nep-ent New Economics Papers
on Entrepreneurship
Issue of 2005‒10‒15
six papers chosen by
Marcus Dejardin
Facultés Universitaires Notre-Dame de la Paix

  1. Part-Time Entrepreneurship and Wealth Effects: New Evidence from the Panel Study of Entrepreneurial Dynamics By Kameliia Petrova
  2. National institutions and the allocation of entrepreneurial effort By Bowen, Harry P.; De Clercq, D.
  3. What Makes Small and Medium Enterprises Competitive By Piergiuseppe Morone; Giuseppina Testa
  4. Submarkets and the Evolution of Market Structure By Peter Thompson; Steven Klepper
  5. A Simple Business-Cycle Model with Schumpeterian Features By Luis F Costa; Huw D Dixon
  6. Speculative and Entrepreneurial Behaviour: A Study of Micro-Economic Sustainability in Argentina During the 1990s By Valeria Arza; Paula Español

  1. By: Kameliia Petrova (Boston College)
    Abstract: Why do people become part-time entrepreneurs? Are they financially constrained? Previous studies on entrepreneurship do not deal with part- timers. In contrast, a recent survey on the establishment of new businesses reports that 80 percent of entrepreneurs also hold outside paid jobs. In this study, I develop a model of entrepreneurial choice in which individuals make a joint decision of how much capital to invest and what proportion of time to spend in business. The outside wage is inversely related to both time in business and capital for part-timer entrepreneurs. I also show that wealth and ability are positively correlated. To evaluate wealth effects, I use data from the Panel Study of Entrepreneurial Dynamics. I instrument wealth with month-to-month changes in the Standard & Poor 500 stock market index and I find that wealth does not affect the propensity to become an entrepreneur. If individuals know their entrepreneurial ability ahead of time and expect financial difficulties, they will accumulate funds before making entrepreneurial decisions. Wealth is shown to be less significant for starting new businesses.
    Keywords: Start-ups, Entrepreneurship, Liquidity Constraints
    JEL: M13
    Date: 2005–10–10
  2. By: Bowen, Harry P.; De Clercq, D.
    Abstract: This paper examines how the allocation of entrepreneurial effort within a country is influenced by the country’s institutional environment. We hypothesize that the likelihood that entrepreneurs launch a growth-oriented start-up is associated with the institutional environment in which entrepreneurs are embedded. We test our hypothesis using data on 44 countries over the three-year period from 2002 to 2004. The data are drawn from two sources: the Global Entrepreneurship Monitor and the World Economic Forum’s Executive Opinion Survey. Our findings indicate that the likelihood of a growth-oriented start-up is positively related to a country’s level of human capital targeted at entrepreneurship and the level of regulatory protection, but is negatively related to the extent of corruption and mistrust in public officials.
    Keywords: institutions, entrepreneurship, resource, allocation
    JEL: D21 M13 O49
    Date: 2005–10–05
  3. By: Piergiuseppe Morone; Giuseppina Testa
    Abstract: : This paper aims at understanding the determinants of Italian small- and medium-sized enterprises’ competitiveness. Having in mind the fact that the Italian economic system relies substantially on small firms which have managed to stay competitive by adopting strategies such as the creation of well-integrated social and institutional clusters (the so-called industrial districts) or specialising in the production of quality goods (the so called made in Italy). However, the growing competing pressure coming from the Far East has rendered this production system vulnerable, challenging its internationally competitiveness. By developing a conceptual model we identify the sources of competitiveness of Italian SMEs. The model is tested using a unique database which collects data, for the year 2004, over a sample of 2,600 SMEs.
    Keywords: SMEs, competitiveness, innovation, interval regression, ordered probit
    JEL: L1 O31 C24
    Date: 2005–09
  4. By: Peter Thompson (Department of Economics, Florida International University); Steven Klepper (Department of Social and Decision Sciences, Carnegie Mellon University)
    Abstract: We construct a model of industry evolution in which the central force for change is the creation and destruction of submarkets. Firms expand when they are able to exploit new opportunities that arrive in the form of submarkets; they contract and ultimately exit when the submarkets in which they operate are destroyed. This simple framework can transparently explain a wide range of well-known regularities about industry dynamics, most notably the subtle relationships between size, age, growth, and survival. Data on the laser industry, where submarkets are prominent, further illustrate the ability of the model to explain distinctive patterns in the evolution of industries and firms.
    Keywords: Spinoffs, firm growth, survival, firm age, market structure, industry evolution, technological change
    JEL: L1 O33
    Date: 2003–12
  5. By: Luis F Costa; Huw D Dixon
    Abstract: We develop a dynamic general equilibrium model of imperfect competition where a sunk cost of creating a new product regulates the type of entry that dominates in the economy: new products or more competition in existing industries. Considering the process of product innovation is irreversible, introduces hysteresis in the business cycle. Expansionary shocks may lead the economy to a new 'prosperity plateau,' but contractionary shocks only affect the market power of mature industries.
    Keywords: Entry; hysteresis, mark-up
    JEL: E62 L13 L16
  6. By: Valeria Arza (SPRU, University of Sussex); Paula Español (EHESS, PSE (Paris-Jourdan Sciences Economiques))
    Abstract: This paper sheds light on microeconomic sustainability after complete financial liberalisation was implemented in Argentina during the 1990s. Inspired by Keynes and Minsky, we estimate an investment model that accounts for financial constraints using panel data for Argentina during the 1990s. The main conclusion of the study is that there was an increase in speculative behaviour which was unconnected to entrepreneurial behaviour based on investment in fixed assets. Over the decade, the number of speculative firms increased. Moreover, these firms increased their debt burden, particularly with financial institutions. However, they did not use these funds to invest in fixed assets.
    Keywords: speculation, investment, financial constraints, firm behaviour, micro sustainability, Minsky, Argentina
    JEL: C23 D21 O16 O54
    Date: 2005–10–10

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