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on Entrepreneurship |
| By: | Brendan Burchell; Alan Hughes |
| Abstract: | It is commonly asserted that high rates of entrepreneurship and superior economic performance in the United States is linked to a higher cultural tolerance of business failure. After reviewing cross country patterns of entrepreneurship we develop in this paper a measure of cultural attitudes towards failure which has two components. We term these failure tolerance which captures attitudes towards the risk of a business failing and second chancing which measures the degree of agreement with the proposition that those who have failed should be given a second chance. Using a unique dataset on attitudes to failure for a sample of 9,500 individuals drawn from 19 economies for the year 2002 we show that respondents in the USA appear to have relatively high levels of failure tolerance. However, they are less willing to grant a second chance to those who have tried and failed. We find that having relatively high levels of failure tolerance is not positively correlated with GDP growth. Having a relatively positive attitude towards second chancing across countries is positively related to GDP growth. Taken together these results suggest there is a link between attitudes to failure and economic growth, but it is not the one conventionally assumed in current policy rhetoric which argues that relatively favourable attitudes towards second chancing in the USA explains its more entrepreneurial activity. |
| Keywords: | Attitudes to failure, Entrepreneurship, Cross-country comparisons |
| JEL: | L26 Z1 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp334&r=ent |
| By: | Marco Caliendo; Alexander S. Kritikos |
| Abstract: | This paper empirically analyzes whether the character-based approach, which is based on the personality structure and the human capital of business founders, allows prediction of entrepreneurial success. A unique data set is used consisting of 414 previously unemployed persons whose personal characteristics were screened by different methods, namely a one-day assessment center (AC) and a standardized questionnaire, before they launched their business. Results are partly unexpected: first, there is almost no correlation between the AC data and the questionnaire. Second, the predictive power of the AC data is slightly better than that of the questionnaire, but lower than expected in theory. Interestingly, for those subgroups where the AC data have low predictive power, the questionnaire does better. Third, when success is measured in terms of employees hired, the character-based approach is a poor predictor. |
| Keywords: | Entrepreneurship, psychological assessment, character-based approach, success prediction |
| JEL: | M13 J23 C13 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp684&r=ent |
| By: | Ferrante, Francesco; Sabatini, Fabio |
| Abstract: | There is wide consensus that entrepreneurial talent is the ability to discover and exploit market opportunities by taking the relevant risky decisions. Discovery and exploitation are separate but interlinked features of entrepreneurship requiring, in different proportions, the exploitation of innate and acquired skills. Institutions and technology, by determining the nature of the discovery and exploitation process and the need for such skills, play an essential role in shaping the nature of entrepreneurial talent and the specific role of education in entrepreneurial selection and performance. Empirical studies on entrepreneurship do not offer a neat picture of the actual contribution of education to entrepreneurial human capital or entrepreneurial talent. This unsatisfactory outcome is not surprising and is due to an inadequate assessment of the context-dependent factors shaping the latter. Building on these premises, the aim of our research work is to carry out a in depth analysis of the determinants of entrepreneurship in Italy, thus accounting for the role that variables like the educational qualification, the family background, and social capital play in determining the entrepreneurial selection. This paper attempts to constitute a first step for the improvement of our understanding by means of a preliminary, exploratory, analysis on the Italian data and a series of probit analyses aimed at identifying the main determinants founding the entrepreneurial choice. Rough data are taken from an original dataset built by the authors partly drawing on the Survey of Household Income and Wealth (SHIW) carried out by the Bank of Italy. The latter has been integrated with a wide variety of environmental variables drawn from different data sources describing the social and institutional context of the entrepreneurial activity. |
| Keywords: | Education; Work status; Employment; Self-employment; Entrepreneurship; Human capital; Social capital; Cognitive abilities |
| JEL: | I21 M13 J24 J23 I2 Z13 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2451&r=ent |
| By: | Bienz, Carsten (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration); Walz, Uwe (Fachbereich Wirtschaftswissenschaften, Lehrstuhl für Volkswirtschaftslehre, insb. Industrieökonomie, Johann Wolfgang Goethe-Universität) |
| Abstract: | We analyze the structure and evolution of the allocation of decision and control rights in venture capital contracts by using a sample of 464 contracts between venture capitalists (VC) and portfolio firms from Germany. We focus on the evolution of control and decisions rights along three time dimensions: the point in time when the contract was signed, the expected duration of the contract and the actual duration of the relationship. We show that contracts are not static but that control rights are adjusted along all three time dimensions. First, we observe a change in the structure but not in the level of the VC’s control rights during the relationship between the VC and the portfolio firm. While venture capitalists return superfluous operational rights to entrepreneurs, they gain (valuable) exit rights during the course of the relationship. Second, we show that the shorter the expected length of the VC’s engagement the more control rights are allocated to the hands of the VC. Finally, we observe that learning took place in the German VC market. |
| Keywords: | Venture capital; corporate governance; empirical contract theory; control rights; exit rights |
| JEL: | D80 D86 G24 G32 G34 |
| Date: | 2007–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2007_013&r=ent |
| By: | Chrsitiane Clemens (Otto-von-Guericke University Magdeburg); Maik Heinemann (University of Lueneburg) |
| Abstract: | This paper examines the effects of credit market imperfections and idiosyncratic risks on occupational choice, capital accumulation, as well as on the income and wealth distribution in a two sectore heterogeneous agent general equilibrium model. Workers and firm owners are subject to idiosyncratic shocks. Entrepreneurship is the riskier occupation. Compared to an economy with perfect capital markets, we find for the case of serially correlated shocks that more individuals choose the entrepreneurial profession in the presence of credit consraints, and that the fluctuation between occupationa increase too. Workers and entrepreneurs with high individual productivity tend to remain in their present occupantion, whereas low productivity individuals are more likely to switch between professions. Interestingly, these results reverse if we assume iid shocks, thus indicating that the nature of the underlying shocks plays an important role for the general equilibrium effects. In general, the likelihood of entrepreneurship increases with individual wealth. |
