nep-ent New Economics Papers
on Entrepreneurship
Issue of 2009‒12‒11
ten papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Taxation and the Quality and Quantity of Entrepreneurship By Asoni, Andrea; Sanandaji, Tino
  2. Market Potential and New Firm Formation By Grek, Jenny; Karlsson, Charlie; Klaesson, Johan
  3. Do Institutions Have a Greater Effect on Female Entrepreneurs? By Estrin, Saul; Mickiewicz, Tomasz
  4. Urban Economics and Entrepreneurship By Edward L. Glaeser; Stuart S. Rosenthal; William C. Strange
  5. Entrepreneurship as a process of collective exploration By Liliana Doganova
  6. Female Hires and the Success of Start-up Firms By Weber, Andrea; Zulehner, Christine
  7. Dynamics of Entry and Exit of Product Varieties – what evolution dynamics can account for the empirical regularities? By Andersson, Martin; Johansson, Börje; Månsson, Kristofer
  8. Precautionary and Entrepreneurial Saving: New Evidence from German Households By Frank M. Fossen; Davud Rostam-Afschar
  9. Expanding Microenterprise Credit Access: Randomized Supply Decisions to Estimate the Impacts in Manila By Karlan, Dean; Zinman, Jonathan
  10. Do Firms Learn by Exporting or Learn to Export? Evidence from Small and Medium-Sized Enterprises (SMEs) in Swedish Manufacturing By Eliasson, Kent; Hansson, Pär; Lindvert, Markus

  1. By: Asoni, Andrea (Research Institute of Industrial Economics (IFN)); Sanandaji, Tino (Research Institute of Industrial Economics (IFN))
    Abstract: We study the effect of taxation on entrepreneurship, taking into account both the amount of entry and the quality of new ventures. We show that even with risk neutral agents and no tax evasion progressive taxes can increase entrepreneurial entry, while reducing average firm quality. So called "success taxes" increase startup of lower value business ideas by reducing the option value of pursuing better projects. This suggests that the most common measure used in the literature, the likelihood of entry into self-employment, may underestimate the adverse effect of taxation.
    Keywords: Taxation; Entrepreneurial Entry; Quality of Entrepreneurial Firms
    JEL: H24 H25 L26
    Date: 2009–11–13
  2. By: Grek, Jenny (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Karlsson, Charlie (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Klaesson, Johan (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: The purpose of the paper is to show how entrepreneurship conditions vary between regions of various sizes, and test the theoretical arguments on why large regions generally should generate more entrepreneurship. The paper empirically ana¬lyzes the role of regional size in explaining varia¬tions in total entrepreneurship. It also examines en¬trepreneurship in different sectors across functional regions, using data from Sweden for the period 1993 to 2004. Employing fixed effects vector decomposition (FEVD) regressions, we estimate how the conditions for entrepreneurship vary between re¬gions. The results show that the market potential as measured by local and external accessibility to gross regional product (GRP) has a strong significant impact on both entry of new firms and on firm exit. For the primary sector and the manufacturing sector this impact is negative and for the ordinary service sector and the advanced service sector its positive. A high employment rate implies that there is a strong negative impact on firm entry in all sectors. This is in line with what one could expect as there are weaker incentives for individuals starting own businesses in periods of low employment rate. Further, the presence of many small firms in different sectors has a strong positive significant impact on new firm formation.
    Keywords: Entrepreneurship; Entry; Exit; Net entry; Regions; Sweden
    JEL: L10 R11 R12
    Date: 2009–11–23
  3. By: Estrin, Saul (London School of Economics); Mickiewicz, Tomasz (University College London)
    Abstract: This paper compares the impact of institutions on individual decisions to become entrepreneurs in the form of new business start ups by males and females across 44 developed and developing economies between 1998 and 2004. We test four hypotheses; that women are less likely to undertake entrepreneurial activity in countries where the rule of law is weaker; where the state sector is larger; where the informal financial sector is weaker and where the formal financial sector is weaker. We use data from the Global Enterprise Monitor survey (GEM) which covers at least 2,000 individuals annually in each of up to 44 countries, merged with country-level data, from the WB WDI and Heritage Foundation. We start with a spectrum of institutional variables and by utilizing factor analysis prior to regression estimation models, we are able to obtain results that are more robust and address multicollinearity between the institutional measures. We find that women are less likely to undertake entrepreneurial activity in countries where the state sector is larger, and demonstrate that this result applies to both high aspiration and low aspiration entrepreneurship. We also find that women benefit more from the larger informal financial sector.
    Keywords: female entrepreneurship, state sector, informal finance
    JEL: L26 J16 H11 O16 O17 P43
    Date: 2009–11
  4. By: Edward L. Glaeser; Stuart S. Rosenthal; William C. Strange
    Abstract: Research on entrepreneurship often examines the local dimensions of new business formation. The local environment influences the choices of entrepreneurs; entrepreneurial success influences the local economy. Yet modern urban economics has paid relatively little attention to entrepreneurs. This essay introduces a special issue of Journal of Urban Economics dedicated to the geography of entrepreneurship. The paper frames the core questions facing researchers interested in assessing the local causes and consequences of entrepreneurship, perturbs a core urban model to incorporate entrepreneurship, and concludes by offering an agenda for future work on the spatial aspects of entrepreneurship.
