nep-ent New Economics Papers
on Entrepreneurship
Issue of 2007‒09‒16
eleven papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. What is the Value of Entrepreneurship? A Review of Recent Research By C. Mirjam van Praag; Peter H. Versloot
  2. The Knowledge Filter, Entrepreneurship, and Economic Growth By Bo Carlsson; Zoltan J. Acs; David B. Audretsch; Pontus Braunerhjelm
  3. Penetrating the Knowledge Filter in the Rust Belt By Zoltan Acs; Lawrence A. Plummer; Ryan Sutter
  4. The Knowledge Spillover Theory of Entrepreneurship and Foreign Direct Investment By Zoltan J. Acs; David J. Brooksbank; Colm O'Gorman; David G. Pickernell; Siri Terjesen
  5. Too little Destruction too little Creation: A Schumpeterian Diagnosis of Barriers to Sustained Growth in Ukraine By Christian Gianella; William Tompson
  6. Entry, Exit and Productivity Empirical Results for German Manufacturing Industries By Joachim Wagner
  7. Export Entry, Export Exit, and Productivity in German Manufacturing Industries By Joachim Wagner
  8. Co-evolution of firms, industries and networks in space By Anne ter Wal; Ron A. Boschma
  9. Silicon Valley in the Polder? Entrepreneurial Dynamics, Virtuous Clusters and Vicious Firms in the Netherlands and Flanders By Hulsink, W.; Bouwman, H.; Elfring, T.
  10. The role of the new, entrepreneurial private sector in transition and economic performance in light of the successes in Poland, the Czech Republic and Hungary By Winiecki , Jan
  11. Democratic Capitalism and Philanthropy in a Global Economy By Zoltan J. Acs; Sameeksha Desai

  1. By: C. Mirjam van Praag (University of Amsterdam; Tinbergen Institute; Max Planck Institute of Economics; IZA Institute for the Study of Labour); Peter H. Versloot (University of Amsterdam; Tinbergen Institute)
    Abstract: This paper examines to what extent recent empirical evidence can collectively and systematically substantiate the claim that entrepreneurship has important economic value. Hence, a systematic review is provided that answers the question: What is the contribution of entrepreneurs to the economy in comparison to non-entrepreneurs? We study the relative contribution of entrepreneurs to the economy based on four measures that have most widely been studied empirically. Hence, we answer the question: What is the contribution of entrepreneurs to (i) employment generation and dynamics, (ii) innovation, and (iii) productivity and growth, relative to the contributions of the entrepreneurs' counterparts, i.e. the 'control group'? A fourth type of contribution studied is the role of entrepreneurship in increasing individuals' utility levels. Based on 57 recent studies of high quality that contain 87 relevant separate analyses, we conclude that entrepreneurs have a very important - but specific - function in the economy. They engender relatively much employment creation, productivity growth and produce and commercialize high quality innovations. They are more satisfied than employees. More importantly, recent studies show that entrepreneurial firms produce important spillovers that affect regional employment growth rates of all companies in the region in the long run. However, the counterparts cannot be missed either as they account for a relatively high value of GDP, a less volatile and more secure labor market, higher paid jobs and a greater number of innovations and they have a more active role in the adoption of innovations.
    Keywords: entrepreneur, entrepreneurship, self-employment, productivity, economic development, growth, employment, innovation, patents, R+D, utility, remuneration, income.
    JEL: D24 D31 E23 E24 J21 J28 J31 L26 M13
    Date: 2007–09–12
  2. By: Bo Carlsson (Case Western Reserve University); Zoltan J. Acs (University of Baltimore); David B. Audretsch (Max-Planck Institute of Economics, Jena, Germany); Pontus Braunerhjelm (Royal Institute of Technology)
    Abstract: This paper explores the relationship between knowledge creation, entrepreneurship, and economic growth in the United States over the last 150 years. According to the "new growth theory", investments in knowledge and human capital generate economic growth via spillovers of knowledge. But the theory does not explain how or why spillovers occur, or why large investments in R+D do not always result in economic growth. What is missing is "the knowledge filter" - the distinction between general knowledge and economically useful knowledge. Also missing is a mechanism (such as entrepreneurship) converting economically relevant knowledge into economic activity. This paper shows that the unprecedented increase in R+D spending in the United States during and after World War II was converted into economic activity via incumbent firms in the early postwar period and increasingly via new ventures in the last few decades.
