nep-ent New Economics Papers
on Entrepreneurship
Issue of 2008‒07‒14
nine papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. The Impact of Risk Attitudes on Entrepreneurial Survival By Caliendo, Marco; Fossen, Frank M.; Kritikos, Alexander S.
  2. A Gender Perspective on Self-Employment Entry and Performance as Self-Employed By Andersson Joona, Pernilla; Wadensjö, Eskil
  3. A Framework for Addressing and Measuring Entrepreneurship By Nadim Ahmad; Anders Hoffman
  4. Regional Path-Dependence in Start-up Activity By Thomas Brenner; Dirk Fornahl
  5. The entrepreneurial decision: theories, determinants and constraints By Daniela Grieco
  6. Competencies and Institutions Fostering High-growth Firms By Henrekson, Magnus; Johansson, Dan
  7. Who Are the Microenterprise Owners? Evidence from Sri Lanka on Tokman v. de Soto By de Mel, Suresh; McKenzie, David; Woodruff, Christopher
  8. Informality and Macroeconomic Fluctuations By Fiess, Norbert M.; Fugazza, Marco; Maloney, William F.
  9. Formality, Informality, and Social Welfare By Bennett, John

  1. By: Caliendo, Marco (IZA); Fossen, Frank M. (DIW Berlin); Kritikos, Alexander S. (Hanseatic University Rostock)
    Abstract: Risk attitudes have an impact on not only the decision to become an entrepreneur but also the survival and failure rates of entrepreneurs. Whereas recent research underpins the theoretical proposition of a positive correlation between risk attitudes and the decision to become an entrepreneur, the effects on survival are not as straightforward. Psychological research posits an inverse U-shaped relationship between risk attitudes and entrepreneurial survival. On the basis of recent waves of the German Socio-Economic Panel (SOEP), we examine the extent to which risk attitudes influence survival rates of entrepreneurs. The empirical results confirm that persons whose risk attitudes are in the medium range survive significantly longer as entrepreneurs than do persons with particularly low or high risks.
    Keywords: entrepreneurship, risk attitudes, survival and failure
    JEL: D81 J23 M13
    Date: 2008–06
  2. By: Andersson Joona, Pernilla (SOFI, Stockholm University); Wadensjö, Eskil (Stockholm University)
    Abstract: Research on self-employment has increased during recent years and particular attention has been paid to self-employment dynamics and the factors influencing entry and exit rates from self-employment. Using a large panel data set for Sweden, this paper investigates variations in recruitment to self-employment and in self-employment performance by gender and by employment status prior to entering self-employment. As performance measures we use income from self-employment, number of employees, exit rates and destination after self-employment. We find that the probability of becoming self-employed is highest among men who are economically inactive and lowest among women who are wage-earners. Analysing self-employment performance, we find that men have higher incomes than women. Self-employed women more often than self-employed men have employees. For both men and women those who enter from unemployment or inactivity are less successful in terms of income and the probability of having employees than those who enter from paid employment. When exits are divided into paid employment and other employment status, we find that those who entered from unemployment or inactivity face a higher risk of returning to one of these states.
