nep-ent New Economics Papers
on Entrepreneurship
Issue of 2006‒01‒24
eleven papers chosen by
Marcus Dejardin
Facultés Universitaires Notre-Dame de la Paix

  1. Growth and Entrepreneurship: An Empirical Assessment By Acs, Zoltán J; Audretsch, David B; Braunerhjelm, Pontus; Carlsson, Bo
  2. The Lag Structure of the Impact of Business Ownership on Eco-nomic Performance in OECD Countries By Martin Carree; Roy Thurik
  3. Knowledge-based Entrepreneurship : The Organizational Side of Technology Commercialization By Ulrich Witt; Christian Zellner
  4. What are Firms? Evolution from Birth to Public Companies By Kaplan, Steven N.; Sensoy, Berk A.; Strömberg, Per
  5. Growth of New Firms : Which Factors Influence Post-Entry Performance? An Empirical Analysis Based on Swiss Firm Data By David Marmet
  6. Promoting Entrepreneurship in the Mature Welfare State By Henrekson, Magnus; Roine, Jesper
  7. Legal Status at Entry, Economic Performance, and Self-employment Proclivity: A Bi-national Study of Immigrants By Amelie Constant; Klaus F. Zimmermann
  8. What’s In a City?: Understanding the Micro-Level Employer Dynamics Underlying Urban Growth By R. Jason Faberman
  9. Spatial Activity and Labour Market Patterns By Giovanni Russo; Aura Reggiani; Peter Nijkamp
  10. Firm size distribution and employment protection legislation in Italy By Fabiano Schivardi; Roberto Torrini
  11. Product Quality Selection and Firm Survival. Evidence from the British Automobile Industry, 1895-1970. By Yuanyuan Peng

  1. By: Acs, Zoltán J; Audretsch, David B; Braunerhjelm, Pontus; Carlsson, Bo
    Abstract: This paper suggests that the spillover of knowledge may not occur automatically as has typically been assumed in models of endogenous growth. Rather, a mechanism is required that serves as a conduit for the spillover and commercialization of knowledge from the source creating it to the firm actually commercializing the new ideas. In this paper, entrepreneurship is identified as one such mechanism facilitating the spillover of knowledge. Using a panel of entrepreneurship data for 18 countries, empirical evidence is found that in addition to measures of R&D and human capital, entrepreneurial activity also serves to promote economic growth.
    Keywords: entrepreneurship; growth
    JEL: M13 O40 R11
    Date: 2005–12
  2. By: Martin Carree; Roy Thurik
    Abstract: This note investigates the impact of changes in the number of business owners on three measures of economic performance, viz. employment growth, GDP growth and labor productivity growth. Particular attention is devoted to the lag structure. The analysis is performed at the country level for 21 OECD countries. Our results confirm earlier evidence on three stages in the impact of entry on economic growth: an initial direct positive effect, followed by a negative effect due to exiting capacities and finally a stage of positive supply-side effects. The net effect is positive for employment and GDP growth. Changes in the number of business owners have no effect on labor productivity.
    Keywords: Business ownership, entrepreneurship, economic growth, lag structure
    JEL: O40 M13
    Date: 2006–01
  3. By: Ulrich Witt (Max-Planck-Institute Jena, Evolutionary Economics group); Christian Zellner (Ecole Polytechnique Fédérale de Lausanne, Chaire en Economie et Management de l'Innovation)
    Abstract: New knowledge with commercial potential is continually created in academic institutions. How is it turned into economically valuable businesses? This paper argues that the transfer is an entrepreneurial process. To understand this, the actions and the constraints characteristic for the entrepreneurial reshaping of the division of labor must be recognized. In the case of knowledge-based entrepreneurship, specific constraints result from the peculiarities of scientific knowledge – epitomized by constrasting tacit and encoded knowledge. Scientifically trained labor is required for transferring both forms of knowledge. However, the mode of transfer differs crucially and shapes the organizational form of commercializing new scientific knowledge.
