nep-ent New Economics Papers
on Entrepreneurship
Issue of 2008‒09‒29
sixteen papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Entrepreneurship and Structural Economic Transformation By Gries, Thomas; Naude, Wim
  2. Entrepreneurship in Economic Development By Naude, Wim
  3. Entrepreneurship and unemployment: a nonlinear bidirectional causality By Joao Ricardo Faria; Juan Carlos Cuestas; Estefania Mourelle
  4. Unemployment and entrepreneurship: a cyclical relationship? By Joao Ricardo Faria; Juan Carlos Cuestas; Luis Gil-Alana
  5. Science and technology-based regional entrepreneurship in the Netherlands: By Jolanda Hessels; Kashifa Suddle; Willem Hulsink
  6. The Multipliers and Key Sectors of Entrepreneurship Spillover: An input-output approach By Massón-Guerra, José Luis
  7. Why and how do scientists commercialize their research? Towards a typology of inventors By Devrim Goktepe-Hultan
  8. The Effects of Displacement on Self-employment Survival By Nykvist, Jenny
  9. Venture capital as a mechanism for knowledge governance : new markets and innovation-led economic growth By Antonelli Cristiano; Teubal Morris
  10. The Internationalization of Venture Capital and Private Equity By Joshua Aizenman; Jake Kendall
  11. Innovativeness of Small and Medium Size Enterprises in Regional Innovation System: Evidences from Turkey By Bahar C. Erbas; Ali Fýkýrkoca; Arcan Tuzcu
  12. Do regional payroll tax reductions boost employment? By Bennmarker, Helge; Mellander, Erik; Öckert, Björn
  13. Out of equilibrium profit and innovation By Antonelli Cristiano; Scellato Giuseppe
  14. Trade Liberalization and the Self-employed in Mexico By Popli, Gurleen K.
  15. Inheritance Law and Investment in Family Firms By Andrew Ellul; Marco Pagano; Fausto PAnunzi
  16. Testing Gibrat’s law: empirical evidence from panel unit root tests of turkish firms By Aslan, Alper

  1. By: Gries, Thomas; Naude, Wim
    Abstract: A stylized fact of economic development is the structural transformation of countries from traditional, mainly agricultural societies to modern economies dominated by manufacturing and services. In this paper we provide an endogenous growth model to illuminate the role of entrepreneurial start-up firms in structural economic transformation. We follow the Lewis-model?s distinction between a traditional and modern sector, and underpin this with micro-foundations. We specify mature and start-up entrepreneurs and make a distinction between survivalist self-employment activities in the traditional sector, and opportunity-driven entrepreneurship in the modern sector. The model shows how opportunity-driven entrepreneurship can drive structural transformation through innovation, provision of intermediate inputs and services (which permits greater specialization in manufacturing), and by increasing employment and productivity in both the modern and traditional sectors.
    Keywords: entrepreneurship, economic development, structural transformation, start-ups
    Date: 2008
  2. By: Naude, Wim
    Abstract: What is the role of entrepreneurship in economic development? At a minimum the answer should be able to explain the role of entrepreneurs in the structural transformation of countries from low income, primary-sector based societies into high-income service and technology based societies. More broadly though, it should also be able to explain the role of entrepreneurs in the opposite pole of stagnating development (including conflict) and in high innovation-driven growth. Although economic development lacks a ?general theory? of entrepreneurship, which could encompass a variety of development experiences, much progress has been made in extending the understanding of entrepreneurship in the process of development. This paper surveys the progress with the purpose of distilling the outlines for a more general theory of entrepreneurship in economic development. Entrepreneurship in developing countries remains a relatively under-researched phenomenon, so by surveying the current state of research, and by discussing the role of entrepreneurship in dual economy models of structural transformation and growth, a secondary objective of this paper is to identify avenues for further research. Finally, the policy implications from the economic literature suggest that a case for government support exists, and that this should focus on the quantity, the quality, and the allocation of entrepreneurial ability. Many routinely adopted policies for entrepreneurship, such as provision of credit and education, are shown to have more subtle effects, not all of which are conducive to growth-enhancing entrepreneurship.
    Keywords: entrepreneurship, economic development, small business
    Date: 2008
  3. By: Joao Ricardo Faria; Juan Carlos Cuestas; Estefania Mourelle
    Abstract: This paper tests the view that the relation between unemployment and entrepreneurship is dynamic and possibly nonlinear. It performs Granger-causality tests and STAR-EXT estimation to assess the causality direction and the nonlinear nature of the relation for a set of OECD countries. The results reveal a bidirectional and nonlinear relation between business creation and changes in unemployment.
    Keywords: New firms, employment creation, causality, nonlinearities, STAR-EXT
    JEL: J69 L26 M13
    Date: 2008–06
  4. By: Joao Ricardo Faria; Juan Carlos Cuestas; Luis Gil-Alana
    Abstract: This paper presents a cyclical model for unemployment and entrepreneurship. The estimated periodicity of the cycles for the US, the UK, Spain and Ireland is between 5 and 10 years, and the orders of integration are smaller (greater) than 1 if the underlying disturbances are autocorrelated (white noise), corresponding to dampen cycles (limit cycle).
