nep-ent New Economics Papers
on Entrepreneurship
Issue of 2008‒01‒26
28 papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Entrepreneurial Culture and its Effect on the Rate of Nascent Entrepreneurship By Sander Wennekers; Kashifa Suddle; Sjoerd Beugelsdijk
  2. Entrepreneurial diversity and economic growth By André van Stel; Ingrid Verheul
  3. Modelling latent and actual entrepreneurship By Roy Thurik; Isabel Grilo; Peter van der Zwan
  4. Overoptimism among entrepreneurs in new ventures: the role of information and motivation By Ingrid Verheul; Martin Carree
  5. A conversation with 590 nascent entrepreneurs By Jeffrey R. Campbell; Mariacristina De Nardi
  6. Entrepreneurship and innovation By Ro Braaksma; Joris Meijaard
  7. Drivers of entrepreneurial aspirations at the country lever: the role of start-up motivations and social security By Marco van Gelderen; Roy Thurik; Jolanda Hessels
  8. Does self-employment reduce unemployemt? By André van Stel; Roy Thurik; David Audretsch; Martin Carree
  9. Entrepreneurial exit in real and imagined markets By Roy Thurik; Erik Stam; Peter van der Zwan
  10. Social security arrangements and early-stage entrepreneurial activity By André van Stel; Peter Brouwer; Sander Wennekers; Jolanda Hessels
  11. Ambitious Nascent Entrepreneurs and National Innovativeness By Jolanda Hessels; Kashifa Suddle
  12. High-Growth Support Initiatives By Jolanda Hessels; Kashifa Suddle
  13. The relevance of size, gender and ownership for performance-related pay schemes By Jan de Kok; A. Roepers
  14. New Ventures' Export Orientation: Outcome and Source of Knowledge Spillovers By André van Stel; Jolanda Hessels; Dirk De Clerq
  15. Telecommunications, the Internet and Mr Schumpeter By Jackie Krafft
  16. The relationship between knowledge management, innovation and firm performance: evidence from Dutch SMEs By André van Stel; Mickey Folkeringa; Joris Meijaard; Lorraine Uhlaner
  17. Entry and exit of firms in a global economy: a cross-country and industry analysis By Colantone, Italo; Sleuwaegen, Leo
  18. Creative industries By Jeroen de Jong; Pieter Fris; Erik Stam
  19. The Role of Export-Driven New Ventures in Economic Growth: A Cross-Country Analysis By André van Stel; Jolanda Hessels
  20. Labor market transitions and self-employment By Ellen Rissman
  21. The firm and its governance along the industry life cycle By Jackie Krafft; Jacques Laurent Ravix
  22. The Impact of Financial Constaints on Firm Survival and Growth By Patrick Musso; Stefano Schiavo
  23. Assessing and measuring the equity gap and the equity requirements for innovative SMEs By Elisabetta Gualandri; Valeria Venturelli
  24. Product Innovation and Survival in a High-Tech Industry By Roberto Fontana; Lionel Nesta
  25. Employment Growth of New Firms By Elisabeth Garnsey; Petra Gibcus; Erik Stam; Jennifer Telussa
  26. Knowledge management, innovation orientation and innovation performance By Lorraine Uhlaner; Haibo Zhou; Sita Tan
  27. The relationship between economic development and business ownership revisited By André van Stel; Roy Thurik; Sander Wennekers; Martin Carree
  28. Competition and innovative intentions: A study of Dutch SMEs By Jeroen de Jong

  1. By: Sander Wennekers; Kashifa Suddle; Sjoerd Beugelsdijk
    Abstract: This paper investigates the relationship between entrepreneurial culture and the rate of nascent entrepreneurship. Embedded in trait research, we develop a new composite measure of entrepreneurial culture using data from the World Values Survey. To corroborate the results obtained when regressing this newly developed measure on 2002 levels of nascent entrepreneurship in a sample of 28 countries, we also employ existing indicators of entrepreneurial culture, i.e. McClelland’s N achievement index (1961), Granato, Inglehart and Leblang’s Achievement motivation index (1996), Lynn’s Competitiveness index (1991), and GLOBE’s (2004) performance orientation measure. In contrast with the existing measures we find a significant positive effect of our new measure of entrepreneurial culture, leading us to i) discuss the strengths and weaknesses of these existing measures, and ii) interpret the wider implications of our findings for the research into the role of entrepreneurial culture in explaining international differences in entrepreneurship rates.
