nep-ent New Economics Papers
on Entrepreneurship
Issue of 2005‒12‒14
nine papers chosen by
Marcus Dejardin
Facultés Universitaires Notre-Dame de la Paix

  1. From nascent to actual entrepreneurship: the effect of entry barriers By Andre van Stel; David Storey; Roy Thurik; Sander Wennekers
  2. Explaining female and male entrepreneurship at the country level By Ingrid Verheul; Andre van Stel; Roy Thurik
  3. The Dynamics of Venture Capital Contracts By Julia Hirsch; Carsten Bienz
  4. Successful management buyouts: Are they really more entrepreneurial? By Bruining, H.; Verwaal, E.
  5. The Impact of New Firm Formation on Regional Development in the Netherlands By Stel, A.J. van; Suddle, K.
  6. Innovation, strategic renewal and its effect on small firm performance By Mickey Folkeringa; Andre van Stel; Joris Meijaard
  7. Learning, Investment, and Entrepreneurial Survival By Junjian Miao; Neng Wang
  8. Evaluating Training Programs for Small and Medium Enterprises : Lessons from Mexico By Hong Tan; Gladys Lopez Acevedo
  9. International Migration, Human Capital, and Entrepreneurship : Evidence from Philippine Migrants' Exchange Rate Shocks By Dean Yang

