nep-ent New Economics Papers
on Entrepreneurship
Issue of 2005‒10‒29
thirteen papers chosen by
Marcus Dejardin
Facultés Universitaires Notre-Dame de la Paix

  1. Entrepreneurial engagement levels in the European Union By Isabel Grilo; Roy Thurik
  2. Entrepreneurship, Evolution and the Human Mind By Brian Loasby
  3. Innovation, Appropriation and Entrepreneurial Strategy. By Stewart, Geoff
  4. Popular Attitudes, Globalization, and Risk By Marcus Noland
  5. Survivor: The Role of Innovation in Firm's Survival By Elena Cefis; Orietta Marsili
  6. Credit Rationing and Firms in Oligopoly By Tong, Jian
  7. Firm Maturity and Product Processes R&D in Swedish Manufacturing Firms By Nyström, Kristina
  8. Entry and Exit With Information Externalities By stefano comino
  9. Testing Gibrat's Legacy: A Bayesian Approach to Study the Growth of Firms By Elena Cefis; Matteo Ciccarelli; Luigi Orsenigo
  10. Agglomeration and the Spatial Distribution of Creativity By Andersson, Roland; Quigley, John. M; Wilhelmsson, Mats
  11. Skills and Creativity in a Cross-section of Dutch Cities By Gerard Marlet; Clemens van Woerkens
  12. The Impact of High-Level Skill Shortages on Firm-Level Performance: Evidence from the UK Technical Graduate Labour Market By John Forth; Geoff Mason
  13. Does Spatial Disaggregation Matter in Job Creation and Destruction Flows? By Elena Cefis; Roberto Gabriele

  1. By: Isabel Grilo; Roy Thurik
    Abstract: A multinomial logit model and survey data from the 25 EU member states and the US are used to establish the effect of demographic and other variables on various entrepreneurial engagement levels. These engagement levels range from "never thought about starting a business" to "thinking about it", "taking steps for starting up", "having a young business", "having an older business" and "no longer being an entrepreneur". Data of the 2004 Entrepreneurship Flash Eurobarometer survey containing over 13,500 ob-servations is used. Other than demographic variables such as gender, age, education level and whether par-ents are self-employed, the set of explanatory variables used includes country specific effects, measures of risk tolerance, internal and external locus of control and four perceptions of 'obstacles'. The 'obstacle' vari-ables include the perception by respondents of administrative complexities, of availability of financial sup-port, of accessibility of information for start-up and whether the current economic climate is favorable. Among the four perception variables only administrative complexities displays an unambiguous obstacle profile in that its presence has a significant negative impact on higher entrepreneurial engagement levels. Country effects suggest a clear underperformance of Europe relative to the US in less mature entrepreneu-rial phases.
    Keywords: determinants of entrepreneurship, nascent entrepreneurship, multinomial logit, barriers to entry, Europe
    JEL: M13 H10 J23 R12
    Date: 2005–10
  2. By: Brian Loasby
    Date: 2005–09
  3. By: Stewart, Geoff
    Abstract: Innovation, Appropriation and Entrepreneurial Strategy Geoff Stewart Economics Division School of Social Sciences University of Southampton Abstract We analyse the strategy of an entrepreneur seeking to earn a return on a new discovery when faced by an incumbent firm and pool of potential entrants. The entrepreneur may choose to purchase the incumbent without revealing the discovery, enter the market as a competitor, or approach the incumbent with a view to some form of cooperation. Among our findings is that it is the magnitude of the discovery and its susceptibility to appropriation, rather than entry costs, that are the main determinants of whether entry will occur. Also, whilst major discoveries will always be implemented, others might be withheld. JEL classification: D23; D43; L13; O31.
    Keywords: Entrepreneur; Property rights; Appropriability; Oligopoly.
    Date: 2004–02–19
  4. By: Marcus Noland (Institute for International Economics)
    Abstract: Popular opposition to globalization may be interpreted as xenophobia or hostility to market economics and signal country risk, including the degree of security risk - the possibility that local staff of facilities could be subject to discriminatory treatment, harassment, or attack. This paper integrates the Pew Global Attitudes data into a series of economic models on foreign direct investment (FDI), sovereign ratings, and local entrepreneurship and finds that some responses correlate with economic variables of interest, conveying information beyond what can be explained through standard models. More tolerant countries attract more FDI, obtain better ratings, and exhibit more entrepreneurship.
