|
on Entrepreneurship |
| By: | Czarnitzki , Dirk; Toole, Andrew A. |
| Abstract: | Is there a trade-off of scholarly research productivity when faculty members found or join for-profit firms? This paper offers an empirical examination of this question for a subpopulation of biomedical academic scientists who received research funding from the U.S. National Institutes of Health (NIH). In this study, we are able to distinguish between permanent versus temporary employment transitions by entrepreneurial faculty members and examine how their journal article publication rates change using individual-level panel data. We find that the biomedical scientists who eventually choose to found or join a for-profit firm were more productive during their careers in academe than a randomly selected control group of their NIH peers. When they pursue entrepreneurship in the private sector, however, their scholarly productivity falls. Those entrepreneurial faculty members who return to academe are not as productive as they were before their entrepreneurial experience in terms of journal publications. |
| Keywords: | academic entrepreneurship,SBIR,NIH,biomedical research,life scientist productivity |
| JEL: | O38 O31 L53 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09022&r=ent |
| By: | Gottschalk, Sandra; Müller, Kathrin; Niefert, Michaela |
| Abstract: | This paper analyzes empirically the determinants of new born firms' initial size. As survival prospects of young firms tend to be linked to a firm's start-up size, a better understanding of the factors influencing start-up size is crucial. Most of the rare literature on initial firm size focuses on industry characteristics. We contribute to the understanding of the determinants of initial firm size by analyzing firm specific factors such as founders' human capital composition and entry strategies. We find that in addition to industry effects start-up size is considerably influenced by the human capital of firm founders. We distinguish between generic and specific human capital. Generic human capital refers to the general knowledge acquired through formal education and professional experience and usually coincides with a higher personal wealth. Specific human capital comprises competences that can be directly applied to the entrepreneurial job. For generic human capital we find that having a university degree has a positive influence on start-up size. The same applies for general working experience proxied by the founder's age. For the specific human capital components we find that successful entrepreneurial experience and managerial experience gained in dependent employment support a higher start-up size. Altogether, specific human capital tends to have a larger impact on initial size than generic human capital. Entry strategies are expected to have a crucial influence on start-up size, because objectives of market entry largely determine the resources a firm requires. We distinguish between different types of entry strategies. On the one hand, we look at entry strategies based on innovation. We measure innovation by a variable which indicates if a firm carries out continuous R&D. On the other hand, entry is classified according to the main motive of the founders for firm formation. We conclude that different motives are accompanied by diverse entry strategies. The four main groups of entry strategies are independency entrepreneurship, opportunity entrepreneurship, spin-out entrepreneurship and necessity entrepreneurship. The results indicate that firms conducting R&D continuously start larger than others when measuring initial employment in full-time equivalents. We do not observe a significant effect on start-up size measured in head counts. This suggests that R&D tasks are mostly carried out by fulltime employees and to a lesser extent by persons working part-time for the firm. Further, firms with entry strategies based on the exploitation of new market opportunities as well as spin-out entrepreneurship exhibit a higher initial size while start-ups established from necessity appear to start at a smaller scale. |
| Keywords: | firm start-up size,human capital,firm foundation |
| JEL: | L11 L26 J24 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09030&r=ent |
| By: | Yochanan Shachmurove (Department of Economics, University of Pennsylvania) |
| Abstract: | Economic geography receives limited consideration in the venture capital literature. This study utilizes thirty years of data concerning companies that initially were backed by venture capital. These firms are located in Entrepreneurial Focal Points in the United States, namely: California, Massachusetts, New York, Pennsylvania and Texas. How well do these companies operate once they go public? Do the scrutiny measures, expertise and financial backing that firms gain from the venture capitalists increase their annual and cumulative returns? The results show that returns on investment are adequate given their substantial risk. |
| Keywords: | Annualized and cumulative returns, Venture Capital, Venture-Backed Public Companies, Active and Inactive firms, Pennsylvania, Massachusetts, California, Texas, New York |
| JEL: | C12 D81 D92 E22 G12 G24 G3 M13 M21 O16 O3 |
| Date: | 2009–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:09-032&r=ent |
| By: | Zimmermann, Jörg; Grimpe, Christoph; Sofka, Wolfgang |
| Abstract: | Young firms with the ability to internationalize early and decisively have received much attention in recent academic discussion. However, relatively little is known about the underlying processes that enable them to skip several stages of the internationalization process. We contribute to this research stream by establishing theoretical links with the emerging open innovation paradigm of firms optimizing their R&D activities by interconnecting them with external partners such as leading customers, universities or specialized suppliers. Based on a sample of more than 2,500 firms in Germany we contrast young and mature firms with regard to the effect of open innovation strategies on internationalization performance. Our results show that both the breadth and depth of search strategies for external knowledge help young firms to enter international markets. Once they have entered these markets, though, the drivers for success seem to shift from general knowledge sourcing to targeted and specific ones. |
