, which seems to ignore much of the lessons taught by the institutional schools - both old and new. And which tends to describe the past, rather than providing explanations that might help us understand the future.
    Date: 2005–04
  8. By: Kristin J. Forbes
    Abstract: Macroeconomic analyses of capital controls face a number of imposing challenges and have yielded mixed results to date. This paper takes a different approach and surveys an emerging literature that evaluates various microeconomic effects of capital controls and capital account liberalization. Several key themes emerge. First, capital controls tend to reduce the supply of capital, raise the cost of financing, and increase financial constraints - especially for smaller firms, firms without access to international capital markets and firms without access to preferential lending. Second, capital controls can reduce market discipline in financial markets and the government, leading to a more inefficient allocation of capital and resources. Third, capital controls significantly distort decision-making by firms and individuals, as they attempt to minimize the costs of the controls or even evade them outright. Fourth, the effects of capital controls can vary across different types of firms and countries, reflecting different pre-existing economic distortions. Finally, capital controls can be difficult and costly to enforce, even in countries with sound institutions and low levels of corruption. This microeconomic evidence on capital controls suggests that they have pervasive effects and often generate unexpected costs. Capital controls are no free lunch.
    JEL: F2 F3 G1
    Date: 2005–05
  9. By: Frédéric CREPLET; Olivier DUPOUET; Francis KERN; Francis MUNIER
    Abstract: On the basis of the recent concepts of epistemic communities and communities of practice, we show that the firm can be defined according to a form of double duality: cognitive and organisational. The interest of this approach is to put ahead the differentiated behavior from the manager and the entrepreneur inside the firm. It also puts in light the important questions concerning the organisational tensions under the vision of the knowledge-based economies.
    Keywords: Creation of knowledge - Learning process - Routines – Community of Practice – Epistemic Community – Knowledge conversion modes – Knowledge management
    JEL: L20 L21 L23 M11 M12 M13 M14
    Date: 2004

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