nep-ent New Economics Papers
on Entrepreneurship
Issue of 2010‒02‒13
nine papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Economic Adversity and Entrepreneurship-led Growth: Lessons from the Indian Software Sector By Athreye, Suma
  2. Venture capital and the financial crisis: an empirical study across industries and countries By Block, Joern; Sandner, Philipp; De Vries, Geertjan
  3. On factors promoting and hindering entry and exit. By Carree, Martin A.
  4. Entry Selection By J.J.A. Kamphorst; E. Mendys-Kamphorst; B. Westbrock
  5. Geographical distance of innovation collaborations By Jeroen de Jong; Mark Freel
  6. Financial Innovation and Endogenous Growth By Stelios Michalopoulos; Luc Lueven; Ross Levine
  7. Importance of Technological Innovation for SME Growth: Evidence from India By Bala Subrahmanya, M. H.; Mathirajan, M.; Krishnaswamy, K. N.
  8. Public Interventions Supporting Innovation in Small and Medium-Size Firms. Successes or Failures? A Probit Analysis By Serena Novero
  9. Ownership and High-Growth Firms By Bjuggren, Carl Magnus; Daunfeldt, Sven-Olov; Johansson, Dan

  1. By: Athreye, Suma
    Abstract: It is commonly believed that the business environment in developing countries does not allow productive technology-based entrepreneurship to flourish. In this paper, we draw on the experience of Indian software firms where entrepreneurial growth has belied these predictions. This paper argues that the business models chosen by Indian firms were those that best aligned the country’s abundant labour resources and advantages to global demand. Many potentially higher value added opportunities struggled to attain success, but the qualitative value of experimental failures and the capability gaps they exposed was invaluable for collective managerial learning in the industry. Second, the paper also shows that the presence of growth opportunities and the success of firms stimulated institutional evolution to promote entrepreneurial growth. Last we show that the distinctive aggregate contribution of entrepreneurial firms was that they outperformed business houses and multinational subsidiaries in their more productive use of available capital resources whilst achieving similar levels of growth in output and employment. This paper draws upon an earlier shorter paper co-authored with Mike Hobday and titled 'Overcoming Development Adversity: How Entrepreneurs Led Software Development in India'.
    Keywords: Technology entrepreneurship, institutions and economic development, Indian software, intellectual property rights
    Date: 2010
  2. By: Block, Joern; Sandner, Philipp; De Vries, Geertjan
    Abstract: This study analyzes the effect of the 2008 financial crisis on the venture capital market. We show that the crisis is associated with a decrease in the number of initial funding rounds as well as with a decrease in the amount of funds raised in later funding rounds. The effects of the crisis differed across industries and were stronger in the US than in other countries. We suggest that the crisis has led to a severe ‘funding gap’ in the financing of technological development and innovation
    Keywords: Venture capital; financial crisis; innovation finance; entrepreneurial finance; recession
    JEL: M13 G24 O3
    Date: 2010–01–27
  3. By: Carree, Martin A. (Maastricht University)
  4. By: J.J.A. Kamphorst; E. Mendys-Kamphorst; B. Westbrock
    Abstract: It is well-known in the IO literature that incumbent firms may want to deter entry by behaving as if they are efficient. In this paper we show that incumbents may sometimes prefer to encourage entry by mimicking the behaviour of a less efficient firm for the following reason. If the incumbent cannot deter potential efficient entrants, he may want to elicit entry by an inefficient firm who would not enter if he knows that the incumbent is efficient. The presence of the additional firm in the market prevents further entry. The incumbent then faces a less efficient competitor in the long run.
    Keywords: Duopoly competition, entry deterrence, signalling weakness
    JEL: D43 D82 L11
    Date: 2009–12
  5. By: Jeroen de Jong; Mark Freel
    Abstract: This paper explores the geographical distance of innovation collaborations in high tech small firms. We test if absorptive capacity is a key determinant. Drawing on survey data from a sample of 316 Dutch high-tech small firms, engaging in 1.245 collaborations, we find most partners to be ‘local’. However, controlling for a variety of potential influences, higher R&D expenditure is positively related to collaboration with more distant organisations.  