    Keywords: self-employment, unemployment, income, occupational mobility, gender differences
    JEL: J23 J24 J64 J16
    Date: 2008–07
  3. By: Nadim Ahmad; Anders Hoffman
    Abstract: In recent years entrepreneurship has become a buzzword that?s entered the mainstream. Politicians continuously cite its importance and the need to create more entrepreneurial societies, and newspapers and television programmes frequently create themes around successful entrepreneurs. But, the pursuit and development of policies related to entrepreneurship are often hampered by the limited, albeit growing, empirical information relating to entrepreneurship (its size, factors and benefits). Therefore, in the absence of definitions that capture the essence of entrepreneurship, and entrepreneurship indicators that are internationally comparable, policy makers are left somewhat rudderless when it comes to developing policies, particularly when they relate to learning from international best-practice. These shortcomings and the growing importance of entrepreneurship in the policy domain have magnified the need for a sounder basis for internationally comparable indicators of entrepreneurship. This paper provides a framework that is intended to provide that sounder basis. It does so by adopting a holistic approach, and, so, by focusing on the: factors that impede or motivate entrepreneurship (determinants); measures that provide indicators of the state of entrepreneurship (entrepreneurial performance); and, outcomes (impacts) of that performance on the economy as a whole. Each of these three themes provides the overarching structure to the framework, using a standardised OECD definition of entrepreneurship, and, within each, we develop a suite of indicators that provide the basis for quantifiable information to be collected in an internationally comparable way for each of these themes. <P>Cadre pour la présentation et la mesure de l'entrepreneuriat <BR>L’entrepreneuriat est devenu un terme incontournable ces dernières années, il est au coeur des préoccupations des décideurs politiques qui soulignent très régulièrement son importance et la nécessité de créer des sociétés plus entrepreneuriales. De même, journaux et émissions télévisées montent fréquemment des sujets autour d'entrepreneurs qui réussissent. Malgré cela, le développement de politiques liées à entrepreneuriat sont souvent entravés par les limites, quoique régulièrement repoussées, de l’information empirique disponible sur l?entrepreneuriat (sa taille, les facteurs l'encourageant et les avantages retirés). Ainsi, l'absence de définition communément admise sur l’essence de l'entrepreneuriat et d'indicateurs comparables au niveau international, laisse les décideurs politiques sans leviers de commande pour développer leur politiques économiques et ce, de façon plus prégnante encore lorsqu'il s'agit d'étudier les meilleurs pratiques internationales. Ces imperfections, ajoutées à l’importance croissante de l’entrepreneuriat sur la scène politique, ont renforcé le besoin de fondements plus solides au niveau international pour des indicateurs sur l'entrepreneuriat. Ce document apporte cette base solide en adoptant une approche holistique. Il rassemble les facteurs qui entravent ou encouragent l?entrepreneuriat (les déterminants) ; les mesures évaluant l'état de l'entrepreneuriat (les indicateurs de performance) ; et les résultats (l'impact économique). Ces trois thèmes structurent le cadre d'analyse et utilisent la définition standardisée de l'OCDE pour l'entrepreneuriat. Pour chacun de ces thèmes nous développons une suite d'indicateurs, donnant ainsi une base d’information statistique à collecter comparable au niveau international.
    Date: 2008–01–24
  4. By: Thomas Brenner; Dirk Fornahl
    Abstract: This paper studies the impact of an existing industrial structure in a region on the number of start-ups in this region. The aim is to detect path-dependencies in the regional industry structure. To this end we study empirically the regional factors that influence start-up rates. The approach deviates from the huge literature on start-up rates by studying each 2-digit industry separately, including the employment in other industries into the analysis and distinguishing between factors that provide founders and factors that influence their likelihood to start a firm.
    Keywords: industrial dynamics, regional industry structure, start-ups, entrepreneurship, path-dependence
    JEL: R11 L26 R30
    Date: 2008–06
  5. By: Daniela Grieco (Cattaneo University (LIUC))
    Abstract: The pervasiveness of the entrepreneurial phenomenon attracts the attention on the determinants of the decision of becoming entrepreneur. As the entrepreneurial decision can be additionally conceived as firm entry, as a real business investment in the creation of a new business and as a career choice in favour of self-employment, the literature about entrepreneurship is integrated with industrial organization, financial economics and labour economics approaches to identify contextual and personal determinants. Finally, an analysis of the constraints that limit the entrepreneurial decision is carried out.