    Keywords: entrepreneurship, knowledge transfer, technology commercialization
    JEL: L23 M13 O31 O32
    Date: 2005–05
  4. By: Kaplan, Steven N. (University of Chicago); Sensoy, Berk A. (University of Chicago); Strömberg, Per (Swedish Institute for Financial Research)
    Abstract: We study how firm characteristics evolve from early business plan to initial public offering to public company for 49 venture capital financed companies. The average time elapsed is almost 6 years. We describe the financial performance, business idea, point(s) of differentiation, non-human capital assets, growth strategy, customers, competitors, alliances, top management, ownership structure, and the board of directors. Our analysis focuses on the nature and stability of those flrIn attributes. Firm business lines remain remarkably stable from business plan through public company. Within those business lines, non-human capital aspects of the businesses appear more stable than human capital aspects. In the cross-section, firms with more alienable assets have substantially more human capital turnover.
    Keywords: Theory of the firm; Entrepreneurship; Venture capital; Firm life cycle
    JEL: G24 L20 M13
    Date: 2005–10–15
  5. By: David Marmet (Swiss Institute for Business Cycle Research (KOF), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: The aim of this study is to shed light on the factors which determine the post-entry performance of new firms. It is often argued that new firms are the driving force of structural changes and sometimes they are even characterized as an “engine” of economic growth. Nevertheless, the empirical evidence is mixed. Taking into account the high exit rate of new firms, a specific founding cohort does not contribute substantially to new jobs. In this paper, we analyse the contribution of new firms concerning the ability of creating jobs. Furthermore, we investigate the main determinants of post-entry performance, which we derive from existing theoretical concepts based on industrial economic approaches, learning models and founding characteristics. The endogenous variable is employment development. We test our model with data from the Swiss cohort of start-ups of 1996/1997. The results reveal that the important and robust factors determining the post-entry performance are changes in demand, innovation behaviour, human capital, self-financing, seed capital, consultancy and support, assets, legal form, and motives for founding a new firm, such as the possibility to implement own ideas coming from research at university or to escape from unemployment.
    Keywords: New firms, employment growth, performance
    JEL: L25 J23 D21
    Date: 2004–12
  6. By: Henrekson, Magnus (The Research Institute of Industrial Economics); Roine, Jesper (Stockholm School of Economics)
    Abstract: Entrepreneurship is largely ignored or treated in a highly simplified way in endogenous growth theory. Still, it is now widely recognized that the supply of entrepreneurial talent is likely to be important for economic growth, innovation and job creation. In this study we provide an in-depth examination of how the supply of productive entrepreneurship is likely to be affected by the kind of tax and welfare arrangements that may prevail in a mature welfare state. Sweden, allegedly the most extensive of all welfare states, is the object of the empirical analysis. It is argued that the Swedish welfare state early on chose a specific “Swedish Model” of trying to combine ambitious welfare programs and a high tax burden with good opportunities for economic growth. This particular view rested heavily on the assumption that innovative activity was best performed in large established firms and that entry of new firms was less important. Consequently, policy and institutions were geared to promoting certain types of activities which could deliver growth if scale economies are important and intrapreneurship can substitute for entrepreneurship. However, in an environment where entry, exit and turnover of firms are important for growth, and where scale-economies are less important, this kind of model may be more problematic. Both aggregate economic performance and data on firm growth and direct measures of entrepreneurial activity are broadly consistent with the identified structure of payoffs. A number of measures that can be implemented to strengthen entrepreneurial incentives within extensive welfare states are discussed, but the fact still remains that an entrepreneurial culture and a welfare state are very remotely related. As a result, the respective cultures are unlikely to be promoted by a similar set of institutions.
    Keywords: Economic Growth; Entrepreneurship; Innovation; Swedish Model; Welfare State
    JEL: H30 J20 M13 O12
    Date: 2005–11–13
  7. By: Amelie Constant (IZA Bonn); Klaus F. Zimmermann (University of Bonn, IZA Bonn and DIW Berlin)
    Abstract: There are concerns about the attachment of immigrants to the labor force, and the potential policy responses. This paper uses a bi-national survey on immigrant performance to investigate the sorting of individuals into full-time paid-employment and entrepreneurship and their economic success. Particular attention is paid to the role of legal status at entry in the host country (worker, refugee, and family reunification), ethnic networks, enclaves and other differences among ethnicities for their integration in the labor market. Since the focus is on the understanding of the self-employment decision, a two-stage structural probit model is employed that determines the willingness to work full-time (against part-time employment and not working), and the choice between full-time paid work and self-employment. The choices are determined by the reservation wage for full-time work, and the perceived earnings from working in paid-employment and as entrepreneur, among other factors. Accounting for sample selectivity, the paper provides regressions explaining reservation wages, and actual earnings for paid-employment and self-employment, which provide the basis for such an analysis. The structural probit models suggest that the expected earnings differentials from working and reservation wages and for self-employment and paid-employment earnings matter much, although only among a number of other determinants. For Germany, legal status at entry is important; former refugees and those migrants who arrive through family reunification are less likely to work full-time; refugees are also less self-employed. Those who came through the employment channel are more likely to be in full-time paid work. In Denmark, however, the status at entry variables do not play any significant role. This suggests that the Danish immigrant selection system is ineffective.