    Keywords: knowledge, economic growth, entrepreneurship, spillovers, history
    JEL: O14 O17 O30 N90
    Date: 2007–09–12
  3. By: Zoltan Acs (George Mason University); Lawrence A. Plummer (Clemson University); Ryan Sutter (George Mason University)
    Abstract: A new model of economic growth introduces the knowledge filter between new knowledge and economically useful knowledge. It identifies both new ventures and incumbent firms as the mechanisms that penetrate the knowledge filter. Recent empirical work has shown that new firms are more proficient at penetrating the knowledge filter than are incumbent firms; however, the analysis has only examined expanding economies and has relied on purely cross-sectional regression methodologies. This study explores the role of new and incumbent firms in penetrating the knowledge filter utilizing recent developments in spatial panel estimation techniques to provide a more robust set of findings. The results suggest those new firms are more proficient at penetrating the knowledge filter in declining and growing regions alike.
    Keywords: Entrepreneurship, Knowledge, Regional Growth, Endogenous Growth
    JEL: L26 O1 O18 O3 R1
    Date: 2007–09–12
  4. By: Zoltan J. Acs (George Mason University and Max-Planck-Institute of Economics, Jena); David J. Brooksbank (University of Glamorgan); Colm O'Gorman (Dublin City University); David G. Pickernell (University of Glamorgan); Siri Terjesen (Queensland University of Technology and Max-Planck-Institute of Economics, Jena)
    Abstract: We explore if the Knowledge Spillover Theory of Entrepreneurship, applied to FDI, provides at least a partial explanation for the greater emergence of recent knowledge-based entrepreneurship in Ireland compared with Wales. In order to examine how FDI and entrepreneurship policy in these two regions might have influenced the levels of knowledge-based entrepreneurship, we outline FDI and entrepreneurship policies for Wales and Ireland and key measures of knowledge creation, and evaluate the extent and nature of FDI activity and its relationship with entrepreneurship in general and knowledge-based entrepreneurship in particular. Implications include possible policy directions for countries that are characterized by weak knowledge-creating institutions yet wish to encourage knowledge-based entrepreneurship.
    Keywords: Economic Development, Entrepreneurship, Foreign Direct Investment, Ireland, Knowledge Spillovers, Wales
    JEL: J24 L26 M13
    Date: 2007–09–12
  5. By: Christian Gianella; William Tompson
    Abstract: This paper examines problems of entry, exit and competition in Ukrainian product markets. It finds that Ukraine still has too little of all three, and that exit mechanisms, in particular, function poorly. Since impediments to entry and exit are largely the product of excessive and ill administered regulation, the paper also provides a systematic assessment of product-market regulation in Ukraine, using indicators developed by the OECD Economics Department. Finally, the paper presents the main findings of two empirical studies concerned with the potentially large benefits of opening up markets, via both increased competition and further privatisation, for productivity growth in Ukraine. This paper relates to the 2007 Economic Survey of Ukraine ( <P>Une insuffisance de création-destruction : un diagnostic schumpétérien des freins à la croissance en Ukraine <BR>Cet article examine les questions de concurrence, d’entrée et de sortie des entreprises sur le marché des biens. Il montre que toutes trois demeurent insuffisantes en Ukraine, et que les mécanismes de sortie du marché, en particulier, fonctionnent de manière très imparfaite. Compte tenu du fait que les barrières à l’entrée et à la sortie sont largement le produit d’une réglementation excessive et mal appliquée, l’article donne une évaluation systématique du niveau de réglementation du marché des biens en Ukraine, en utilisant les indicateurs développés par le Département des affaires économiques. Enfin, l’article expose les principaux résultats de deux études empiriques évaluant les effets bénéfiques sur la croissance de la productivité de l’ouverture des marchés, d’une part par un accroissement de la concurrence et d’autre part par la poursuite des privatisations. Ce document se rapporte à l’Etude économique de l’Ukraine 2007 (
    Keywords: product market regulation, competition, privatisation, réglementation sur les marchés des biens et du travail, concurrence, restructuring, restructuration, privatisation, entry, exit, Ukraine, Ukraine, creative destruction, destruction créatrice, entrée sur le marché, sortie sur le marché
    JEL: D24 D43 H11 L1 L5 L9 O12 P23
    Date: 2007–09–03
  6. By: Joachim Wagner (University of Lueneburg and Max Planck Institute of Economics)
    Abstract: Using panel data from Spain Farinas and Ruano (IJIO 2005) test three hypotheses from a model by Hopenhayn (Econometrica 1992): (H1) Firms that exit in year t were in t-1 less productive than firms that continue to produce in t. (H2) Firms that enter in year t are less productive than incumbent firms in year t. (H3) Surviving firms from an entry cohort were more productive than non-surviving firms from this cohort in the start year. Results for Spain support all three hypotheses. This paper replicates the study using a unique newly available panel data sets for all manufacturing plants from Germany (1995 - 2002). Again, all three hypotheses are supported empirically.
