nep-ent New Economics Papers
on Entrepreneurship
Issue of 2007‒06‒11
eight papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Lending Competition, Relationship Banking, and Credit Availability for Entrepreneurs By OGURA Yoshiaki
  2. An assessment of government funding of business angel networks: a regional study By Collewaert, V.; Manigart, S.; Rudy Aernoudt
  3. Allocation determinants of institutional investments in venture capital and private equity limited partnerships in Central Eastern Europe By Groh, Alexander P.; Liechtenstein, Heinrich; Canela, Miguel A.
  4. La création d’entreprise au féminin dans le monde occidental By de Beaufort, Viviane
  5. Firm Growth: A Survey By A. Coad
  6. Decentralization, Corruption, and the Unofficial Economy By Michael Alexeev; Luba Habodaszova
  7. Innovation and the export-productivity link By Cassiman, Bruno; Golovko, Elena
  8. From Industrial Policy to Innovative Policy: Japan's Pursuit of Competitive Advantage By Marcus Noland

  1. By: OGURA Yoshiaki
    Abstract: Existing theories consistently predict that relationship banking enhances credit availability for new firms. To put more concretely, these theories predict that soft information acquisition about borrowers' creditworthiness and the resulting incumbent lender's profit-improving and relation-specific consulting ability yield a monopolistic rent for the incumbent lender, and that this expected rent encourages a bank to lend to younger firms to pre-empt an exclusive relationship ahead of rival banks. The present study tries to provide evidence for this hypothesis using a dataset collected from the 2003 Survey of the Financial Environment of Enterprises in Japan. Our statistical analysis shows that the time interval from start-up to the first loan approval for a firm is shorter if a bank intends to undertake relationship banking, even after controlling fund-demand and creditworthiness factors of each firm. This result provides evidence to support the above hypothesis. Our logit analysis shows that the probability for banks to undertake relationship banking is decreasing or hump-shaped against the number of competing banks. Thus, the increase in the number of competing banks is more likely to discourage these banks from providing relationship banking, and this in turn diminishes credit availability for new firms. Besides such an effect arising from relationship banking, the data shows evidence suggesting the statistical significance of another mechanism generating a negative correlation between the number of competing banks and credit availability for new firms, which may be explained by the theory of winner's curse. As a whole, credit availability for new firms was higher in more concentrated local credit markets in the last fifteen years in Japan.
    Date: 2007–06
  2. By: Collewaert, V.; Manigart, S.; Rudy 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: 2007–06–05
  3. By: Groh, Alexander P. (IESE Business School); Liechtenstein, Heinrich (IESE Business School); Canela, Miguel A. (University of Barcelona)
    Abstract: Growth expectations and institutional settings are favorable in CEE to establish a vibrant VC/PE market. However, there is lacking supply of risk capital. We address the obstacles for institutional investments in the region via a questionnaire addressed to (potential) Limited Partners worldwide. The respondents provide information about their criteria for international asset allocation. The protection of property rights is the dominant concern, followed by the need to find local quality General Partners and by the management quality and skills of local entrepreneurs. Further, the expected deal flow plays an important role for the allocation process, while the investors fear bribing and corruption. CEE is regarded as very attractive, especially the economic and entrepreneurial activity. However, the investors are not comfortable there with the protection of their claims.
    Keywords: Venture capital; Private equity; International asset allocation; Institutional investors;
    JEL: G23 G24
    Date: 2007–05–07
  4. By: de Beaufort, Viviane (ESSEC Business School)
    Abstract: The principal aim of this study is to identify the dimensions implied by female entrepreneurialism, especially its potential economic contribution to national growth, its specificities, or the analysis of public or private initiatives willing to promote it. Thus, our goal is to issue a number of hypotheses as well as warnings and recommendations for the launch of specific initiatives towards women entrepreneurship. Female entrepreneurship is often considered as an insufficiently-exploited source of economic growth. The recent evolutions of the labour market forced number of women to create their own position so that they can balance their working and family lives with the drive to succeed on a meaningful project. Women entrepreneurs create employment for themselves and for others, sometimes in order to cater for needs a common employee status cannot fill (schedule and/or family obligations). Thanks to their specificities as managers dealing with common business issues such as organisation, they also bring their own potential to society. Women need more financial supports, adapted trainings, more mentoring, and more networks to reach equal opportunities with men. Depending on each country, both cultural context and the way gender diversity is achieved have an importance in reaching this goal.
