nep-ent New Economics Papers
on Entrepreneurship
Issue of 2008‒11‒04
seven papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Founders' experience and self-employment duration : the importance of being a 'Jack-of-all-trades'. An analysis based on competing risks By Oberschachtsiek, Dirk
  2. Market Entry in E-Commerce By Maximilian Kasy; Michael Kummer
  3. On Entrepreneurial Risk–Taking and the Macroeconomic Effects of Financial Constraints By Christiane Clemens and Maik Heinemann
  4. The Global Award for Entreprenurship Research By Henrekson, Magnus; Lindström, Anders
  5. Measuring business dynamics among incumbent firms in The Netherlands By André van Stel; Mickey Folkeringa; Kashifa Suddle; Sita Tan
  6. User Innovation in SMEs: Incidence and Transfer to Producers By Jeroen de Jong; Eric von Hippel
  7. Firms as Bundles of Discrete Resources - Towards an Explanation of the Exponential Distribution of Firm Growth Rates By Alex Coad

  1. By: Oberschachtsiek, Dirk (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper investigates how founders' experience and professional background affect the duration of periods of self-employment, and to what extent the duration is affected by a balanced skill set in particular. In this context, an occupational choice framework based on a competing risk setting is used that considers an exit choice as a time varying incident. Particularly, a tailor-made variable is used reflecting the balancing property of the individuals' professional background. The results show that most self-employed individuals find themselves unemployed again. Industrial experience, experience in the service or product, high motivation and professional background as a crafts master are clearly associated with comparative advantages in self-employment. It turns out that a broad range of competences is not sufficient in order to prolong the expected duration. However, a comprehensive set of skills combined with sales/business experience can extend the duration of self-employment." (author's abstract, IAB-Doku) ((en))
    Keywords: berufliche Selbständigkeit - Dauer, Unternehmenserfolg - Determinanten, Humankapital, unternehmerische Qualifikation, Fachkenntnisse, berufliche Qualifikation, Berufserfahrung, Selbständige, Unternehmer, Überbrückungsgeld - Inanspruchnahme, Berufsverlauf, Arbeitslosigkeit, Unternehmensgründung, Arbeitslose, abhängig Beschäftigte, Niedersachsen, Lüneburg, Bundesrepublik Deutschland
    JEL: C41 J24 J44 J62 J64
    Date: 2008–10–23
  2. By: Maximilian Kasy (UC-Berkeley, Department of Economics); Michael Kummer (Johannes Keppler University, Linz, Austria)
    Abstract: We analyze the behavior of start-ups in e-commerce, namely on Austria's leading price-comparison-site, a multi-product environment with almost complete information. We use weekly panel data on price-quotes of digicams, Audio/HiFi-equipment and hardware. We furthermore use advanced estimation methods, which, having only recently been introduced to IO, aim at using a minimum of modeling assumptions. Thus, being able to trace the behavior of roughly 350 start-up companies and 600 incumbents, we investigate whether start-ups have a different composition of product-portfolios, charge lower prices and offer fewer goods.
    Keywords: nonparametric estimation, panel data, start-up, entry, e-commerce, strategic behavior, pricing
    JEL: C14 C23 L11 L14 L81
    Date: 2008–09
  3. By: Christiane Clemens and Maik Heinemann (Institute of Economics, University of Lüneburg)
    Abstract: This paper deals with credit market imperfections and idiosyncratic risks in a two–sector heterogeneous agent dynamic general equilibrium model of occupational choice. We focus especially on the effects of tightening financial constraints on macroeconomic performance, entrepreneurial risk–taking, and social mobility. Contrary to many models in the literature, our comparative static results cover a broad range for borrowing constraints, from an unrestrained to a perfectly constrained economy. In our baseline model, we find substantial gains in output, welfare, and wealth equality associated with credit market improvements. The marginal gains from relaxing constraints are largest for empirically relevant debt–equity ratios. Interestingly, the entrepreneurship rate and social mobility respond non–monotonically to a change in the tightness of financial constraints. The results crucially depend on the degree of income persistence and feedback effects in general equilibrium, where optimal firm sizes and the demand for credit are determined endogenously.