    Keywords: New firms, Employment creation, cycles.
    JEL: J69 L26 M13
    Date: 2008–02
  5. By: Jolanda Hessels; Kashifa Suddle; Willem Hulsink
    Abstract: In this contribution we develop a theoretical framework derived from the national system of innovation literature and the subsequent criticisms voiced by regional scientists and industry/technology experts who emphasize the importance of the intermediate subnational and sectoral levels to analysing science- and technology-based regional entrepreneurship in the Netherlands. The national system of innovation of the Netherlands, and its specifics and peculiarities, and the country's general entrepreneurship policy, and the most important policy and support initiatives are subsequently discussed. Based on a desire to overcome the knowledge paradox between fundamental research and market needs and on the recognition that the Netherlands lags behind other countries when it comes to innovative entrepreneurship, various changes and initiatives were recently introduced in the Netherlands. The impresson is of an overambitious national government with numerous programmes, schemes and agencies involved, sometimes working with each other but at other times separately as well, and its effectiveness can be questioned. Serious paperwork and preparation is involved in the participation in most programes and, together with the complexity of these programmes and policies, small and young entrepreneurs are neither informed, ready or wellequipped; some of them are not even interested in participating in those schemes.
    Date: 2008–09–16
  6. By: Massón-Guerra, José Luis
    Abstract: The Entrepreneurship Spillover evaluates the systemic effect of creating enterprises in different sectors and industries from a new firm created in a given sector. One way to estimate these Entrepreneurship Spillovers is doing an adaptation of the methodology applied by Dietzenbacher, (2002); Dietzenbacher and Los, (2002a,b) Diezenbacher and Volkerink (1998) that they used to determinate the Knowledge Spillover through R&D multipliers. In this regard, the objectives of this paper are: (a) to develop a methodology that allows calculating the concept of entrepreneurship spillover; (b) to identify the key sectors of entrepreneurship; and (c) to determinate the multipliers of business creation. With these aims, the methodological design is based on an adaptation of the model of input-output matrix (Leontief, 1936; Dietzenbacher and Los, 2002 a y b).
    Keywords: Entrepreneurship; Multipliers; Input-Ouput; Economic Growth
    JEL: O30 L26 O4 C67
    Date: 2008–06–14
  7. By: Devrim Goktepe-Hultan (Max Planck Institute of Economics)
    Abstract: Incentives and assistance provided by TTOs, university policies, patent legislation and scientific disciplines are certainly part of the explanations for academic entrepreneurship. But they are only one facet of the story. Another facet is related to the scientists' motives, expectations and perceptions about the importance and necessity of such activities. There are no comprehensive studies to date that cover both internal and external factors. This is an important, complex and relatively under-researched theme. Our findings suggest that scientists are rarely engage in patenting activities for economic profit reasons or due to institutional and organizational support. Individual relations and networks with firms and other actors found to be important factors for scientists' entrepreneurial activities. Serial inventors act as role models to other scientists and crucial in the creation of an entrepreneurial milieu at the universities, as others would be affected by these behaviours and tend to follow them. However, the fact that university policies and TTOs have provided little incentives for scientists to get involved in entrepreneurship should not be considered to rule out institutional effects.
    Keywords: university patenting, incentives, individual inventors, inventors’ typology
    JEL: O31 O34 O38 B31
    Date: 2008–09–15
  8. By: Nykvist, Jenny (Research Institute of Industrial Economics (IFN))
    Abstract: A large literature has studied the effect of displacement on labor market outcomes in general, but none has evaluated how the displaced manage as self-employed. This paper studies how the survival of the business is affected by displacement in connection to entry, using a discrete-time proportional hazard model on a matched sample of displaced and non-displaced individuals. The main result of the paper is that, as a consequence of previous displacement, the probability of switching from self-employment to paid employment decreases and the probability of switching to unemployment is unaffected.
    Keywords: Self-employment; Survival; Displacement
    JEL: J24 J63 J65 M13
    Date: 2008–09–24
  9. By: Antonelli Cristiano (University of Turin); Teubal Morris
    Date: 2008–05
  10. By: Joshua Aizenman; Jake Kendall
    Abstract: This paper investigates the internationalization of venture capital (VC) and private equity (PE) investments. We derive flows between countries of VC and PE investments worldwide, relying on comprehensive firm-level data sources, covering three decades and about 100 countries. A gravity analysis indicates that distance, common language, and colonial ties are significant factors in directing these flows. Additionally, the presence of high-end human capital, a better business environment, high levels of military expenditure, and deeper financial markets are important local factors that attract international venture capital. There is also evidence of path dependency and persistence in VC and PE flows, indicating network effects and fixed costs of entry may be at work. Further analysis suggests the internalization of VC and PE is an ongoing story. Prior to the 1990s, VC was primarily a US-only phenomenon. The globalization of IT activities induced the US venture capital industry to mature, and to start exporting its unique skills as VC managers. The US is now a dominant net exporter of deals, though most crossborder deals are still either to or from the US. China has emerged as the dominant net importer, followed by Sweden, Canada, the UK, France and India. For deals outside the US, cross-border participation has been the norm, while US-located deals have been almost exclusively domestic, involving a higher percent of international participation only after 2001. In the past few years, domestic VC capacity has begun to emerge in many countries where it did not exist previously.