    Date: 2008–02
  6. By: Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Johansson, Dan (Ratio)
    Abstract: High-growth firms (HGFs) are critical for net job creation and economic growth. We analyze HGFs using the theory of competence blocs, linking firm growth to property rights and the interaction of complementary expertise. Specifically, we discuss how the institutional framework affects the prevalence and performance of HGFs. Firm growth is viewed as resulting from the perpetual discovery and use of productive knowledge. A key element in this process is the competence bloc, a nexus of economic actors with complementary competencies that are vital in order to generate and commercialize novel ideas. The institutional framework determines the incentives for these individuals to acquire and utilize knowledge. We identify a number of institutions that foster the emergence of competence blocs and the creation of HGFs. In particular, our analysis points to the pivotal roles played by tax structures, labor market regulation, and the contestability of currently closed service markets. Finally, we characterize institutions beneficial for sclerotic or dynamic capitalism, respectively, depending on whether they provide a favorable environment for the emergence of competence blocs and the creation of HGFs.
    Keywords: Competence bloc; Dynamic capitalism; Entrepreneurship; Flyers; Gazelles; High-growth firms; Industrial policy; Innovation; Institutions; Labor security; Product market regulations; Property rights; Sclerotic capitalism; Self-employment; Tax policy.
    JEL: H32 L25 M13 O31 P14
    Date: 2008–06–30
  7. By: de Mel, Suresh (University of Peradeniya); McKenzie, David (World Bank); Woodruff, Christopher (University of California, San Diego)
    Abstract: Is the vast army of the self-employed in low income countries a source of employment generation? We use data from surveys in Sri Lanka to compare the characteristics of own account workers (non-employers) with wage workers and with owners of larger firms. We use a rich set of measures of background, ability, and attitudes, including lottery experiments measuring risk attitudes. Consistent with the ILO’s views of the self employed (represented by Tokman), we find that 2/3rds to 3/4ths of the own account workers have characteristics which are more like wage workers than larger firm owners. This suggests the majority of the own account workers are unlikely to become employers. Using a two and a half year panel of enterprises, we show that the minority of own account workers who are more like larger firm owners are more likely to expand by adding paid employees. The analysis suggests that finance is not the sole constraint to growth of microenterprises, and provides an explanation for the low rates of growth of enterprises supported by microlending.
    Keywords: entrepreneurship, self-employment, De Soto
    JEL: O17 L26
    Date: 2008–05
  8. By: Fiess, Norbert M. (University of Glasgow); Fugazza, Marco (UNCTAD); Maloney, William F. (World Bank)
    Abstract: This paper examines the adjustment of developing country labor markets to macroeconomic shocks. It models as having two sectors: a formal salaried (tradable) sector that may or may not be affected by union or legislation induced wage rigidities, and an informal (nontradable) self-employment sector facing liquidity constraints to entry. This is embedded in a standard small economy macro model that permits the derivation of patterns of comovement among relative salaried/self-employed incomes, salaried/self-employed sector sizes and the real exchange rate with respect to different types of shocks in contexts with and without wage rigidities. The paper then explores time series data from Argentina, Brazil, Colombia and Mexico to test for cointegrating relationships corresponding to the patterns predicted by theory. We confirm episodes of expansion of informal self-employment consistent with the traditional segmentation views. However, we also identify episodes consistent with the sectoral expansion being driven by relative demand or productivity shocks to the nontradables sector that lead to “procyclical” behavior of the informal self-employed sector.
    Keywords: informality, labor market dynamics, self-employment, real exchange rates
    JEL: F41 J21 J24 J31 O17
    Date: 2008–05
  9. By: Bennett, John (Brunel University)
    Abstract: An industry is modeled in which entrepreneurs, who are heterogeneous in ability, may produce formally or informally. It is shown how the formal-informal mix depends on the distribution of ability, product demand and various parameter values. The industry equilibrium is compared to one in which informality is prohibited. With relatively high product demand, the effect of entrepreneurs being free to choose informality is that consumer surplus and total employment are reduced, but profit is redistributed towards more able entrepreneurs. With relatively low product demand the opposite effects obtain. We also show that informality may be a built-in stabilizer or destabilizer.
    Keywords: informality, social welfare, formality
    JEL: O17 D2
    Date: 2008–06

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