nep-ent New Economics Papers
on Entrepreneurship
Issue of 2008‒05‒31
fifteen papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Explaining International Differences in Entrepreneurship: The Role of Individual Characteristics and Regulatory Constraints By Silvia Ardagna; Annamaria Lusardi
  2. The Entrepreneurial Culture: Guiding Principles of the Self-Employed By Florian Noseleit
  3. "Trying" to be Entrepreneurial By Brannback, Malin; Krueger, Norris; Carsrud, Alan; Elfving, Jennie
  4. Past Experience, Cognitive Frames, and Entrepreneurship: Some Econometric Evidence from the Indian Pharmaceutical Industry By S. Bhaduri; H. Worch
  5. Mexican-American Entrepreneurship By Fairlie, Robert W.; Woodruff, Christopher
  6. Self-Employment Transitions among Older American Workers with Career Jobs By Michael D. Giandrea; Kevin E. Cahill; Joseph F. Quinn, Ph.D.
  7. Determinants of self-employment : the case in Vietnam By Thi Quynh Trang Do; Gérard Duchêne
  8. Business Constraints and Growth Potential of Micro and Small Manufacturing Enterprises in Uganda By Esther K. Ishengoma; Robert Kappel
  9. Small Business Taxation By Judith Freedman; Claire Crawford
  10. Government Sponsored versus Private Venture Capital: Canadian Evidence By James A. Brander; Edward J. Egan; Thomas F. Hellmann
  12. Growth Processes of Italian Manufacturing Firms By Alex Coad; Rekha Rao
  13. Intra-Sectoral Structural Change and Aggregate Productivity Development. A Robust Stochastic Nonparametric Frontier Function Approach By Jens J. Krüger
  14. A Theoretical Framework for Understanding University Inventors and Patenting By Devrim Göktepe
  15. Product Market Deregulation and the U.S. Employment Miracle By Ebell, Monique; Haefke, Christian

  1. By: Silvia Ardagna; Annamaria Lusardi
    Abstract: We use a micro dataset that collects information across individuals, countries, and time to investigate the determinants of entrepreneurial activity in thirty-seven developed and developing nations. We focus both on individual characteristics and on countries' regulatory differences. We show that individual characteristics, such as gender, age, and status in the workforce are important determinants of entrepreneurship, and we also highlight the relevance of social networks, self-assessed skills, and attitudes toward risk. Moreover, we find that regulation plays a critical role, particularly for those individuals who become entrepreneurs to pursue a business opportunity. The individual characteristics that are impacted most by regulation are those measuring working status, social network, business skills, and attitudes toward risk
    JEL: M13
    Date: 2008–05
  2. By: Florian Noseleit (Friedrich Schiller University Jena, School of Economics and Business Administration)
    Abstract: What makes entrepreneurs different? Using a cross-country dataset, this paper explores essential parts of the value system of entrepreneurs in Western European countries by comparing value items of the self-employed to that of the non-self-employed. The self- employed rate values higher that aim toward openness to change and self-enhancement. In turn, values related to conservation are considered less important.
    Keywords: Entrepreneurship, self-employment, values, culture, motivations, psychology
    JEL: L26 M13 Z1
    Date: 2008–05–02
  3. By: Brannback, Malin; Krueger, Norris; Carsrud, Alan; Elfving, Jennie
    Abstract: If we are to understand how entrepreneurial intentions evolve, we must embrace theories reflecting the inherent dynamics of human decision making. While the dominant model of entrepreneurial intentions remains invaluable, capturing the dynamics is necessary to advance our understanding of how intent becomes action. To this end, we offer Bagozzi’s Theory of Trying (TT) as a theory-driven model that assumes a dynamic pathway to intent. Rather than focusing on intentions toward a static target behavior, TT focuses on intentions toward a dynamic goal. To support this perspective, we offer striking new evidence that the emergent intentions process is indeed dynamic.