| Keywords: | DSGE model, wealth distribution, occupational choice, credit constraints |
| JEL: | C68 D3 D8 D9 G0 J24 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:46&r=ent |
| By: | Kozo Kiyota; Miho Takizawa |
| Abstract: | This paper examines the pre-exit productivity performance and asks how productivity affects future survival, using firm-level data in Japan for 1995-2002. We found that firms did not face "sudden death" but there was a "shadow of death." Future exiting firms had lower performance four years before their exit. Besides, within a hair 's breadth of death, the unobserved heterogeneity of firm such as management effort played an important role in the firm survival. |
| Keywords: | Pre-exit performance, Productivity, Size, Unobserved heterogeneity, Firm survival |
| JEL: | D21 D24 L25 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:hst:hstdps:d06-204&r=ent |
| By: | B.K. Atrostic |
| Abstract: | Innovation has long been credited as a leading source of economic strength and vitality in the United States because it leads to new goods and services and increases productivity, leading to better living standards. Better measures of innovative activities–activities including but not limited to innovation alone–could improve what we know about the sources of productivity and economic growth. The U.S. Census Bureau either currently collects, or has collected, data on some measures of innovative activities, such as the diffusion of innovations and technologies, human and organizational capital, entrepreneurship and other worker and firm characteristics, and the entry and exit of businesses, that research shows affect productivity and other measures of economic performance. But developing an understanding of how those effects work requires more than just measures of innovative activity. It also requires solid statistical information about core measures of the economy: that is, comprehensive coverage of all industries, including improved measures of output and sales and additional information on inputs and purchased materials at the micro (enterprise) level for the same economic unit over time (so the effects can be measured). Filling gaps in core data would allow us to rule out the possibility that a measure of innovative activity merely proxies for something that is omitted from or measured poorly in the core data, provide more information about innovative activities, and strengthen our ability to evaluate the performance of the entire economy. These gaps can be filled by better integrating existing data and by more structured collections of new data. |
| Keywords: | innovation, productivity, economic measurement |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:07-11&r=ent |
| By: | Yochanan Shachmurove (Department of Economics, The City College of the City University of New York, and Department of Economics, University of Pennsylvania) |
| Abstract: | Do certain regions inherently enjoy an advantage in venture capital investment decisions? And how do industry characteristics affect venture capital activity? These questions fall under the reemerging study of economic geography, which suggests the importance of industrial location to economic decision making. Through the lens of economic geography, this paper examines the impact of industrial and regional characteristics on venture capital activities from 1996 to 2005. Analyzing venture capital data with nineteen regions and seventeen industries, this study affirms the significance of geography and industry to investment trends in venture capital. |
| Keywords: | Venture Capital, Venture-Backed Public Companies, Economic Geography, Location, Biotechnology, Business Products and Services, Computers and Peripherals, Consumer Products and Services, Electronics and Instrumentation, Financial Services, Healthcare Services, Industrial and Energy, Information Technology Services, Media and Entertainment, Medical Devices and Equipment, Networking and Equipment, Retailing and Distribution, Semiconductors, Software, Telecommunications. |
| JEL: | C12 D81 D92 E22 G12 G24 G3 M13 M21 O16 O3 |
| Date: | 2007–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:07-015&r=ent |
| By: | Hyunbae Chun; Jung-Wook Kim; Randall Morck; Bernard Yeung |
| Abstract: | Traditional U.S. industries with higher firm-specific stock return and fundamentals performance heterogeneity use information technology (IT) more intensively and post faster productivity growth in the late 20th century. We argue that elevated firm performance heterogeneity mechanically reflects a wave of Schumpeter's (1912) creative destruction disrupting a wide swath of U.S. industries, with newly successful IT adopters unpredictably undermining established firms. This evidence validates endogenous growth theory models of creative destruction, such as Aghion and Howitt (1992); and suggests that recent findings of more elevated firm-specific performance variation in richer, faster growing countries with more transparent accounting, better financial systems, and more secure property rights might partly reflect more intensive creative destruction in those economies. |
| JEL: | E32 G3 O3 O4 O51 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13011&r=ent |
| By: | Jacques Poot (University of Waikato) |
| Abstract: | The demographic profile of a region is usually seen as a slowly changing background phenomenon in the analysis of regional competitiveness and regional growth. However, regional demographic change can have a significant impact on regional competitiveness and such change is often more rapid and profound than at the national level. In turn, regional population size, growth, composition and distribution are endogenous to regional economic development. This paper focuses on the impact of population ageing and immigration on aspects of regional competitiveness such as innovation, entrepreneurship and productivity. Immigration and ageing trends have generated huge separate literatures but it is argued here that it is fruitful to consider these trends jointly. Theoretically, there are many channels through which immigration and population ageing can affect regional competitiveness. There is empirical evidence that population ageing reduces regional competitiveness, while immigration – particularly of entrepreneurs and highly skilled workers to metropolitan areas – enhances competitiveness. Much of the available literature is based on small-scale case studies and rigorous econometric research on the impact of demographic change at the regional level is still remarkably rare. Some directions for further research are suggested. |
| Keywords: | regional competitiveness, immigration, population ageing, innovation |
| JEL: | F22 J11 O31 R11 |
| Date: | 2007–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:wai:pscdps:dp-64&r=ent |