nep-ent New Economics Papers
on Entrepreneurship
Issue of 2007‒08‒08
twelve papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Why Are Some Entrepreneurs More Innovative Than Others? By Koellinger, P.
  2. Entrepreneurial Backgrounds, Human Capital and Start-up Success By Rui Baptista; Murat Karaoez; Joana Mendonça
  3. Serial Entrepreneurship: Differentiating Direct from Latent Re-entrants By A. Miguel Amaral; Rui Baptista
  4. Educating Multi-disciplinary Student Groups in Entrepreneurship: Lessons Learned from a Practice Enterprise Project By Collan, Mikael; Kallio-Gerlander, Jaana
  5. Risky Earnings, Taxation and Entrepreneurial Choice : A Microeconometric Model for Germany By Frank M. Fossen
  6. Is Self-Employment Always a Bad Experience? By Ulrich Kaiser; Nikolaj Malchow-Møller
  7. Turbulence in High Growth and Declining Industries By Rui Baptista; Murat Karaoez
  8. Entrepreneurs' Gender and Financial Constraints : Evidence from International Data By Alexander Muravyev; Dorothea Schäfer; Oleksandr Talavera
  9. A Proposed Framework For business Demography Statistics By Nadim Ahmad
  10. Returns to Capital in Microenterprises: Evidence from a Field Experiment By Suresh de Mel; David McKenzie; Christopher Woodruff
  11. Jump-Starting Self-Employment? Evidence among Welfare Participants in Argentina By Rita Almeida; Emanuela Galasso
  12. Innovation Networks of High Tech SMES: Creation of Knowledge but no Creation of Value By Rob Winters; Erik Stam

  1. By: Koellinger, P. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The study provides theoretical insights and empirical evidence on the emergence of different types and degrees of entrepreneurial innovativeness. The results suggest that entrepreneurial innovativeness depends both on individual factors and on the environment in which the individual lives. In particular, high educational attainment and a high degree of self-confidence are significantly associated with entrepreneurial innovativeness at the individual level. Furthermore, entrepreneurs in highly developed countries are more likely to engage in innovative rather than purely imitative activities. The results also show that product, process, and variety innovations have at least to some extent different antecedents.
    Keywords: Entrepreneurship;Innovation;Business opportunities;
    Date: 2007–04–11
  2. By: Rui Baptista (IN+, Instituto Superior Tecnico, Technical University of Lisbon; Max Planck Institute of Economics); Murat Karaoez (IN+, Instituto Superior Tecnico, Technical University of Lisbon; IIBF, Department of Economics, Sueleyman Demirel University, Isparta, Turkey); Joana Mendonça (IN+, Instituto Superior Tecnico, Technical University of Lisbon.)
    Abstract: We examine whether founders’ backgrounds influence new firm survival in the early years after start-up. We develop hypotheses linking founders' backgrounds to pre-entry capabilities associated with entrepreneurial human capital, highlighting the cases of spin-offs and habitual entrepreneurs. The subject of unemployment-driven entrepreneurship is also explored. We find that specific human capital more frequently found in spin-off founders plays a key role in enhancing survival chances, while more general forms of human capital may help inexperienced entrepreneurs overcome the barrier posed by the critical early years after start-up.
    Keywords: Founders' backgrounds, Human capital, Start-up Success, Pre-entry capabilities, Spin-offs, Habitual entrepreneurs
    JEL: D21 L10 M13
    Date: 2007–07–31
  3. By: A. Miguel Amaral (IN+, Instituto Superior Tecnico, Technical University of Lisbon); Rui Baptista (IN+, Instituto Superior Tecnico, Technical University of Lisbon; Max Planck Institute of Economics)
    Abstract: This study is the first to examine the decision to re-enter business ownership by entrepreneurs who have exited their first business using a longitudinal matched employer-employee database. This kind of data allow us to distinguish between those serial entrepreneurs who re-enter business ownership immediately upon exiting their first business (direct serial), and those who do so after an interlude in paid employment, or non-employment (latent serial). Results highlight the importance of human capital in triggering serial entrepreneurship, but the kinds of experiences driving direct and latent serial entrepreneurs are different.
    Keywords: Serial entrepreneurship, Occupational choice, Entrepreneurial opportunity; Human capital, Longitudinal data.
    JEL: J24 L26 M13
    Date: 2007–07–31
  4. By: Collan, Mikael; Kallio-Gerlander, Jaana
    Abstract: The target audiences for entrepreneurial university studies are most often students of different fields of business studies, or economics; entrepreneurship studies are a part of their normal curriculum. Entrepreneurs, however, are not a group that consists only of business professionals, but a group of people from all walks of life. The basic procedures and laws governing the starting of a company are most often same for all companies and individuals. It is important to acknowledge these two facts, when designing curriculums for university studies: basic courses in entrepreneurship (starting a business) are important for students of all disciplines. This paper reports experiences from educating multi-disciplinary student groups in entrepreneurship, presents preliminary data about student background and attitudes towards entrepreneurship, and discusses some lessons learned from the experiences.
