nep-ent New Economics Papers
on Entrepreneurship
Issue of 2007‒04‒14
ten papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  2. Becoming an Entrepreneur By Hugo Ñopo; Patricio Valenzuela
  3. State of Literature on Small to Medium-Size Enterprises and Entrepreneurship in Low-Income Communities By Zoltan J. Acs; Kadri Kallas
  4. Once bitten, twice shy? : The performance of entrepreneurial restarts By Metzger, Georg
  5. Exploring the relationship between scientist human capital and firm performance . the case of biomedical academic entrepreneurs in the SBIR program By Toole, Andrew A.; Czarnitzki, Dirk
  6. Human capital and successful academic spin-off By Müller, Bettina
  7. Success breeds success locally : a tale of incubator firms By Inci, Eren
  8. You can't make an omelette without breaking eggs : the impact of venture capitalists on executive turnover By Heger, Diana; Tykvová, Tereza
  9. Inequality for wage earners and self-employed : evidence from panel data By Pedro Albarran; Raquel Carrasco; Maite Martinez Granado
  10. Innovation Diffusion in Heterogeneous Populations By H. Peyton Young

  1. By: Wong, Poh Kam; Lee, Lena; Foo, Maw Der
    Abstract: Prior studies have found that knowledge gained from work experience is a way to gather insights for business opportunity recognition. However, little is known about the specific types of knowledge that lead to business founding. Utilizing concepts from knowledge spillovers and from the opportunity recognition literatures, this paper argues that through an organization’s technological innovation activities, employees develop specialized knowledge that provides them with the entrepreneurial opportunities to found new businesses. Besides highlighting the positive relationship between technological innovation activities in organizations and the propensity of individuals leaving the organizations to start new businesses, this paper also provides a more fine-grained explanation of the types of technological innovation activities that can lead to business founding. We argue that knowledge acquired through product innovations is more easily appropriated by individuals for commercial uses, while knowledge acquired through process innovations must be integrated with other parts of the organization to be valuable. This study proposes that product innovation activities in an organization more so than process innovation activities in an organization are related to new business founding. Implications for opportunity exploitation and ways to appropriate knowledge spillovers are discussed.
    JEL: M0 M00
    Date: 2007–04
  2. By: Hugo Ñopo (Inter-American Development Bank); Patricio Valenzuela (International Monetary Fund)
    Abstract: Using the 1996-2001 Chilean CASEN Panel Survey, this paper analyzes the impact on income of the switch from salaried employment to entrepreneurship (self-employment and leadership of micro-enterprises). By means of a difference-in-differences non-parametric matching estimator the paper alleviates problems of selection bias (on observable and unobservable traits) and creates the appropriate counterfactuals of interest. The results indicate that the income gains associated with the switch from salaried employment to entrepreneurship are positive, statistically significant and financially substantial. Even more, the results are qualitatively the same using mean and medians, suggesting that the impacts are not influenced by the presence of few “superstar winners.” Additionally, the income changes associated with the reverse switches (from self-employment to salaried jobs) are negative. The results also suggest interesting gender differences, as females show higher gains than males on the switch from salaried jobs to entrepreneurship and lower losses on the reverse switch.
    Keywords: difference-in-differences; non-parametric matching; micro-enterprises
    JEL: J16 J31 J41
    Date: 2007–03
  3. By: Zoltan J. Acs; Kadri Kallas
    Date: 2007–03
  4. By: Metzger, Georg
    Abstract: The aim of this paper is to analyze the effect of entrepreneurial experience on firm growth. According to the human capital theory, individuals who have higher ‘human capital’ are more successful than others. Entrepreneurial experience is a kind of human capital and, therefore, should affect firm performance positively. In reality, however, not all types of experience indicate enhanced knowledge alone. Bad experience, here the experience of failure, might equally be a signal for entrepreneurial weakness and, thus, an argument for exercising restraint in possible further business ventures. The ambiguous effects of this failure experience on firm success necessitate an in-depth analysis of the issue. Therefore, this paper contains an empirical comparison of firms involving experienced entrepreneurs and novice firms. The analysis shows that entrepreneurial experience affects firm growth positively. Accounting for failure experience separately reveals a negative effect. Interpreting this finding in combination with other control measures indicates that failed entrepreneurs indeed behave more cautiously regarding firm growth.