    JEL: J23 L26 M13 O31 R30
    Date: 2009–11
  5. By: Liliana Doganova (CSI - Centre de sociologie de l'innovation - CNRS : UMR7185 - Mines ParisTech)
    Abstract: Clarifies the potentials of the notion of exploration for the analysis of the uncertain and collective nature of entrepreneurship, and provides detailed examination of a case study on a French academic spin-off.
    Keywords: entrepreneurship; exploration; opportunity recognition; partnerships
    Date: 2009
  6. By: Weber, Andrea (RWI Essen); Zulehner, Christine (University of Vienna)
    Abstract: In this paper we investigate the relationship between females among the first hires of start-up companies and business success. Our results show that firms with female first hires have a higher share of female workers at the end of the first year after entry. Further, we find that firms with female first hires are more successful and stay longer in the market. We conclude that our results support the hypothesis that gender-diversity in leading positions is an advantage for start-up firms.
    Keywords: firm survival, profitability, female employment, discrimination, market test, matched employer-employee data
    JEL: J16 J71 L25
    Date: 2009–11
  7. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Månsson, Kristofer (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Firm-level heterogeneity is substantial even in narrowly defined industries. This paper focuses on formulating evolution dynamics which can account for the observed heterogeneity and its maintenance. Based on examination of data on Swedish firm’ supply pattern to different markets over time, we present a parsimonious model that has the ambition to capture the picture of heterogeneous firms, while accommodating the simultaneous exit and entry of destination varieties in firms’ supply pattern. The model assumes both scale economies of firms and path-dependence, where the latter is manifested in such a way that the arrival rate of innovation ideas to an individual firm is a function of each firm’s stock of varieties at every given point in time. The path-dependence phenomenon is an “explosive” non-linearity, whereas conservation mechanisms include development of demand and exit of established varieties. The described path dependence explains the skewed distribution of varieties across firms, but the question of what keeps the “equilibrium” away from competitive exclusion where only few large firms remain. We make use of simulations to depict and assess the innovation dynamics of the proposed model.
    Keywords: innovation; path-dependence; firm-level; heterogeneity; evolution dynamics
    JEL: C16 F14 L25 O33
    Date: 2009–11–23
  8. By: Frank M. Fossen; Davud Rostam-Afschar
    Abstract: The well-documented positive correlation between income risk and wealth was interpreted as evidence for high amounts of precautionary wealth in various studies. However, the large estimates emerged from pooling non-entrepreneurs and entrepreneurs without controlling for heterogeneity. This paper provides evidence for Germany based on representative panel data including private wealth balance sheets. Entrepreneurs, who face high income risk, hold more wealth than employees, but it is shown that this is not due to precautionary motives. Entrepreneurs may rather save for old age, as they are usually not covered by statutory pension insurance. The analysis accounts for endogeneity of entrepreneurial choice.
    Keywords: precautionary saving, precautionary wealth, entrepreneurship
    JEL: D91 D12 E21
    Date: 2009
  9. By: Karlan, Dean (Yale University and Innovations for Poverty Action); Zinman, Jonathan (Dartmouth College and Innovations for Poverty Action)
    Abstract: Microcredit seeks to promote business growth and improve well-being by expanding access to credit. We use a field experiment and follow-up survey to measure impacts of a credit expansion for microentrepreneurs in Manila. The effects are diffuse, heterogeneous, and surprising. Although there is some evidence that profits increase, the mechanism seems to be that businesses shrink by shedding unproductive workers. Overall, borrowing households substitute away from labor (in both family and outside businesses), and into education. We also find substitution away from formal insurance, along with increases in access to informal risk-sharing mechanisms. Our treatment effects are stronger for groups that are not typically targeted by microlenders: male and higher-income entrepreneurs. In all, our results suggest that microcredit works broadly through risk management and investment at the household level, rather than directly through the targeted businesses.
    JEL: D10 D20 G20 O10
    Date: 2009–07
  10. By: Eliasson, Kent (Growth Analysis); Hansson, Pär (Growth Analysis); Lindvert, Markus (Growth Analysis)
    Abstract: Using a matching approach, we compare the productivity trajectories of future exporters and matched and unmatched non-exporters. Future exporters have higher productivity than do unmatched non-exporters before entry into the export market, which indicates self-selection into exports. More interestingly, we also find a productivity increase among future exporters relative to matched non-exporters 1-2 years before export entry. However, the productivity gap between future exporters and matched non-exporters does not continue to grow after export entry. Our results suggest that learning-to-export occurs but that learning-by-exporting does not. In contrast to previous studies on Swedish manufacturing, we focus particularly on small and medium-sized enterprises (SMEs).
    Keywords: productivity; learning-to-export; learning-by-exporting; matching
    JEL: D24 F14
    Date: 2009–11–27

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