    JEL: F15 F21
    Date: 2008–09
  11. By: Bahar C. Erbas; Ali Fýkýrkoca; Arcan Tuzcu
    Date: 2008–09
  12. By: Bennmarker, Helge (IFAU - Institute for Labour Market Policy Evaluation); Mellander, Erik (IFAU - Institute for Labour Market Policy Evaluation); Öckert, Björn (IFAU - Institute for Labour Market Policy Evaluation)
    Abstract: Using a Difference-in-Differences approach we evaluate the effects of a 10 percentage points reduction in the payroll tax introduced in 2002 for firms in the northern part of Sweden. We find no employment effects for existing firms and can rule out that a 1 percentage point payroll tax reduction would increase employment with more than 0.2 percent. We do, however, find that tax reductions have significantly positive effects on the average wage bill per employee. These are likely to be driven by higher average wages, but might also be due to more hours worked. As a sensitivity check we investigate if reduced payroll taxes affect the likelihood of firm entry and exit, and find some support for a net firm inflow. Our attempts to assess concomitant effects on employment indicate that payroll tax reductions might yield increases in employment through the start-up of new firms.
    Keywords: Payroll tax; Labour demand; Incidence; Firm entry/exit; Difference-in-Differences
    JEL: H22 J23 J38 J58 J68
    Date: 2008–09–05
  13. By: Antonelli Cristiano (University of Turin); Scellato Giuseppe
    Abstract: Innovation is the result of intentional decision-making that takes place in out-of-equilibrium conditions. The farther is profitability from the average and the deeper the out-of-equilibrium conditions. The farther away is the firm from equilibrium and the stronger the likelihood for innovation to take place. The hypothesis of a U-relationship between levels of profitability and innovative activity, as measured by the rates of increase of total factor productivity, is articulated and tested. The evidence of a large sample of 7000 Italian firms in the years 1996-2005 confirms that a strong causal relation holds between the quadratic specification of profitability and the growth rates of total factor productivity. The results are robust to different approaches to evaluate productivity growth rates.
    Date: 2008–04
  14. By: Popli, Gurleen K.
    Abstract: In this paper I examine the trend in income inequality and poverty among the self-employed workers in Mexico over the last two decades (1984?2002). This is the period over which Mexico opened its economy to the global market through trade and investment liberalization. For the first decade following the liberalization, inequality and poverty among the self-employed increased; as the economy stabilized and the country saw economic growth inequality started to go down, but poverty kept increasing. To understand the changes in inequality and poverty I decompose the inequality and poverty indices into within and between group components. Rising returns to skilled labour, regional differences in impact of liberalization and sectoral shifts in employment are important factors in explaining the trends in both inequality and poverty.
    Keywords: income inequality, poverty, Shapley?Shorrocks decomposition, self-employed, Mexico
    Date: 2008
  15. By: Andrew Ellul (Kelley School of Business, Indiana University); Marco Pagano (Università di Napoli Federico II, CSEF, EIEF and CEPR); Fausto PAnunzi (Bocconi University, IGIER and CEPR)
    Abstract: Entrepreneurs may be constrained by the law to bequeath a minimal stake to non-controlling heirs. The size of this stake can reduce investment in family firms, by reducing the future income they can pledge to external financiers. Using a purpose-built indicator of the permissiveness of inheritance law and data for 10,245 firms from 32 countries over the 1990-2006 interval, we find that stricter inheritance law is associated with lower investment in family firms, while it leaves investment unaffected in non-family firms. Moreover, as predicted by the model, inheritance laws affects investment only in family firms that experience a succession.
    Keywords: succession, family firms, inheritance law, growth, investment
    JEL: G32
    Date: 2008–09–21
  16. By: Aslan, Alper
    Abstract: The purpose of this paper is to use panel unit root tests to see if Gibrat’s law holds in Turkey. Gibrat's Law establishes that firm growth is a random walk, it means that the probability of a given proportional change in size during a specified period is the same for all firms in a given industry. In this paper, it is examined Gibrat law in Turkey empirically by using Chen & Lu (2003) methodology and use the panel unit root method to investigate the relation between firm size and firm growth. Since it has been observed that many panel unit root tests are invalid when cross-section correlation problem and also finds that conclusion is not the same.
    Keywords: Gibrat’s Law; Firm Growth; MADF Test
    JEL: L11 L20
    Date: 2008

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