    Date: 2007–12–20
  2. By: André van Stel; Ingrid Verheul
    Abstract: We investigate the impact of entrepreneurial diversity on national economic growth. More specifically, using data for 36 countries participating in the Global Entrepreneurship Monitor, we investigate whether the impact of entrepreneurial activity is different for different sociodemographic groups. Diversity is measured 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 highly developed countries the contribution of younger entrepreneurs is more important. We do not find evidence for a differential contribution of female and male entrepreneurs.
    Date: 2007–01–10
  3. By: Roy Thurik; Isabel Grilo; Peter van der Zwan
    Abstract: The determinants of latent (i.e., desired) and actual entrepreneurship are analysed in two ways with nearly 8,000 observations from the 2004 “Flash Eurobarometer survey on Entrepreneurship” covering the 25 European Union member states and the United States. Both methods lead to new and extensive insights in the interrelation of both concepts. First, latent and actual entrepreneurship are investigated simultaneously in a bivariate probit setting. The perception of lack of financial support, the perception of administrative complexities, and the perception of lack of sufficient information do not have significant direct impacts on latent entrepreneurship. This points at indirect effects of these variables on latent entrepreneurship via actual entrepreneurship. Second, four groups of individuals are distinguished, based on their involvement in both measures of entrepreneurship. The analysis enables us for example to discuss the determinants of ‘necessity entrepreneurship’. Results show that the perception of administrative complexities is a significant obstacle in setting up a business, irrespective of the declared preference for self-employment, while the perception of financial constraints does not have a significant influence. Also, necessity entrepreneurs are characterized by a relatively low education level compared to those who are neither latent nor actual entrepreneurs. Each model has its own merits. The multinomial model enables researchers to perform group-wise analyses, while the bivariate probit model makes is possible to take into account the importance of latent entrepreneurship without explicitly including latent entrepreneurship in the set of explanatory variables.
    Date: 2007–12–21
  4. By: Ingrid Verheul; Martin Carree
    Abstract: There are various reasons why some entrepreneurs may be more overoptimistic at the start of their ventures than others. We distinguish between four broad categories of determining factors and three areas of overoptimism (income, psychological burden and leisure time) and empirically investigate those for a sample of Dutch start-ups. The first category is information. We find that more specifically informed entrepreneurs are less likely to be overoptimistic while (general) educationincreases overoptimism. The second category is motivation. Entrepreneurs motivated by pull factors are found to be less overoptimistic than those who are ‘pushed’ to start a venture. The third category encompasses personal characteristics such as gender, age, having a life partner and access to other income. The fourth category of firm characteristics includes factors such as sector, take-over versus newly started business, and home-based versus separate business premises. We find little additional explanatory power of these personal and firm characteristics.
    Date: 2007–12–21
  5. By: Jeffrey R. Campbell; Mariacristina De Nardi
    Abstract: This paper summarizes interviews from 1998 with 590 individuals trying to create a business centered around five questions: “Who are you?”, “What are you trying to accomplish?”, “What have you and others put into the business?”, “What have you accomplished?”, “What remains to be done?” There is a great deal of heterogeneity across these Nascent entrepreneurs, but they tend to have more education than the general population. Growing up in a family in which one or both parents had a business does not seem to be an important determinant of entry into entrepreneurship for males, while it seems to be of some importance for females. Most of the nascent businesses are in retail and consumer services, and about 50 percent of nascent entrepreneurs expect to become employers within five years of the business’s birth. Most nascent entrepreneurs have already made personally-significant investments of time and money in their firms; and nearly all of them are saving for their firms out of non-business income. For about half of the sample, these investments have yielded a fully-specified product; and the remainder are still in the product development stage. Family and friends are an importance source of seed money for many Nascent Entrepreneurs. Formal credit markets have been requested for funds only by a minority of Nascent Entrepreneurs, and almost half of these applicants have been denied loans. About 40% of the Nascent Entrepreneurs believe that their businesses require significantly greater equity before they can attract external funds.
