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on Entrepreneurship |
| By: | Edward Glaeser; William Kerr; Giacomo Ponzetto |
| Abstract: | Employment growth is strongly predicted by smaller average establishment size, both across cities and across industries within cities, but there is little consensus on why this relationship exists. Traditional economic explanations emphasize factors that reduce entry costs or raise entrepreneurial returns, thereby increasing net returns and attracting entrepreneurs. A second class of theories hypothesizes that some places are endowed with a greater supply of entrepreneurship. Evidence on sales per worker does not support the higher returns for entrepreneurship rationale. Our evidence suggests that entrepreneurship is higher when fixed costs are lower and when there are more entrepreneurial people. |
| Keywords: | Entrepreneurship, Industrial Organization, Chinitz, Agglomeration, Clusters, Cities |
| JEL: | J2 L0 L1 L2 L6 O3 R2 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-36&r=ent |
| By: | Neus Herranz; Stefan Krasa; Anne P. Villamil |
| Abstract: | This paper assesses quantitatively the impact of legal institutions on entrepreneurial firm dynamics. Owners choose firm size, financial structure and default to manage risk. We find: (i) Less risk averse entrepreneurs run bigger firms and it is optimal for them to incorporate, while more risk averse entrepreneurs run smaller firms and generally are better off remaining unincorporated. (ii) More risk-averse owners tend to default more often than the less risk averse, though they carry less debt. (iii) The model estimates a credit constraint, which binds for many but not all entrepreneurs and matches bank lending criteria. The model also finds modest differences in owner risk aversion, consistent with micro studies. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:man:cgbcrp:128&r=ent |
| By: | Semrau, Thorsten; Werner, Arndt |
| Abstract: | It is widely recognized that networks provide access to the resources necessary for founding a business. Up until now, however, the relationship between networking investments and the availability of resources has not been analyzed in depth. Using a sample of 416 nascent entrepreneurs, we address this issue, and provide evidence that networking investments lead to diminishing marginal resource returns in terms of financial, informational, emotional and contact support. Our results also show that resource returns strongly vary with resource type. While emotional support is quite easy to get, many more networking investments are needed to achieve financial support. |
| Keywords: | Networks; Networking Investments; Resource Access; Nascent Entrepreneurship |
| JEL: | D23 L26 J24 D85 M13 |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18350&r=ent |
| By: | Erkko Autio |
| Abstract: | ABSTRACT : This paper looks at how well Finland performs in high growth entrepreneurship and uses data from the Global Entrepreneurship monitor to benchmark Finland against other European countries. It is found that Finland’s prevalence rate of high growth entrepreneurial activity lags significantly behind most of its European and all of its Scandinavian peers. That this weak performance in high-growth entrepreneurship goes hand in hand with Finland being a world leader in per capita investment in R&D may be described as a paradox. The reasons underlying the underperformance of Finland remain however unclear. At this point, explanations should be sought in culture, industrial traditions and systemic experience in high growth entrepreneurship. |
| JEL: | D21 L25 M13 O12 O40 |
| Date: | 2009–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1197&r=ent |
| By: | Marco Capasso; Elena Cefis; Koen Frenken |
| Abstract: | This study analyses persistence in growth rates of the entire population of Dutch manufacturing firms. Previous literature on firm growth rates shows that extreme growth events are likely to be negatively correlated over time. A rebound effect following an extreme growth event questions the existence of persistent outperformers, indicated by a positive correlation over time. By supplementing the quantile regression analyses with transition probability matrices, our study shows that ?bouncing? firms co-exist with persistent outperformers. This result is robust if we exclude firms involved in acquisitions or spin offs. Differentiating among different size classes, we find that the existence of persistent outperformers is especially pronounced in micro firms. We interpret this finding as supporting the notion of a Schumpeter Mark I regime, with small firms displaying strong heterogeneity in their growth patterns, versus a Schumpeter Mark II regime, with large firms displaying less heterogeneity of growth. |
| Keywords: | firm growth; heterogeneity; persistence, transition probability matrices; quantile regression |
| JEL: | L11 L25 |
| Date: | 2009–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2009/15&r=ent |
| By: | Irene Daskalopoulou; Panagiotis Liargovas; Anastasia Petrou |
