nep-ent New Economics Papers
on Entrepreneurship
Issue of 2008‒10‒07
nine papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Entrepreneurship and Second-best Institutions: Going Beyond Baumol’s Typology By Douhan, Robin; Henrekson, Magnus
  2. Entrepreneurship Spillover and the determinants of Key Sectors for new business creation: An inter-sectorial approach By Massón-Guerra, José Luis; Vendrell-Ferrero, Ferran
  3. Entrepreneurship, Economic Growth and Policy in Emerging Economies By Thurik, A.R.
  4. How does Entrepreneurial Activity Affect the Supply of Business Angels? By André van Stel; Kashifa Suddle; Andrew Burke; Chantal Hartog
  5. The Innovation and Entrepreneurship Latinamerican Scoreborard: The impact of University-Industry Cooperation in Ecuador By Massón-Guerra, José Luis
  6. The exponential age distribution and the Pareto firm size distribution By Alex Coad
  7. Affärsstrukturer och entreprenörskap – New Builders By Leijon, Svante; Söderbom, Arne
  8. Human Capital Risk and the Firmsize Wage Premium By Danny Leung; Alexander Ueberfeldt
  9. A new challenge for higher education in Romania –entrepreneurial universities By Sitnikov, Catalina Soriana

  1. By: Douhan, Robin (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: This paper reconsiders the predominant typology pioneered by Baumol (1990) between productive, unproductive and destructive entrepreneurship. Baumol’s classificatory scheme is built around a limited concept of first-best outcomes and therefore easily fails to appreciate the true impact of entrepreneurship in real world circumstances characterized by suboptimal institutions. We present an alternative way of generalizing the notion of entrepreneurship and show how and why it encompasses the Baumol typology as a special case. Our main distinction is between business and institutional entrepreneurship. We draw on Schumpeter’s notion of creative destruction and reintroduce the entrepreneur as a potential disturber of an institutional equilibrium. Various subsets of institutional entrepreneurship are posited and discussed. It is shown that changing the workings of institutions constitutes an important set of entrepreneurial profit opportunities. An implication of this is that entrepreneurial efforts to reform or offset inefficient institutions can in some cases be welfare-improving.
    Keywords: Entrepreneurship; Innovation; Institutions
    JEL: L50 M13 O17 O31
    Date: 2008–09–23
  2. By: Massón-Guerra, José Luis; Vendrell-Ferrero, Ferran
    Abstract: Whereas the knowledge spillover theory of entrepreneurship focuses on the diffusion of innovative output and knowledge filter among new firms and industries (Acts, et al., 2005; Audrescht, 2007), it has not been studied the phenomenon of entrepreneurship dissemination or entrepreneurship spillover among sectors. From an adaptation of the model of input-output matrix (Leontief, 1936; Dietzenbacher and Los, 2002) we develop a methodology that allows calculating the concept of entrepreneurship spillover. Besides, using intra-sectorial data from the 73 Spanish sectors, we empirically test the characteristics of the sectors with more entrepreneurship spillover. In short, the results clearly state that higher diversity and competition entails more entrepreneurship spillover. Moreover, the innovation only affects positively entrepreneurship spillover in restricted situations, briefly when the sectors have high competition and/or a high degree of technology.
    Keywords: Entrepreneurship; Innovation; Economic Growth; Multipliers; Leontief; Input Output Analysis;
    JEL: O30 L26 O4 C67
    Date: 2008–09–19
  3. By: Thurik, A.R. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Entrepreneurship has emerged as an important element in the organization of economies. This emergence did not occur simultaneously in all developed countries. Differences in growth rates are often attributed to differences in the speed with which countries embrace entrepreneurial energy. This led to the political mandate to promote entrepreneurship. Hence, a clear and organized view is needed of what the determinants and consequences of entrepreneurship are. The present contribution tries to provide this view with a particular view on emerging economies. Entrepreneurship, its drivers and its consequences can be best understood using the model of the Entrepreneurial Economy which explains the functioning of the modern economy. This model differs from that of the earlier Managed Economy. Policies in emerging economies should aim at combining the two models.
    Keywords: entrepreneurship;policy;economic development;small firms;economic growth
    Date: 2008–09–25
  4. By: André van Stel; Kashifa Suddle; Andrew Burke; Chantal Hartog
    Abstract: This paper examines the prevalence and the determinants of informal entrepreneurial investment activity (i.e. the 3 FFFs –friends, fools and family– and business angels), using a data set of more than 175,000 individuals – including some 4000 informal investors – in a large number of highly developed countries over the period 2002-2004. We distinguish between micro-level and macro-level determinants. The results uncover a positive virtuous circle where the demand for business angel finance tends to generate its own supply as a result of micro and macro factors. Our results also suggest that higher levels of entrepreneurial activity at the country level increase the probability that venture capital and business angel finance work in tandem with one another as complements rather than substitutes. Overall, the results uncover some important new relationships that perhaps provide some good news that market forces to some extent appear to naturally ameliorate equity gaps faced by entrepreneurs.