    Date: 2007
  6. By: Ro Braaksma; Joris Meijaard
    Abstract: This report provides an overview of recent facts and figures on start-ups in the Netherlands, techno start-ups in particular and the overall link between entrepreneurship and innovation.
    Date: 2007–12–20
  7. By: Marco van Gelderen; Roy Thurik; Jolanda Hessels
    Abstract: This paper investigates whether start-up motivations and the level of social security can explain entrepreneurial aspirations. We use country-level data from the Global Entrepreneurship Monitor (GEM) for the year 2005. We distinguish between the necessity motive, independence motive and increase wealth motive and look at entrepreneurial aspirations in terms of innovativeness, job growth expectations and export orientation. As an indicator of a country?s level of social security we take the social security contribution rate (for employer?s and employees) from the World Competitiveness Yearbook. Previous research has found a negative relationship between the level of entrepreneurial activity and social security contributions, suggesting that social security increases the opportunity costs for entrepreneurship. The results of this study complement these previous findings by indicating that social security contributions have a negative influence on the supply of ambitious entrepreneurship in terms of new product or service introductions, job growth and export orientation. Furthermore, our findings indicate that entrepreneurialaspirations in terms of job growth and export relate positively to the increase wealth motive, whereas no significant relationship is found between our aspiration variables and the independence and necessity motives. On the basis of our findings policy directions are presented for an entrepreneurial economy. This is an update of paper H200627.
    Date: 2007–10–16
  8. By: André van Stel; Roy Thurik; David Audretsch; Martin Carree
    Abstract: This paper investigates the dynamic relationship between self-employment and unemployment rates. On the one hand, high unemployment rates may lead to start-up activity of self-employed individuals (the 'refugee' effect). On the other hand, higher rates of self-employment may indicate increased entrepreneurial activity reducing unemployment in subsequent periods (the 'entrepreneurial' effect). This paper introduces a new two-equation vector autoregression model capable of reconciling these ambiguities and estimates it for data from 23 OECD countries between 1974 and 2002. The empirical results confirm the existence of two distinct relationships between unemployment and self-employment: the 'refugee' and 'entrepreneurial' effects. We also find that the 'entrepreneurial' effects are considerably stronger than the 'refugee' effects. This is an updated version of SCALES-paper N200504.
    Date: 2007–10–12
  9. By: Roy Thurik; Erik Stam; Peter van der Zwan
    Abstract: Market selection is a central, yet under explored phenomenon. Selection takes place after anew variation is introduced, for example by entrepreneurs starting new businesses. These entrepreneurs also select ex-ante whether an opportunity should be turned into a business, and ex-post to close down their business due to selection experienced in the market place. This paper compares the role of personal and ecological factors as determinants of these two types of selection: exit in real and in imagined markets in a cross-section of European countries and the US. Entrepreneurial personality characteristics like risk tolerance and internal locus of control are not related to exit directly. Indirectly, an entrepreneurial personality dampens the effect of environmental constraints on exit. Other personal characteristics like educational level, having self-employed parents and age are directly related to entrepreneurial exit. Ecological characteristics, like perceived environmental constraints, urbanization, and welfare state all have positive relations with exit. There are significant differences in the explanation of exit in real and imagined markets. Personal characteristics are more often related to exit in real markets than in imagined markets. Cognitive and labour market mechanisms seem to be more relevant for exit in real markets, than for giving up entrepreneurial intentions and efforts.
    Date: 2007–12–21
  10. By: André van Stel; Peter Brouwer; Sander Wennekers; Jolanda Hessels
    Abstract: This exploratory study defines a number of propositions regarding the relation between social security arrangements and the rate of early-stage entrepreneurial activity at the country level. We state that in investigating this relation it may be relevant to distinguish between social security contributions paid by employers and employees, and to look at micro-based indicators (replacement rates) for the benefits an individual is entitled to in case of unemployment and illness. Furthermore, we state that it may be especially relevant to focus on the social security position of self-employed relative to the social security position of employees. Using a sample of countries participating in the Global Entrepreneurship Monitor, we explore how various measures of entrepreneurial activity are related to various measures of social security arrangements. Our analysis using aggregate indicators shows that the height of employer social security contributions negatively influences entrepreneurial activity at the macro level, but that the height of employee contributions has no impact. The results of our analysis using micro-level based indicators suggest that the replacement rate of employees has a significantly negative influence on the level of early-stage entrepreneurship at the macro level.
