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on Entrepreneurship |
| By: | Brixy, Udo (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Sternberg, Rolf; Stüber, Heiko (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]) |
| Abstract: | "Not everyone who plans to set up a firm succeeds in doing so. This paper focuses on the phase before a firm is founded, the pre-nascent stage of the entrepreneurship process. Based upon cross-sectional data from the German section of the Global Entrepreneurship Monitor (GEM), the specific aim of this paper is to shed some light on the selection that takes place during the entrepreneurial process and to explain empirically demographic and cognitive characteristics and differences between latent nascent entrepreneurs, nascent entrepreneurs and young entrepreneurs. The results clearly reveal that there are both significant differences between and common determinants of the three phases of the entrepreneurial process. Education, the readiness to take risks, and role models are very important determinants during all phases. However, the regional environment and the age of the entrepreneur have quite a differentiating impact during the entrepreneurial process." (author's abstract, IAB-Doku) ((en)) |
| JEL: | L26 |
| Date: | 2008–08–12 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:200832&r=ent |
| By: | Robert E. Hall; Susan E. Woodward |
| Abstract: | In the standard venture capital contract, entrepreneurs have a large fraction of equity ownership in the companies they found and are paid a sub-market salary by the investors who provide the money to develop the idea. The big rewards come only to those whose companies go public or are acquired on favorable terms, forcing entrepreneurs to bear a substantial burden of idiosyncratic risk. We study this burden in the case of high-tech companies funded by venture capital. Over the past 20 years, the typical venture-backed entrepreneur earned an average of $4.4 million from companies that succeeded in attracting venture funding. Entrepreneurs with a coefficient of relative risk aversion of two and with less than $0.7 million would be better off in a salaried position than in a startup, despite the prospect of an average personal payoff of $4.4 million and the possibility of payoffs over $1 billion. We conclude that startups attract entrepreneurs with lower risk aversion, higher initial assets, preferences for entrepreneurship over employment, and optimistic beliefs about the payoffs from their products. |
| JEL: | G12 G24 G32 H1 L14 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14219&r=ent |
| By: | Manju Puri; Rebecca Zarutskie |
| Abstract: | We use a new data set that tracks U.S. firms from their birth over two decades to understand the life cycle dynamics and outcomes (both successes and failures) of VC- and non-VC financed firms. We first ask to what market-wide and firm-level characteristics venture capitalists respond in choosing to make their investments and how this differs for firms financed solely by non-VC sources of entrepreneurial capital. We then ask what are the eventual differences in outcomes for firms that receive VC financing relative to non-VC-financed firms. Our findings suggest that VCs follow public market signals similar to other investors and typically invest largely in young firms, with potential for large scale being an important criterion. The main way that VC financed firms differ from matched non-VC financed firms, is they demonstrate remarkably larger scale both for successful and failed firms, at every point of the firms' life cycle. They grow more rapidly, but we see little difference in profitability measures at times of exit. We further examine a number of hypotheses relating to VC-financed firms' failure. We find that VC-financed firms' cumulative failure rates are lower than non-VC-financed firms but the story is nuanced. VC appears initially "patient" in that VC-financed firms are less likely to fail in the first five years but conditional on surviving past this point become more likely to fail relative to non-VC-financed firms. We perform a number of robustness checks and find that VC does not appear to have more stringent survival thresholds nor do VC-financed firm failures appear to be disguised as acquisitions nor do particular kinds of VC firms seem to be driving our results. Overall, our analysis supports the view that VC is "patient" capital relative to other non-VC sources of entrepreneurial capital in the early part of firms' lifecycles and that an important criterion for receiving VC investment is potential for large scale, rather than level of profitability, prior to exit. |
| JEL: | G24 G32 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14250&r=ent |
| By: | Altan Aldan; Mahmut Gunay |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:0805&r=ent |
| By: | Rupert Harrison; Jordi Jaumandreu; Jacques Mairesse; Bettina Peters |
| Abstract: | This paper studies the impact of process and product innovations introduced by firms on employment growth in these firms. A simple model that relates employment growth to process innovations and to the growth of sales separately due to innovative and unchanged products is developed and estimated using comparable firm-level data from France, Germany, Spain and the UK. Results show that displacement effects induced by productivity growth in the production of old products are large, while those associated with process innovations, which are likely to be compensated by price decreases, appear to be small. The effects related to product innovations are, however, strong enough to overcompensate these displacement effects. |
| JEL: | D2 J23 L1 O31 O33 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14216&r=ent |