    Keywords: Globalization, risk, foreign direct investment, sovereign ratings, entrepreneurship
    JEL: F2 O24 M13
    Date: 2004–08
  5. By: Elena Cefis; Orietta Marsili
    Abstract: This paper explores the relationship between innovation and the survival of manufacturing firms in the Netherlands. The determinants of the survival probability of a firm, traditionally identified in the size and age of a firm, are extended to include the ability of a firm to introduce an innovation in the market. The empirical analysis combines economic and demographic data from the Business Register of the population of firms active in the Netherlands with data on innovation derived from the second Community Innovation Survey. The survival probability of a firm is estimated by using a non-parametric approach: Transition Probability Matrices were calculating over different time periods. We observe that, in general, innovation has a positive and significant effect on firms' survival that increases as time lengthens. Furthermore, our results confirm that small and young firms are those most exposed to the risk of exit, but at the same time those that benefit most of innovation to survive in the market, especially in the longer term.
    Keywords: Firms Survival, Innovation, Firms Exit, Transition Probability Matrices
    JEL: L11 O30 D21 C14 L25
    Date: 2003–11
  6. By: Tong, Jian
    Abstract: This paper develops a theory of the firm, and equilibrium credit rationing mechanisms in oligopoly with R&D-product market competition. Credit rationing arises from a hold-up problem between wealth-constrained entrepreneurs and external investors. Underinvestment occurs if entrepreneurial wealth constraint is binding, even though the equilibrium corporate governance structure addresses the hold-up problem optimally. In a symmetric equilibrium outcome all firms face equitable credit-size rationing. In contrast the asymmetric equilibrium outcome sees some firms (the 'preys') denied external credits entirely while the others (the 'predators') receiving more favorable finances, which turns out to increase market concentration and overall R&D investments. Key words: credit rationing, oligopoly, hold-up, corporate governance, theory of the firm, market structure, predation
    Date: 2005–06–01
  7. By: Nyström, Kristina (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper investigates the commonly debated question about innovations and firm age. Are innovations made by incumbent firms, and does innovation therefore constitute a barrier to entry, or is innovation a way for new firms to successfully compete? The paper further investigates the relationship between firm size and innovation. Does innovation constitute a way for small firms to compete or are innovation a large firm phenomenon? In the analysis the paper explicitly distinguishes between product and process innovation. Data from 1997 and 1999 on product and process R&D, firm size and age in the Swedish manufacturing industry is used in the empirical analysis. A multinomial logit-model is used to estimate the probability of performing process and product R&D. The results show that there are complementarities between product and process R&D and very few firms conduct only process R&D. The probability of product R&D and combined product and process R&D is higher for large firms and firms that are older than 80 years. The size and age effects are more pronounced for firms that carry out both process and product R&D.
    Keywords: Product; process; R&D; firm size; firm maturity
    JEL: L11 O31 O33
    Date: 2005–10–18
  8. By: stefano comino (Dipartimento di Economia, Università di Trento)
    Abstract: In the paper we analyze how the possibility of revealing information to a competitor alters the entry/investment behavior of a first entrant. We show that once it has entered the market, the firm might refrain from making further profitable investments in order to hide information from the competitor. Moreover, we show that before entering the market, the first entrant anticipates that there is a strategic advantage in choosing an initially small scale of entry: in this way it 'commits' itself to revealing the true state of the market with its subsequent decisions and this fact is beneficial since it induces the competitor to postpone entry into market.
    Keywords: Entry, Information Externalities, Wait and See, First Entrant, Strategic Behavior
    JEL: D82 D83 L11
    Date: 2005–10–21
  9. By: Elena Cefis; Matteo Ciccarelli; Luigi Orsenigo
    Abstract: Gibrat's law is a referent model of corporate growth dynamics. This paper employs Bayesian panel data methods to test for Gibrat's law and its implications. Using a Pharmaceutical Industry Database (1987-1998), we find evidence against Gibrat's law on average, within or across industries. Estimated steady states differ across firms, and firm sizes and growth rates don't converge within the same industry to a common limiting distribution. There is only weak evidence of mean reversion: initial larger firms do not grow relatively slower than smaller firms. Differences in growth rates and in size steady state are persistent and firm-specific, rather than sizespecific.