    Date: 2010–02–01
  6. By: Stelios Michalopoulos; Luc Lueven; Ross Levine
    Abstract: We model technological and financial innovation as reflecting the decisions of profit maximizing agents and explore the implications for economic growth. We start with a Schumpeterian endogenous growth model where entrepreneurs earn monopoly profits by inventing better goods and financiers arise to screen entrepeneurs. A novel feature of the model is that financiers also engage in the costly, risky, and potentially profitable process of innovation: Financiers can invent more effective processes for screening entrepreneurs. Every existing screening process, however, becomes less effective as technology advances. Consequently, technological innovation and, thus, economic growth stop unless financiers continually innovate. Historical observations and empirical evidence are more consistent with this dynamic model of financial innovation and endogenous growth than with existing models of financial development and growth.
    Keywords: Invention, Economic Growth, Corporate Finance, Financial Institutions, Technological Change, Entrepreneurship.
    JEL: G0 O31 O4
    Date: 2010
  7. By: Bala Subrahmanya, M. H.; Mathirajan, M.; Krishnaswamy, K. N.
    Abstract: This paper probes the drivers, dimensions, achievements, and outcomes of technological innovations carried out by SMEs in the auto components, electronics, and machine tool sectors of Bangalore in India. Further, it ascertains the growth rates of innovative SMEs vis-à-vis non-innovative SMEs in terms of sales turnover, employment, and investment. Thereafter, it probes the relationship between innovation and growth of SMEs by (i) estimating a correlation between innovation sales and sales growth, (ii) calculating innovation sales for high, medium, and low growth innovative SMEs and doing a aggregate one-way ANOVA, and (iii) ascertaining the influence of innovation sales, along with investment growth and employment growth on gross value-added growth by means of multiple regression analysis. The paper brings out substantial evidence to argue that innovations of SMEs contributed to their growth.
    Keywords: Technological innovations, sales growth, auto components, electronics, machine tools, Bangalore
    Date: 2010
  8. By: Serena Novero (Ceris - Institute for Economic Research on Firms and Growth, Moncalieri (Turin), Italy)
    Abstract: The aim of this work is to investigate the probability of success or failure of public interventions, made to support the development of some Italian firms. The great number of small and medium-size enterprises, placed in the Canavese area, north of Turin, Italy, has suffered, in the nineties, of a gap in technological innovation in their production. The Consortium for the Canavese Technological District (CCTD), a public local association established in 1993 specifically to support the firms of the area, has supplied them with some technological, innovative services, sustaining their growth. More exactly, some research centres, named Centres of Competence, were created, with the pre-existing structures of the Polytechnic of Turin and of the firm RTM (placed in Vico Canavese, Province of Turin): their targets were to supply innovative services to the local firms and to place technical machineries at the disposal of the local units, to support their innovation and competitiveness. The present research analyzes a central point: which has been the impact of these services? Which is the probability that a public o private intervention to innovate has success and brings economic growth to the involved firms? This objective is achieved with a Probit Model, built on a panel of 103 firms, that covers a 6-year range (from 1999 to 2004) and contains their balance-sheets data and the technical information regarding their collaborations with the Centres; the results highlight the role of a solid patrimonial stability, of the choice of the right innovations to apply to the production processes as well as the importance of a high previous technological status of the involved enterprises.
    Keywords: Innovation probability, Public interventions, Firms growth, Qualitative choice models
    JEL: C35 D92 H71 O31
    Date: 2008–12
  9. By: Bjuggren, Carl Magnus (Ratio); Daunfeldt, Sven-Olov (Ratio); Johansson, Dan (Ratio)
    Abstract: Empirical studies demonstrate that most net job-growth originates from a small number of high-growth firms (HGFs). The purpose of this paper is to analyze whether firm ownership – private non-family, or family – matters for being classified as a HGF, using data covering all firms in Sweden during 1993-2006. We find that ownership and changes of ownership are correlated with being a HGF, and that the method of measuring growth affects the results. In line with previous research, the age and size of firms, as well as belonging to an enterprise group, are also correlated with being a HGF.
    Keywords: high-growth firms; gazelles; firm growth; firm ownership; family firms; rapid firm growth
    JEL: D24 L25 L26
    Date: 2010–02–01

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