    Keywords: self-employment, entrepreneurship, ethnicity, migration, asylum seekers, refugees, migrant workers, family reunification, citizenship, discrimination
    JEL: C25 F22 J15 J23 J31 J61 J82
    Date: 2005–12
  8. By: R. Jason Faberman (U.S. Bureau of Labor Statistics)
    Abstract: This paper synthesizes the literatures on labor dynamics and urban growth and agglomeration by presenting new evidence on the micro-level establishment dynamics of metropolitan areas. I explore how the patterns of job reallocation and entry and exit affect the growth and composition of these areas. I find that high-growth metropolitan areas have high rates of job and establishment turnover, primarily though higher rates of gross job creation and establishment entry, and have a relatively young distribution of establishments. Variations in the age distribution and differences in the entry and exit patterns of young establishments account for a sizeable portion of regional differences in labor dynamics and growth, even after controlling for regional differences in industry composition. These results suggest that variations in the age distribution and the dynamics that lead to such variations are important factors in understanding urban growth and agglomeration.
    Keywords: Job Reallocation; Urban Growth and Agglomeration; Firm Dynamics
    JEL: E24 J63 R11
    Date: 2005–12
  9. By: Giovanni Russo (IRES FvG, Trieste); Aura Reggiani (University of Bologna); Peter Nijkamp (Vrije Universiteit Amsterdam)
    Abstract: The spatial activity patterns of firms in a multi-regional system are closely connected with the structure and evolution of regional labour markets. Based on an extensive data set (cross-section) on commuting flows in Germany, this paper aims to identify the relationship between entrepreneurial activity and spatial labour markets, by employing in particular the concept of entrepreneurial city. A network connectivity model is adopted to assess connectivity patterns, using the power-law and exponential law as a statistical test framework, in order to detect the presence of economic activity hubs that may resemble the concept of entrepreneurial cities. Various results are presented and interpreted in the final part of the paper.
    Keywords: Network; Commuting; Entrepreneurship
    JEL: O
    Date: 2005–12–06
  10. By: Fabiano Schivardi (Banca d'Italia); Roberto Torrini (Banca d'Italia)
    Abstract: We study the role of employment protection legislation (EPL) in explaining the relative small average size of Italian firms. We construct a simple model that shows that the smooth relation between size and growth probability is disturbed in proximity of the thresholds at which EPL applies differentially. We use a comprehensive dataset of all Italian firms between 1986 and 1998 to estimate the effects of EPL in terms of discouraging small firms from growing. We then construct a stochastic transition matrix for firm size that, together with the estimates, allows for a quantitative evaluation of the effects of EPL in the long run. Our results show that EPL does influence firm size distribution, but that its effects are quantitatively modest: average firm size would increase by less than 1% when removing the threshold effect. In terms of policy, these findings suggest that changes in EPL are not likely to have a large impact on the propensity of small firms to grow.
    Keywords: Firm size distribution, firing costs, employment protection
    JEL: J65 D21 L11
    Date: 2004–06
  11. By: Yuanyuan Peng (Department of Economics, Florida International University)
    Abstract: This paper proposes an additional determininant of firm survival. Based on a detailed examination of firm survival in the British automobile industry between 1895 and 1970, we conclude that firm’s selection of submarket-defined by quality level-influenced survival. In contrast to findings for the US automobile industry, there is no evidence of first-mover advantage in the market as a whole. However, we do find evidence of first-mover advantage after conditioning on submarket choice.
    Keywords: firm survival, product differentiation, submarket, product quality
    JEL: L11
    Date: 2006–01

This nep-ent issue is ©2006 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.