nep-ent New Economics Papers
on Entrepreneurship
Issue of 2009‒04‒18
six papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. The global entrepreneurship index (GEINDEX) By Zoltán J. Ács; László Szerb
  2. R&D Subsidies to Start-ups - Effective Drivers of Patent Activity and Employment Growth? By Uwe Cantner; Sarah Kösters
  3. Credit and self-employment By Kartik Athreya; Ahmet Akyol
  4. Pension Schemes for the Self-Employed in OECD Countries By Jongkyun Choi
  5. Has the industrial cluster project improved the R&D efficiency of industry-university partnership in Japan? By Nishimura, Junichi; Okamuro, Hiroyuki
  6. Does Innovation Help the Good or the Poor Performing Firms? By Jože P. Damijan; Crt Kostevc; Matija Rojec

  1. By: Zoltán J. Ács (George Mason University); László Szerb (University of Pécs)
    Abstract: This paper constructs a Global Entrepreneurship Index (GEINDEX) that captures the contextual feature of entrepreneurship across countries. We find the relationship between entrepreneurship and economic development to be mildly S-shaped not U-shaped or L-shaped. Our findings suggest moving away from simple measures of entrepreneurship across countries illustrating a U-shaped or L-shaped relationship to more complex measures, which are positively related to economic development. Implications for public policy suggest that institutions need to be strengthened before entrepreneurial resource can be deployed to drive innovation.
    Keywords: Entrepreneurship, Development, Stages of Growth, Globalization, Innovation, Index, Knowledge, Institutions
    JEL: L26 O1 O3
    Date: 2009–04–14
  2. By: Uwe Cantner (Friedrich-Schiller-University Jena, Department of Economics, Chair of Economics/Microeconomics); Sarah Kösters (Friedrich-Schiller-University Jena, Department of Economics, DFG RTG 1411 "The Economics of Innovative Change")
    Abstract: The present paper investigates the effectiveness of R&D subsidies given to start-ups. Taking an aggregate view rather than evaluating a single program, we estimate the impact of R&D subsidies on start-ups' employment growth and their patent output. A unique data set on start-ups in the East German county of Thuringia allows us to focus on those start-ups that conduct R&D within the first three business years. We conduct propensity score matching to address the selection bias between subsidized and non-subsidized start-ups. We find that R&D subsidies lead to an increase in employment growth of about 66%. Furthermore, subsidized start-ups show a 2.8 times higher patent output. These estimates provide evidence for the additionality of R&D subsidies within the first three business years. Moreover, our analysis points to the special group of academic spin-offs which excels in the novelty of business ideas and patent activity. For some of these high-tech start-ups, no non-subsidized counterparts can be found. This might be attributed to the policy focus on academic spin-offs, which has led to a successful targeting of R&D support schemes.
    Keywords: R&D subsidies, start-ups, policy evaluation
    JEL: O38 L26 H50 C14
    Date: 2009–04–14
  3. By: Kartik Athreya; Ahmet Akyol
    Abstract: Limited personal liability for debts has long been justified as a tool to promote entrepreneurial risk taking by providing insurance to the borrower in the event of low returns. Nonetheless, such limits erode repayment incentives, and so may increase unsecured borrowing costs. Our paper is the first to evaluate the tradeoff between credit costs and insurance against failure. We build a life-cycle model with risky, and repeated, occupational choice in the presence of defaultable debt contracts. We find that limits to liability can encourage self-employment, and alter the timing, size, and financing of self-employment projects. We also find that the positive relationship between wealth and self-employment rates may not be evidence for credit constraints: We show that such a relationship is present even when limited liability is eliminated.
