nep-ent New Economics Papers
on Entrepreneurship
Issue of 2006‒03‒25
twelve papers chosen by
Marcus Dejardin
Facultes Universitaires Notre-Dame de la Paix

  1. Does Entrepreneurship create enough Jobs in Europe? A Note By Miltiades N. Georgiou
  2. Mexican Entrepreneurship: A Comparison of Self-Employment in Mexico and the United States By Robert W. Fairlie; Christopher Woodruff
  3. Who will seize the promise of the new? By PABLO MARTIN; DIMO DIMOV
  4. Starting anew: Entrepreneurial intentions and realizations subsequent to business closure By Veronique Schutjens; Erik Stam
  5. Entrepreneurial Entry, Exit and Re-Entry: The Extent and Nature of Opportunity Identification By Deniz Ucbasaran; Mike Wright; Paul Westhead
  6. Education and Regional Job Creation by the Self-Employed: The English North-South Divide By Andrew E. Burke; Michael A. Nolan; Felix R. FitzRoy
  7. Start-up Success of Freelancers: New Microeconometric Evidence from the German Socio-Economic Panel By Joachim Merz; Peter Paic
  8. Strategic Management in Estonian SMEs By Juhan Teder; Urve Venesaar
  9. Innovation Paths of Estonian Biotechnology By Tõnis Mets
  10. Banks and Innovation: Microeconometric Evidence on Italian Firms By Luigi Benfratello; Fabio Schiantarelli; Alessandro Sembenelli
  11. Tales of serial exploration By PABLO MARTIN; DIMO DIMOV
  12. Native-Migrant Differences in Risk Attitudes By Holger Bonin; Amelie Constant; Konstantinos Tatsiramos; Klaus F. Zimmermann

  1. By: Miltiades N. Georgiou
    Abstract: In the present note an effort will be made for a contribution to economic theory by extending the discussion paper "Entrepreneurship, Regional Development and Job Creation: The Case of Portugal" by R. Baptista, V. Escarta and P. Madruga, MPI, # 0605, in which the authors conclude (among others) that entrepreneurship creates jobs and reduces unemployment. This extension will be feasible by estimating the total economy´s entrepreneurship reward for Western European countries and relating it with the total economy's unemployment rate. A regression based on the estimation of total economy´s entrepreneurship reward will yield the same main results with the above article not only for Portugal but also for all Western European countries, that in any Western European country entrepreneurship creates enough jobs to reduce unemployment. This generalization with panel data econometric analysis is based on the discussion paper "A Practical Method to Measure Entrepreneurship's Reward: A Note" by M. N. Georgiou, MPI, #3805.
    Keywords: entrepreneurship, unemployment
    JEL: M13 E24
    Date: 2006–03
  2. By: Robert W. Fairlie (University of California, Santa Cruz and IZA Bonn); Christopher Woodruff (University of California, San Diego)
    Abstract: Nearly a quarter of Mexico's workforce is self employed. In the United States, however, rates of self employment among Mexican Americans are only 6 percent, about half the rate among non-Latino whites. Using data from the Mexican and U.S. population census, we show that neither industrial composition nor differences in the age and education of Mexican born populations residing in Mexico and the U.S. accounts for the differences in the self employment rates in the two countries. Within the United States, however, estimates indicate that low levels of education and the youth of Mexican immigrants residing in the United States account for roughly half of the Mexican immigrant/U.S. total difference in selfemployment rates for men and the entire difference for women. We also find some suggestive evidence that for both men and women, Mexican immigrant self-employment rates may be higher for those who reside in the United States legally and are fluent in English, and for men, those who live in ethnic enclaves.