    Date: 2007–09–10
  11. By: Jolanda Hessels; Kashifa Suddle
    Abstract: Abstract This study investigates whether ambitions amongst nascent entrepreneurs regarding innovativeness matter for the national level of innovativeness. We link ambitious nascent entrepreneurship to the national level of innovativeness for 36 countries, using data from the Global Entrepreneurship Monitor. We find a significant positive relation between the level of nascent entrepreneurs who intend to offer a product or service that is new to all or to some of their customers and the national technology level. This may suggest that ambitions to offer new products or services tend to contribute to higher levels of competition and knowledge spillovers, and consequently to the emergence of highly innovative economies. Our results also suggest that this relationship is less strong in poor countries.
    Date: 2007–01–03
  12. By: Jolanda Hessels; Kashifa Suddle
    Abstract: New firms create new jobs. Many studies have shown that SMEs do play an important role in job creation. Others state that this role is overestimated due to the high job destruction rate among SMEs. Still, the net effect of new firms on employment creation can remain positive, especially when a there are fast growing firms among these new firms. In consequence, there has been increasing policy interest in new firm formation, and especially in highgrowth firms. However, even though governments worldwide are increasingly aware of the importance of high-growth entrepreneurship, it is difficult to design effective policies for this group, because this group experiences specific bottlenecks. In this report, we describe the available policy and support initiatives specifically aimed at supporting rapidly growing intrepreneurial firms in the Netherlands. These initiatives are directed at the various stages of the firm life cycle, especially the creation, start-up, early growth and stable growth. Furthermore, we also describe a number of high-growth support initiatives in other countries.
    Date: 2007–03–01
  13. By: Jan de Kok; A. Roepers
    Abstract: With performance-related pay, the reward for an employee is partly dependent upon its own performance and/or on the performance of the organisation. In the Netherlands, performance-related pay is being implemented in SMEs an increasing scale. Currently, about 25% of Dutch SMEs make use of some kind of performance-related pay scheme, which may include profit sharing, bonuses, gratuities and stock options.  The aim of this study is to increase our understanding of the usage of performance-related pay schemes in Dutch small and medium-sized enterprises. In particular, we examine whether firm size, ownership structure, and gender of the entrepreneur and employees predict the presence of performance-related pay schemes. The results show that larger SMEs are more likely to use performance-related pay than smaller SMEs (as can be expected). We also find strong support for the presence of a gender effect. The results indicate that for male entrepreneurs, the use of performance-related pay is independent of the gender composition of the work force. For female entrepreneurs, we find that the usage of performance-related pay increases with the share of male employees. This relationship is such, that for firms where more than 70% of the workforce is male, female entrepreneurs are more likely to apply performance-related pay then male entrepreneurs. A possible explanation is that female entrepreneurs are more inclined to take the preferences of their employees into account when they determine the compensation scheme of their enterprise. Finally, the ownership structure also seems to matter. The results suggest that we should differentiate between (at least) three different ownership structures: single-owned and managed firms, family firms (firms with multiple owners that have family ties between them), and multiple-owned non-family firms. Once we do so, we find that single-owned and managed firms are just as likely to use performance-related pay schemes as family firms. Both types of firms use performance-related pay significantly less often than multiple-owned non-family firms.  
    Date: 2007–12–21
  14. By: André van Stel; Jolanda Hessels; Dirk De Clerq
    Abstract: In this paper we draw on knowledge spillover literature to suggest that a country’s proportion of exportoriented new ventures, compared to its total number of new ventures, represents an outcome of knowledge spillovers (export spillovers) that stem from foreign direct investment (FDI) and international trade, as well as a source of knowledge spillovers (entrepreneurship spillovers) that positively influence the country’s total level of entrepreneurial activity. We distinguish between higher-income and lower-income countries, because the latter are less integrated into the world economy. To test the hypotheses, we use macro-level data from 34 countries during the period 2002–2005. After controlling for relevant factors such as size of the domestic market and industry structure, we find that the relationship between FDI and international trade on the one hand and a country’s proportion of export-oriented new ventures on the other differs for higherand lower-income countries. In addition, a country’s proportion of export-oriented new ventures affects the subsequent emergence of new businesses. These findings have important implications for research and practice. This is an update of paper H200619.
