nep-ent New Economics Papers
on Entrepreneurship
Issue of 2009‒09‒11
seven papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Entrepreneurial Progress: Climbing The Entrepreneurial Ladder in Europe and The US By Peter van der Zwan; Ingrid Verheul; Roy Thurik; Isabel Grilo
  2. Embeddedness of Entrepreneurs in Rural Areas: A Comparative Rough Set Data Analysis By Aliye Ahu Gulumser; Peter Nijkamp; Tüzin Baycan-Levent; Martijn Brons
  3. What do We Know about Social Entrepreneurship: An Analysis of Empirical Research By Hoogendoorn, B.; Pennings, H.P.G.; Thurik, A.R.
  4. Developing Innovative Competences in an Emerging Business System: New Private Enterprises in Hangzhou’s Software Industry By Greeven, M.J.; Xiaodong, Z.
  5. The Financing of R&D and Innovation By Bronwyn H. Hall; Josh Lerner
  6. Bank Competition and Firm Growth in the Enlarged European Union By Gábor Pellényi; Tamás Borkó
  7. Entry, exit and the determinants of market structure By Timothy Dunne; Shawn D. Klimek; Mark J. Roberts; Daniel Yi Xu

  1. By: Peter van der Zwan (Erasmus University Rotterdam); Ingrid Verheul (Erasmus University Rotterdam and EIM, Zoetermeer); Roy Thurik (Erasmus University Rotterdam, EIM, Zoetermeer, Max Planck Institute of Economics, Jena, and VU University Amsterdam); Isabel Grilo (DG Enterprise, European Commission, Brussels, GREMARS, Université de Lille 3, CORE, Université de Louvain, Belgium)
    Abstract: We investigate which countries have the highest potential to achieve entrepreneurial progress. This progress is defined using an entrepreneurial ladder with five successive steps: “never thought about starting a business”, “thinking about starting a business”, “taking steps to start a business”, “running a business for less than three years”, and “running a business for more than three years”. We assess the influence of individual-level and country-level variables on progression through these stages. Data are used from the 2007 “Flash Eurobarometer Survey on Entrepreneurship”, covering 27 European countries and the United States. We find that countries display large variation in the ease with which businesses come into existence and survive. In the US many people think about setting up a business whereas Europeans are better at achieving higher levels of engagement. Particularly in Austria, France and Lithuania there appear to be low probabilities to advance in the process. Our analysis suggests that country differences can be explained by the level of economic development and risk tolerance while the administrative and financial climate play a role for some steps. The paper also provides results on the influence of individual-level demographic and obstacle perception variables.
    Keywords: entrepreneurship; determinants; nascent entrepreneurship; competitiveness; continuation ratio logit
    JEL: H10 J23 L26 M13 R12
    Date: 2009–08–05
  2. By: Aliye Ahu Gulumser (VU University Amsterdam, Istanbul Technical University); Peter Nijkamp (VU University Amsterdam); Tüzin Baycan-Levent (Istanbul Technical University); Martijn Brons (VU University Amsterdam)
    Abstract: This study aims to identify the critical factor(s) that determine the embeddedness level (EL) of rural entrepreneurs. In order to achieve this aim, existing applied studies on the embeddedness of entrepreneurs undertaken in different rural areas were systematically collected to create a database in order to provide the material for a systematic comparative analysis. This was done in order to highlight common and contrasting findings from a set of selected studies for different ELs. As many results of these studies were largely qualitative in nature and only partially comparable, a specific tool for analysing categorical data based on artificial intelligence methods, viz. rough set data analysis (RSDA), was employed. This experimental study is the first RSDA approach that compares the results of several rural case studies and infers general induction rules for the different ELs. The results of our analysis show that using and benefiting from local resources are the key factors that explain how entrepreneurs become embedded in rural areas.
    Keywords: rural development; rural entrepreneurship; embeddedness; rough set data analysis
    JEL: Q19 R23
    Date: 2009–07–16
  3. By: Hoogendoorn, B.; Pennings, H.P.G.; Thurik, A.R. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Despite the growing attention for social entrepreneurship as a scholarly field of research, it is still at a stage of infancy. Academic research in the past two decades was primarily dedicated to establish a conceptual foundation which resulted in a considerable stream of conceptual papers. Empirical articles are gradually appearing since the turn of the century. Although they are still by far outnumbered by conceptual articles, they are of considerable significance for social entrepreneurship to evolve as a field of scientific inquiry. This paper reviews 14 empirical research studies on social entrepreneurship, classifies them along four dimensions and summarizes research findings for each of these dimensions. Preliminary to the analysis of the empirical researches, an overview of four schools of thought is presented that serves as a background for interpreting the empirical inquiries.
    Keywords: social entrepreneurship;definition;empirical research;school of thought
    Date: 2009–07–23
  4. By: Greeven, M.J.; Xiaodong, Z. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: What kind of innovative competences are credibly developed by private entrepreneurs in China’s transition economy? On the basis of original empirical fieldwork in 45 software enterprises in Hangzhou, Zhejiang Province, we propose a working theory of innovative competence development in an emerging private sector. Combining resource-based and institutional perspectives we argue that Chinese private enterprises in Hangzhou were able to develop unique innovative competences to overcome resource constraints and manage technical - and market risks while respecting the location and sector-specific constraints. The findings suggest that private software enterprises in Hangzhou developed five innovative competences: organizational integration, financial commitment, external knowledge transformation, reputation development and strategic flexibility. The analysis further allows to propose three implications: 1) These five competences form a ‘configuration’ or coherent set of competences in this particular institutional setting; 2) Technological – and institutional regimes shape the potential range of innovative competences firms credibly develop depending on the available resources of the firm; 3) Innovative competences can be functional equivalents of institutions in the absence of well-developed, mature formal institutions.
    Keywords: private entrepreneurs;innovation;China;software industry;institutions;competences;business system
    Date: 2009–08–08
  5. By: Bronwyn H. Hall; Josh Lerner
    Abstract: Evidence on the “funding gap“ for investment innovation is surveyed. The focus is on financial market reasons for underinvestment that exist even when externality-induced underinvestment is absent. We conclude that while small and new innovative firms experience high costs of capital that are only partly mitigated by the presence of venture capital, the evidence for high costs of R&D capital for large firms is mixed. Nevertheless, large established firms do appear to prefer internal funds for financing such investments and they manage their cash flow to ensure this. Evidence shows that there are limits to venture capital as a solution to the funding gap, especially in countries where public equity markets for VC exit are not highly developed. We conclude by suggesting areas for further research.
    JEL: G24 G32 O32 O38
    Date: 2009–09
  6. By: Gábor Pellényi; Tamás Borkó
    Abstract: We examine the impact of bank competition and institutional factors on net firm entry in a sample of European manufacturing industries over the 1995-2006 period. Taking into account industry differences in the need for external finance, we find that bank competition helps firm entry. In addition, better institutions - especially legal structure and property rights - also have a positive impact, particularly through a better functioning financial system.
    Keywords: market structure, banks, market entry, manufacturing, financial development
    JEL: D4 G21 L11 L60 O16
    Date: 2009
  7. By: Timothy Dunne; Shawn D. Klimek; Mark J. 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 factorsand 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: Markets ; Competition ; Service industries
    Date: 2009

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