nep-ent New Economics Papers
on Entrepreneurship
Issue of 2009‒05‒16
eleven papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Extensive and Intensive Investment over the Business Cycle By Boyan Jovanovic; Peter L. Rousseau
  2. Market Concentration and Business Survival in Static v Dynamic Industries By Andrew Burke; Aoife Hanley
  3. The Effect of Ability on Young Men’s Self-Employment Decision: Evidence from the NELS By Ozkan Eren; Ozan Sula
  4. Does Experience Determine Performance? A Meta-Analysis on the Experience-Performance Relationship By Peake, Whitney O.; Marshall, Maria I.
  5. In search of excellence - Innovation contests to foster innovation and entrepreneurship in Portugal By Adão Carvalho
  6. Firm Birth and Death in U.S. Manufacturing: A Regional Adjustment Model By Brown, Jason P.; Lambert, Dayton M.; Florax, Raymond J.G.M.
  7. Institutional Determinants of New Firm Entry in Russia: A Cross Regional Analysis By R. L. Bruno; M. Bytchkova; S. Estrin
  8. Relation entry, exit and productivity By Viktoria Kocsis; Ruslan Lukach; Bert Minne; Victoria Shestalova; Nick Zubanov; Henry van der Wiel
  9. Entry, Ownership Form, and Spatial Location: An Analysis of the Hotel Industry By Helmers, Claes Gustav; Connor, John M.; Florax, Raymond J.G.M.; Vroom, Govert
  10. Divari territoriali e limiti nell’accesso al credito per le PMI meridionali: quale ruolo per i Confidi? By Petraglia, Carmelo; Amaturo, Francesca; Giordano, Luca
  11. New Economy Growth Decomposition in the U.S. By Adelaja, Soji; Hailu, Yohannes G.; Abdulla, Majd

  1. By: Boyan Jovanovic; Peter L. Rousseau
    Abstract: Investment of U.S. firms responds asymmetrically to Tobin’s Q: Investment of established firms — ‘intensive’ investment — reacts negatively to Q whereas investment of new firms — ‘extensive’ investment — responds positively and elastically to Q. This asymmetry, we argue, reflects a difference between established and new firms in the cost of adopting new technologies. A fall in the compatibility of new capital with old capital raises measured Q and reduces the incentive of established firms to invest. New firms do not face such compatibility costs and step up their investment in response to the rise in Q. A composite-capital version of the model fits the data well using aggregates since 1900 and our new database of firm-level Qs that extend back to 1920.
    JEL: E22 E32
    Date: 2009–05
  2. By: Andrew Burke; Aoife Hanley
    Abstract: We propose that the effect of market concentration on firm survival is different according to whether an industry is static (low entry and exit) or dynamic. In our empirical analysis we find support for this hypothesis. Industry concentration rates reduce the survival of new plants but only in markets marked by low entry and exit rates. Specifically, a 10 percent increase in the 5-firm concentration ratio in a dynamic market raises the survival rate of new ventures by approximately 2 percent. Our results have implications for the antitrust/competition law indicating less need for regulation of dominant firms in dynamic industries characterized by high entry and exit rates. We use a unique dataset comprising the population of new ventures that enter the UK market in 1998
    Keywords: new firms, start-ups, survival, dynamism, competition policy, industry concentration
    JEL: L11 L25 M13 M40
    Date: 2009–05
  3. By: Ozkan Eren (Department of Economics, University of Nevada, Las Vegas); Ozan Sula (Department of Economics, Western Washington University)
    Abstract: Using the National Educational Longitudinal Study data, we examine the role of pre-market abilities, as well as other determinants, on young men’s self-employment decision. Our results indicate that cognitive and noncognitive abilities are two important, in opposing directions, predictors of self-employment. We also find that cognitive and noncognitive abilities differ in their malleability with the latter being more malleable during adolescence. In addition, having a self-employed father, being black and family size exert large influences on self-employment probability.
    Keywords: Cognitive Ability, Endogeneity, Intergenerational Correlation, Malleability, Noncognitive Ability.
    JEL: C25 J0 J24
    Date: 2009–04
  4. By: Peake, Whitney O.; Marshall, Maria I.
    Abstract: The impact of experience on entrepreneurial performance has been widely tested. Although experience is expected to positively impact performance, results are varied. This research synthesizes the current literature by determining systematic sources of variation through both exploratory and ordered probit analyses. Results reveal that start date for data collection and form of experience tested pose a major impact on the probability of obtaining a positive estimate for the experience-performance relationship. This research further emphasizes the need for tightened standards across the experience-performance literature in order to equip both academics and practitioners with better information.
    Keywords: Entrepreneurship, Experience, Performance, Meta-Analysis, Agribusiness, Labor and Human Capital,
    Date: 2009
  5. By: Adão Carvalho (Universidade de Evora, Departamento de Economia, CEFAGE-UE)
    Abstract: Numerous initiatives of different nature have taken place in Portugal over the recent years aiming at raising consciousness of the importance and advantages of innovation and entrepreneurship, persuading businesspeople to place innovation as strategic intent and encouraging would-be entrepreneurs to come forward with novel businesses ideas. Innovation contests are but one of such initiatives. From sporadic events before 2000, the phenomenon gained unprecedented dimension and growing sophistication at several levels, including the number of innovation contests launched annually, number and kind of organizations involved, volume and kind of prizes and support in business plan construction. Today, this is a popular means that a range of different organizations use to uncovering novel business ideas and promoting innovation and entrepreneurship. Based on a large data base purposefully built for this research by the author, this paper aims to describe the phenomenon of innovation contests in Portugal and characterize its evolution over the period 2000-2008. Findings show a general use of contests as instruments to promote and prize innovation across a range of target audiences going from high school students to established businesses; an increasing trend in the number of innovation contests launched annually in Portugal; high rates of rotation of the innovation contests launched annually over the period under analysis; a growing diversification in the type of promoters which is particularly clear from 2004 onwards; and that private firms, higher education institutions and business associations appear to be gaining a prominent role as promoters of innovation contests.
