nep-ent New Economics Papers
on Entrepreneurship
Issue of 2009‒03‒14
eight papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Entrepreneurial Morality: Some Indications from Greece By Bitros, George C.; Karayiannis, Anastassios D.
  2. Encountered Problems and Outcome Status in Nascent Entrepreneurship By Gelderen, A.M. van; Patel, B.P.; Thurik, A.R.
  3. Perceptions of Efficacy, Control, and Risk: A Theory of Mixed Control By Erik Monsen; Diemo Urbig
  4. Entrepreneurial dimensions of the growth of small companies By Colombelli Alessandra
  5. The Effect of New Business Formation on Employment - The Dominance of Density By Alexandra Schroeter
  6. Employment generation by small firms in Spain By Paloma López-García; Sergio Puente; Ángel Luis Gómez
  7. Herding versus Hotelling: Market Entry with Costly Information By David B. Ridley
  8. Large Employers Are More Cyclically Sensitive By Giuseppe Moscarini; Fabien Postel-Vinay

  1. By: Bitros, George C.; Karayiannis, Anastassios D.
    Abstract: In countries with relatively small firms, entrepreneurial morality is determined by the influences that shape the values, the personality and the character of entrepreneurs as owners and managers of their enterprises. To shed some light on the processes involved we estimate an ordered probit model using data from 1643 enterprises, which were collected in Greece in the spring of 2006. We find that localized and generalized morality, the family and the educational environment, the level of education, the size of firms, and the moral factors that contribute to success in business, determine entrepreneurial morality in a statistically significant way. By contrast, even though we experimented with such other influences as the age of enterprises, the gender of entrepreneurs, the location of schools where they grew up, etc., none of them turned out to exert perceptible impacts.
    Keywords: entrepreneurship; morality; Greece; small-medium enterprises
    JEL: D29 L26 M13
    Date: 2008–06–17
  2. By: Gelderen, A.M. van; Patel, B.P.; Thurik, A.R. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The relationship is investigated between outcome status and encountered problems in the business start-up process. Contrary to expectations, we find that starters do not differ from quitters in number and type of problems encountered, and that problems encountered generally do not affect outcome status. This Dutch research uses a design that is comparable to the U.S. PSED (Panel Study of Entrepreneurial Dynamics) in which a sample of 414 nascent entrepreneurs were followed over a three year period.
    Keywords: nascent-entrepreneurship;outcome-status;encountered-problems
    Date: 2009–02–23
  3. By: Erik Monsen (Max Planck Institute of Economics, Jena, Germany); Diemo Urbig (Max Planck Institute of Economics, Jena, Germany)
    Abstract: Based on the aggregated insights of the existing theories related to multiple sources of efficacy and locus of control, we introduce the theory of mixed control, a model of compound-risk perception. This theory considers outcome expectancies as being composed of expectancies regarding three distinct sources of risk (self, others, and chance). This reflects that entrepreneurship is a complex and dynamic activity, involving multiple sources of risk. Beliefs about the efficacy of these elements are weighted by the degree to which these elements are perceived to control the outcome. The interaction of efficacy and control beliefs is therefore at the core of our theory. Further, we discuss that risks are not only subjectively perceived but can be endogenous and depend on future decisions and actions of the entrepreneur.
    Keywords: locus of control, self-efficacy, risk perception
    JEL: D8 D83 D84
    Date: 2009–03–04
  4. By: Colombelli Alessandra
    Abstract: The aim of this paper is to highlight the main features of entrepreneurial businesses and to shed light on the determinants of the growth of small firms undertaking an IPO. For this purpose, we centre our attention on companies going public on the Alternative Investment Market (AIM), a market dedicated to young and growing companies. In the paper we investigate the post-IPO performance of 665 listed firms that have gone public during the period from 1995 to 2006. In the work the factors influencing business performance are inferred from a broad range of variables (e.g. accounting information, CEO and board age, educational background and past experience). Our findings confirm that small companies listed on the AIM grow at a faster rate after the IPO. It seems that intangible assets are important determinants of their fast growth. The results of this work underline the relevance of secondary markets, such as the AIM, as a valuable alternative to traditional financial institutions in providing capital to small and entrepreneurial companies.
    Date: 2009–02
  5. By: Alexandra Schroeter (Friedrich Schiller University Jena, Faculty of Economics and Business Administration)
    Abstract: Empirical analyses show that the employment effects of start-ups are highest in agglomerations, whereas moderately congested areas exhibit only modest effects, and weak or even no significant effects could be found in rural regions. This paper will set out to show that these discrepancies arise from specific characteristics of urban areas. The magnitude of the employment effects of entry in agglomerations can, therefore, be regarded as a further kind of agglomeration benefit which has not been discussed in the literature yet. In particular, it is explained how the distinct characteristics of urban areas contribute to the emergence of high-quality start-ups that are known to cause larger employment effects than other types of new businesses. In addition, this paper argues that the relatively intense competition in urban areas further stimulates the economic effects of new business formation in agglomerations.
    Keywords: Entrepreneurship, new business formation, regional development, entrepreneurship policy
    JEL: M13 O1 O18 R11
    Date: 2009–03–05
  6. By: Paloma López-García (Banco de España); Sergio Puente (Banco de España); Ángel Luis Gómez (Banco de España)
    Abstract: Despite the relevance in terms of policy, we still know little in Spain about where and by whom jobs are created, and how that is affecting the size distribution of firms. The main innovation of this paper is to use a rich database that overcomes the problems encountered by other firm-level studies to shed some light on the employment generation of small firms in Spain. We find that small firms contribute to employment disproportionately across all sectors of the economy although the difference between their employment and job creation share is largest in the manufacturing sector. The job creators in that sector are both new and established firms whereas only new small firms outperform their larger counterparts in the service sector. The large annual job creation of the small firm size class is shifting the firm size distribution towards the very small production units, although not uniformly across industries of different technology intensity.
    Keywords: Firm-level data, employment creation and destruction, and firm size distribution
    JEL: L11 L53 J21
    Date: 2009–03
  7. By: David B. Ridley
    Date: 2009–03–12
  8. 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. The differential growth rate of employment between large and small firms varies by about 5% over the business cycle. Omitting cyclical indicators may lead to conclude that, on average, these cyclical effects wash out and size does not predict subsequent growth (Gibrat's law). We employ a variety of measures of relative employment growth, employer size and classification by size. We revisit two statistical fallacies, the Regression and Reclas- sification biases, that can affect our results, and we show empirically that they are quantitatively modest given our focus on relative cyclical behavior. We exploit a va- riety of (mostly novel) 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. The pattern that we uncover is robust to different treatments of entry and exit of firms and establishments, and occurs within, not across broad industries, regions and states. Evidence on worker flows suggests that the pattern is driven at least in part by excess layoffs by large employers in and just after recessions, and by excess poaching by large employers late in expansions. We find the same pattern in similar datasets in four other countries, including full longitudinal censuses of employers from Denmark and Brazil. 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.
    Keywords: business cycle , employment, firm size.
    JEL: J21 E32
    Date: 2009–02

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