    Keywords: entry, exit, productivity
    JEL: L11 L60
    Date: 2007–09–12
  7. By: Joachim Wagner (University of Lueneburg; Max Planck Institute of Economics)
    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: 2007–09–12
  8. By: Anne ter Wal; Ron A. Boschma
    Abstract: The cluster literature suffers from a number of shortcomings: (1) by and large, cluster studies do not take into account that firms in a cluster are heterogeneous in terms of capabilities; (2) cluster studies tend to overemphasize the importance of place and geographical proximity and underestimate the role of networks which are, by definition, a-spatial entities; (3) most, if not all cluster studies have a static nature, and do not address questions like the origins and evolution of clusters. Our aim is to overcome these shortcomings and propose a theoretical framework on the evolution of clusters. Bringing together bodies of literature on clusters, industrial dynamics, the evolutionary theory of the firm and network theory, we describe how clusters co-evolve with: (1) the industry they adhere to; (2) the (dynamic) capabilities of the firms they contain; and (3) the industry-wide knowledge network they are part of. Based on this framework, we believe the analysis of cluster evolution provides a promising research agenda in evolutionary economic geography for the years to come.
    Keywords: cluster evolution, network dynamics, industrial dynamics, co-evolution, evolutionary economic geography
    Date: 2007–08
  9. By: Hulsink, W.; Bouwman, H.; Elfring, T. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: High-technology starters do not operate in a vacuum and innovation is not a solitary activity. The activities of technology-based firms are embedded in socio-economic networks with other companies, investors, universities, vocational institutions, etc. The geographical proximity of those institutions and infrastructural hubs will partly play a role in determine the location of ICT firms decision. Furthermore, many high-tech companies shape clusters around areas where their major customers are located. The topic of this paper is regional clustering Enright, 1992; Rosenfeld, 1997within the context of Internet and ICT technology. A dynamic model previously developed for the analysis of ICT-entrepreneurship and networking will be applied to make a critical analysis of five ICT-clusters in the Netherlands and Flanders (Northern part of Belgium): the Louvain Technology Corridor, Flanders Language Valley, Amsterdam Alley, Dommel Valley, and Twente.
    Keywords: clusters;high-tech entrepreneurship;networks;Netherlands;Flanders;ICT;
    Date: 2007–07–24
  10. By: Winiecki , Jan (BOFIT)
    Abstract: The central theme of this paper is the role of the new, entrepreneurial private sector, established after the fall of communism, in output recovery, and, more generally, in economic expansion of post-communist economies. This role is considered specifically in the context of the successes in Poland, the Czech Republic, and Hungary. The author notes a substantial difference between the performance of the new private sector and the privatized sector in the short to medium run (3-7 years) from the start of privatization. New private firms typically enter the economic game with well-established de jure and de facto property rights and with industrial relations based on market economy rules. Unlike the public sector or privatized firms, the labor force of these firms is not demoralized by the change to market-economy rules. As a result, they often perform better and are quick to increasing their share of aggregate output. This also helps the economy as a whole emerge earlier from transitional recession. The author discusses two hypothetical paths of recovery and expansion; one with and one without a dynamic new private sector. The determinants for establishing and growth of new private firms are considered. In addition to the specific rules and general framework of transition, the study concludes that broad institutional fundamentals of political liberty, law and order, and trust contribute to the successful emergence of this new entrepreneurial sector.
    Keywords: new private sector; transition; growth; Poland
    Date: 2007–09–13
  11. By: Zoltan J. Acs (George Mason University and Max Planck Institute of Economics); Sameeksha Desai (Max Planck Institute of Economics and George Mason University)
    Abstract: Democratic capitalism has become the popular paradigm in the modern world, and it is spreading further through globalization. It is a model based on growth, expansion and constant innovation. However, it is accompanied by social problems which may worsen despite overall gains in wealth. In this paper, we suggest that democratic capitalist societies may benefit from the application of what has been a primarily American institution: Philanthropy. We present the Entrepreneurship-Philanthropy Cycle, which demonstrates the relationship between wealthy entrepreneurs, philanthropic contributions and economic opportunity. As a nonmarket and nonstate mechanism, philanthropy is unique in its structure and operations, and may offer the ideal approach to solving social problems. We suggest that both the internationalization of American foundations, and the growth of domestic philanthropy, can help developing countries offset social problems.
    Keywords: Philanthropy, entrepreneurship, democratic capitalism, foundation, social problems, India education, social innovation
    JEL: O10 P10 I30
    Date: 2007–09–12

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