nep-ent New Economics Papers
on Entrepreneurship
Issue of 2007‒06‒30
nine papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Born Local: Two Avenues to Internationalization By Zoltan J. Acs; Siri Terjesen
  2. Self-Employment and Unemployment in Spanish Regions in the Period 1979-2001 By Antonio Golpe; Andre van Stel
  3. New Pecking Order Financing for Innovative Firms: an Overview By SAU, Lino
  4. From creativity to innovation By Yusuf, Shahid
  5. Firm growth : a survey. By Alex Coad
  6. Export Entry, Export Exit, and Productivity in German Manufacturing Industries By Joachim Wagner
  7. Self-Employment and Parenthood: Exploring the Impact of Partners, Children and Gender By Ruta Aidis; Cecile Wetzels
  8. Do initial conditions persist between firms? : an analysis of firm-entry cohort effects and job losers using matched employer-employee data By Wachter, Till von; Bender, Stefan
  9. Contract enforcement and firms’ financing By Cristina Arellano; Yan Bai; Jing Zhang

  1. By: Zoltan J. Acs (School of Public Policy, George Mason University, Fairfax, Virginia, USA; Max Planck Institute of Economics, Jena, Germany); Siri Terjesen (Brisbane Graduate School of Business, Queensland University of Technology; Max Planck Institute of Economics, Jena, Germany)
    Abstract: Are firms born Global? Because knowledge spillovers that lead to new venture creation are geographically constrained we believe that firms are born local. It follows that the decision to create sustainable new ventures is independent from the decision to internationalize, even if that is the ultimate goal of the firm. We explore two avenues to internationalize new ventures, a direct path described in much of the extant literature and an intermediated one. New ventures face high entry barriers and intellectual property rights protection to internationalization, which are circumvented by intermediating activities using existing multinational enterprises as facilitators of internationalization. However, new ventures using the intermediated mode of internationalization face transaction costs and rent extraction from multinational enterprises. Therefore, sustainable new ventures face a strategic decision on how to internationalize.
    Keywords: International Entrepreneurship, Multinational Enterprises, Knowledge Spillovers, Intermediated Internationalization, International New Ventures, Foreign Direct Investment
    Date: 2007–06–25
  2. By: Antonio Golpe (University of Huelva, Spain); Andre van Stel (EIM Business and Policy Research, Zoetermeer, Netherlands; Cranfield University School of Management, UK; Max Planck Institute of Economics, Jena, Germany)
    Abstract: This paper investigates the relation between changes in self-employment and changes in unemployment at the regional level in Spain in the period 1979-2001. We estimate a vector autoregression model as proposed by Audretsch, Carree, van Stel and Thurik (2005) using a data base for Spanish regions. By estimating the model we are able to empirically distinguish between two directions of causality. On the one hand increases in self-employment may contribute to lower unemployment rates (the "entrepreneurial" effect). On the other hand, higher unemployment rates may push individuals into self-employment, thereby contributing to higher self-employment rates (the "refugee" effect). In our analysis of these two effects we distinguish between higher and lower income regions within Spain. We find empirical support for the "entrepreneurial" effect to exist, both in higher income and in lower income regions. As regards the "refugee" effect, the evidence is mixed. We find empirical support for this effect for higher income regions. Remarkably, we do not find evidence for a "refugee" effect in lower income regions of Spain, even though unemployment rates are on average higher in these regions. We argue that this may be partly related to a lack of incentives for unemployed individuals in these regions to find paid employment.
    Keywords: entrepreneurship, self-employment, unemployment, economic growth, Spain
    JEL: E24 L11 M13 O10 O52
    Date: 2007–06–25
  3. By: SAU, Lino
    Abstract: The paper try to modify traditional pecking order. For this reason the role of venture capital as private equity financing is taken into account particularly for young innovative firms.
    Keywords: pecking order; venture capital; innovative firms
    JEL: G30 G32
    Date: 2007–02
  4. By: Yusuf, Shahid
    Abstract: Talent is the bedrock of a creative society. Augmenting talent involves mobilizing culture and tradition, building institutions to increase the stock of human capital, enhance its quality, and instill values favoring achievements and initiative. The productivity of this talent in the form of ideas can be raised by nurturing wikicapital-the capital arising from networks. Translating creativity into innovation is a function of multiple incentives and sustaining innovation is inseparable from heavy investment in research. Finally, the transition from innovation to commercially viable products requires the midwifery of many service providers and the entrepreneurship skills of firms small and large.