  1. By: Andre van Stel; David Storey; Roy Thurik; Sander Wennekers
    Abstract: This exploratory study focuses on the conversion from nascent to actual entrepreneurship and the role of entry barriers in this process. Using data for a sample of countries partici-pating in the Global Entrepreneurship Monitor between 2002 and 2004, we estimate a two-equation model explaining the nascent entrepreneurship rate and the young business entre-preneurship rate, while taking into account the interrelationship between the two variables (i.e. the conversion). Furthermore various determinants of entrepreneurship reflecting the demand and supply side of entrepreneurship as well as government intervention are incor-porated in the model. We find evidence for a strong conversion effect from nascent to ac-tual entrepreneurship. We also find positive effects on entrepreneurial activity rates of la-bour flexibility and tertiary enrollment and a negative effect of social security expenditure. Concerning the effect of entry regulations we find mixed results. Using one set of entry regulation measures we find no effects whereas using data from a second source we find a weak negative effect of more burdensome entry regulations on the rate of entrepreneurship.
    Keywords: nascent entrepreneurship, young businesses, entry regulations
    JEL: H10 M13
    Date: 2005–11
  2. By: Ingrid Verheul; Andre van Stel; Roy Thurik
    Abstract: This study aims at explaining female and male entrepreneurship across countries. Explanatory variables are derived from three streams of literature, including the literature on the determinants of entrepreneurship, the literature on female labor force participation, and that on female entrepreneurship. To test the hypotheses use is made of Global Entrepreneurship Monitor data, including total entrepreneurial activity rates for both women and men for 2002, as well as a range of prospective determinants derived from standardized national statistics. We find that female and male entrepreneurship are largely influenced by the same factors in the same direction. A remarkable exception is life satisfaction for which we find a positive impact on female entrepreneurship and no impact on male entrepreneurship. The paper pays explicit attention to the methodological aspects of investigating the determinants of female and male entrepreneurship.
    Keywords: entrepreneurship, gender, determinants of entrepreneurship
    JEL: M13 H10 J16 J23
    Date: 2005–11
  3. By: Julia Hirsch; Carsten Bienz
    Abstract: We analyze the degree of contract completeness with respect to staging of venture capital investments using a hand-collected German data set of contract data from 464 rounds into 290 entrepreneurial firms. We distinguish three forms of staging (pure milestone financing, pure round financing and mixes). Thereby, contract completeness reduces when going from pure milestone financing via mixes to pure round financing. We show that the decision for a specific form of staging is determined by the expected distribution of bargaining power between the contracting parties when new funding becomes necessary and the predictability of the development process. To be more precise, parties choose the more complete contracts the lower the entrepreneur's expected bargaining power - the maximum level depending on the predictability of the development process.
    Date: 2005–12
  4. By: Bruining, H.; Verwaal, E. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The paper explores the impact of entrepreneurial management dimensions on post-MBO financial performance. We use Stevenson?s conceptualization of entrepreneurship (1983), empirically validated by Brown, Davidsson and Wiklund (2001), positing that entrepreneurial companies will be involved in recognizing and exploiting opportunity, regardless of the resources controlled. From the literature we hypothesize positive effects of entrepreneurial management dimensions on post-MBO financial performance. We find that successful buyout managers cannot be classified as entrepreneurs on all entrepreneurial dimensions. Instead they ambidextrously combine the pursuit of valuable opportunities with the exploitation and control of their resources. Implications for theory and managerial practice are discussed.
    Keywords: Management Buyouts;Entrepreneurial Management;Financial Performance;
    Date: 2005–11–30
  5. By: Stel, A.J. van; Suddle, K. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This paper examines the relationship between new firm formation and regional employment change in the Netherlands. Using a new regional data base for the period 1988-2002, we examine the time lags involved in the relationship. We also investigate whether the relationship differs by time period, by sector and by degree of urbanization. We find that the maximum effect of new businesses on regional development is reached after about six years. Our results also suggest that the overall employment impact of new-firm startups is positive but that the immediate employment effects may be small in the Netherlands. Furthermore, we find that the relation between new businesses and regional development has been stable during the period under investigation, that the employment impact of new firms is strongest in manufacturing industries and that the employment impact of new firms is stronger in areas with a higher degree of urbanization.
    Keywords: Startups;Entrepreneurship;Regional Development;the Netherlands;
    Date: 2005–11–30
  6. By: Mickey Folkeringa; Andre van Stel; Joris Meijaard
    Abstract: In this paper, we investigate the relationship between strategic renewal and the performance of smaller firms (less than 100 employees). We use a panel of micro data on about 1000 Dutch firms. The dataset contains information on aspects of strategic renewal, including process innovation and knowledge management. In our regression analyses we explain the variation in firm performance and we explicitly control for reversed causality, business cycle effects, sector effects, and firm age. We find that market research, an active external network for knowledge acquisition and strategic efforts into the improvement of internal processes are positively related to turnover growth. Furthermore, codification of knowledge, cooperation with partner firms and the provision of training to employees directly relates to employment growth. The results emphasize the importance of both knowledge absorption and knowledge creation to the success of innovative efforts in small firms. We find that the impact of the various measures varies with firm size. One further notable finding is that the ownership of patents negatively impacts small firm performance, particularly for the smallest firms in our sample.
    Keywords: strategic renewal, growth of small firms, entrepreneurship, innovation
    JEL: L25 O33
    Date: 2005–11
  7. By: Junjian Miao (Department of Economics, Boston University); Neng Wang (Columbia Business School)
    Abstract: Empirical evidence shows that entrepreneurs on average do not earn more than paid em- ployees in terms of present value. One may ask why individuals what to stay in business and take entrepreneurial activities. To address this question, we propose a continuous time real options model in which entrepreneurs do not know their investment quality and learn about it over time. We show that due to the option value of learning, an entrepreneur may stay in business even though the net present value (NPV) is negative. We also show that risk aversion erodes option value and lowers private ¯rm value so that a highly risk averse entrepreneur may exit even when the NPV is positive. We also show that a more risk averse or a more pessimistic entrepreneur exits earlier. Finally, the model can generate the positive relation between wealth and survival duration without liquidity constraints.
    Keywords: real options, learning, private firm value, survival, precautionary savings
    JEL: D80 D91 G11 E21
    Date: 2005–07
  8. By: Hong Tan (The World Bank); Gladys Lopez Acevedo (The World Bank)
    Abstract: While there have been numerous impact evaluations of unemployed individuals participating in retraining programs or in programs to foster self-employment, impact evaluations of enterprises benefiting from training programs for small and medium enterprises (SMEs) are rare. The authors reevaluate the impact of the largest SME program in Mexico, the Comprehensive Quality and Modernization Program (CIMO). They show that compared to the control group, CIMO firms increased investments in worker training, had higher rates of capacity utilization, and were more likely to adopt quality practices. The evidence also suggests that these improved intermediate outcomes were associated with increased productivity growth among CIMO participants, impacts that were especially strong throughout the 1991-93 period. However, the productivity impacts of CIMO are not apparent in the 1993-95 period.
    Keywords: Industry, Private sector development, Labor and employment, Education
    Date: 2005–11–01
  9. By: Dean Yang (University of Michigan)
    Abstract: Millions of households in developing countries receive financial support from family members working overseas. How do the economic prospects of overseas migrants affect origin-household investments-in particular, in child human capital and household enterprises? Yang examines Philippine households' responses to overseas members' economic shocks. Overseas Filipinos work in dozens of foreign countries which experienced sudden (and heterogeneous) changes in exchange rates due to the 1997 Asian financial crisis. Appreciation of a migrant's currency against the Philippine peso leads to increases in household remittances received from overseas. The estimated elasticity of Philippine peso remittances with respect to the Philippine/foreign exchange rate is 0.60. In addition, these positive income shocks lead to enhanced human capital accumulation and entrepreneurship in origin households. Favorable migrant shocks lead to greater child schooling, reduced child labor, and increased educational expenditure in origin households. More favorable exchange rate shocks also raise hours worked in self-employment and lead to greater entry into relatively capital-intensive enterprises by migrants' origin households.
    Keywords: International economics
    Date: 2005–04–01

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