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on Entrepreneurship |
| By: | Dimitris Georgarakos (Goethe University Frankfurt and CFS); Konstantinos Tatsiramos (IZA) |
| Abstract: | Many studies have explored the determinants of entering into entrepreneurship and the differences in self-employment rates across racial and ethnic groups. However, very little is known about the survival in entrepreneurship of immigrants to the U.S. and their descendants. Employing data from the Survey of Income and Program Participation, we find a lower survival probability in entrepreneurship for Mexican and other Hispanic immigrants, which does not carry on to their U.S.-born descendants. We also find that these two immigrant groups tend to enter entrepreneurship from unemployment or inactivity and they are more likely to exit towards employment in the wage sector, suggesting that entrepreneurship represents for them an intermediate step from non-employment to paid employment. |
| Keywords: | entrepreneurship, business ownership, duration analysis, left truncation, immigrant status |
| JEL: | F22 J15 J82 C41 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2792&r=ent |
| By: | Isabel Pizarro-Moreno (Department of Business Administration, Universidad Pablo de Olavide); Juan C. Real (Department of Business Administration, Universidad Pablo de Olavide); Elena Sousa-Ginel (Department of Business Administration, Universidad Pablo de Olavide) |
| Abstract: | Increasing globalisation and dynamism in the economy has made it necessary for established companies to regenerate themselves and renew their ability to compete. This is the goal of Corporate Entrepreneurship (CE) activities, which involve extending the firm’s domain of competence and corresponding opportunity set, through internally generated new resource combinations. The purpose of this study is to contribute to the understanding of the way the process of CE is developed within the organizations. In order to achieve this, a model relating key components of the CE process (opportunity, initiative and capability) to five phases of knowledge creation taken from Nonaka & Takeuchi is proponed. |
| Keywords: | organizational knowledge creation; corporate entrepreneurship; knowledge-base view; innovation; development of capabilities |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpbsad:07.02&r=ent |
| By: | Martin Carree (University of Maastricht); André van Stel (EIM, Zoetermeer, Cranfield University School of Management, and Erasmus Universiteit Rotterdam); Roy Thurik (Erasmus School of Economics, Erasmus Universiteit Rotterdam; EIM, Zoetermeer, Cranfield University School of Management, and Max Planck Institute of Economics, Jena, Germany); Sander Wennekers (EIM, Zoetermeer, and Erasmus Universiteit Rotterdam) |
| Abstract: | This paper revisits the two-equation model of Carree, van Stel, Thurik and Wennekers (2002) where deviations from the ‘equilibrium’ rate of business ownership play a central role determining both the growth of business ownership and that of economic development. Two extensions of the original setup are addressed: using longer time series of averaged data of 23 OECD countries (up to 2004) we can discriminate between different functional forms of the ‘equilibrium’ rate and we allow for different penalties for being above or under the ‘equilibrium’ rate. The additional data do not provide evidence of a superior statistical fit of a U-shaped ‘equilibrium’ relationship when compared to an L-shaped one. There appears to be a growth penalty for having too few business owners but not so for having too many. |
| Keywords: | entrepreneurship; economic development; economic growth; business ownership |
| JEL: | L26 O10 |
| Date: | 2007–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20070022&r=ent |
| By: | V. COLLEWAERT; S. MANIGART; R. AERNOUDT |
| Abstract: | In this paper we evaluate whether government intervention through the public funding of business angel networks is warranted. Based on a regional study of four BANs, we find that these subsidies reach their goals in terms of contribution to economic development and reducing financing and information problems entrepreneurial companies face. However, they are partly based on the wrong assumptions as these companies are not (yet) value creating. Therefore, we advise caution in using the market failure argument as grounds for government intervention in the informal risk capital market. |
| Keywords: | risk capital; business angels; policy; economic development; market failure |
| JEL: | G24 H71 M13 R58 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:07/455&r=ent |
| By: | Acharya, Viral V; Subramanian, Krishnamurthy |
| Abstract: | Do legal institutions governing financial contracts affect the nature of real investments in the economy? We develop a simple model and provide evidence that the answer to this question is yes. We consider a levered firm's choice of investment between innovative and conservative technologies, on the one hand, and of financing between debt and equity, on the other. Bankruptcy code plays a central role in these choices by determining whether the firm is continued or liquidated in case of financial distress. When the code is creditor-friendly, excessive liquidations cause the firm to shy away from innovation. In contrast, by promoting continuation upon failure, a debtor-friendly code induces greater innovation. This effect remains robust when the firm attempts to sustain innovation by reducing its debt under creditor-friendly codes. Employing patents as a proxy for innovation, we find support for the real as well as the financial implications of the model: (1) In countries with weaker creditor rights, technologically innovative industries create disproportionately more patents and generate disproportionately more citations to these patents relative to other industries; (2) This difference of difference result is further confirmed by within-country analysis that exploits time-series changes in creditor rights, suggesting a causal effect of bankruptcy codes on innovation; (3) When creditor rights are stronger, innovative industries employ relatively less leverage compared to other industries; and (4) In countries with weaker creditor rights, technologically innovative industries grow disproportionately faster compared to other industries. Finally, while overall financial development fosters innovation, stronger creditor rights weaken this effect, especially for highly innovative industries. |
| Keywords: | creditor rights; entrepreneurship; financial development; growth; law and finance; R&D; technological change |
| JEL: | G3 K2 O3 O4 O5 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6307&r=ent |
| By: | Mariëlle C. Non (Erasmus Universiteit Rotterdam); Philip Hans Franses (Erasmus Universiteit Rotterdam) |
| Abstract: | An interlock between two firms occurs if the firms share one or more directors in their boards of directors. We explore the effect of interlocks on firm performance for 101 large Dutch firms using a large and new panel database. We use five different performance measures, and for each performance measure we design three different panel data models, where we allow the effect of the number of interlocks to be linear, quadratic or square root, either with or without lags. Based on all results we conclude that current interlocks can have a negative effect on future firm performance. We show that this negative effect is jointly established by (1) interlocking directors being too busy and (2) by directors being members of a homogenous upper class group. |
| Keywords: | interlocks; firm performance |
| JEL: | C23 G34 J53 Z13 |
| Date: | 2007–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20070034&r=ent |
| By: | Jaap H. Abbring (Vrije Universiteit Amsterdam); Jeffrey R. Campbell (Federal Reserve Bank of Chicago, and NBER) |
| Abstract: | This paper considers the effects of raising the cost of entry for a potential competitor on infinite-horizon Markov-perfect duopoly dynamics with ongoing demand uncertainty. All entrants serving the model industry incur sunk costs, and exit avoids future fixed costs. We focus on the unique equilibrium with last-in first-out expectations: A firm never exits leaving behind an active younger rival. We prove that raising a second producer's sunk entry cost in an industry that supports at most two firms reduces the probability of having a duopoly but increases the probability that some firm will serve the industry. Numerical experiments indicate that a barrier to entry's quantitative relevance depends on demand shocks' serial correlation. If they are not very persistent, the direct entry-deterring effect of a barrier to a second firm's entry greatly reduces the average number of active firms. The indirect entry-encouraging effect does little to offset this. With highly persistent demand shocks, the direct effect is small and the barrier to entry has no substantial effect on the number of competitors. This confirms Carlton's (2004) assertion that the effects of a barrier depend crucially on industry dynamics that two-stage "short run/long run" models capture poorly. |
| Keywords: | LIFO; FIFO; Sunk costs; Markov-perfect equilibrium; Competition policy |
| JEL: | L13 L41 |
| Date: | 2007–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20070037&r=ent |