nep-ent New Economics Papers
on Entrepreneurship
Issue of 2009‒02‒22
nine papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Where does regulation hurt? Evidence from new businesses across countries By Silvia Ardagna; Annamaria Lusardi
  2. Gender Differences in Risk Aversion and Ambiguity Aversion By Borghans, Lex; Golsteyn, Bart; Heckman, James J.; Meijers, Huub
  3. Out with the sleaze, in with the ease: Insufficient for entrepreneurial development? By Naude, Wim
  4. Does social capital create trust? Evidence from a community of entrepreneurs By Sabatini, Fabio
  5. Impact assessment of an entrepreneurship course on students’ entrepreneurial competencies: a constructivist perspective By Izquierdo, E.; Buyens, D.
  6. Human Resource challenges for growing SMEs. How Flemish entrepreneurs attract, develop and retain employees By Van Bruystegem, K.; Van De Woestyne, M.; Dewettinck, K.
  7. The European venture capital and private equity country attractiveness index(es) By Groh, Alexander P.; Liechtenstein, Heinrich; Lieser, Karsten
  8. Die reformierte Gründungsförderung für Arbeitslose : Chancen und Risiken By Marco Caliendo; Alexander S. Kritikos
  9. Large Employers Are More Cyclically Sensitive By Giuseppe Moscarini; Fabien Postel-Vinay

  1. By: Silvia Ardagna; Annamaria Lusardi
    Abstract: We use two micro data sets that collect harmonized data across countries to investigate the effects of regulation on new businesses. We are able to distinguish between two types of entrepreneurs: those who start a business to pursue a business opportunity and those who start a business because they could not find better work. Irrespective of the measure of regulation we use, we always find a detrimental effect of regulation on entrepreneurship. While women are overall less likely to start new businesses, in more regulated countries women are pulled into entrepreneurship not to pursue a business opportunity but because they could not find better work. Moreover, regulation dampens the effects of self-assessed business skills and social networks. In more regulated economies, those with better business skills and those who know other entrepreneurs are less likely to become entrepreneurs to pursue a business opportunity. Tighter regulation also exacerbates fear of failure, further discouraging business start-up. All our estimates point to a negative effect of regulation.
    JEL: E0
    Date: 2009–02
  2. By: Borghans, Lex (Maastricht University); Golsteyn, Bart (Maastricht University); Heckman, James J. (University of Chicago); Meijers, Huub (Maastricht University)
    Abstract: This paper demonstrates gender differences in risk aversion and ambiguity aversion. It also contributes to a growing literature relating economic preference parameters to psychological measures by asking whether variations in preference parameters among persons, and in particular across genders, can be accounted for by differences in personality traits and traits of cognition. Women are more risk averse than men. Over an initial range, women require no further compensation for the introduction of ambiguity but men do. At greater levels of ambiguity, women have the same marginal distaste for increased ambiguity as men. Psychological variables account for some of the interpersonal variation in risk aversion. They explain none of the differences in ambiguity.
    Keywords: gender, risk aversion, ambiguity aversion
    JEL: J24 D80
    Date: 2009–01
  3. By: Naude, Wim
    Abstract: Improved governance and lower start-up costs may not be sufficient for encouraging the type of entrepreneurship that matters for economic growth. Using panel data on 60 countries spanning the period 2003-07 this paper establishes that (i) opportunity-motivated entrepreneurship (as opposed to necessity-motivated entrepreneurship) drives economic growth; (ii) governance and the start-up costs are not significant determinants of opportunity entrepreneurship; and (iii) better governance leads to higher economic growth. This implies that better governance and lower start-up costs, widely advocated as measures to promote entrepreneurship in developing countries, may not in fact be enough. Indeed, despite poorer governance and higher start-up costs, rates of opportunity-motivated entrepreneurship are higher in developing countries. Second, better governance can lead to better growth through reducing the impact of destructive entrepreneurship (including rent-seeking), even though this may not result in a reallocation of effort from destructive towards opportunity-motivated entrepreneurship. The paper concludes by discussing whether these results call in question the popular belief that a lack of opportunity-motivated entrepreneurship constrains developing country growth, and whether there is justification for more proactive government support for entrepreneurship.
    Keywords: entrepreneurship, development, institutions
    Date: 2009
  4. By: Sabatini, Fabio (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: Which kind of social capital fosters the diffusion of development-oriented trust? This paper carries out an empirical investigation into the causal relationships connecting four types of social capital (i.e. bonding, bridging, linking, and corporate), and different forms of trust (knowledge-based trust, social trust, trust towards public services and political institutions), in a community of entrepreneurs located in the Italian industrial district of the Tuscia. Our results suggest that the main factors fostering the diffusion of social trust among entrepreneurs are the perception that the local community is a safe place, and the establishment of corporate ties through professional associations. Trust in people is positively and significantly correlated also to higher levels of satisfaction and confidence in public services. Participation in voluntary organizations does not appear to increase trust in people. Rather, we find evidence of the other way round: interpersonal trust seems to encourage civic engagement.
