nep-ent New Economics Papers
on Entrepreneurship
Issue of 2005‒07‒03
fifteen papers chosen by
Marcus Dejardin
Facultés Universitaires Notre-Dame de la Paix

  1. Modelling the Entrepreneurial Space-Economy: an overview By Nijkamp, Peter; Wissen, Leo van
  2. Biomedical Academic Entrepreneurship Through the SBIR Program By Andrew A. Toole; Dirk Czarnitzki
  3. A short history of French spirit of enterprise (from 1780 till date) (In French) By Hubert BONIN
  4. The imprinting effect of initial resources and market strategy on the early growth path of start-Ups By A. HEIRMAN; B. CLARYSSE
  5. How intentions to create a social venture are formed. A case study By Mair, Johanna; Noboa, Ernesto
  6. Empirical evidence for a theory of international new ventures By Reinhard Meckl; Robert Schramm
  7. Endogenous Growth in the Presence of Informal Credit Markets: A Comparative Analysis Between Credit Rationing and Self-Revelation Regimes By Basab Dasupta
  8. The Number of Bank Relationships of SMEs: A Disaggregated Analysis for the Swiss Loan Market By Doris Neuberger; Christoph Schacht
  11. Financial constraints and capacity adjustment in the United Kingdom: evidence from a large panel of survey data By Ulf von Kalckreuth; Emma Murphy
  12. The Influence of University Research on Industrial Innovation By Jinyoung Kim; Sangjoon John Lee; Gerald Marschke
  13. I Like the Way you Move - An Empirical Investigation into the Mechansimns Behind First Mover and Follower Strategies By Wolfgang Sofka; Tobias Schmidt
  14. Knowledge Flows and R&D Co-operation: Firm-level Evidence from Germany By Tobias Schmidt
  15. Latvia: Working Too Hard? By Mihails Hazans

  1. By: Nijkamp, Peter (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Wissen, Leo van
    Abstract: The aim of this paper is to review recent contributions to the study of entrepreneurship and firm dynamics from a methodological and firm demographic perspective. Understanding the contemporary changes in business life requires a thorough understanding of structural changes in entrepreneurial behaviour and firm dynamics, both in space and in time. The spatial and temporal aspects of business life have in recent years received much attention, and a review is given here. The framework concept of the 'firm life course' is proposed in this article to integrate both dimensions. The firm life course represents the way firms organize their life path over time in sequences of critical events, decisions, and periods. The dimensions of time and space appear to be highly connected in business life. Not only is firm mobility increasing, but also are entrepreneurs increasingly acting as networkers. The emergence of virtual and dynamic networks of entrepreneurs calls for new methods of research of dealing with them. This article maps out some of the modern research trends in this domain.
    Keywords: entrepreneurship; dynamics
    Date: 2004
  2. By: Andrew A. Toole; Dirk Czarnitzki
    Abstract: This paper considers the U.S. Small Business Innovation research (SBIR) program as a policy fostering academic entrepreneurship. We highlight two main characteristics of the program that make it attractive as an entrepreneurship policy: early-stage financing and scientist involvement in commercialization. Using unique data on NIH supported biomedical researchers, we trace the incidence of biomedical entrepreneurship through SBIR and describe some of the characteristics of these individuals. To explore the importance of early-stage financing and scientist involvement, we complement our individual level data with information on scientist-linked and non-linked SBIR firms. Our results show that the SBIR program is being used as a commercialization channel by academic scientists. Moreover, we find that the firms associated with these scientists perform significantly better than other non-linked SBIR firms in terms of follow-on venture capital funding, SBIR program completion, and patenting.
    JEL: O38 O31 G38 M13 C25
    Date: 2005–07
  3. By: Hubert BONIN
    Abstract: Pessimistic views among French economist, political and scholar opinion givers have often prevailed about the assessment of French economic competitiveness ; that might be explained by negative surveys of the ability of economic elites to adapt themselves to the changes of the environment of competition and of the productive and technological systems. Breakdowns of enterprise spirit could thus explain that periods of sluggishness be imposed to French growth and, globally, that backwardness had been endured when factors of progress were at stake. Our text reconstitutes the overall issues and, then, proceeds, alongside chronological periods, to a large scrutinizing of the validity of these assertions, throughout the 19th and 20th centuries.
