nep-ent New Economics Papers
on Entrepreneurship
Issue of 2006‒10‒07
nine papers chosen by
Marcus Dejardin
Facultes Universitaires Notre-Dame de la Paix

  1. Entrepreneurial Decision Making: Examining Preferences for Causal and Effectual Reasoning in the New Venture Creation Process By Politis, Diamanto; Gabrielsson, Jonas
  2. Migrant Entrepreneurship from the Perspective of Cultural Diversity By Sahin, Mediha; Nijkamp, Peter; Baycan-Levent, Tuzin
  3. The Effect of Business Regulations on Nascent and Young Business Entrepreneurship By Stel, A.J. van; Storey, D.; Thurik, A.R.
  4. Towards a Dynamic Resource-Based View: Insights from Austrian Capital and Entrepreneurship Theory By Nicolai J. Foss; Ibuki Ishikawa
  5. The Growth Opportunities for SMEs? By Bentzen, Jan; Madsen, Erik Strøjer; Smith, Valdemar
  6. The Impact of the Non-distribution Constraint and Its Enforcement on Entrepreneurial Choice, Price, and Quality By Petra Brhlikova; Andeas Ortmann
  7. Entry and Exit in International Markets: Evidence from Chilean Data By Roberto Alvarez; Ricardo Lopez
  8. The European Institutional Environment and SME Relationship Lending: Should We Care? By Hernandez-Canovas, Gines; Koeter-Kant, Johanna
  9. Performance Sampling and Bimodal Duration Dependence By Jerker Denrell; Zur Shapira