    Keywords: Trust; Social capital; Safety; Professional associations; Entrepreneurship; Corporate ties; Group and Interpersonal Processes; Social Perception and Cognition
    JEL: A13 J24 O15 Z13
    Date: 2009–01–12
  5. By: Izquierdo, E.; Buyens, D. (Vlerick Leuven Gent Management School)
    Abstract: This paper reports on educational issues of an entrepreneurship course, supported by a constructivist perspective. The study discusses the relevance of constructivism in entrepreneurship education. As a way of assessing this issue, a pre-test-post-test multiple-group quasi-experimental design was performed with the data collected during an academic term. Data were collected by using three instruments to examine the students’ entrepreneurial competencies and self-efficacy levels; two of them were newly developed. Results indicate that an action-oriented instructional approach, fitting into the constructivist view, has a positive impact on the development of entrepreneurial competencies in undergraduate students. Furthermore, the findings reveal that students self-assessed higher on their entrepreneurial self-efficacy after the course completion. Discussion of the findings and implications for future research are presented.
    Keywords: Constructivist Perspective, Entrepreneurship, Competencies, Self-efficacy
    Date: 2008–12–12
  6. By: Van Bruystegem, K.; Van De Woestyne, M.; Dewettinck, K. (Vlerick Leuven Gent Management School)
    Abstract: For Flemish entrepreneurs human resource management is one of the biggest challenges for further development and growth (Forum on Entrepreneurship, October 2006). Hence, this paper aims to shed light on how successful entrepreneurs in Flanders manage their human resources. Building on Greiner’s (1998) growth model and the model of Ulrich (1997), we conducted a qualitative study of various human resource practices within Flemish entrepreneurial firms in different sectors and stages of growth. We investigated the interplay between the focus of HRM and the growth phase of an SME. The main objective is to better understand the major challenges entrepreneurs experience when managing people during the first stages of company growth. Our findings suggest that HRM within growing SMEs shifts from an operational focus on people to a more strategic focus on procedures. Throughout the process of evolution entrepreneurs need to find the right balance of HR practices, paying attention to formalisation, delegation and coaching.
    Keywords: SME; HRM; small firms; growth phase
    Date: 2008–12–11
  7. By: Groh, Alexander P. (IESE Business School); Liechtenstein, Heinrich (IESE Business School); Lieser, Karsten (IESE Business School)
    Abstract: We calculate composite indexes to compare the attractiveness of 25 European countries for institutional investments into the Venture Capital and Private Equity asset class. To achieve this we use 42 different criteria and propose an aggregation structure that allows for benchmarking on more granular levels. The United Kingdom leads our ranking, followed by Ireland, Denmark, Sweden and Norway. While Germany is slightly above the average European attractiveness level, the scores for France, Italy, Spain, and Greece are rather disappointing. Our analyses reveal that while the United Kingdom is similar to the other European countries with respect to many criteria, there are two major differences which ultimately affect its attractiveness: its investor protection and corporate governance rules; and the size and liquidity of its capital market. The state of the capital market is likewise a proxy for the professionalism of the financial community, deal flow and exit opportunities. We determine a reasonable correlation between our attractiveness index scores and actual Venture Capital and Private Equity fundraising activities and prove the robustness of our calculations. Our findings across all the European countries suggest that while investor protection and capital markets are in fact very important determinants of attractiveness, there are numerous other criteria to consider.
    Keywords: Venture Capital; Private Equity; Alternative Asset; International Asset Allocation;
    JEL: G11 G23 G24 O16 P52
    Date: 2008–11–07
  8. By: Marco Caliendo; Alexander S. Kritikos
    Abstract: Support schemes for unemployed persons aiming to become self-employed have been recently reformed several times. In 2003, the "start-up-subsidy" (Existenzgründungszuschuss) was added to the existing "bridging-allowance" (Überbrückungsgeld) and the two programs to-gether led to a strong increase in the number of supported start-ups. In 2006 both instruments were merged to the "start-up allowance" (Gründungszuschuss). Since the bridging allowance has been evaluated as effective and efficient and the start-up-subsidy reached new target groups, the latest reform shows several short-comings. First of all, an end of the start-up boom is to be expected with the newly attracted target groups not being reached anymore. Secondly, the design of the "start-up allowance" is suboptimal, where efficiency losses can be expected if participants aim at maximizing social transfers. First empirical evidence from data of 2007 supports most of these expectations.
    Date: 2009
  9. By: Giuseppe Moscarini; Fabien Postel-Vinay
    Abstract: We provide new evidence that large firms or establishments are more sensitive than small ones to business cycle conditions. Larger employers shed proportionally more jobs in recessions and create more of their new jobs late in expansions, both in gross and net terms. We employ a variety of measures of relative employment growth, employer size and classification by size, and a variety of U.S. datasets, both repeated cross-sections and job flows with employer longitudinal information, starting in the mid 1970's and now spanning four business cycles. We revisit two statistical fallacies, the Regression and Reclassification biases, and show empirically that they are quantitatively modest given our focus on relative cyclical behavior. The differential growth rate of employment between large (>1000 employees) and small (<50) firms varies by about 5% over the business cycle, and is strongly negatively correlated with the unemployment rate. This pattern occurs within, not across broad industries, regions and states, and is robust to different treatments of entry and exit. It appears to be partly driven by excess (mass) layoffs by large employers during and just after recessions, and by excess poaching by large employers late in expansions. We find the same qualitative pattern in longitudinal censuses of employers from Denmark and Brazil, and in other countries. Finally, we sketch a simple firm-ladder model of turnover that can shed light on these facts, and that we analyze in detail in companion papers.
    JEL: E24 E32 J23 J63
    Date: 2009–02

This nep-ent issue is ©2009 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.