    Keywords: Gibrat's Law, Firm Growth, Pharmaceutical Industry, Heterogeneity, Bayesian Estimation
    JEL: C11 C23 D21 L11 L25
    Date: 2004–11
  10. By: Andersson, Roland (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Quigley, John. M (University of California Berkeley); Wilhelmsson, Mats (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper analyzes the spatial distribution of “creativity” -- the production of new knowledge. We analyze commercial patents granted in Sweden during 1994-2001 using a panel of one hundred labor market areas which encompass the entire country. We relate patent activity to measures of localization and urbanization, to the industrial composition and size distribution of firms, and to the regional distribution of human capital. Our analysis confirms the importance of human capital and research facilities in stimulating regional patent output. Importantly, our results document the importance of agglomeration and spatial factors in influencing creativity: Patent activity is increased in larger and more dense labor markets and in regions in which a larger fraction of the labor force is employed in medium-sized firms. Our results also indicate that creativity is greater in labor markets with more diverse employment bases and in those which contain a larger share of national employment in certain industries, confirming the importance of urbanization and localization economies in stimulating creativity. Our quantitative results suggest that the urbanization of Sweden during the 1990s had an important effect upon the aggregate level of patent activity in the country, leading to increases of up to five percent in aggregate patents.
    Keywords: Agglomeration; patent; spatial distribution; creativity
    JEL: N34 O31 R11
    Date: 2005–10–18
  11. By: Gerard Marlet; Clemens van Woerkens
    Abstract: In this paper we examine Richard Florida's Creative Capital theory in comparison with Human Capital theory, using a cross section of Dutch cities as our sample. Employment growth in Dutch cities can be predicted both from local education levels and from the presence of a large creative class, but especially from the latter. We conclude that in theory creativity is not very different from human capital. Nevertheless Florida's creative class is a better standard to measure human capital then education is.
    Keywords: human capital, creative class, urban growth.
    Date: 2004–10
  12. By: John Forth; Geoff Mason
    Abstract: This paper uses data from the 1998 Technical Graduates Employers Survey, combined with post-survey financial data, to examine the effects of high-level skill shortages on firm-level performance in the UK. We focus specifically on enterprise difficulties in recruiting engineers and scientists with skills related to Information and Communication Technologies (ICTs). In contrast to most other surveys of skill shortages, these data distinguish clearly between external recruitment difficulties which are largely attributable to low numbers of job applicants and recruitment problems which are primarily due to shortcomings in the quality of job applicants.Cross-sectional and panel regression analysis of the determinants of sales per employee at firm level suggests that quality-related difficulties in recruiting ICTskilled engineers and scientists do not have any statistically significant effects on performance. However, quantity-based difficulties in recruiting technical graduates with ICT skills are significantly negatively related to average sales per employee. The mechanisms by which unfilled positions for ICT-skilled engineers and scientists may contribute to relatively weak performance include slower development of new products and services, failure to meet delivery dates, higher costs of employing temporary and contract staff, loss of new customer orders and lack of forward planning.
    Date: 2004–05
  13. By: Elena Cefis; Roberto Gabriele
    Abstract: The paper investigates the changes in job creation and destruction flows considering a very disaggregate level of analysis. If institutional setup plays a more important role compared to other factors, than at lower levels of aggregation we should observe that job flows regularities are in line with national ones. We explore the issue using a unique database on the population of firms in Trentino (a NorthEastern Province of Italy) from 1991 to 2001. We find that: (a) job flows show a "fractal" nature, i.e. many regularities appear to be scale invariant (magnitude of flows and their persistence). In particular job flows magnitude is in line with the average values for Italy; (b) there are some qualifications to "fractality": entrant firms' contribution to job creation process is lower than the corresponding contribution at national level, whereas the job destruction share accounted for by exit firms is around 30%, in line with stylized facts; (c) size and age shape the job flows; (d) shifts of jobs between macro sectors are rare.
    Keywords: Labour reallocation, job flows, sample selection, two-stage Heckman estimator.
    JEL: C34 J23 L11
    Date: 2005–03

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