    Keywords: CGE, occupational choice, financial constraints, wealth distribution
    JEL: C68 D3 D8 D9 G0 J24
    Date: 2008–10
  4. By: Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Lindström, Anders (Swedish Foundation for Small Business Research)
    Abstract: The International Award for Entrepreneurship and Small Business Research was instituted in 1996, and it is now firmly established as the leading Prize for outstanding research contributions in the area. Thanks to a generous donation from the Swedish entrepreneur Rune Andersson it has been possible to make a number of changes in order to strengthen the Prize even further: The name is changed to The Global Award for Entrepreneurship Research, the Prize sum is roughly doubled to 100,000 euros, and the system for nomination, evaluation and selection of future Award Winners is becoming more structured and transparent. This essay presents the background to and the organizations behind the Award, briefly categorizes Winners in the 1996–2008 period, describes the previous and future system for nomination, evaluation and selection of Award Winners, and discusses the criteria for the selection of Prize candidates and Award Winning contributions.
    Keywords: Entrepreneurship; Innovation; Research award; Small business
    JEL: L26 L50 M13 O31
    Date: 2008–10–23
  5. By: André van Stel; Mickey Folkeringa; Kashifa Suddle; Sita Tan
    Abstract: Business dynamics in an industry is generally seen as an important indicator of the industry's level of competitiveness and economic performance. Two types of business dynamics may be distinguished: business dynamics reflecting competition by new-firm entries and business dynamics reflecting competition among incumbent firms. A growing literature pays attention to the important role of the former type of business dynamics (the starting up of new firms) for achieving economic growth. However, the latter type of business dynamics tends to be overlooked in this type of literature. In part this is due to the large requirements, both in terms of data and in terms of methodology, of measuring competition among incumbent firms. A sophisticated indicator for measuring the extent of business dynamics among incumbent firms in an industry is the mobility index. In the current paper we compute mobility indices for 16 industries -covering the whole private sector except for the primary sectors of economy- in the Netherlands over the period 2000-2006, and compare the values of the mobility indices across the sectors.
    Date: 2008–10–27
  6. By: Jeroen de Jong; Eric von Hippel
    Abstract: The contribution of this paper is threefold. Firstly, we measure the incidence of user innovation in a broad sample of firms. Previous work has collected repeated evidence on the frequency of user innovation in a variety of industries and products, but so far its incidence has not been demonstrated in samples of larger business populations. Secondly, we assess if current innovation surveys adequately capture user innovation. Surveys such as the CIS (Community Innovation Survey) take a producer perspective and seem to overlook that in practice many innovation efforts are done by users to satisfy their process needs. Thirdly, we explore to what extent user innovations are transferred to producer firms. In doing so we assess if user innovation is marked by voluntary spillovers which is a strong argument to justify policies for user innovation. Drawing on survey data of 2 416 SMEs in the Netherlands, we find that 21% of all SMEs engage in user innovation, i.e. they develop and/or significantly modify existing techniques, equipment or software to satisfy their own process-related needs. We also find that user innovation is remains largely invisible in the current innovation surveys. Next, in a survey of technology-based small firms in the Netherlands we identified 364 specific user innovations. We found that users tend not to patent or protect their innovations, and that one out of four is transferred to producers. The data suggest a significant feedstock of voluntary knowledge spillovers from users to producer firms. We conclude that future innovation surveys should explicitly capture user innovation, and develop some recommendations to guide this effort. We also plea for more research on policies for user innovation.
    Date: 2008–10–21
  7. By: Alex Coad (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Max Planck Institute of Economics - Evolutionary Economics Group)
    Abstract: A robust feature of the corporate growth process is the Laplace, or symmetric exponential, distribution of firm growth rates. In this paper, we sketch out a class of simple theoretical models capable of explaining this empirical regularity. We do not attempt to generalize on where growth opportunities comme from, but rather we focus on how firms build upon growth opportunites. We borrow ideas from the self-organizing criticality literature to explain how the interdependent nature of discrete resources may lead to the triggering off of a series of additions to a firm's resources. In a first formal model we consider the case of employment growth in a hierarchy, and observe that growth rates follow an exponential distribution. In a second model we include plant and capital as resources and we are able to reproduce a number of stylized facts about firm growth.
    Keywords: Firm growth rates, exponential distribution, hierarchy, growth autocorrelation.
    Date: 2008–10

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