    Keywords: Education for Development (superceded),ICT Policy and Strategies,Tertiary Education,Agricultural Knowledge & Information Systems,Cultural Policy
    Date: 2007–06–01
  5. By: Alex Coad (Centre d'Economie de la Sorbonne)
    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.
    JEL: L25 L11
    Date: 2007–05
  6. By: Joachim Wagner (Institute of Economics, Leuphana University of Lüneburg)
    Abstract: This paper contributes to the flourishing literature on exports and productivity by using a unique newly available panel of exporting establishments from the manufacturing sector of Germany from 1995 to 2004 to test three hypotheses derived from a theoretical model by Hopenhayn (Econometrica 1992): (H1) Firms that stop exporting in year t were in t-1 less productive than firms that continue to export in t. (H2) Firms that start to export in year t are less productive than firms that export both in year t-1 and in year t. (H3) Firms from a cohort of export starters that still export in the last year of the panel were more productive in the start year than firms from the same cohort that stopped to export in between. While results for West Germany support all three hypotheses, this is only the case for (H1) and (H2) in East Germany.
    Keywords: Export entry, export exit, productivity
    JEL: F14 L60
    Date: 2007–06
  7. By: Ruta Aidis (University College London and FEE, University of Amsterdam); Cecile Wetzels (FEE, University of Amsterdam and IZA)
    Abstract: This paper explores the relationship between self-employment, partner’s employment, the household and children on a mother’s and father’s probability to choose self-employment. Few studies are available on this topic and their analysis is mainly limited to the female role in the North American context. In this study, we examine the influence of personal characteristics, household and labor market characteristics for both mothers and fathers in a family context and their probability to be self-employed as compared to parents who have chosen formal, gainful employment. We focus on the data from the European context comparing results from Spain, Italy and the Netherlands. Using these large and comparable data sets, our logit model estimates show that mothers who choose self-employment do not work fewer working hours than those in gainful employment. Similar results were found for fathers in Spain and Italy. Perhaps the most striking result is the very strong significance of the partner’s self-employed status on the choice for self-employment for both mothers and fathers in all three countries. Other effects such as human capital, household income, presence of grandmothers and number of young children indicate country differences.
    Keywords: entrepreneurship, parenthood, self-employment, gender, Europe
    JEL: M13 J24 J13 J16
    Date: 2007–05
  8. By: Wachter, Till von; Bender, Stefan (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Influential studies have suggested that initial conditions can have persistent effects on workers' careers within firms. It is a longstanding question among economists whether such lasting wage differentials among firms and industries are due to persistent deviations of wages from workers' skills due to contracting and market frictions, or whether they arise from permanent differences among workers' skills. However, there is currently little representative evidence on firm-entry cohort effects and few explicit tests of alternative explanations. We use information on the universe of workers from a large German manufacturing sector from matched employer- employee records to show that firm-entry cohort effects are a pervasive phenomenon for the firms we study. The cohort effects we estimate are highly heterogeneous across firms and slowly fade over time. We also find that wage premiums on the past job are lost at job displacement, and that initial positive effects on wage levels at the new job fades over time. This suggests that at least part of firm-entry cohort effects arise from transitory rents, and that initial effects from previous wages fade as workers' search for better jobs." (author's abstract, IAB-Doku) ((en))
    Date: 2007–06–20
  9. By: Cristina Arellano; Yan Bai; Jing Zhang
    Abstract: This paper studies how the degree of contract enforcement in a country influences firms’ financing decisions. We first document empirical facts on debt financing for two new firm-level datasets in the United Kingdom and Ecuador. In the United Kingdom, small firms borrow more relative to their assets than large firms, whereas in Ecuador small firms borrow less. We build a dynamic model of firms’ debt financing where debt is constrained by the likelihood of default, which varies across firms and economies with different degrees of enforcement. Because of their low firm values, small firms are mostly affected by abundance or scarcity of economy-wide loans generated by weak or strong contract enforcement. We calibrate our model to the datasets in the two countries and find that our mechanism can quantitatively account for the patterns observed in the data.
    Date: 2007

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