    Date: 2009
  4. By: Jongkyun Choi
    Abstract: The self-employed workers make up a small but significant minority of the workforce in many OECD countries. Moreover, transitions into and out of self-employment have become much more common for a larger group of workers. It is therefore of critical importance to review and assess the pension schemes available to self-employed workers across OECD countries. Given employment and income patterns commonly observed for this subgroup, it is also important to address the issue of compliance and enforcement towards a formal affiliation of this group to pension schemes on offer. This paper reviews three key aspects of pension schemes available to self-employed workers: coverage, contributions and benefits. In each part, analyses are undertaken not just by describing the rules governing these schemes but also looking into their actual functioning in terms of compliance and enforcement. Key findings include the fact that the self-employed are covered by the same pension schemes as those of employees in the majority of countries. One important difference is that, while employees share the contribution burden with their employers, the self-employed workers in most cases pay the full pension contribution from their own income. The rules for pension entitlements, on the other hand, are usually almost identical to those that apply to employees. One key conclusion emerging from this paper is that the pension provision for the self-employed is a matter of practical implementation of existing schemes rather than overhauling pension rules for these schemes. Low coverage is a common problem for this group in some OECD countries, as they belong to the informal sector and their incomes are hard to identify. Contribution evasion or under-reporting of income by the self-employed is prevalent even in some countries with high per capita income. This has implications as these self-employed workers will have lower levels of pension incomes at retirement. In some cases, low contributions coupled with relatively generous pension rights also raise an issue of equity in the provision of pensions for the self-employed and employees.<BR>Dans beaucoup de pays de l’OCDE, les travailleurs indépendants constituent, au sein de la population active, une minorité faible par la taille mais d’importance significative. En outre, pour un nombre accru de travailleurs, le passage au statut d’indépendant et l’abandon de ce statut est un processus bien plus courant aujourd’hui. En conséquence, il est crucial d’examiner et évaluer les régimes de pension qui sont à la disposition des travailleurs indépendants dans les différents pays de l’OCDE. Compte tenu de la structure de l’emploi et de celle du revenu généralement observées au sein de cette population, il importe également de s’intéresser au respect de l’obligation d’affiliation formelle de ces travailleurs aux régimes de pension qui leur sont proposés et aux moyens de les y contraindre. Ce document examine trois aspects clés des régimes de pension auxquels les travailleurs indépendants peuvent s’affilier : couverture, cotisations et prestations. Dans chaque partie, les analyses proposées ne se contentent pas de décrire les règles régissant ces dispositifs, mais portent aussi sur leur fonctionnement concret du point de vue du respect de l’obligation d’affiliation et des instruments de coercition. Les principales observations englobent le fait que, dans la majorité des pays, les travailleurs indépendants sont couverts par les mêmes régimes de retraite que les salariés, à ceci près, et la différence est de taille, que si les salariés partagent le poids des cotisations avec leurs employeurs, les travailleurs indépendants payent dans la plupart des cas les deux parts sur leur propre revenu. Par ailleurs, les règles régissant les droits à pension des indépendants sont généralement presque identiques à celles s’appliquant aux salariés. Une conclusion essentielle se dégage de ce document : en matière de retraite, la question qui se pose pour les travailleurs indépendants concerne l’application pratique des dispositifs existants et non la remise à plat des règles. Dans quelques pays de l’OCDE, les indépendants se heurtent à un même problème, celui du faible niveau de couverture, car cette catégorie de travailleurs relève du secteur informel, et ses revenus sont difficiles à cerner. La fraude fiscale et la sous-déclaration des revenus sont très répandues chez les travailleurs indépendants, même dans des pays où le revenu par habitant est élevé. Ce phénomène n’est pas sans conséquence car au moment de la retraite, le niveau de revenu que procurera à ces travailleurs leur pension sera plus modeste. Dans certains cas, le faible niveau des cotisations conjugué à la générosité des droits à pension soulève aussi un problème d’équité dans le financement des pensions des travailleurs indépendants et des salariés.
    JEL: H55 J23
    Date: 2009–04–09
  5. By: Nishimura, Junichi; Okamuro, Hiroyuki
    Abstract: We evaluate the “Industrial Cluster Project†in Japan initiated by the Ministry of Economy, Trade and Industry (METI) in 2001 in terms of industry-university partnership (IUP), using original questionnaire data of small and medium enterprises (SMEs). In this paper, we use the number of patent applications as the measure of both the performance of the cluster project and the industry-university partnership. Specifically, we test the following hypotheses: 1) The SMEs that participate in the cluster project apply for more patents than those that do not. 2) The effect of participation in the cluster project on R&D productivity is enhanced by collaboration with national universities within the same cluster area. We collected the data of 229 R&D intensive SMEs with up to 300 employees through a survey conducted in 2005. We employ negative binomial regression to test how participation in the cluster project affects R&D productivity, controlling for firm characteristics such as the number of employees, R&D intensity, the number of IUP projects, the dummy variable for collaboration with national universities, the dummy variable for joint R&D, the dummy variable for collaboration within cluster regions, and industry dummies. Moreover, we estimate the treatment effect model and the instrumental variables (IV) regression, considering the possibility that participation in a cluster project is endogenous. We use firm age as an instrumental variable because the cluster project aims at attracting start-ups and young firms. The estimation results can be summarized as follows. First, participation in the cluster projects alone does not affect patent application. Rather, local firms collaborating with partners outside the cluster show higher R&D productivity in general. Second, the cluster participants apply for more patents when they collaborate with national universities in the same cluster region. Further results reveal that, in this case, the quality of applied patents measured by the average number of claims does not significantly decrease, which is not in line with the argument that cluster firms are subject to administrative pressures to show off the performance of the cluster projects.
    Keywords: Industrial cluster, Industry-university partnership (IUP), Small and medium enterprise (SME), R&D, Patent, Japan
    JEL: O23 O32 O38 R38
    Date: 2008–11
  6. By: Jože P. Damijan; Crt Kostevc; Matija Rojec
    Abstract: Using firm-level innovation data for a large sample of Slovenian firms in the period 1996-2002, the paper finds surprising results that innovation is not benefitting all firms. We find that only manufacturing firms with below average productivity growth (the lowest four deciles) are likely to experience significant benefits from successful innovation, while faster growing firms do not extract any additional benefits from innovation. This evidence demonstrates how innovation can affect the observed convergence of firms in terms of productivity in the manufacturing sector.
    Keywords: research and development, innovation, knowledge spillovers, productivity growth
    JEL: D24
    Date: 2009

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