nep-ent New Economics Papers
on Entrepreneurship
Issue of 2006‒07‒15
eight papers chosen by
Marcus Dejardin
Facultes Universitaires Notre-Dame de la Paix

  1. Innovation strategies for SMEs and clusters: the challenges of a globalised Europe By Massimo FLORIO; Emanuele OZZIMO
  2. Regulatory Barriers & Entry in Developing Economies By John Bennett; Saul Estrin;
  3. Reforms, Entry and Productivity: Some Evidence from the Indian Manufacturing Sector By Sumon Kumar Bhaumik; Shubhashis Gangopadhyay; Shagun Krishnan
  4. Welfare Analysis Incorporating a Structural Entry-Exit Model: A Case Study of Medicare HMOs By Shiko Murayama
  5. Enterprise Restructuring in Belarus By Marina Bakanova; Saul Estrin; Igor Pelipas; Sergei Pukovich
  6. Firm Dynamics with Infrequent Adjustment and Learning By Eugenio Pinto
  7. Financial Market Imperfections: Does it Matter for Firm Size Dynamics? By Kim P. Huynh
  8. Wages, Employment, and Capital in Capitalist and Worker-Owned Firms By John Pencavel; Luigi Pistaferri; Fabiano Schivardi

  1. By: Massimo FLORIO; Emanuele OZZIMO
    Abstract: In this paper we discuss the challenges for the European SMEs fac ing increased global competition, and how it is possible to desig n innovative strategies through the new Regional Competitiveness and Employment Objective. First, the paper offers an assessment o f the importance of SMEs in the EU context and particularly in th e regions concerned by the new objective. Second, the paper will discuss how globalisation poses a serious thread to this developm ent pattern. Third, we briefly explain why further labour market and product liberalisation policies probably have a limited poten tial. Fourth, there is a wide empirical literature, and a lot of practical experience, on innovation strategies for SMEs and clust ers in Europe. The paper will offer a critical assessment of thes e findings and will suggest how to make the best use of the limit ed, but critical, resources available under the new Regional Comp etitiveness Objective.
    Keywords: EU Structural funds, SMEs, Clusters, Innovation strategies
  2. By: John Bennett; Saul Estrin;
    Abstract: We model entry by entrepreneurs into new markets in developing economies with regulatory barriers in the form of licence fees and bureaucratic delay. Because laissez faire leads to ‘excessive’ entry, a licence fee can increase welfare by discouraging entry. However, in the presence of a licence fee, bureaucratic delay creates a strategic opportunity, which can result in both greater entry by first movers and a higher steady-state number of firms. Delay also leads to speculation, with entrepreneurs taking out licences to obtain the option of immediate entry if they later observe the industry to be profitable enough.
    Keywords: Entry, Entry Barriers, Developing Economy.
    JEL: L15 O14
    Date: 2006–03–01
  3. By: Sumon Kumar Bhaumik; Shubhashis Gangopadhyay; Shagun Krishnan
    Abstract: It is now stylized that, while the impact of ownership on firm productivity is unclear, product market competition can be expected to have a positive impact on productivity, thereby making entry (or contestability of markets) desirable. Traditional research in the context of entry has explored the strategic reactions of incumbent firms when threatened by the possibility of entry. However, following De Soto (1989), there has been increasing emphasis on regulatory and institutional factors governing entry rates, especially in the context of developing countries. Using 3-digit industry level data from India, for the 1984-97 period, we examine the phenomenon of entry in the Indian context. Our empirical results suggest that during the 1980s industry level factors largely explained variations in entry rates, but that, following the economic federalism brought about by the post-1991 reforms, variations entry rates during the 1990s were explained largely by state level institutional and legacy factors. We also find evidence to suggest that, in India, entry rates were positively associated with growth in total factor productivity.
    Keywords: Entry, Productivity, Institutions, Regulations, India, Reforms
    JEL: L11 L52 L64 L67 O14 O17
    Date: 2006–03–01
  4. By: Shiko Murayama
    Abstract: Should the government subsidize entry to promote competition? In theory, free entry does not guarantee the socially optimum number of entrants. In differentiated product markets, free entry can result either in excessive or insufficient entry. In this paper I propose an empirical framework to address this issue with a case study of the Medicare HMO market for 2003 and 2004. I perform counterfactual welfare simulations with different entry conditions and with different government payment rates to HMOs. The results indicate that uniformly raising the payment rate lowers national welfare, which supports the government's efforts to contain the payment rate in my sample years. A comparison of the cases with and without entry and/or market power indicates that this welfare loss does not come from additional entry, but instead the oligopolistic market structure and market distortion from the payment rate subsidy. The number of entrants is likely to be insufficient.
    Date: 2006–06
  5. By: Marina Bakanova (World Bank, Minsk); Saul Estrin (London Business School and IZA Bonn); Igor Pelipas (Institute of Privatisation and Management, Minsk); Sergei Pukovich (Institute of Privatisation and Management, Minsk)
    Abstract: We explore the impact of privatization and the entry of new firms on enterprise performance in Belarus, a transition economy in which reform and market-orientated institutional development has been limited. We hypothesize that private ownership will enhance company performance, measured in a variety of ways including profitability and capacity to export to the West, and that newly created firms will perform better than state-owned ones. Our work is based on a large enterprise level survey which includes state-owned firms, privatized companies and newly created enterprises. The data refute both hypotheses. We conclude that this is probably because the institutional environment has not evolved sufficiently from the socialist era to permit free competition and effective governance by new owners.
    Keywords: enterprise restructuring, privatization, transition, Belarus
    JEL: P2 P31 L1
    Date: 2006–05
  6. By: Eugenio Pinto (University of Maryland)
    Keywords: Adjustment Costs, Learning, Young Firms
    JEL: E24 L11 L16
    Date: 2006–07–04
  7. By: Kim P. Huynh (Indiana University)
    Keywords: Firm Dynamics, Leverage, Dynamic Panel Data
    JEL: D21 G3 C23
    Date: 2006–07–04
  8. By: John Pencavel (Stanford University and IZA Bonn); Luigi Pistaferri (Stanford University); Fabiano Schivardi (Bank of Italy and CEPR)
    Abstract: Differences in wages, employment, and capital between worker-owned and capitalist enterprises are computed from a matched employer-worker panel data set from Italy, the market economy with the greatest incidence of worker-owned and worker-managed firms. These differences are related to orthodox models of the capitalist firm and worker co-op. The estimates of the wage, employment, and capital equations largely corroborate the implications of the behavioral models of the two types of enterprise. Co-op wages are about 14 percent lower on average and they are more volatile (and employment less volatile) than those in capitalist enterprises. Given the breadth of the data set analyzed, the results can claim to constitute general findings about capitalist and co-op enterprises.
    Keywords: worker-owned firms, capitalist firms, wages, employment, capital
    JEL: J54 D21 L21
    Date: 2006–06

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