    Date: 2007–11–16
  15. By: Jackie Krafft (GREDEG - Groupe de recherche en Droit Economie Gestion - Université de Nice Sophia-Antipolis)
    Abstract: The purpose of this chapter is thus to understand the ups and downs of this industry, and especially to identify in Schumpeter’s vision of capitalism what could be the determinants of such an evolution. In a nutshell, the paper will investigate to what extent the key notions of Schumpeter’s analysis – which include economic development and creative destruction, entrepreneurship and large firms, patterns of industry dynamics and evolution, competition as a process, and invention and innovation – can shed a new light on the evidence of the rise and decay of the telecommunications industry viewed as an exemplifying and central figure of modern economic capitalism.
    Date: 2007
  16. By: André van Stel; Mickey Folkeringa; Joris Meijaard; Lorraine Uhlaner
    Abstract: This article investigates the relationship between knowledge management (KM), innovation and firm performance of smaller firms (less than 100 employees), based on a panel of more than 400 Dutch firms. Regression analyses explain the variations in sales turnover growth from various measures of KM strategies. We distinguish between KM input, throughput and output (or innovation) strategies. We find that KM input strategies related to knowledge acquisition are positively related to sales turnover growth. In contrast, we do not find a relation between KM throughput and KM output (innovation) measures and firm performance. The results emphasize the importance of both knowledge absorption and knowledge creation to the success of innovative efforts in small firms. This is an updated version of Scales-paper N200322.
    Date: 2007–01–24
  17. By: Colantone, Italo; Sleuwaegen, Leo (Vlerick Leuven Gent Management School)
    Abstract: This paper examines the impact of international trade on firm entry and exit in Europe. The results point to strong displacement exit and less creative replacement entry in industries characterized by increasing import competition Moreover, the evidence suggests strong selection and higher entry barriers in industries characterized by higher openness through the export channel. The negative effects of trade openness lose importance if the increasing trade exposure concerns intra-industry trade, mainly coupled with international sourcing within the industry.
    Keywords: Globalization, Exit, Entry
    Date: 2008–01–11
  18. By: Jeroen de Jong; Pieter Fris; Erik Stam
    Abstract: Creative industries are nowadays central in many policies to stimulate the economic development of cities, regions and advanced capitalist economies in general. This paper contributes to the  creative industries literature in two respects. First, we empirically explore if high shares of creative industries in regions go together with one particular aspect of regional economic development, namely firm entry rates. Drawing on Dutch trade register data over a six-year period, it is concluded that at the level of municipalities there is indeed a connection between the share of creative industries and firm entry, even after controlling for the sizes of municipalities, and no matter if creative industries are defined broadly or narrowly. Second, the paper analyses if firms in creative industries are heterogeneous in terms of business processes and their contribution to regional firm entry. Drawing on previous work four creative domains are identified: arts, media and entertainment, creative business services and, at the periphery, knowledge intensive business services. After analysing survey data of 4,746 Dutch SMEs, we find that firms across these domains are distinct in their use of the surveyed business practices: innovation, strategy and marketing, and human resources practices. Especially knowledge intensive services firms are deviant. For the connection with firm entry rates, it appears that high shares of firms in the arts and knowledge intensive business services are significantly connected with regional firm entry rates, while media and entertainment and creative business services remain insignificant. Implications for practitioners and future research are discussed.
    Date: 2007–12–20
  19. By: André van Stel; Jolanda Hessels
    Abstract: We investigate the relationship between a country’s prevalence of new ventures and its rate of economic growth, while distinguishing between export-oriented new ventures and domestic new ventures. It is generally acknowledged that new venture creation as well as export activity may both be important strategies for achieving national economic growth. However, to our knowledge no attempt has been made to empirically investigate the role of export-driven new ventures in economic growth. We focus on the national level and use data from the Global Entrepreneurship Monitor for a sample of 36 countries. Our results suggest that a country’s prevalence of export-driven new ventures is significantly positively related to economic growth, whereas the prevalence of new ventures that focus exclusively on domestic market sales shows no significant relation to national growth.