    Keywords: Business Failure, Firm Growth, Entrepreneurial experience
    JEL: G33 J23 M13
    Date: 2006
  5. By: Toole, Andrew A.; Czarnitzki, Dirk
    Abstract: Do academic scientists bring valuable human capital to the companies they found or join? If so, what are the particular skills that compose their human capital and how are these skills related to firm performance? This paper examines these questions using a particular group of academic entrepreneurs – biomedical research scientists who choose to commercialize their knowledge through the U.S. Small Business Innovation Research Program. Our conceptual framework assumes the nature of an academic entrepreneurs’ prior research reflects the development of their human capital. We highlight differences in firm performance that correlate with differences in the scientists’ research orientations developed during their academic careers. We find that biomedical academic entrepreneurs with human capital oriented toward exploring scientific opportunities significantly improve their firms’ performance of research tasks such as “proof of concept” studies. Biomedical academic entrepreneurs with human capital oriented toward exploring commercial opportunities significantly improve their firms’ performance of invention oriented tasks such as patenting. Consistent with prior evidence, there also appears to be a form of diminishing returns to scientifically oriented human capital in a commercialization environment. Holding the commercial orientation of the scientists’ human capital constant, we find that increasing their human capital for identifying and exploring scientific opportunities significantly detracts from their firms’ patenting performance.
    Keywords: Academic Entrepreneurship, SBIR Program, Human Capital, Biotechnology
    JEL: D21 J24 L65 O32
    Date: 2007
  6. By: Müller, Bettina
    Abstract: Academic spin-offs are one way in which employability of university graduates is reflected. Using the ZEW spinoff-survey, this paper studies empirically the impact of human capital on the success of academic spinoffs founding in knowledge and technology intensive sectors. The focus is thereby on the composition of human capital which is described according to whether or not the founders have studied several subjects and whether or not they all come from the same research establishment. Additionally the impact of having founded as a team is analyzed. Success is measured by employment growth. The findings suggest that it is advantageous to found within a team, but that the human capital composition both for single entrepreneurs and team foundations is rather irrelevant.
    Keywords: Higher Education, Human Capital, Entrepreneurship, Spin-off
    JEL: C12 L25 M13
    Date: 2006
  7. By: Inci, Eren
    Abstract: This paper focuses on the pre-establishment period of start-ups in industrial districts. The industrial architecture is what I call a "rationed agglomeration" in which some entrepreneurs gather around an established firm while other entrepreneurs in the same business stand alone. In a rationed agglomeration, I analyze the e¤ects of relations between established firms, network entrepreneurs, and local financiers on the market prices of loans. I show that such relations improve the match of capital to ideas in the network even though the overall distribution of capital to ideas remains unchanged. This suggests that success breeds success in the networks of established firms. The existence of networks overturns the claim that there are no motives to engage in information gathering in a simple market regime with information asymmetries. In particular, I show that there are market incentives for established firms to decrease the information gap between network entrepreneurs and local financiers.
    Keywords: agglomeration, entrepreneur, dispersion, innovation, local financiers, networks, regional economies, project financing, signaling, start-up
    JEL: D82 G20 L26 R12
    Date: 2006
  8. By: Heger, Diana; Tykvová, Tereza
    Abstract: We present evidence on venture capitalists’ (VCs) impact on turnover of executives for a sample of nearly 47,000 German high-tech start-ups between 1995 and 2004. We confirm that the presence of VCs increases the probability of a change in the initial executive team. Additionally, we take a closer look on the subsample of venturebacked firms. We find that a small distance between the VCs and the companies they finance and a larger total stake in the company owned by VCs increase the probability of changes in the initial executive teams.
    Keywords: Venture Capital, Executive Turnover
    JEL: G24 G32
    Date: 2007
  9. By: Pedro Albarran; Raquel Carrasco; Maite Martinez Granado
    Abstract: In this paper we study the evolution of income inequality for employees and self-employed workers. We highlight the importance of separately analyze these different sources of income to gain a broader understanding of inequality. Using Spanish panel data on income and consumption from the ECPF for the period 1987-96, we decompose income shocks into a permanent and a transitory component. We find that there are noticeable differences in the evolution of income inequality, as well as in the relative importance of the permanent and transitory components across these groups. Our results points that the evolution of inequality can be basically explained by movements in the transitory component of income for the self-employed, while for the employees it is mainly driven by the permanent component, specially at the end of the period. Given these disparities, it seems that these two sources of income should be studied separately and that different policies are suitable for each group.
    Date: 2007–03
  10. By: H. Peyton Young
    Abstract: New products and practices take time to diffuse, a fact that is often attributed to some form of heterogeneity among potential adopters. People may realize different benefits and costs from the innovation, or have different beliefs about its benefits and costs, hear about it at different times, or delay in acting on their information. This paper analyzes the dynamics arising from different sources of heterogeneity in a completely general setting without placing parametric restrictions on the distribution of the relevant characteristics. The structure of the dynamics, especially the pattern of acceleration, depends importantly on which type of heterogeneity is driving the process. These differences are sufficiently marked that they provide a potential tool for discriminating empirically among diffusion mechanisms. The results have potential application to marketing, technological change, fads, and epidemics.
    Keywords: Diffusion, Innovation, Learning
    JEL: O33 D8 M3
    Date: 2007

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