  1. By: Politis, Diamanto (Department of Business Administration, School of Economics and Management, Lund University); Gabrielsson, Jonas (Department of Business Administration, School of Economics and Management, Lund University)
    Abstract: A growing body of studies emphasizes the discovery of opportunities and the decision to exploit them as the essence of entrepreneurial activity. Following this stream of research, we present a study that examines entrepreneurs’ preferences for causal and effectual reasoning in the new venture creation process. The dominating view is that entrepreneurial decision making to a large degree varies in response to the unique situational context. In contrast, we are in this paper particularly interested to what extent individual career experiences and career motives makes entrepreneurs in favour of one decision making logic over another. From this point of departure we develop hypotheses of the expected influence of career experience and career motives on entrepreneurs’ preferences for causal and effectual reasoning. Statistical analysis on a sample of 291 Swedish entrepreneurs give ample support for the argument that entrepreneurs’ career experience and career motives have a significant influence on entrepreneurial decision making. The finding suggests that future research into entrepreneurial decision making should include career experience and career motives as contingency variables. Furthermore, the article provides an attempt to operationalize entrepreneurs’ preference for causal and effectual modes of reasoning. To our knowledge no such operationalizations exists.
    Keywords: entrepreneurial decision making; career experience; career motives; effectuation
    Date: 2006–09–19
  2. By: Sahin, Mediha (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Nijkamp, Peter; Baycan-Levent, Tuzin
    Abstract: The phenomenon of migrant entrepreneurship refers to business activities undertaken by migrants with a specific socio-cultural and ethnic background or migrant origin. The studies on migrant entrepreneurship in both the US and Europe have recognized the significant share of immigrants in SME activities. In the context of migrant entrepreneurship several scholars have highlighted the impact of different migrant group cultures on entrepreneurship. They emphasize the importance of values like social or business attitude, close family and religious ties and trust, which enable some immigrant groups to compete successfully in business. Against this background, the aim of this paper is to review and evaluate migrant entrepreneurship from the perspective of cultural diversity. The paper investigates key socio-economic and cultural aspects of migrant entrepreneurship and next addresses different migrant group entrepreneurs in the Netherlands in order to compare the differences between various migrant groups and to explore cultural diversity in migrant entrepreneurship.
    Keywords: Entrepreneurship; Migrant entrepreneurship; Cultural diversity
    JEL: A13 E24
    Date: 2006
  3. By: Stel, A.J. van; Storey, D.; Thurik, A.R. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: We examine the relationship, across 39 countries, between regulation and entrepreneurship using a new two-equation model. We find the minimum capital requirement required to start a business lowers entrepreneurship rates across countries, as do labour market regulations. However the administrative considerations of starting a business ? such as the time, the cost, or the number of procedures required ? are unrelated to the formation rate of either nascent or young businesses. Given the explicit link made by Djankov et al. (2002) between the speed and ease with which businesses may be established in a country and its economic performance ? and the enthusiasm with which this link has been grasped by European Union policy makers ? our findings imply this link needs reconsidering.
    Keywords: Nascent Entrepreneurship;Young Businesses;Business Regulations;Global Entrepreneurship Monitor;World Bank Doing Business;
    Date: 2006–09–26
  4. By: Nicolai J. Foss; Ibuki Ishikawa
    Abstract: Over the last two decades the resource-based view (“RBV”) has become dominant in the strategic management field. It has often been observed that the RBV is lacking in the dynamic dimension. For example, processes of building competitive advantages by means of combining existing complementary resources in novel ways are not inquired into. We argue that the RBV may profitably draw on insights in entrepreneurship and capital theory, drawn from Austrian economists as well as Frank Knight, in order to strengthen its dynamic dimension. We link the RBV and Austrian ideas in the context of the theory of complex systems pioneered by Herbert Simon. We draw a number of implications for strategic management from this synthesis, notably into resource value and sustainability of competitive advantage.
    Keywords: Resource-based view; Austrian capital theory; complexity theory; entrepreneurs competitive advantage
    JEL: B53 D21 L23 M1
    Date: 2006
  5. By: Bentzen, Jan (Department of Economics, Aarhus School of Business); Madsen, Erik Strøjer (Department of Economics, Aarhus School of Business); Smith, Valdemar (Department of Economics, Aarhus School of Business)
    Abstract: The extensive empirical literature on the validity of Gibrat’s law does not in general verify the law as it finds that firms’ growth rates are negatively correlated with both firm size and age. However, some studies find that Gibrat’s law holds for sub-samples of firms such as large firms or firms belonging to special industries. It has been pointed out that these results are due to the fact that the likelihood of firm survival for natural reasons is positively related to firm size and age. This study uses a relatively large and representative sample of Danish firms to evaluate the validity of Gibrat’s law for different kinds of firms over the period 1990 - 2003. In contrast to the majority of earlier studies our analysis corrects for the bias in the estimations by using variables related to the survival of small firms.
    Keywords: Market Structure; Firm Strategy; Market Performance;
    JEL: L10
    Date: 2006–09–27
  6. By: Petra Brhlikova; Andeas Ortmann
    Abstract: We study the conditions under which it is rational for a representative entrepreneur to start a nonprofit firm. Taking as point of departure a model of entrepreneurial choice proposed by Glaeser and Shleifer (2001), we analyze consequences of weak enforcement of the non-distribution constraint on entrepreneurial choice and price and quality of the product. We find that the nonprofit organizational form becomes unequivocally more attractive to entrepreneurs if enforcement of the non-distribution constraint is weak. We also nd that the quality delivered by nonprofit firms is lower under weak enforcement than that of the nonprofit firm under strict enforcement, but higher than the quality delivered by a for-prot rm. We discuss the implications and limitations of our results.
    Keywords: Entrepreneurial choice, Nonprofit, For-profit, Non-distribution constraint, Enforcement
    JEL: D2 L2 L31 K42
    Date: 2006–07
  7. By: Roberto Alvarez (Central Bank of Chile); Ricardo Lopez (Indiana University Bloomington)
    Abstract: Several studies examine the patterns and determinants of entry and exit in manufacturing industries. Not much work exists on entry and exit in international markets. This paper uses Chilean data to analyze the determinants of entry and exit in and out of export markets. We find that entry and exit rates differ across industries; vary over time; and are positively correlated. The econometric analysis shows that within-industry heterogeneity, measured by differences in productivity or other firm characteristics, has a significant effect on plant turnover in international markets. Our findings reveal that trade costs, factor intensities, and fluctuations in the real exchange rate play a minor role explaining entry and exit. This last result is consistent with hysteresis in international markets.
    Keywords: Treatment Entry, Exit, International Markets, Chile
    JEL: F14 D21 O54
    Date: 2006–09
  8. By: Hernandez-Canovas, Gines (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Koeter-Kant, Johanna
    Abstract: This paper examines the impact of country specific determinants on multiple banking using a unique survey sample of 4959 SMEs from 19 European countries. Our data shows that (1) SMEs in countries with inefficient loan enforcement mechanisms are more likely to maintain multiple bank relationships, (2) the association between multiple banking and bank fragility is non-monotonous, being negative when the banking system is relatively stable and positive for high values of bank fragility, and (3) multiple banking is more likely for SMEs in countries with larger banking systems as well as smaller and less active securities markets. Overall, this evidence suggests that SMEs need multiple banking as a diversification mechanism to overcome expensive adverse selection that may arise within a country that suffers from an inefficient legal system and fragile banks, but also that movement towards a more market based financial system decreases the likelihood of multiple bank relationships for SMEs. These findings have important implications for policy makers in Europe when contemplating SME access to finance.
    Keywords: SMEs; Relationship Lending; Banks
    JEL: G21 G32
    Date: 2006
  9. By: Jerker Denrell; Zur Shapira
    Abstract: Performance sampling models of duration dependence in employee turnover and firm exit predict that hazard rates will initially be low, gradually rise to a maximum, and then fall. As we note in this paper, however, several empirical duration distributions have bimodal hazard rates. This paper shows that such bimodal hazard rates can be derived from existing models of performance sampling by small changes in the assumptions. In particular, bimodal hazard rates emerge if the mean or the variance of performances changes over time, which would occur if employees or firms face more challenging tasks over time. Using data on turnover in law firms, we show that the hazard rate predicted by these models fit data better than existing models.
    Keywords: Duration Dependence; Performance Sampling; Turnover
    Date: 2006–09

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.
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