    Keywords: intentions; theory of trying; tipping points; reciprocal causation; entrepreneurship; entrepreneurial cognition
    JEL: M13
    Date: 2007–06
  4. By: S. Bhaduri; H. Worch
    Abstract: The theoretical literature identifies three important entrepreneurial dimensions, namely discovering new opportunities, responsiveness to uncertainty, and coordination of a firm. In the empirical literature, past experience has been identified as having an important influence on organizational behavior. This literature, however, focuses predominantly on the impact of experience on new opportunities using a resource-based view and human capital perspective. In contrast, we draw upon the cognitive science literature to argue that past experience shapes an entrepreneur’s cognitive frame, and, hence, influences entrepreneurship in a more holistic manner. We provide econometric evidence of the impact of past experience on all three entrepreneurial dimensions from the small scale Indian pharmaceutical enterprises.
    Keywords: Entrepreneurship, Past experience, Cognition, Informatione and knowledge, India pharmaceutical industry Length 42 pages
    JEL: D83 L26 M10
    Date: 2008–05
  5. By: Fairlie, Robert W. (University of California, Santa Cruz); Woodruff, Christopher (University of California, San Diego)
    Abstract: Although business ownership has implications for income inequality, wealth accumulation and job creation, surprisingly little research explores why Mexican-Americans are less likely to start businesses and why the businesses that they start are less successful on average than non-Latino whites. We conduct a comprehensive analysis of Mexican-American entrepreneurship using microdata from the 2000 U.S. Census, the matched and unmatched March and Outgoing Rotation Group Files of the Current Population Survey from 1994 to 2004, and the Legalized Population Survey (LPS). We find that low levels of education and wealth explain the entire gap between Mexican immigrants and non-Latino whites in business formation rates. Nearly the entire gap in business income for Mexican immigrants is explained by low levels of education and limited English language ability. Using the natural experiment created by the Immigration Reform and Control Act (IRCA), we find that legal status represents an additional barrier for Mexican immigrants. A conservative estimate suggests that the lack of legal status reduces business ownership rates by roughly seven-tenths of a percentage point for both men and women. Human and financial capital deficiencies are found to limit business ownership and business success among second and third-generation Mexican-Americans, but to a lesser extent. These findings have implications for the debates over the selection of immigrants and the assimilation of Mexican-Americans in the U.S. economy.
    Keywords: Mexican-Americans, entrepreneurship, inequality
    JEL: J15 L26
    Date: 2008–05
  6. By: Michael D. Giandrea (U.S. Bureau of Labor Statistics); Kevin E. Cahill (Analysis Group, Inc.); Joseph F. Quinn, Ph.D. (Boston College)
    Abstract: What role does self-employment play in the retirement process? Older Americans are staying in the labor force longer than prior trends would have predicted and many change jobs later in life. These job transitions are often within the same occupation or across occupations within wage-and-salary employment. The transition can also be out of wage-and-salary work and into self employment. Indeed, national statistics show that self employment becomes more prevalent with age, partly because self employment provides older workers with opportunities not found in traditional wage-and-salary jobs, such as flexibility in hours worked and independence. This paper analyzes transitions into and out of self employment among older workers who have had career jobs. We utilize the Health and Retirement Study, a nationally-representative dataset of older Americans, to investigate the prevalence of self employment among older workers who made a job transition later in life and to explore the factors that determine the choice of wage-and-salary employment or self employment. We find that post-career transitions into and out of self employment are common and that health status, career occupation, and financial variables are important determinants of these transitions. As older Americans and the country as a whole face financial strains in retirement income in the years ahead, self employment may be a vital part of the pro-work solution.
    Keywords: Retirement, Retirement Transitions, Self Employment
    JEL: J26 J21
    Date: 2008–05
  7. By: Thi Quynh Trang Do (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Gérard Duchêne (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: The determinants of self-employment are widely studied in the economic literature in recent twenty years. However, in the case of Vietnam where self-employed population takes an important proportion in workforce, it remains an under researched area. By using the data from the Vietnam Household Living Standard Survey 2004 (VHLSS2004), this paper aims to provide clearer insights into this area. We use the Heckman method to determine the level and identify the factors that affect the workers' choice between self-employment and wage employment in Vietnam. We emphasize the role of expected earnings differential in workers' decision making. Comparisons between female and male workers are made. Our empirical results show that there exist a number of determinants that permit to construct the pattern of self-employed as well a salary workers in Vietnam. Regardless of educational attainment, experiences and familial background, perspective of having higher earnings plays an important role in choice behavior of workers.