    Keywords: entrepreneurship, self-employment, Mexico, Mexican-Americans
    JEL: J15 J23
    Date: 2006–03
  3. By: PABLO MARTIN (Instituto de Empresa); DIMO DIMOV (Instituto de Empresa)
    Abstract: This paper studies the conditions that motivate firms to begin exploratory moves that lead to investing in an emerging industry. Using knowledge, institutional and population ecology theories, we capture contributing factors to these exploratory drives. We use a longitudinal census of the US Venture Capital industry since inception (>33 years, >4500 firms, >85000 transactions 4 industries). Data are analyzed using a Cox proportional hazard model, setting clocks to track unfolding events. Predictions that size (positive), age (negative), knowledge specialization (negative), and interaction between age and prior experience (positive) have significant effects on exploratory drives are supported
    Date: 2006–01
  4. By: Veronique Schutjens; Erik Stam
    Abstract: We know that most businesses fail. But what is not known is to what extent failed ex-entrepreneurs set up in business again. The objective of this article is to explore potential and realized serial entrepreneurship. Based on three disciplines - psychology, labour economics, and the sociology of careers - we formulated propositions to explain (potential) serial entrepreneurship. We tested these propositions empirically with a longitudinal database of 79 businesses that had closed within 5 years after start-up. A large majority of the ex-entrepreneurs maintained entrepreneurial intentions subsequent to business closure, while almost one in four business closures were followed by a new business (serial entrepreneurship). Our results show that the determinants of restart intention (potential serial entrepreneurship) and actual restart realization (realized serial entrepreneurship) are different. Ex-entrepreneurs who are young, who worked full-time in their prior business, and who recall their business management experience positively are likely to harbour restart intentions. Only 'being located in an urban region' transpired to have a significant effect on the start of a new business. Although entrepreneurial intentions are a necessary condition for the start of a new business, this study shows that the explanation of entrepreneurial intentions is distinct from the explanation of new business formation subsequent to business closure.
    Keywords: serial entrepreneurship; business closure; entrepreneurial intentions; new business formation, The Netherlands
    Date: 2006–03
  5. By: Deniz Ucbasaran; Mike Wright; Paul Westhead
    Abstract: This study utilizes a human capital framework to explore whether business ownership experience is associated with the number of business opportunities identified, the number of identified opportunities that are pursued, and the nature of those opportunities. Information from a large representative sample of owners of 631 private independent firms is utilized. Controlling for various dimensions of entrepreneurs' general and specific human capital, we find that experienced (habitual) entrepreneurs identify more business opportunities, pursue more of these opportunities and are associated with more innovative opportunities. We can infer that business ownership experience acts as an important guide for entrepreneurs in processing information in a manner than allows them not only identify more opportunities but potentially more innovative ones too.
    Date: 2006–03
  6. By: Andrew E. Burke; Michael A. Nolan; Felix R. FitzRoy
    Abstract: Using decomposition analysis, the paper investigates the reasons why Northern England has less but higher performing self-employed businesses than the South. It finds the causes are mainly structural differences rather than due to regional variation in people's characteristics. The paper also unearths a regional dimension behind the impact of education on entrepreneurial job creation. It finds that, in the less developed North, education boosts self-employment job creation by enhancing performance per venture (quality). In the South, it reduces it by having no effect on quality alongside a negative effect on the number of people who become self-employed (quantity).
    Keywords: Self-employment, job creation, North-South divide, decomposition
    JEL: J23 R11 R23
    Date: 2006–03
  7. By: Joachim Merz (University of Lueneburg and IZA Bonn); Peter Paic (University of Lueneburg)
    Abstract: If certain start-up characteristics will indicate a business success, knowing such characteristics could generate more successful start-ups and more efficient start-up counseling. Our study will contribute to this by quantifying individual success determinants of freelance start-ups. The data base for the microeconometric analyses of the survival of the first three years is a revised German Socio-Economic Panel (SOEP) for 1992 until 2002, which allows to incorporate institutional, personal and family/household socio-economic variables. We describe and discuss the datawork to achieve compatible information over time within a revised GSOEP and present microeconometric rare events logit, logit and probit results.