| Abstract: | The present study undertakes a comparative analysis of the development of business incubators and technoparks in the EU member countries. We estimate three intensity indicators for business incubators and technoparks activity and use both a uniform and a weighted rank order of the EU member countries to illustrate regional differences in the intensity of incubation activity within the EU. Exploratory analysis reveals that a region’s endowments base differentiates its ability to benefit from additive effects generated by the presence and operation of business incubators. |
| Keywords: | technology transfer, business incubators, technoparks, EU. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:uop:wpaper:00038&r=ent |
| By: | Irene Daskalopoulou; Panagiotis Liargovas |
| Abstract: | This paper analyses the effect of the spatial context upon entrepreneurship in Greek regions. Cross-sectional data referring to 4,151 births at NUTS III level (prefecture) are used for firm births in four industries. Results indicate that the spatial context of entrepreneurship affects different industries in different ways. Localization economies are the primary factor affecting the location of manufacturing and tourism births. Births in services and commerce seem to be the outcome of urbanization economies rather than the result of intra-industry concentration. Manufacturing and services are positively affected by state financial incentives promoting births at certain locations. Nonetheless, in the case of manufacturing, the effectiveness of such incentives is questioned by the presence of negative localization effects. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:uop:wpaper:00039&r=ent |
| By: | Irene Daskalopoulou; Panagiotis Liargovas |
| Abstract: | The paper analyses the regional determinants of manufacturing start-up ratios in Greece. Emphasis is placed upon analysing the effect of agglomeration economies, which are distinguished between urbanisation, and localisation economies. The data refer to establishments realised in the 51 Greek prefectures (NUTS III level) during 2005. Results indicate that negative urbanisation economies prevail. Localisation economies in the form of positive Marshallian and negative Jacobian externalities are observed and constitute important determinants of start-up ratios. Results regarding the effect of other factors such as expected demand and profit, cost and human resources factors are as anticipated. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:uop:wpaper:00041&r=ent |
| By: | Andrea Bellucci (Universit… di Urbino); Alexander V. Borisov (Indiana University); Alberto Zazzaro (Universit… Politecnica delle Marche, Department of Economics, MoFiR) |
| Abstract: | In this paper we study the relevance of the gender of the contracting parties involved in lending. We show that female entrepreneurs face tighter access to credit, even though they do not pay higher interest rates. The effect is independent of the information available about the borrower and holds if we control for unobservable individual effects. The gender of the loan officer is also important: we find that female officers are more risk-averse or less self-confident than male officers as they tend to restrict credit availability to new, unestablished borrowers more than their male counterparts. |
| Keywords: | Female-owned enterprises, Gender-based discrimination, Loan officers |
| JEL: | G21 G32 J16 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:31&r=ent |
| By: | Hallward-Driemeier, Mary; Thompson, Fraser |
| Abstract: | This paper examines the impact of firm productivity and local industrial structure on firm entry and exit in Morocco between 1985 and 2001. There is strong evidence of productivity exerting a market-cleansing role. Less productive firms are found to be more likely to exit - and locations with more productive firms attract higher rates of new firm entry. The effect of productivity operates not only in an absolute sense; a firm’s relative productivity or distance to the local sector frontier matters too. First, large productivity gaps are associated with higher rates of exit, while new firms are attracted to locations with small productivity gaps. Second, local competition increases the probability of exit, although it does not encourage entry. Third, there is evidence of scale or agglomeration effects that increase firm turnover. Fourth, measures of sector diversity are not associated with lower turnover. Fifth, the geographic level at which agglomeration and competition effects are defined matters differently for exit than entry. For exit, the provincial measures are strong, while those for communes are weaker. For entry, it is the local productivity at the commune level that is more significant. This implies that competitive pressures are less geographically constrained while the potential benefits of agglomeration and spill-overs are indeed more local. |
| Keywords: | Microfinance,Labor Policies,Economic Theory&Research,Knowledge for Development,Labor Markets |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5106&r=ent |
| By: | Hallward-Driemeier, Mary; Thompson, Fraser |
