nep-ent New Economics Papers
on Entrepreneurship
Issue of 2007‒11‒17
thirteen papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Entrepreneurial Diversity and Economic Growth By Verheul, I.; Stel, A.J. van
  2. Entrepreneurial Orientation as a main Resource and Capability on Small Firm’s Growth By Ferreira, João; Azevedo, Susana
  3. Commitment or Control? Human Resource Management Practices in Female and Male-Led Businesses By Verheul, I.
  4. What determines entrepreneurial clusters? By Luigi Guiso; Fabiano Schivardi
  5. Investment Climate and Employment Growth: The Impact of Access to Finance, Corruption and Regulations Across Firms By Carmen Pages; Reyes Aterido; Mary Hallward-Driemeier
  6. Clustering in ICT: From Route 128 to Silicon Valley, from DEC to Google, from Hardware to Content By Hulsink, W.; Manuel, D.; Bouwman, H.
  8. Why New Business Development Projects Fail: Coping with the Differences of Technological versus Market Knowledge By Burgers, J.H.; Bosch, F.A.J. van den; Volberda, H.W.
  9. The Structure of Multiple Credit Relationships: Evidence from US Firms By Luigi Guiso; Raoul Minetti
  11. Size, Structure, and Strategies: Insolvency and "The Nature of the Firm" in Italy, 1920S-1970S By Paolo Di Martino; Michelangelo Vasta
  12. Firm Survival, Performance, and the Exchange Rate By Jen Baggs; Eugene Beaulieu; Loretta Fung
  13. Coordination Failures, Poverty Traps, "Big Push" Policy and Entrepreneurship: A Critical View By Glavan, Bogdan

  1. By: Verheul, I.; Stel, A.J. van (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Most studies investigating the relationship between entrepreneurship and economic growth treat entrepreneurs as a homogeneous group. This study investigates the impact of entrepreneurial diversity on national economic growth. Using data for 36 countries participating in the Global Entrepreneurship Monitor we investigate whether the impact on growth depends on socio-demographic diversity in entrepreneurship (in terms of age, education and gender). We find that in less developed countries older and higher educated entrepreneurs are particularly important for stimulating economic growth, while for developed countries younger entrepreneurs are more important. Accordingly, policy should aim at stimulating particular groups of entrepreneurs, rather than just the number of entrepreneurs.
    Keywords: entrepreneurship;diversity;economic development;
    Date: 2007–10–30
  2. By: Ferreira, João; Azevedo, Susana
    Abstract: This research provides a useful framework for identifying a small firms’ propensity to engage in entrepreneurial orientation. We examine the impact of the Entrepreneurial Orientation (EO) as a main resource and capability on small firm' growth. The growth seems to come out as an important demonstration of the entrepreneurial orientation of small firms (Davidsson, 1989; Green and Brown, 1997; Janney and Gregory, 2006). Thus, this research builds on prior conceptual research that suggests a positive integration between entrepreneurial orientation and resource-based view. In the first instance, the research will focus on reviewing literature in the emerging area of entrepreneurial orientation as it applies to growth oriented small firms and resource-based view of the firm. Secondly, an empirical study was developed based on a stratified sample of small firms of manufacturing industry. Data were submitted to a multivariate statistical analysis and a linear regression model was performed in order to predict the influence of the resources and capabilities on small firms' growth. In this sense, we consider the construct growth as a dependent variable and the ones relates with resources and capabilities (entrepreneur resources, firm resources, networks and EO) as independent variables. The research results suggest a set of resources and capabilities that promote the growth of the small firms. Also, the EO seems to have a predictive value on growth. Explaining variables related with resources and capabilities and EO were identified as essential in growth oriented small firms. It was still possible to conclude that the entrepreneurial firms which grew seem to have resources and develop more capabilities and take advantage in the search for those competences. This attitude reflects on the EO of the firm. This study has important implication for both researchers and practitioners. It highlights the necessity of firms to develop superior EO of all their members and also to invest on better resources and consequently superior capabilities as a way of reaching higher levels of growth. While previous authors have attempted to analyse certain aspects of this process (linkage between entrepreneurial orientation and growth), this research developed a framework that combines these and others factors (resource-based view) pertinent to growth oriented small firms. The results support the necessity to identify explicative variables of multiple levels to explain the growth of small firms. The adoption of an entrepreneurial orientation as an indispensable variable to the growth oriented small firms seems pertinent.
    Keywords: Resources-Based View; Entrepreneurial orientation; Growth of Small Firms
    JEL: M13 L1
    Date: 2007–11–09
  3. By: Verheul, I. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This paper investigates the commitment-orientation of HRM practices in female- and male-led firms. A distinction is made between emphasizing commitment or control in the design of HRM practices. To test for gender differences use is made of a sample of 555 Dutch firms. Contrary to what is generally believed it is found that ? when controlled for relevant factors related to the business (e.g., firm size, age, sector) ? HRM in female-led firms is more control-oriented than that in male-led firms. More specifically, female-led firms are more likely to be characterized by fixed and clearly defined tasks, centralized decision-making and direct supervision of the production process.