    Keywords: Entrepreneurship education; multi-disciplinary groups; lessons learned
    JEL: M13 L26 A22 A2
    Date: 2006
  5. By: Frank M. Fossen
    Abstract: Which role do individual income prospects play in the decision to be an entrepreneur rather than an employee? In a model of occupational choice, higher expected after-tax earnings attract people to self-employment, while more risky net earnings deter risk-averse individuals. In this paper I analyse the expected value and variance of income in self-employment and dependent employment empirically, accounting for selection. Based on this analysis, structural models of self-employment entry and exit under risk are estimated, which include a standard risk aversion parameter. The model predicts that the German income tax reduction of 2000 induced smaller exit rates out of self-employment for men and smaller entry rates for women.
    Keywords: Entrepreneurship, risk, returns to self-employment, taxation
    JEL: J23 H24 D81 C51
    Date: 2007
  6. By: Ulrich Kaiser (University of Southern Denmark); Nikolaj Malchow-Møller (Department of Economics, University of Copenhagen)
    Abstract: We estimate the effects of past self-employment experience on subsequent earnings in wage work using the population of Danish citizens between 16 and 65 years of age that we observe between 1980 and 1996. Specifically, we analyze how the effects of previous self-employment experience are affected by age, success in self-employment and the employment status prior to self-employment. We also take a long-term perspective and test whether wage-effects of self-employment are nonlinear and if they depreciate over time. We find that an additional year of self-employment experience reduces subsequent wage earnings by 4.7%-8.2% compared to continued wage-work experience. Young and successful formerly self-employed benefit, however, from their self-employment experience. Moreover, formerly self-employed who were non-employed or unemployed prior to their self-employment experience receive only slightly lower wages than individuals that never entered self-employment. We also find that the negative self-employment effects decrease with longer spells of self-employment and that they depreciate over time in subsequent wage work.
    Keywords: self-employment; entrepreneurship; wages; experience
    JEL: L26 C21
    Date: 2006–11
  7. By: Rui Baptista (IN+, Instituto Superior Tecnico, Technical University of Lisbon; Max Planck Institute of Economics); Murat Karaoez (IN+, Instituto Superior Tecnico, Technical University of Lisbon; IIBF, Department of Economics, Sueleyman Demirel University, Isparta, Turkey)
    Abstract: We examine turbulence over the product life cycle using the lowest possible level of industry aggregation, allowing for the use of panel data to study the evolution of single product markets. We find that replacement of exiting firms by subsequent entry plays a primary role in generating turbulence in high growth markets, while displacement of incumbents by recent entrants is the main selection force in declining markets. As product life cycles progress, trial-and-error entry subsides, and turbulence decreases.
    Keywords: Entry, Exit, Selection, Product life cycle, Replacement, Displacement
    JEL: L11
    Date: 2007–07–31
  8. By: Alexander Muravyev; Dorothea Schäfer; Oleksandr Talavera
    Abstract: This paper studies gender discrimination against entrepreneurs by financial institutions. Based on the Business Environment and Enterprise Performance Survey (BEEPS) that covers firms in several countries of Western Europe as well as in the transition countries of Eastern Europe, our analysis suggests that female-managed firms are less likely to obtain a bank loan compared with male-managed counterparts. In addition, there is some evidence that female entrepreneurs are charged higher interest rates when loan applications are approved. Disaggregation of the sample by country groups suggests that these results are driven by firms in the least financially developed countries of the region.