    Date: 2007–12–21
  20. By: Ellen Rissman
    Abstract: The self-employed are a heterogeneous group. Some are self-employed because they are good at it, while others are self-employed because they cannot find a better paying salaried job. Data from the CPS for prime age males show that workers are almost twice as likely to enter self-employment from unemployment as from paid employment. Furthermore, almost 22% of workers exit self-employment within the year with most returning to paid employment. This paper develops a framework for examining transitions between the labor market states of unemployment, paid employment, and self-employment. The self-employed fall into two groups: those who continue to seek paid employment in the wage and salary sector and those whose value from self-employment exceeds the expected value from continued search. The calibrated model is used to examine the effects of business startup costs on labor market transition rates. Doubling startup costs has very little impact on these rates.
    Date: 2007
  21. By: Jackie Krafft (GREDEG - Groupe de recherche en Droit Economie Gestion - Université de Nice Sophia-Antipolis); Jacques Laurent Ravix (GREDEG - Groupe de recherche en Droit Economie Gestion - Université de Nice Sophia-Antipolis)
    Abstract: The paper explores this issue by reconciling two trends of literature that are generally disconnected – the industry life cycle (ILC) on the one hand and the governance of large and small firms on the other – to generate results on how the governance of the firm may look like over the industry life cycle. When the two bodies of literature are connected, the immediate result is that the governance of small, young and innovative firms in the early stages of the life cycle should be different from the governance of large, mature and routinized firms. Small young and innovative firms should benefit of a mode of governance based on cooperation and assistance to stimulate innovation, while large mature and routinized firms should be imposed a mode of governance based on control of the manager’s action in the interests of shareholders. We argue that this immediate result can only be but preliminary, since age and size are not necessarily the key determinants of innovative behaviours of firms. In the ILC, small new firms engage product innovations, while large mature firms continue the process of innovation by investing in process capacities . In that perspective, imposing these firms a governance based on control may not be the optimal solution, since we know that this mode of governance favours short term choices that may be detrimental to the development of innovation. What is more important is thus to consider how the innovative behaviour of firms can be maintained in phases of growth and decline of the industry. In the paper, we advance the idea that new principles of governance should be proposed for innovative corporations (large or small) as a distinctive category.
    Date: 2008
  22. By: Patrick Musso (University of Nice-Sophia Antipolis); Stefano Schiavo (Observatoire Français des Conjonctures Économiques)
    Abstract: We propose a new approach for identifying and measuring the degree of financial constraint faced by firms and use it to investigate the effect of financial constraints on firm survival and development. Using panel data on French manufacturing firms over the 1996-2004 period, we find that (i) financial constraints significantly increase the probability of exiting the market, (ii) access to external financial resources has a positive effect on the growth of firms in terms of sales, capital stock and employment, (iii) financial constraints are positively related with productivity growth in the short-run. We interpret this last result as the sign that constrained firms need to cut costs in order to generate the resources they cannot raise on financial markets.
    Keywords: Financial constraints; Firm growth; Firm survival
    JEL: E44 G32 L25
    Date: 2007
  23. By: Elisabetta Gualandri; Valeria Venturelli
    Abstract: This paper sets out to critically review the different approaches developed for the assessment and measurement of the equity gap for innovative firms, mainly SMEs, extending the quantitative approaches for equity gap developing a demand-side model that allows to predict the future demand for equity in precise terms. Through the application of an original model to a sample of Italian firms, we find that, the amount of equity needed, expressed in absolute terms, is on average tiny (147.3 K euro). Moreover, the size of the additional equity requirement is clearly influenced by the role of the current debt. The results of the cluster analysis confirm that the degree of innovation cannot be considered the main discriminating factor when it comes to the differences in equity requirement per unit of marginal sale; while the regression analysis reveals the pivotal role played by the enterprise’s year of foundation.