    Keywords: Occupational choice, earnings, self-employment, entrepreneurship, informal sector, Vietnam.
    Date: 2007–12
  8. By: Esther K. Ishengoma (Faculty of Commerce and Management, University of Dar es Salaam, Tanzania); Robert Kappel (GIGA German Institute of Global and Area Studies)
    Abstract: Ugandan micro- and small enterprises (MSEs) still perform poorly. The paper utilizes data collected in Uganda in March and April 2003 to analyze the business constraints faced by these MSEs. Using a stratified random sampling, a sample of 265 MSEs were interviewed. The study focuses on the 105 manufacturing firms that responded to all questions. It examines the extent to which the growth of MSEs is associated with business constraints, while also controlling for owners’ attributes and firms’ characteristics. The results reveal that MSEs’ growth potential is negatively affected by limited access to productive resources (finance and business services), by high taxes, and by lack of market access.
    Keywords: small enterprises, informal sector, growth, manufacturing, Uganda, productivity, business services
    JEL: D21 E26 G38 H25 L25 L26 L6 O12 O14
    Date: 2008–05
  9. By: Judith Freedman (University of Oxford); Claire Crawford (Institute for Fiscal Studies)
    Abstract: This chapter considers the taxation of small, owner-managed businesses. It focuses on the difficulties created by treating employees, unincorporated and incorporated businesses differently for tax and social security purposes. The authors reject blanket tax incentives for small firms and differentiation between legal forms and concentrate on issues arising from opportunities created on incorporation for the conversion of income from labour into income from capital (taxed at a lower rate). Experience in the UK and elsewhere suggests that an approach that relies on defining a sub-category of small businesses will not produce a satisfactory solution. The chapter therefore examines methods of aligning the effective tax treatment of different legal forms: in particular it considers the advantages of combining a Rate of Return Allowance with an Allowance for Corporate Equity, so as to tax income above the normal return to capital at the same rate whether it is described as dividend, capital gain or salary.
    Keywords: Small business taxation, labour income taxation, social security, taxation of income from capital, incorporation, corporation tax, choice of legal form, rate of return allowance, allowance for corporate equity
    Date: 2008
  10. By: James A. Brander; Edward J. Egan; Thomas F. Hellmann
    Abstract: This paper investigates the relative performance of enterprises backed by government-sponsored venture capitalists and private venture capitalists. While previous studies focus mainly on investor returns, this paper focuses on a broader set of public policy objectives, including value-creation, innovation, and competition. A number of novel data-collection methods, including web-crawlers, are used to assemble a near-comprehensive data set of Canadian venture-capital backed enterprises. The results indicate that enterprises financed by government-sponsored venture capitalists underperform on a variety of criteria, including value-creation, as measured by the likelihood and size of IPOs and M&As, and innovation, as measured by patents. It is important to understand whether such underperformance arises from a selection effect in which private venture capitalists have a higher quality threshold for investment than subsidized venture capitalists, or whether it arises from a treatment effect in which subsidized venture capitalists crowd out private investment and, in addition, provide less effective mentoring and other value-added skills. We find suggestive evidence that crowding out and less effective treatment are problems associated with government-backed venture capital. While the data does not allow for a definitive welfare analysis, the results cast some doubt on the desirability of certain government interventions in the venture capital market.