    Keywords: entrepreneurship, gender, financial constraints
    JEL: G21 J16 L26
    Date: 2007
  9. By: Nadim Ahmad
    Abstract: The creation of new businesses and the decline of unproductive ones are often regarded key to business dynamism in OECD economies. Understanding business behaviour, creative destruction and identifying successful and failing businesses, as well as fostering entrepreneurship and innovation, have become increasingly important objectives for policy makers in many OECD economies in recent years. However, despite its growing importance, the study of business dynamics, and entrepreneurship more generally, is hampered by the lack of truly internationally comparable indicators. That is not for a lack of data however, as many statistical institutions and private agencies produce statistics in this domain, but because they lack comparability, are of questionable quality, or are not able to tackle all of the policy questions related to these issues, they can often generate confusion, giving mixed messages to policy makers. The framework of business demography indicators presented in this paper is an attempt to fill this gap by providing a mechanism by which more comparable indicators of business demography can be produced across OECD countries in particular, considering both what is practically achievable and <BR>La création des nouvelles entreprises, et le déclin de celles qui ne sont pas productives sont souvent considerées comme étant primordiales pour le dynamisme de celles des pays de l'OCDE. Ces dernières années, comprendre le comportement des entreprises, les « destructions créatives », et identifier les affaires qui fonctionnent ou pas, ainsi que la promotion de l'entreprenariat et de l'innovation, sont devenus des objectifs de plus en plus importants pour les décideurs dans les economies de l'OCDE. Cependant, en dépit de son importance croissante, l'étude de la dynamique des entreprises, et de l'entreprenariat plus généralement, est gênée par le manque d'indicateurs internationaux réellement comparables. Néanmoins, cela ne vient pas d'un manque de données puisque beaucoup d'instituts ou d'agences privées produisent des statistiques en ce domaine, mais du fait qu'ils manquent de comparabilité, sont de qualité discutable, ou ne sont pas à même de répondre à toutes les questions politiques relatives, ce qui est source de confusion et de messages éronés auprès des décideurs. La structure des indicateurs de la démographie des entreprises présentée dans ce document va tenter de combler les vides en fournissant un mécanisme par lequel plus d'indictateurs comparables de la démographie des entreprises peuvent être produits, en particulier parmi les pays de l'OCDE, considérant ce qui réellement faisable et ce qui est souhaitable.
    Date: 2006–10–24
  10. By: Suresh de Mel (University of Peradeniya); David McKenzie (World Bank and IZA); Christopher Woodruff (University of California, San Diego)
    Abstract: Small and informal firms account for a large share of employment in developing countries. The rapid expansion of microfinance services is based on the belief that these firms have productive investment opportunities and can enjoy high returns to capital if given the opportunity. However, measuring the return to capital is complicated by unobserved factors such as entrepreneurial ability and demand shocks, which are likely to be correlated with capital stock. We use a randomized experiment to overcome this problem, and to measure the return to capital for the average microenterprise in our sample, regardless of whether or not they apply for credit. We accomplish this by providing cash and equipment grants to small firms in Sri Lanka, and measuring the increase in profits arising from this exogenous (positive) shock to capital stock. After controlling for possible spillover effects, we find the average real return to capital to be 5.7 percent per month, substantially higher than the market interest rate. We then examine the heterogeneity of treatment effects to explore whether missing credit markets or missing insurance markets are the most likely cause of the high returns. Returns are found to vary with entrepreneurial ability and with measures of other sources of cash within the household, but not to vary with risk aversion or uncertainty.
    Keywords: microenterprises, returns to capital, self-employment
    JEL: O12 O17
    Date: 2007–07
  11. By: Rita Almeida (World Bank and IZA); Emanuela Galasso (World Bank)
    Abstract: One important concern of governments in developing countries is on how to phase-out large safety nets programs. This paper evaluates the short run effects of one possible exit strategy, programs that promote self-employment, in Argentina. We provide evidence that a small fraction of beneficiaries were attracted by this program. Overall, potential participants to selfemployment are more likely to be female household heads and more educated beneficiaries relative to the average Jefes beneficiaries. Using non-experimental methods, we show that participation in the program does affect labor supply of participants, by reducing the probability of having an outside job especially for males and increasing the total number of hours worked. However, the intervention fails to produce on average income gains to participating individuals and households in the short run. The fact that a very small subset of former welfare beneficiaries are attracted to the program, coupled with the fact that only a subset of participants (younger and more educated beneficiaries, and with previous selfemployment experience) has important implications for this intervention to represent a viable exit strategy from welfare.
    Keywords: self-employment, labor markets, impact evaluation, Argentina
    JEL: J21 I38 J31
    Date: 2007–07
  12. By: Rob Winters (Netherlands Ministry of the Interior and Kingdom Relations); Erik Stam (University of Cambridge, Utrecht University; Max Planck Institute of Economics)
    Abstract: This paper analyses the effects of innovation networks on product and process innovation and sales growth of high technology SMEs. Innovation net- works are positively related to both product and process innovation, i.e. knowledge creation. One exception is the negative effect of innovation networks with suppliers on product innovation. Older SMEs are more product innovative than young SMEs. The positive relation between firm size and (process) innovation, disappears when networks are introduced into the analyses. The general conclusion is that vertical innovation networks remove the effect of firm size on process innovation. In other words, high-tech SMEs can ‘borrow’ size if they co-operate with customers, but especially with suppliers for process innovation. So smallness is not necessarily a disadvantage for innovation, as long as firms cooperate with other organisations. Innovation and networks do not seem to effect value creation, measured as sales growth.
    Keywords: innovation, innovation networks, high tech SMEs, firm growth
    JEL: D21 D83 D85 L25 O31 O32
    Date: 2007–07–31

This nep-ent issue is ©2007 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.