| Abstract: | How important is firm turnover to national productivity growth? The literature points to the contribution of creative destruction being strongest in more developed countries or where market institutions are strongest. This paper looks at the case of Morocco, spanning 16 years, during which reform initiatives aiming to strengthen market forces were introduced. The paper argues that it is important to take into account i) the timing of how decompositions are structured (capturing the effects of high growth among young firms as part of the benefit of increased entry) and ii) the additional indirect impacts of firm dynamics on agglomeration externalities and competition. The paper shows there are striking differences in the productivity paths of entering and exiting firms compared with incumbents, and that restricting the time horizon of productivity decompositions to the actual year of entry or exit underestimates the productivity effects of turnover. Although it has been hypothesized that conducting decompositions over longer horizons would increase the positive contribution of net turnover, this is not the case in Morocco as losses from exiting firms rise too. Nor has the net contribution of turnover increased with market reforms; if anything, the contribution has declined over time. But the allocation of resources has improved. Both technical and allocative efficiency have risen since the mid-1990s. The paper also shows that firm turnover affects productivity through additional channels. It is closely correlated with measures of agglomeration that are associated with higher rates of exit among unproductive firms, and turnover itself is positively associated with subsequent productivity growth of incumbents. |
| Keywords: | Labor Policies,Economic Theory&Research,Labor Markets,Microfinance,E-Business |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5085&r=ent |
| By: | Ibarrarán, Pablo (Inter-American Development Bank); Maffioli, Alessandro (Inter-American Development Bank); Stucchi, Rodolfo (Inter-American Development Bank) |
| Abstract: | Very little is known about the effectiveness of SME policies, and a careful look at the structure, mechanisms and incentives provided by these policies suggest caution in their implementation and, most importantly, the need to carefully and closely monitor their results. This paper relies on the microeconometric analysis of a homogeneous dataset of sixteen Latin American and Caribbean countries to analyze the magnitude and determinants of the productivity gap between large and SME firms and to simulate of the impact on productivity of various policy scenarios. |
| Keywords: | SMEs, SME policy, productivity, Latin America |
| JEL: | D24 L53 L60 O38 O54 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4486&r=ent |
| By: | Hallward-Driemeier, Mary |
| Abstract: | Size, age, sector, and productivity are commonly cited as factors determining a firm’s survival. However, there are several dimensions of the investment climate in which the firm operates that affect whether it continues in business or exits. This paper uses new panel data from 27 Eastern European and Central Asian countries to test the importance of five areas of the business climate on firm exit: the efficiency of government services, access to finance, the extent of corruption or cronyism, the strength of property rights, and the degree of competition. The paper finds that weaknesses in these areas do affect the probability of firm exit – largely in ways that undermine the Schumpeterian cleansing role of exit in raising overall productivity. Greater costs and regulatory burdens raise the probability that more productive firms exit, while less developed financial and legal institutions mitigate forces that would otherwise push less productive firms to exit. Thus, the more productive firms stand to gain the most from improvements in the investment climate, whether that is lowering transaction costs or improving market mechanisms. This holds both within countries and across countries. The impact of a particular investment climate measure can also differ significantly by type of firm, with the focus given to firm size. The differential impact on size can be significant at a size cutoff of 10 or more employees. As these are the firms that are near the threshold of many regulatory requirements, the implications are not just with regard to whether a firm remains in operation, but whether it does so in the formal sector. |
| Keywords: | Access to Finance,Debt Markets,Environmental Economics&Policies,Microfinance,Emerging Markets |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5084&r=ent |
| By: | Marco Cucculelli (Universit… Politecnica delle Marche, Faculty of Economics "Giorgio Fu…"); Francesco Marchionne (Universit… Politecnica delle Marche, Faculty of Economics "Giorgio Fu…") |
| Abstract: | We test the hypothesis that the identity of the owner affects firm ability to seize market opportunities differently according to the firm's actual vs. "optimal" size (size gap). By grouping firms in size clusters having a similar probability of adopting a size-adjusting strategy (growth or downsizing), we measure how the sensitivity of firm sales to demand shocks changes in response to the difference in owner identity and the firm size gap. We use data from a panel of 7,459 continental western European firms over the period 1995-2004 and Eurostat 3-digit sectoral data on firm size distribution in Europe. Our findings show that family business sales are less sensitive to market demand than other firms, particularly when the actual firm size is larger than optimal size. |
| Keywords: | family firms, optimal size class, owner identity, performance |
| JEL: | D21 G32 L11 L25 L26 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:32&r=ent |