| Keywords: | New ventures,internationalization,innovation,search strategies,entrepreneurship |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09017&r=ent |
| By: | Nicola Cetorelli |
| Abstract: | Empirical studies show that competition in the credit markets has important effects on the entry and growth of firms in nonfinancial industries. This paper explores the hypothesis that the availability of credit at the time of a firm’s founding has a profound effect on that firm’s nature. I conjecture that in times when financial capital is difficult to obtain, firms will need to be built as relatively solid organizations. However, in an environment of easily available financial capital, firms can be constituted with an intrinsically weaker structure. To test this conjecture, I use confidential data from the U.S. Census Bureau on the entire universe of business establishments in existence over a thirty-year period; I follow the life cycles of those same establishments through a period of regulatory reform during which U.S. states were allowed to remove barriers to entry in the banking industry, a development that resulted in significantly improved credit competition. The evidence confirms my conjecture. Firms constituted in post-reform years are intrinsically frailer than those founded in a more financially constrained environment, while firms of pre-reform vintage do not seem to adapt their nature to an easier credit environment. Credit market competition does lead to more entry and growth of firms, but also to complex dynamics experienced by the population of business organizations. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-07&r=ent |
| By: | Timothy Dunne; Shawn Klimek; Mark Roberts; Daniel Yi Xu |
| Abstract: | Market structure is determined by the entry and exit decisions of individual producers. These decisions are driven by expectations of future profits which, in turn, depend on the nature of competition within the market. In this paper we estimate a dynamic, structural model of entry and exit in an oligopolistic industry and use it to quantify the determinants of market structure and long-run firm values for two U.S. service industries, dentists and chiropractors. We find that entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competition are all important determinants of long run firm values and market structure. As the number of firms in the market increases, the value of continuing in the market and the value of entering the market both decline, the probability of exit rises, and the probability of entry declines. The magnitude of these effects differ substantially across markets due to differences in exogenous cost and demand factors and across the dentist and chiropractor industries. Simulations using the estimated model for the dentist industry show that pressure from both potential entrants and incumbent firms discipline long-run profits. We calculate that a seven percent reduction in the mean sunk entry cost would reduce a monopolist's long-run profits by the same amount as if the firm operated in a duopoly. |
| Keywords: | entry, exit, market structure, competition, service industry |
| JEL: | L11 L13 L84 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-23&r=ent |
| By: | Janda, Karel |
| Abstract: | This article belongs to the game theoretic and information economics literature dealing with the problem of signaling in the context of game theoretical models of entry into the industry. As opposed to the majority of literature we consider the situation of asymmetric information where the private information belongs to the entrant. We model the capacity decision of the entrant as a signal of his strength. We show that in the Stackelberg model of market entry for some values of underlying parameters the entrant fully utilizes his capacity while for other parameter values he builds excess capacity. The model may be empirically relevant for industrial organization analysis of the entry of a new supplier to the existing supply chain. |
| Keywords: | Signaling; Entry; Capacity |
| JEL: | L13 D82 D43 |
| Date: | 2009–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17007&r=ent |
| By: | Anaïs Hamelin (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and LaRGE, Institut d’Etudes Politiques, Université de Strasbourg, France.) |
| Abstract: | This paper uses a very large sample of French SMEs to study growth of family owned firms. Firms range from total-family to minority control. The estimated relationship accounts for firm characteristics of size and, age, sector, and financial solvency. The results show that firms with greater family control are prone to exhibit lower rates of sales growth than feasible, given financial performance. Because firm growth is limited not by financing constraints but by family-related attitudes, increasing firm growth requires policies that shape incentives in small family businesses. |
| Keywords: | Small Business, Family control, Growth, Sustainable growth, Capital budgeting. |
| JEL: | G31 G32 M13 M21 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:09-032&r=ent |
| By: | Giovanni Dosi; Richard R. Nelson |