    Date: 2008–09–30
  5. By: Massón-Guerra, José Luis
    Abstract: One of the structural problems in Latin-American has been the lower innovative capacity and lower generation of economically exploitable knowledge. This phenomenon has been produced by the absence of government’s incentives and strategies in order to be competitive inside the Knowledge Based Economy. More concretely, political, institutional and social factors have contributed negatively within this reality. As a consequence, the knowledge generation in this region is insufficient not only to satisfy its necessities but also to be competitive in the global context. At difference, the developing regions have recognized the significance impact of R&D investment and Education in their sustainable growth.This report uses the methodology proposed by the European Commission in the study about the “European Innovation Scoreboard 2007”. Specifically, this methodology is adapted at the Latin-American reality. In summary, the results will provide the current picture of the innovation and entrepreneurship in Latin-American Countries.
    Keywords: Innovation; Entrepreneurship; Economic Growth
    JEL: L26 O3 O4
    Date: 2008–07–07
  6. By: Alex Coad (Max Planck Institute of Economics, Jena, Germany)
    Abstract: Recent work drawing on data for large and small firms has shown a Pareto distribution of firm size. We mix a Gibrat-type growth process among incumbents with an exponential distribution of firm's age, to obtain the empirical Pareto distribution.
    Keywords: Firm size distribution, Firm growth, Gibrat's Law, Pareto distribution, Zipf Law
    JEL: L20 L25
    Date: 2008–09–24
  7. By: Leijon, Svante (Department of Business Administration, School of Business, Economics and Law, Göteborg University); Söderbom, Arne (Department of Business Administration, School of Business, Economics and Law, Göteborg University)
    Abstract: Habitual entrepreneurs building complex business structures are despite of their importance and media exposure little researched. Our paper has this category in focus and our research questions besides the entrepreneur himself deals with their business structure from the perspectives of organisational structure and accounting practice. Three habitual entrepreneurs are described and analysed, two in Sweden and one in United Kingdom. Analysis is made with help of the metaphor New Builder with the meaning that these persons are primarily building business secondly cleaning in business structures. Results show that these entrepreneurs can be categorised as constantly exploiting business opportunities in line with many other entrepreneurial studies, but can also be categorised as adventures not discussed in earlier research. Business structure created are quite complex and there is tensions based on entrepreneurs seeing synergy while other actors has to deal with the complexity in these structures. Also there is tension in accounting based on entrepreneurs’ simple revenue/cost model and the professional accounting norms of accurately measuring several dimensions.
    Keywords: Habitual entrepreneurs; builder; adventurer; complexity; organisational structure; accounting practice
    Date: 2008–10–06
  8. By: Danny Leung; Alexander Ueberfeldt
    Abstract: Why do employed persons in large firms earn more than employed persons in small firms, even after controlling for observable characteristics? Complementary to previous results, this paper proposes a mechanism that gives an answer to this question. In the model, individuals accumulate human capital and are exposed to the risk of losing some of their human capital as they change jobs, voluntarily or involuntarily. The model, calibrated to the United States and Canada, accounts for one-third of the firmsize wage premium. Regarding the earnings gap between Canada and the United States, the model finds that it is solely due to differences in labor market uncertainty.
    Keywords: Economic models; Labour markets; Productivity
    JEL: J24 J31
    Date: 2008
  9. By: Sitnikov, Catalina Soriana
    Abstract: Learning and teaching have always been at the core of economic change and development. For long time there was a search for suggestions, ideas, plans and projects of how educational systems can be made more relevant to the needs of the societies they were established to serve. Implementing the Bologna principles and following the priorities of Lisbon strategy, Romanian education system and, particularly, the higher education system, reconsiders and rebuilds its vision and mission as well as its entire strategy. In this regard, the following basic elements are considered in the paper: •What is learned must be relevant to the needs of the people in economy. Educational providers need to be in touch with labour market requirements; •Effective learning must be judged on the basis of the outcomes that result, rather than on the inputs required; •Ways must be found to facilitate learning rather than to simply supply instruction; •The valueing of research and innovation within educational organizations must be increased; •Tailor made “entrepreneurial” education towards the necessities of the market, especially focused on small and medium size enterprises; •The lifelong learning –education permanence- should be continuously developed and be linked to the market requirements. The role and the main influences that higher education system will have over economic and human resources development are underlined. Also, appreciating that entrepreneurship becomes more and more one of the most important factors of development, the education and economic development are linked through the concept of “entrepreneurial university”.
    Keywords: higher education; economic development; entrepreneurial university
    JEL: I2 O15 M13
    Date: 2008–09–26

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