    Keywords: enterprise, enterprise spirit, elites, entrepreneurship, growth, innovation, investment, competitiveness, development, Malthusianism
    JEL: N8 N83 N84 N6 M13
    Date: 2005
    Abstract: Research-based start-ups (RBSUs) differ in their early growth. Some firms grow very rapidly, while others grow slowly or do not grow at all. In this paper we bring insights in the causes of the diversity in the early growth of RBSUs. To identify some of the key factors that affect growth, we study the initial resource base and the firm’s market strategy. We control for age, size and industry differences. Growth is a complex, multidimensional phenomenon. Therefore, we study three growth measures, namely growth in employees, revenues and total assets. Our multivariate analyses show that raising large amounts of VC is a key driver for early employment and revenue growth. Whilst most RBSUs are founded by pure technical founding teams, we find that R&D experience has no effect on growth. Founding teams with commercial experience, on the other hand, grow significantly more in employees, revenues and total assets. Next, RBSUs, which are internationally oriented from the start, grow significantly faster in terms of revenues and total assets but not in employees. Finally, multivariate analysis indicates that firms that are closer to a market ready product at founding do not grow significantly more in terms of revenues and employees, but firms that are earlier in the product development cycle grow more in total assets during the early growth path. We use in-depth qualitative information to explain and interpret the results and discuss the sustainability of different early growth trajectories. Our findings have important implications for entrepreneurs, investors and policy makers.
    Date: 2005–06
  5. By: Mair, Johanna (IESE Business School); Noboa, Ernesto (IESE Business School)
    Abstract: This exploratory study on one social entrepreneur challenges existing knowledge on the intention formation process of entrepreneurship. Drawing from social and cognitive psychology, we adapt an intention-based model from entrepreneurship and translate it to social entrepreneurship. Building on our findings, we argue that social entrepreneurs - like traditional entrepreneurs - experience perceptions of feasibility and desirability, and a propensity to act. However, complementing research on traditional entrepreneurs, we suggest that, in a preceding stage, social entrepreneurs develop social sentiments. Furthermore, we identify willpower, support, and the construction of opportunity as important antecedents of perceptions of feasibility and desirability, and propensity to act.
    Keywords: social entrepreneurship; intention; cognition;
    Date: 2005–06–29
  6. By: Reinhard Meckl (Faculty of Economics, University Bayreuth, Germany); Robert Schramm (University of Jena, Faculty of Economics)
    Abstract: This paper analyzes twenty empirical studies relating to international new ventures (INVs). Based on this analysis it is shown that traditional internationalization theories do not explain INVs sufficiently. Therefore a model integrating static and process elements from the empirical evidence as well as parts of the traditional internationalization theories is developed. Obtained was an eclectic theory describing and explaining the rise of new firms already venturing abroad briefly after the time of their formation. Key results A 4-pillar-model for explaining the internationalization of INVs is developed. The model relies on basic assumptions from the network-, the stages-, the internalization- and the monopolistic advantage theory.
    Keywords: Born global, international new ventures, internationalization theory
    Date: 2005–06–20
  7. By: Basab Dasupta (University of Connecticut)
    Abstract: This paper examines whether the presence of informal credit markets reduces the cost of credit rationing in terms of growth. In a dynamic general equilibrium framework, we assume that firms are heterogenous with different degrees of risk and households invest in human capital development. With the help of Indian household level data we show that the informal market reduces the cost of rationing by increasing the growth rate by 0.7 percent. This higher growth rate, in the presence of an informal sector, is due to the ability of the informal market to separate the high risk from the low risk firms thanks to better information. But even after such improvement we do not get the optimum outcome. The findings, based on our second question, suggest that the revelation of firms' type, based on incentive compatible pricing, can lead to almost 2 percent higher growth rate as compared to the credit rationing regime with informal sector.