    Keywords: Finance; Equity gap; Innovative SMEs
    JEL: G24 M13 O16 O38 R58
    Date: 2008–01
  24. By: Roberto Fontana; Lionel Nesta
    Date: 2007
  25. By: Elisabeth Garnsey; Petra Gibcus; Erik Stam; Jennifer Telussa
    Abstract: This paper provides an overview of empirical studies on employment growth in new firms and offers a systematic analysis of new empirical data to address the methodological issues identified. Using a longitudinal database of 354 firms over their first ten years, we examine factors associated with new firm growth in terms of R&D, inter-firm alliancing, new product development, and exporting; these are activities that have been identified as denoting dynamic capabilities. The empirical evidence gives some evidence for the positive association between dynamic capabilities and new firm growth. Inter-firm alliancing is the only indicator of dynamic capabilities that has a positive effect on new firm growth. No moderating effect on dynamic capabilities and growth could be seen to be exerted by the level of human capital and/or firm resources. Environmental dynamism – assumed to be highly relevant in the dynamic capability approach – is not revealed to be a moderating factor affecting the relationship between dynamic capabilities and new firm growth.
    Date: 2007–12–20
  26. By: Lorraine Uhlaner; Haibo Zhou; Sita Tan
    Abstract: Western economies are increasingly viewed as knowledge-driven (Audretch and Thurik, 2001, 2004). Knowledge plays a crucial role in determining firm innovation capability and in enhancing working life quality of knowledge workers (Corso, Martini, Pelligrini, and Paolucci, 2001). Previous studies show that knowledge is managed in a different manner in SMEs. It is identified that knowledge is created, shared, transferred and applied via people based mechanisms in SMEs. Although research and policy interest in knowledge management is beginning to grow for SMEs (Sparrow, 2001; Wong, & Radcliffe, 2000), still relatively limited attention has been paid to understand the specifics of knowledge management issues for SMEs and to KM’s contribution to innovation performance in particular. Furthermore, most of studies are conducted by using methods on either qualitative case studies or very small samples. The aim of this study is to provide a quantitative insight of the relationship between KM and innovation performance of SMEs based on a large sample of Dutch SMEs, as well as the role of innovation orientation in this relationship. Our findings indicate that knowledge management- external acquisition and internal sharing- contribute positively to exploratory innovation performance of a firm. A full mediated effect of innovation orientation is identified in the relationship between external acquisition and exploratory innovation performance. We discuss how KM contributes to innovation performance, using the perspective of absorptive capacity. Based on a literature review on absorptive capacity, an implicit relationship between knowledge management practices and building a firm’s absorptive capacity is identified.
    Date: 2007–12–21
  27. By: André van Stel; Roy Thurik; Sander Wennekers; Martin Carree
    Abstract: This paper revisits the two-equation model of Carree, van Stel, Thurik and Wennekers (2002) where deviations from the 'equilibrium' rate of business ownership play a central role determining both the growth of business ownership and that of economic development. Two extensions of the original setup are addressed: using longer time series of averaged data of 23 OECD countries (up to 2004) we can discriminate between different functional forms of the 'equilibrium' rate and we allow for different penalties for being above or under the 'equilibrium' rate. The additional data do not provide evidence of a superior statistical fit of a U-shaped 'equilibrium' relationship when compared to an L-shaped one. There appears to be a growth penalty for having too few business owners but not so for having too many.
    Date: 2007–02–14
  28. By: Jeroen de Jong
    Abstract: This paper explores the complex relationship between competition and innovation. Traditional measures of competition using industry statistics are often challenged andfound wanting. This paper distinguishes between three types of competitive forces: internal rivalry among incumbent firms in an industry, bargaining power of suppliers,and bargaining power of buyers. Using survey data from 2,281 Dutch firms, we apply new perception-based measures for these competitive forces to explore how competition relates to firms innovative intentions. We also investigate the influence of innovation strategy as a contingency variable. Results show that specific innovative intentions, i.e. to invest in product and process innovation, are related to different competitive forces. Process innovation is correlated with the bargaining power of suppliers, while intentions to invest in product innovation are associated with buyer power. Finally, intended product innovation is related to internal rivalry, but only when firms have no innovation strategy.
    Date: 2007–05–30

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