    Keywords: gender;entrepreneurship;human resource management;commitment;control;
    Date: 2007–10–30
  4. By: Luigi Guiso; Fabiano Schivardi
    Abstract: We contrast two potential explanations of the substantial di¤erences in entrepreneurial activity observed across geographical areas: entry costs and external effects. We extend the Lucas model of entrepreneurship to allow for heterogeneous entry costs and for externalities that shift the distribution of entrepreneurial talents. We show that these assumptions have opposite predictions on the relation between entrepreneurial activity and .rm level TFP: with di¤erent entry costs, in areas with more entrepreneurs firms' average productivity should be lower and vice versa. We test these implications on a sample of Italian firms and unambiguously reject the entry costs explanation in favor of the externalities one. We also investigate the sources of external e¤ects, finding robust evidence that learning externalities are an important determinant of cross-sectional differences in entrepreneurial activity.
    Keywords: Entrepreneurship, clustering, agglomeration economies
    JEL: D24 D62 J23
    Date: 2007
  5. By: Carmen Pages (Inter-American Development Bank); Reyes Aterido (World Bank); Mary Hallward-Driemeier (World Bank)
    Abstract: Using firm level data on 70,000 enterprises in 107 countries, this paper finds important effects of access to finance, business regulations, corruption, and to a lesser extent, infrastructure bottlenecks in explaining patterns of job creation at the firm level. The paper focuses on how the impact of the investment climate varies across sizes of firms. The differences across size categories come from two sources. First, objective conditions of the business environment do vary systematically by firm types. Micro and small firms have less access to formal finance, pay more in bribes than do larger firms, and face greater interruptions in infrastructure services. Larger firms spend significantly more time dealing with officials and red tape. Second, even controlling for these differences in objective conditions, there is evidence of significant non-linearities in their impact on employment growth. The results suggest strong composition effects: A weak business environment shifts downward the size distribution of firms. In the case of finance and business regulations this occurs by reducing the employment growth of all firms, particularly micro and small firms. On the other hand, corruption and poor access to infrastructure reduce employment growth by affecting the growth of medium size and large firms. With significant differences between firms with less than 10 employees and SMEs, these results indicate significant reforms are needed to spur micro firms to grow into the ranks of the SMEs.
    Date: 2007–10
  6. By: Hulsink, W.; Manuel, D.; Bouwman, H. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: One of the pioneers in academic entrepreneurship and high-tech clustering is MIT and the Route 128/Boston region. Silicon Valley centered around Stanford University was originally a fast follower and only later emerged as a scientific and industrial hotspot. Several technology and innovation waves, have shaped Silicon Valley over all the years. The initial regional success of Silicon Valley started with electro-technical instruments and defense applications in the 1940s and 1950s (represented by companies as Litton Engineering and Hewlett & Packard). In the 1960s and 1970s, the region became a national and international leader in the design and production of integrated circuit and computer chips, and as such became identified as Silicon Valley (e.g. Fairchild Semiconductor, and Intel). In the 1970s and 1980s, Silicon Valley capitalised further on the development, manufacturing and sales of the personal computer and workstations (e.g. Apple, Silicon Graphics and SUN), followed by the proliferation of telecommunications and Internet technologies in the 1990s (e.g. Cisco, 3Com) and Internet-based applications and info-mediation services (e.g. Yahoo, Google) in the late 1990s and early 2000s. When the external and/or internal conditions of its key industries change, Silicon Valley seemed to have an innate capability to restructure itself by a rapid and frequent reshuffling of people, competencies, resources and firms. To characterise the demise of one firm leading, directly or indirectly, to the formation of another and the reconfiguration of business models and product offerings by the larger companies in emerging industries, Bahrami & Evans (2000) introduced the term `flexible recycling.? This dynamic process of learning by doing, failing and recombining (i.e. allowing new firms to rise from the ashes of failed enterprises) is one of the key factors underlying the dominance of Silicon Valley in the new economy.
    Keywords: Academic entrepreneurship;Flexible recycling;Clusters;Silicon Valley;Stanford University;MIT;Route 128;ICT;Networks;
    Date: 2007–10–30
  7. By: Celeste Amorim Varum (Universidade de Aveiro); Carlos Pinho (Universidade de Aveiro)
    Abstract: The present paper is conducted under the research project “Enterprise of the Future: Trends and Scenarios towards Competitiveness” which attempts to disclosure determinants of future enterprise competitiveness. Innovation is not only a must today but also an imperative in future competitiveness scenarios. In modern evolutionary economics it is argued that sector-specific factors are one of the key factors explaining innovative behaviour and performance of firms. Several contributions have pointed that industries largely differ in terms of knowledge base and technological sources, opportunities and appropriation of innovative activities, technological trajectories and firms’ strategies. Using as background Pavitt’s taxonomy, this paper explores the nature, extent and sources of variety of innovation in the manufacturing industry, aiming at identifying common patterns across industries, and sectoral patterns across countries. This paper presents evidence based on the aggregated results of the last IV Community Innovation Survey released by EUROSTAT (CIS4), for which data is available for a number of industries and countries.