    Keywords: credit rationing, informal credit markets, self revelation mechanism
    JEL: O16 O17
    Date: 2005–06
  8. By: Doris Neuberger (University of Rostock); Christoph Schacht (Institute for Financial Services Zug)
    Abstract: The present paper investigates the number of bank relationships of small and medium-sized enterprises in Switzerland using survey data from 1996 and 2002. We differentiate between overall bank relationships and lending relationships and disaggregate the loan market with respect to firm sizes, industries and banking groups. On average, bank lending declined, while the role of housebank relationships increased in 1996- 2002. The development of the number of bank relationships seems to have been demand-driven as well as supply-driven for medium-sized firms, but only supply-driven for very small and small firms. Supply-side reductions resulted from the merger between two big banks and changes in credit risk management at major banks.
    Keywords: relationship lending, housebank, loan market structure, multiple banks
    JEL: G21 G32
    Date: 2005–06–30
  9. By: Giorgio Gobbi (Economics Research Department, Bank of Italy); Francesca Lotti (Economics Research Department, Bank of Italy)
    Abstract: During the last decades there has been a widespread relaxation of legal entry barriers into the banking industry, with potential benefits for financial integration and competition. Obstacles to banks' geographical and business expansion have been removed and branching has been substantially liberalized. This paper analyzes the determinants of entry decisions into local credit markets using a unique data set before and after deregulation of the Italian banking industry. We estimate an entry model à la Poisson and find evidence that spreads between loan and deposit rates drive entry only for newly chartered banks, but does not affect the decision to open branches of banks operating in other markets. Branching by outside banks is instead positively correlated with business opportunities in the provision of financial services which do not require the acquisition of substantial proprietary information. Both these results are consistent with the hypothesis that in credit markets incumbents have an informational advantage over new entrants.
    Keywords: Entry, deregulation, informational barriers, count data, overdispersion
    JEL: G21 L22 C25
    Date: 2004–12
  10. By: Maurizio Pontani (University of Siena)
    Abstract: The word "bankruptcy" derives from the Italian word bancarotta (= broken bench) that during the Middle Ages was used to indicate the typical sanction applied to bankrupt tradesmen or bankers - the bench breaking, i.e. the breaking of the tradesman/banker's money table. At its origin, thus, the word bankruptcy had a punitive meaning that has been preserved in continental Europe (for instance the words bancarotta, Bankrott and banqueroute still designate the criminal consequences of failure in Italy, Germany and France respectively), but it has been lost in the Anglo-American world, where bankruptcy presently indicates the default as such. This study focuses on criminal liability of directors and entrepreneurs for misconduct committed prior to bankruptcy in the US and Italy and tries to understand how the different regulation is likely to affect the economic agents' behavior. We show that the boundary between a firm's legal and illegal management appears more clear-cut in the US than in Italy, with positive effects on the economic behavior of entrepreneurs and managers.
    Keywords: Bankruptcy law, Criminal liability, Judicial discretion, Optimal risk taking,
  11. By: Ulf von Kalckreuth; Emma Murphy
    Abstract: The interrelationship between financial constraints and firm activity is a hotly debated issue. The way firms cope with financial constraints is fundamental to the analysis of monetary transmission, of financial stability and of economic growth and development. The CBI Industrial Trends Survey contains detailed information on the financial constraints faced by a large sample of UK manufacturers. This paper uses the quarterly CBI Industrial Trends Survey firm-level data between January 1989 and October 1999. The cleaned sample contains 49,244 quarterly observations on 5,196 firms. The data set is presented and a new method of checking the informational content of the data is developed. The relationship between investment activity and financial constraints is ambivalent because both can affect each other and they are affected by the same kind of economic developments, so it is not clear which is driving the other. But the link between financial constraints faced by the firm and the prevalence and duration of capacity restrictions should be unambiguously positive. Looking at that relationship, two important results emerge. First, financially constrained firms take longer to close capacity gaps. This indicates that financial constraints do indeed play a part in the investment process. Second, small firms close their capacity gaps faster than large firms do, but financial constraints seem to be of higher relevance to their adjustment.