    Keywords: Economic Growth; Tools of Success; Women Entrepreneurship
    JEL: H00 K00
    Date: 2007–02
  5. By: A. Coad
    Abstract: We survey the phenomenon of the growth of firms drawing on literature from economics, management, and sociology. We begin with a review of empirical ‘stylised facts’ before discussing theoretical contributions. Firm growth is characterized by a predominant stochastic element, making it difficult to predict. Indeed, previous empirical research into the determinants of firm growth has had a limited success. We also observe that theoretical propositions concerning the growth of firms are often amiss. We conclude that progress in this area requires solid empirical work, perhaps making use of novel statistical techniques.
    Keywords: Firm Growth, Size Distribution, Growth Rates Distribution, Gibrat’s Law, Theory of the Firm, Diversification, ‘Stages of Growth’ models Length 73 pages
    JEL: L11 L25
    Date: 2007–05
  6. By: Michael Alexeev (Indiana University Bloomington); Luba Habodaszova (City University/VSM, Bratislava, Slovakia)
    Abstract: We analyze the implications of decentralization for the incentives of local governments to provide productivity enhancing local public goods and extort bribes from local entrepreneurs. We show that an increase in the share of locally raised tax revenue left with the local government raises its incentives to provide public goods and brings more entrepreneurs into the official economy. Corruption, measured by the size of bribes that local officials charge entrepreneurs for issuing licenses for operating officially, may increase or decrease, depending on the extent to which public goods enhance the entrepreneur’s productivity. The tests using cross-sectional country-level data support the model’s implications.
    Keywords: decentralization, local public goods, corruption, unofficial economy
    JEL: H77 D73 O17
    Date: 2007–05
  7. By: Cassiman, Bruno (IESE Business School); Golovko, Elena (IESE Business School)
    Abstract: In this paper, we explore the relationship between innovation activity, productivity, and exports, using a panel of Spanish manufacturing firms for 1990-1998. Our results -based on non-parametric tests- suggest that firm innovation status is critical in explaining the positive export-productivity association documented in prior research. For the sample of small innovating firms, we find no significant differences in productivity levels between exporters and non-exporters. Especially product innovation seems to explain this positive association between exports and productivity. For small non-innovating firms with the low and medium productivity levels, however, exporting firms continue to exhibit higher productivity than non-exporting firms.
    Keywords: Innovation; productivity; exports; industry dynamics;
    Date: 2007–04–05
  8. By: Marcus Noland (Peterson Institute for International Economics)
    Abstract: Japan faces significant challenges in encouraging innovation and entrepreneurship. Attempts to formally model past industrial policy interventions uniformly uncover little, if any, positive impact on productivity, growth, or welfare. The evidence indicates that most resource flows went to large, politically influential “backward” sectors, suggesting that political economy considerations may be central to the apparent ineffectiveness of Japanese industrial policy. Rather than traditional industrial or science and technology policy, financial and labor market reforms appear more promising. As a group, Japan’s industrial firms are competitive relative to their foreign counterparts. Japan falls behind in the heavily regulated service sector. The problems are due less to a lack of industrial policy than to an excess of regulation. Japan may have more to gain through restructuring the lagging service sector than by expending resources in pursuit of marginal gains in the industrial sector.
    Keywords: Japan, industrial policy, innovation policy
    JEL: O3 L52 F13
    Date: 2007–05

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