| Abstract: | This work prepared for B. Hall and N. Rosenberg (eds.) Handbook of Innovation, Elsevier (2010), lays out the basic premises of this research and review and integrate much of what has been learned on the processes of technological evolution, their main features and their effects on the evolution of industries. First, we map and integrate the various pieces of evidence concerning the nature and structure of technological knowledge the sources of novel opportunities, the dynamics through which they are tapped and the revealed outcomes in terms of advances in production techniques and product characteristics. Explicit recognition of the evolutionary manners through which technological change proceed has also profound implications for the way economists theorize about and analyze a number of topics central to the discipline. One is the theory of the firm in industries where technological and organizational innovation is important. Indeed a large literature has grown up on this topic, addressing the nature of the technological and organizational capabilities which business firms embody and the ways they evolve over time. Another domain concerns the nature of competition in such industries, wherein innovation and diffusion affect growth and survival probabilities of heterogeneous firms, and, relatedly, the determinants of industrial structure. The processes of knowledge accumulation and diffusion involve winners and losers, changing distributions of competitive abilities across different firms, and, with that, changing industrial structures. Both the sector-specific characteristics of technologies and their degrees of maturity over their life cycles influence the patterns of industrial organization ? including of course size distributions, degrees of concentration, relative importance of incumbents and entrants, etc. This is the second set of topics which we address. Finally, in the conclusions, we briefly flag some fundamental aspects of economic growth and development as an innovation driven evolutionary process. |
| Keywords: | Innovation, Technological paradigms, Technological regimes and trajectories, Evolution, Learning, Capability-based theories of the firm, Selection, Industrial dynamics, Emergent properties, Endogenous growth |
| Date: | 2009–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2009/07&r=ent |
| By: | Squicciarini, Mariagrazia |
| Abstract: | The paper focuses on the role of Science Parks (SPs) as seedbeds of innovation. It investigates whether and to what extent locating inside a science park relates to the innovative output of tenant firms. The simple assessment methodology proposed relies on count data models, uses patents as innovation performance indicators, and exploits original data regarding the Finnish science parks, their main characteristics, and the data of 252 SP tenant firms, including their patenting activity over the period 19702002. Among other results, the study suggests that both within and among SPs interaction and spillover effects exist, and points out the way in which they relate to firms' innovative output. Results are robust to controlling for the existence of innovation lags. Parks' first mover disadvantages also emerge, as well as non-negligible matching phenomena whereby firms' and parks' characteristics matter jointly. |
| Keywords: | Science Parks,knowledge spillovers,innovation,patents,firm performance |
| JEL: | L29 O32 O38 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:200932&r=ent |
| By: | John Hutchinson (European Central Bank); Jozef Konings (Economics Department, K.U. Leuven); Patrick Paul Walsh (SPIRe and The Geary Institute University College Dublin) |
| Abstract: | We show that the stylized facts of the Firm Size Distribution (FSD) by age cohorts, as shown in Cabral and Mata (2003), bind within 4-digit manufacturing industries in the UK and Belgium. As in Klepper and Thompson (2006) and Sutton (1998), we explore whether time to build a portfolio of products is a mechanism that relates age to firm size. While inter industry diversification, to some extent, accounts for the role of age, we find that the presence of economies of scope has a separate impact on firm size when controlling for age, amongst other factors. Using the techniques in Cabral and Mata's we show that the FSD by degrees of product diversification shifts to the right, but more so in older age groups. This shows a role for inter-industry diversification over and above an age effect. |
| JEL: | L10 L11 L16 |
| Date: | 2009–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:200926&r=ent |
| By: | Custódia Bastos (Faculdade de Economia da Universidade do Porto, Portugal); Suzi Ladeira (Faculdade de Economia da Universidade do Porto, Portugal); Sofia Silva (Faculdade de Economia da Universidade do Porto, Portugal) |
| Abstract: | Culture and art are emerging as the principal components of the creative industries raising their attractiveness in urban centers. Economics apparently does not have a direct connection with culture and art. However, a closer look into de reality shows that economics and arts are intrinsically related with arts benefiting from a more entrepreneurial and economic led perspectives. The proposed study details the intimate connection which is established between arts and economics by empirically analyzing the vibrant creativity cluster of Miguel Bombarda Street (MBS), situated at the centre of Porto city. This insightful and informative case further provides a pertinent account on the role of entrepreneurship in arts. Through a combination of in depth interviews to key actors and a comprehensive survey to all the firms and art galleries of MBS, the study highlights and details the emergence of MBS cluster and the reasons and players responsible for such emergence and development. Finally, based on the results we evaluate and discuss MBS cluster sustainability and how this type of projects might contribute for the renewal and boost the Porto city. |
| Keywords: | indústrias criativas; artes; clusters; empreendedorismo |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:331&r=ent |