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on Entrepreneurship |
| By: | Cécile Carpentier; Jean-François L'Her; Jean-Marc Suret |
| Abstract: | In Canada, a venture stock market lists micro-capitalization firms that are at a pre-revenue stage, and competes with both formal and informal venture capital (VC). This market provides a higher rate of return and is able to provide seven times more new listings to the main exchange than the VC market. We do not evidence post-graduation underperformance, and indeed, new listings on a main exchange can succeed even if they originate from a public venture market. Our results do not support the theoretical arguments that confer specific advantages on the VCs with regard to screening, monitoring and exiting new ventures. <P>Au Canada, un marché boursier de capital de risque inscrit des entreprises à très faible capitalisation, avant même qu’elles ne rapportent des revenus. Ce marché est en concurrence directe avec le capital de risque institutionnel et informel. Le taux de rendement de ce marché boursier est supérieur à celui du capital de risque, et ce marché amène sept fois plus d’entreprises au marché principal, par « graduation », que ne le fait le capital de risque à la suite d’émissions initiales. Nous n’observons aucune performance anormale négative à la suite des graduations. Nos résultats indiquent que le capital de risque canadien ne semble pas disposer des avantages que la théorie attribue généralement à ce type d’investisseurs en matière de sélection des projets, de supervision ou encore de capacité de disposition des placements. |
| Keywords: | public venture capital, start-up, graduation, success rate, stock exchange, capital de risque, démarrage, graduation, marché boursier |
| Date: | 2008–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2008s-12&r=ent |
| By: | Wendy Dobson (Institute for International Business, Rotman School of Management); A.E. Safarian (Rotman School of Management) |
| Abstract: | How is the Chinese economy making the transition from imitation to innovation as the source of sustained long term growth? We address this question using the evolutionary approach to growth in which institutions support technical advance and enterprises develop capabilities to learn and innovate. Growth is seen as a series of disequilibria in which obstacles to innovation such as outdated institutions and weak incentive systems can cause growth to slow. We review existing literatures on institutions and firm behavior in China and compare these findings with those of our survey of Chinese firms in 2006. Industry and firm studies in the literature show how productivity is rising because of firm entry and exit rather than the adoption of new technologies. A striking feature both of the studies in the literature and our survey is the increasing competitive pressures on firms that encourage learning. Our survey of privately owned small and medium enterprises in five high tech industries in Zhejiang province found a market-based innovation system and evidence of much process and some product innovations. These enterprises respond to growing product competition and demanding customers with intensive internal learning, investment in R&D and a variety of international and research linkages. |
| JEL: | O23 H20 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ttp:iibwps:11&r=ent |
| By: | Krug, B.; Hendrischke, H. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | We start our exploration of China’s institutional change by asking what the China experience can tell us about institutional economics and organization theory. We point to under-researched areas such as the formation of firms and the interplay between firms and local politics. Our findings support the dynamic capability approach which concentrates on activities rather than on pre-defined groups and models institution building as a co-operative game between the local business community and local government agencies. We find that the analysis of firms has to set in before they are formed by entrepreneurs and networks and we identify political management as a core competence of these two groups. While this contradicts the conventional view of clientelism or principle agent relations as institutional building blocks, we don’t propose competing models. Instead, we suggest focusing on a dynamic process in which the role of players can change. Faced with the spontaneous emergence of institutions, our concept of institutional architecture captures the fact that the two models can co-exist side by side and that, once the dichotomy between formal and informal institutions is given up, there can be a transition from local patron-client relations to local business-state coordination. |
| Keywords: | institutional change;entrepreneurship;networks;dynamic capabilities;diversity and convergence of institutions |
| Date: | 2008–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:1765012191&r=ent |
| By: | Erzo G.J. Luttmer |
| Abstract: | Given a common technology for replicating blueprints, high-quality blueprints will be replicated more quickly than low-quality blueprints. If quality begets quality, and firms are identifed with collections of blueprints derived from the same initial blueprint, then, along a balanced growth path, Gibrat’s Law holds for every type of firm. A firm size distribution with the thick right tail observed in the data can then arise only when the number of blueprints in the economy grows over time, or else firms cannot grow at a positive rate on average. But when calibrated to match the observed firm entry rate and the right tail of the size distribution, this model implies that the median age among firms with more than 10,000 employees is about 750 years. The problem is Gibrat’s Law. If the relative quality of a firm’s blueprints depreciates as the firm ages, then the firm’s growth rate slows down over time. By allowing for rapid and noisy initial growth, this version of the model can explain high observed entry rates, a thick-tailed size distribution, and the relatively young age of large U.S. corporations. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmwp:657&r=ent |
| By: | Lewis, Vivien |
| Abstract: | Business cycle models with sticky prices and endegenous firm entry make novel predictions on the transmission of shocks through the extensive margin of investment. This paper tests some of these predictions using a vector autoregression with model-based sign restrictions. We find a positive and significant response of firm entry to expansionary shocks to productivity, aggregate spending, monetary policy and entry costs. The estimated response to a monetary expansion does not support the monetary policy transmission mechanism proposed by the model. Insofar as firm startups require labour services, wage stickiness is needed to make the signs of the model responses consistent with the estimated ones. The shapes of the empirical responses suggest that congestion effects in entry make it harder for new firms to survive when the number of startups rises. |
| Keywords: | firm entry, business cycles, VAR |
| JEL: | E30 E32 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:7217&r=ent |
| By: | Shi Qi |
| Date: | 2008–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:122247000000002137&r=ent |
| By: | Edoardo Gaffeo; Corrado di Guilmi; Mauro Gallegati; Alberto Russo |
| Abstract: | In this paper we make use of firm-level data for a sample of European countries to prove the existence of a positive linear relationship between the mean and the variance of firms’ size, an empirical regularity known in mathematical biology as the Taylor power law. A computerized experiment is used to show that the estimated slope of the linear relationship can be fruitfully employed to discriminate among alternative theories of firms’ growth. |
| Keywords: | Taylor power law; Firm size distribution; Stochastic growth |
| JEL: | L1 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpde:0805&r=ent |
| By: | Joshua Abor |
| Abstract: | This study compares the capital structures of publicly quoted firms, large unquoted firms, and small and medium enterprises (SMEs) in Ghana. Using a panel regression model, the paper also examines the determinants of capital structure decisions among the three sample groups. The results show that quoted and large unquoted firms exhibit significantly higher debt ratios than do SMEs. The results did not show significant difference between the capital structures of publicly quoted firms and large unquoted firms. The results reveal that short-term debt constitutes a relatively high proportion of total debt of all the sample groups. The regression results indicate that age of the firm,size of the firm, asset structure, profitability, risk and managerial ownership are important in influencing the capital structure decisions of Ghanaian firms. For the SME sample, it was found that factors such as the gender of the entrepreneur, export status, industry,location of the firm and form of business are also important in explaining the capitalstructure choice. The study provides useful recommendations for policy direction and management of these firms. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:aer:rpaper:rp_176&r=ent |