    Keywords: Innovation contest, innovation, entrepreneurship, Portugal.
    JEL: O31 L26
    Date: 2009
  6. By: Brown, Jason P.; Lambert, Dayton M.; Florax, Raymond J.G.M.
    Abstract: Attracting manufacturing investment is a frequently used rural development policy. Previous research in the location literature has informed policymakers which factors are most important for attracting new firm investment. Far less is known about the interaction of birth and death of establishments. A conceptual model of county-level investment in the U.S. manufacturing sector is developed from location theory and subsequent literature. Specifically, we test the relative importance of location factors influencing firm investment, and if these factors influence firm birth and death differently. Local factors include agglomeration due to localization, urbanization, and internal economies, market structure, labor quality, availability, and cost, market conditions, , infrastructure, and fiscal policy. This study covers the time period 2000 to 2004 for U.S. counties in the lower 48 states. Counts of establishments are from the U.S. Census Bureauâs Dynamic Firm Data Series, which links establishments across space and time. Negative binomial models containing spatially lagged endogenous variables are estimated in a regional adjustment framework to show how ceteris paribus changes in location factors affect the conditional number of establishment births and deaths in a county.
    Keywords: location determinants, manufacturing, count models, Community/Rural/Urban Development, Research Methods/ Statistical Methods, L60, R11, R12,
    Date: 2009–05
  7. By: R. L. Bruno; M. Bytchkova; S. Estrin
    Date: 2008–10
  8. By: Viktoria Kocsis; Ruslan Lukach; Bert Minne; Victoria Shestalova; Nick Zubanov; Henry van der Wiel
    Abstract: This document provides a review of recent theoretical and empirical literature on the relationship between entry, exit and productivity. Decomposition methods show that entry and exit considerably contribute to productivity growth, but are unable to shed any light on the ultimate sources of productivity growth. However, the theories discussed do provide options for effective policy instruments. We argue that productivity or welfare should be the aim of policy and not the number of entrants, the intensity of competition or the amount of innovation expenditures. Taking a welfare approach, we address market failures with respect to entry. The most eminent market failure is market power of dominant incumbents. Lowering institutional entry barriers economy-wide is a promising policy option for further consideration. Whether such a policy measure actually improves social welfare depends also on the extent of other failures. Therefore, an ex ante cost-benefit analysis needs to precede intervention.
    Keywords: entry; exit; productivity
    JEL: B41 O30
    Date: 2009–03
  9. By: Helmers, Claes Gustav; Connor, John M.; Florax, Raymond J.G.M.; Vroom, Govert
    Abstract: This paper analyses the impact of ownership type on the locating behavior and capacity choice of prospective entrant hotels. An important aspect which has often been neglected in the entry literature is the relevance of the ownership that defines an establishment. A hotel outlet can be company-owned, franchised, or independently owned. As this is an important driver of the incentive structure for a firm as well as a strategic indicator for its (prospective) competitors, this paper argues that ownership form is a necessary explanatory factor in market conduct analysis. We show using a spatial lag model that a disaggregated analysis provide a good understanding of market interaction among hotels.
    Keywords: Marketing,
    Date: 2009
  10. By: Petraglia, Carmelo; Amaturo, Francesca; Giordano, Luca
    Abstract: This paper focuses on the perspective role of Mutual Loan-Guarantee Consortia (MLGC) in mitigating credit constraints for SMEs located in the Italian Mezzogiorno. First, we argue how the functioning of MLGC fits into the theory of bank-firm relationships, also referring to the scarce empirical evidence on the issue. Second, we evaluate the weakness – in terms of size, volume of activity, patrimonial requirements and guaranteed loans – of the Southern MLGC system. We then provide insights on the impact of the novelties introduced by the New Basel Capital Accord (Basel II) on MLGC’s activity. Finally, we conclude for the need of public support to MLGC in the Mezzogiorno in order to enhance their function of facilitating the matching of demand and supply in the credit market.
    Keywords: Consorzi Fidi; razionamento del credito; Mezzogiorno; rapporto banca-impresa
    JEL: O16 H81 G21
    Date: 2009–02–01
  11. By: Adelaja, Soji; Hailu, Yohannes G.; Abdulla, Majd
    Abstract: The drivers of economic growth in what is called the New Economy has become an important policy question. As communities across the country face economic challenges and a new economic reality, the question of what works in the New Economy has emerged. This study aims to provide growth decomposition in the New Economy to identify key drivers of growth. It provides a conceptual, theoretical and empirical discussion of growth in the New Economy to solidify the theory and empirics of New Economy growth decomposition. Results suggest that growth in population, income and employment are mostly synergistic; innovation and talent are potent in the New Economy; population dynamics, especially in the young and retiree segment of the population are tied to local economic performance; housing market instability harms growth; green infrastructure assets enhance growth performance; and that economic legacy and entrenchment in the Old Economy can impact new growth potential. The framework, analysis and results in this study can provide the basis for further investigation in the area of New Economy growth accounting.
    Keywords: New Economy, growth decomposition, economic policy, talent, innovation, creative class, green infrastructure, synergistic growth, Public Economics,
    Date: 2009

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