    Keywords: innovation, manufacturing industry, Community Innovation survey CIS
    JEL: L6 O3
    Date: 2007–11
  8. By: Burgers, J.H.; Bosch, F.A.J. van den; Volberda, H.W. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Managing through projects has become important for generating new knowledge to cope with technological and market discontinuities. This paper examines how the fit between the creation of technological and market knowledge and important project management characteristics, i.e. project autonomy and completion criteria, influences the success of new business development (NBD) projects. In-depth longitudinal case research on NBD-projects commercialised during the period 1993-2003 in the consumer electronics industry highlights that project management characteristics focusing only on the creation of technological knowledge contributed to the failure of those NBD-projects that required new market knowledge as well. The findings indicate that senior management support and engaging in an alliance with partners possessing complementary market knowledge can offset this misalignment of the organisation of NBD-projects.
    Keywords: project management;new business development;exploitation-exploration;knowledge;new product development;strategic alliances;sales force;
    Date: 2007–10–30
  9. By: Luigi Guiso; Raoul Minetti
    Abstract: When firms borrow from multiple concentrated creditors such as banks they appear to differentiate their allocation of borrowing. In this paper, we put forward hypotheses for this borrowing pattern based on incomplete contract theories and test them using a sample of small U.S. firms. We find that firms with more valuable, more redeployable, and more homogeneous assets differentiate borrowing more sharply across their concentrated creditors. We also find that borrowing differentiation is inversely related to restructuring costs and positively related to firms’ informational transparency. This evidence supports the predictions of incomplete contract theories: the structure of credit relationships appears to be used as a device to discipline creditors and entrepreneurs, especially during corporate reorganizations.
    Keywords: Credit Relationships, Multiple Creditors, Borrowing Allocation
    JEL: G21 G33 G34
    Date: 2007
  10. By: Celeste Amorim Varum (Universidade de Aveiro); Leonildo Monteiro (Universidade de Aveiro)
    Abstract: Product innovation is a subtle process, frequently leading to shifts in the competitiveness of firms. Developing products in an environment undergoing technological change is given to frequent failure, even in well-established and sophisticated organizations. In order to tackle competitiveness and to deal with innovation uncertainty, firms develop diverse innovation processes. Two modes of innovation are suggested in recent literature: 1) Science, Technology and Innovation (STI) mode, which is based on the production and use of codified scientific and technical knowledge; and 2) Doing, Using and Interacting (DUI) mode, which relies on informal processes of learning and experience-based know-how. In this paper we analyse product innovation at firm level. We perform an exploratory analysis in four leading equipment and machinery producers from the Aveiro region, in Portugal. Doing so, we explore the main features of the capital goods’ industry with implications for innovation, and analyse the dominant uncertainties associated to the innovation process. and modes of innovation. Key findings include the complete absence of DUI mode in the cases studied, and even a low learning characteristic in one company. The paper concludes by considering the implications for firms’ competitiveness and for innovation policy.
    Keywords: modes of innovation, uncertainties, R&D, capital goods, SME
    JEL: O32 L6
    Date: 2007–11
  11. By: Paolo Di Martino; Michelangelo Vasta
    Abstract: During the Twentieth century, Italian joint-stock companies remained relatively small and tended to die young. This fact constrained the development of the full potential of the Italian industry, as small-dimensioned companies struggled to implement the most efficient technologies and managerial techniques. This paper analyses this problem by looking at the functioning of insolvency procedures. Using quantitative and qualitative evidence, we show how various devices that progressively appeared on the scene failed in providing efficient solutions to re-start worthy companies. Insolvency procedures thus remained liquidation-prone, a factor that contributes to explain the peculiarity and the limits of Italian industrial capitalism.
    JEL: N44 N84
    Date: 2007–10
  12. By: Jen Baggs; Eugene Beaulieu; Loretta Fung
    Date: 2007–10–26
  13. By: Glavan, Bogdan
    Abstract: Poverty traps occurs when agents fail to coordinate their actions to achieve the optimal allocation of resources. It is argued that this phenomenon makes economic convergence impossible and keeps agents in a poverty trap from which they cannot escape unless a massive and coordinated industrial policy is implemented. This analysis shows that the literature on coordination failures has overemphasized the significance of market failure. It argues that coordination is possible and profitable in a free market system. State intervention is responsible for the systematic misallocation of resources (discoordination), in general, and for poverty traps in particular.
    Keywords: coordination failure; poverty trap; industrial policy; market system
    JEL: O1 P5 F5
    Date: 2007–11–14

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.