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on Entrepreneurship |
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Issue of 2006‒02‒19
five papers chosen by Marcus Dejardin Facultes Universitaires Notre-Dame de la Paix |
| By: | Pernilla Andersson (SOFI, Stockholm University); Eskil Wadensjö (SOFI, Stockholm University and IZA Bonn) |
| Abstract: | This paper analyzes the self-employment decision among Swedish-born male employees. The main objective of the paper is to investigate the impact of the relation between the actual and the predicted income on the probability to become self-employed. The predicted income is calculated from a standard income regression with controls for age, education, family status, family background and place of residence. By construction of a ratio between the actual and the predicted income we identify three groups of employees: (1) employees who have an actual income lower than the predicted income (underpaid), (2) employees with an actual income close to the predicted one, and (3) employees with an actual income higher than the predicted one (overpaid). The first question is if individuals who are "overpaid" or "underpaid" are more likely to become self-employed than those who are paid as we can expect. Our main finding is that employees who receive an income that differs from the one predicted by the income regression are more likely to become self-employed. We also analyse the effect of the ratio on four different measures of success as self-employed: income from self-employment, number of employees, turnover of the firm, and the probability to have a firm registered as a limited liability company. The general conclusion is that those who performed well as employees are also more successful as self-employed. |
| Keywords: | self-employment, occupational choice, occupational mobility, labour income, wages |
| JEL: | J23 J24 J30 J62 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1971&r=ent |
| By: | Xiao, Mo; Orazem, Peter |
| Abstract: | We extend Bresnahan and Reiss’s (1991) model of local oligopoly to allow firm entry and exit over time. In our framework, entrants have to incur sunk costs in order to enter a market. After becoming incumbents, they disregard these entry costs in deciding whether to continue operating or to exit. We apply this framework to study market structure and competitive conduct in local markets for high-speed Internet service from 1999 to 2003. Replication of Bresnahan and Reiss’s framework generates unreasonable variation in firms’ competitive conduct over time. This variation disappears when entry costs are allowed. We find that once the market has one to three firms, the next entrant has little effect on competitive conduct. We also find that entry costs vary with the order of entry, especially for early entrants. Our findings highlight the importance of sunk costs in determining entry conditions and inferences about firm conduct. |
| Keywords: | Broadband, High-Speed Internet, Entry, Exit, Competition, Pricing, oligopoly |
| JEL: | L8 |
| Date: | 2006–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12500&r=ent |
| By: | Iichiro Uesugi; Koji Sakai; Guy M. Yamashiro |
| Abstract: | From 1998-2001, the Japanese government, in an effort to stimulate the flow of funds to the small business sector, implemented a massive credit guarantee program that was unprecedented in both scale and scope. Because the program was accessible by nearly every small firm we are able to clearly identify the policy effect. The program, therefore, presents a unique opportunity to determine if government intervention can improve the efficiency of credit allocation among bank-dependent small businesses. Utilizing a new panel data set of Japanese firms, which covers the implementation period of the program, we empirically test the theoretical predictions of Mankiw's (1986) adverse selection model. The model of credit markets under asymmetric information allows us to investigate whether government credit programs do more to stimulate small business investment, or serve to worsen the adverse selection problems prevalent in credit markets. We find evidence consistent with the former hypothesis. Specifically, we find that (1) program participants significantly increase their leverage, especially their use of long-term loans, and (2) with the exception of high-risk firms, become more efficient. |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:06004&r=ent |
| By: | Sirtaine, Sophie |
| Abstract: | The author assesses the extent to which Chilean firms have access to sufficient and adequate sources of funds. Access to finance has become an important issue for policymakers in Latin America. Small and medium enterprises (SMEs), in particular, complain that their lack of access to adequate sources of financing is an obstacle to their growth. Chile represents an interesting case study since it has one of the most developed financial markets in the continent, and thus great potential for using products suited to the needs and risk characteristics of SMEs. The author concludes that the largest firms have access to the whole range of financial instruments available in Chile. All smaller firms face financing constraints. She then analyzes the obstacles to downsizing access to the capital market and further increasing the penetration of banks in smaller segments. |
| Keywords: | Banks & Banking Reform,Investment and Investment Climate,Microfinance,Small Scale Enterprise,Economic Theory & Research |
| Date: | 2006–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3845&r=ent |
| By: | Karin Joeveer |
| Abstract: | There are no stylized facts about the capital structure of small firms. Therefore, in this paper I use firm data from 10 Western European countries to contrast the sources of leverage across small and large firms. Specifically, I jointly evaluate the explanatory power of firm-specific, country of incorporation institutional, and macroeconomic factors. Using data that is more comprehensive in coverage than that used in the existing research, I confirm the stylized facts of the capital structure literature for large and listed firms, but I obtain contrasting evidence for smaller companies: First, the country of incorporation carries much more information for small firms supporting the idea that small firms are more financially constrained and face non-firm-specific hurdles in their capital structure choice. Second, using two different leverage measures I show that the relationship of firm size and tangibility to leverage is robust to the measure used for listed, but not for unlisted, firms. |
| Keywords: | Capital structure, Publicly traded and privately hold companies, Europe. |
| JEL: | G32 |
| Date: | 2005–12 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp283&r=ent |