    Keywords: start-up success, freelancers, liberal professions, self-employed, German Socio-Economic Panel, rare events logit, logit, probit
    JEL: J23 J21 D10
    Date: 2006–03
  8. By: Juhan Teder (School of Economics and Business Administration, Tallinn University of Technology); Urve Venesaar (School of Economics and Business Administration, Tallinn University of Technology)
    Abstract: The research is based on the empirical survey conducted among the members of Estonian Association of SMEs. The study involved goal setting, development and implementation of strategies, competitive advantages striven for, orientation toward growth, and factors hindering enterprises’ development. As a result, characteristics of strategic management in enterprises with different levels of growth orientation (expanding, stable and declining enterprises) as well as those depending on other enterprise’s characteristics (e.g., coincidence of managers and owners; age and size of enterprises, etc) were proposed. The analysis showed the existence of clear relationship between the coincidence of owners and managers and existence of formalised plans, whereby company growth leads to the increasing difference of coincidence of owners and managers and therefore increases the role of strategic plans in the enterprises. Measures taken for strategy formation (e.g. managers’ role, cooperation) are supporting factors for positive implementation performance of the intended strategy in expanding firms. The analysis of the factors hindering company growth indicates an increasing need for managers’ training in the area of strategic management. National entrepreneurship policy should, in addition to supporting start-up enterprises, pay more attention to supporting the implementation of company growth potential by help of relevant measures.
    Keywords: SME, strategic management; strategy implementation, coincidence of managers and owners, growth orientation, growth barriers, entrepreneurship policy.
    JEL: L25 M21 O21 O38
    Date: 2005
  9. By: Tõnis Mets (Faculty of Economics and Business Administration, Centre for Entrepreneurship, University of Tartu)
    Abstract: The aim of this article is to evaluate the ratio of expenditures between fundamental research, applied research and technological development, to analyse this proportion in the innovation processes of Estonian biotech public sector and private SMEs, and to shape supportive measures to knowledge transfer and entrepreneurship in the biotechnology sector. The empirical study explores Estonian biotechnology by mapping the strategy, innovation processes and related expenditures of the public sector and private businesses. Findings from the annual reports of biotech SMEs and interviews with managers demonstrate the following: companies are mostly profitable, but their own capability to invest into development is quite limited; only a third of the biotech companies have adopted a growth-oriented strategy; entrepreneurship and marketing experience in the companies was nearly three times lower than in research; international knowledge transfer and networking are mostly related to research and practically never to commercialisation of the research results. The author deduced the gross funding structure proportion of basic and applied research, and product/service development in Estonian biotechnology sector according to the formula: 11:5:1. In the business sector the ratio is approximately 1:3:5 and together with public support: 1:6:5. The structure of research expenditures in the public sector mostly reflects the success of Estonian biosciences rather than the success of the biotech as an economy sector. Some options for improvement of sectoral system of innovation are given.
    Keywords: knowledge transfer, innovation models, biotechnology, R&D expenditures, sectoral system of innovation
    JEL: L65 O31 O32 O38
    Date: 2005
  10. By: Luigi Benfratello (University of Turin); Fabio Schiantarelli (Boston College and IZA Bonn); Alessandro Sembenelli (University of Turin)
    Abstract: In this paper we investigate the effect of local banking development on firms’ innovative activities, using a rich data set on innovation for a large number of Italian firms over the 1990’s. There is evidence that banking development affects the probability of process innovation, particularly for small firms and for firms in high(er) tech sectors and in sectors more dependent upon external finance. The evidence for product innovation is weaker. There is also some evidence that banking development reduces the cash flow sensitivity of fixed investment spending, particularly for small firms, and that it increases the probability they will engage in R&D.
    Keywords: banks, financial development, innovation, R&D, investment
    JEL: D24 G21 G38 O31 O33
    Date: 2006–03
  11. By: PABLO MARTIN (Instituto de Empresa); DIMO DIMOV (Instituto de Empresa)
    Abstract: In this paper, we examine the firm and ecological factors that affect the long-term sustainability of exploration. We analysed the investment decisions by US venture capital firms to enter new technological domains over a 43-year period. Our results suggest that in addition to the well studied effects of inertia and slack, exploration is affected by an organization´s knowledge specialization, is conducive to repetitive momentum, and affects an organization´s subsequent exploration when occurring early in an organization´s life. We contribute to the literature on organizational learning by identifying some of the antecedents of exploration and its sustenance over time.
    Date: 2006–01
  12. By: Holger Bonin; Amelie Constant; Konstantinos Tatsiramos; Klaus F. Zimmermann

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