  12. By: Jinyoung Kim; Sangjoon John Lee; Gerald Marschke
    Abstract: We use U.S. patent records to examine the role of research personnel as a pathway for the diffusion of ideas from university to industry. Appearing on a patent assigned to a university is evidence that an inventor has been exposed to university research, either directly as a university researcher or through some form of collaboration with university researchers. Having an advanced degree is another indicator of an inventor's exposure to university research. We find a steady increase in industry's use of inventors with university research experience over the period 1985-97, economy wide and in the pharmaceutical and semiconductor industries in particular. We interpret this as evidence of growth in the influence of university research on industrial innovation. Moreover, during this period we find that firms with large research operations in both industries, and young and highly capitalized firms in the pharmaceutical industry, are disproportionately active in the diffusion of ideas from the university sector. Finally, we find that the patents of firms that employ inventors with university research experience are more likely to cite university patents as prior art, suggesting that this experience better enables firms to tap academic research.
    JEL: J62 O31 O33
    Date: 2005–07
  13. By: Wolfgang Sofka (ZEW Mannheim); Tobias Schmidt (ZEW Mannheim)
    Abstract: There appears to be an ambivalent dimension in innovation strategies: timing. When is an innovation ready for the market or when is the market ready for the innovation? This paper empirically investigates the determinants of a firm’s decision to become a first mover or a follower in innovation strategies. Much of theoretical and empirical work has focused on whether first mover strategies pay off or not. Here we take a different approach by analysing the determinants that lead companies to opt for either a first mover or a follower strategy. One of this paper’s major goals is to distinguish between firm and industry specific effects on this particular strategic choice. We estimate our model using the most recent data from the German innovation survey of 2003. This dataset allows us to identify deliberate followers rather than outstripped first movers. One of our main findings is that firms choosing a first mover strategy operate in industries with intensive knowledge exchange and further leverage this advantage through excellent internal absorptive capacities. Followers, though, compete by way of their operational excellence for streamlining processes and cutting costs. Hence, we argue that neither of these two innovation strategies is per se superior to the other.
    Keywords: innovation strategy, first mover, bivariat probit
    JEL: L10 O32
    Date: 2005–06–22
  14. By: Tobias Schmidt (ZEW Mannheim)
    Abstract: This paper analyzes the determinants of R&D co-operation among German manufacturing firms. Using firm level data from the Third Community Innovation Survey from Germany, we focus on the role of spillovers in explaining R&D cooperation. We also investigate firms’ decisions to cooperate with research institutions or with suppliers and customers. Implementing a two-step estimation procedure, we find a significant effect of knowledge flows on the probability of R&D co-operation in most model specifications. Additionally, we show that firms with high intramural R&D budgets are more likely to cooperate with universities and research institutions than with suppliers and customers.
    Keywords: Spillovers, R&D Co-operation, CIS 3
    JEL: O P
    Date: 2005–06–22
  15. By: Mihails Hazans (University of Latvia & BICEPS)
    Abstract: This paper provides an assessment of employment and working conditions in Latvia before and immediately after the EU accession. The issues addressed include self-employment, multiple jobs, fixed-term contracts, unreported wages, overtime, unsocial working hours, health and safety at work, social dialogue. The study combines different methods: statistical and econometric analysis of recent Labour Force Surveys and enterprise surveys (Earning Structure Survey and Survey of Occupations); firm level case studies; interviews with experts. Findings indicate that despite recent improvements in legal and institutional environment, as well as some progress in working conditions, significant proportions of workers are exposed to serious risks; health and safety conditions are slow to improve (several bottlenecks are identified). 15 percent of employees in 2003 were usually working 50 or more hours per week, and often this overtime was involuntary and/or unpaid. The analysis suggest that, other things equal, unpaid overtime is more likely to be found in small firms, for temporary workers, for workers with short tenure. Presence of a trade union improves workers’ prospect to be paid for eventual overtime work.
    Keywords: employment contract, working conditions, overtime, transition
    JEL: J22 J23 J28 J5 P23
    Date: 2005–06–25

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