    JEL: G24 H0 O3
    Date: 2008–05
  11. By: Post, Colleen; Meyskens, Moriah
    Abstract: This study identifies trends and patterns of social entrepreneurs using quantitative methods in order to allow direct comparison to those of commercial entrepreneurs. It utilizes the online profiles of the Fellows in the global social venture network, Ashoka, in order to build a database of 70 social entrepreneurs. The resource-based view serves as the theoretical base by which the preliminary results are evaluated. The findings, which indicate that social entrepreneurs demonstrate similar patterns to commercial entrepreneurs, are assessed through a knowledge management lens of analyses. Statistically significant relationships were found between alliances, funding sources, innovation, and ease of replication.
    Keywords: social entrepreneurship; strategy; knowledge management
    JEL: M13
    Date: 2008–05–27
  12. By: Alex Coad (Max Planck Institute of Economics, Jena, Germany); Rekha Rao (Tanaka Business School, Imperial College London)
    Abstract: We apply a reduced-form vector autoregression model to analyze the growth processes of Italian manufacturing firms, 1989-1997. We focus in particular on lead-lag associations describing the coevolution of employment growth, sales growth, growth of profits and labour productivity growth. Employment growth precedes sales growth and growth of profits, and in turn sales growth is also associated with subsequent profits growth. There appears to be little feedback of either sales or profits on employment growth, however. There is no clear association of employment growth with subsequent changes in labour productivity, although at the second lag there is a small negative association. Productivity growth, however, is positively associated with subsequent growth of employment and sales. Quantile autoregressions find asymmetries between growth processes for growing and shrinking firms.
    Keywords: Firm Growth, Panel VAR, Employment Growth, Industrial Dynamics, Productivity Growth
    JEL: L25 L20
    Date: 2008–05–06
  13. By: Jens J. Krüger (Friedrich-Schiller-University Jena, Department of Economics)
    Abstract: This paper investigates the sources of total factor productivity growth in the German manu- facturing sector, 1981-1998. Decomposition formulae for aggregate productivity growth are used to identify the effects of structural change and entry-exit on aggregate productivity growth. Documented is a substantial rise of productivity growth after the German reunifica- tion. The bulk of this rise can be attributed to structural change and entry-exit. Two methodo- logical refinements are implemented, the first is the application of a robust stochastic non- parametric approach to frontier function analysis and the second is the calculation of boot- strap confidence intervals for the components of the productivity decompositions.
    Keywords: productivity decomposition, structural change, manufacturing
    JEL: D24 O12 L60
    Date: 2008–05–06
  14. By: Devrim Göktepe (Max Planck Institute of Economics)
    Abstract: This paper develops theoretical standpoints to investigate and analyse university inventors and patenting activities. Although the studies on academic entrepreneurship and university patenting have substantially increased, first there have not been enough studies on individual inventors and second the current theoretical studies are not eclectic enough to capture the different factors that may explain university inventors patenting activities. The framework described here addresses this need. To accomplish this we inductively derive several factors from a substantial number of studies on university patenting and entrepreneurship, and develop these factors into a tentative framework. It is our hope that this framework is useful in future empirical research on university patenting and provides a point of departure for scientists.
    Keywords: theoretical approach, university patenting, inventors, incentives
    JEL: O31 O34 B31
    Date: 2008–04–08
  15. By: Ebell, Monique (Department of Economics and Business Studies, Humboldt University of Berlin, and Centre for Economic Performance, London School of Economics and Political Science); Haefke, Christian (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria, and Instituto de Análisis Económico, CSIC)
    Abstract: We consider the dynamic relationship between product market entry regulation and equilibrium unemployment. The main theoretical contribution is combining a job matching model with monopolistic competition in the goods market and individual bargaining. We calibrate the model to US data and perform a policy experiment to assess whether the decrease in trend unemployment during the 1980’s and 1990’s could be directly attributed to product market deregulation. Under a traditional calibration, our results suggest that a decrease of less than two-tenths of a percentage point of unemployment rates can be attributed to product market deregulation, a surprisingly small amount. Under a small surplus calibration, however, product market deregulation can account for the entire decline in US trend unemployment over the 1980’s and 1990’s.;
    Keywords: Product market competition, barriers to entry, wage bargaining
    JEL: E24 J63 O00
    Date: 2008–05

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