nep-ent New Economics Papers
on Entrepreneurship
Issue of 2010‒04‒24
six papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. R&D Strategies and Entrepreneurial Spawning By Andersson, Martin; Baltzopoulos, Apostolos; Lööf, Hans
  2. A Model of Destructive Entrepreneurship By Desai,Sameeksha, Acs, Zoltan and Weitzel, Utz
  3. Rural Women Empowerment and Entrepreneurship Development By Sathiabama K
  4. Models of Growth and Firm Heterogeneity By Erzo G. J. Luttmer
  5. Building New Plants or Entering by Acquisition? Estimation of an Entry Model for the U.S. Cement Industry By Hector Perez-Saiz
  6. Death of Canadian Manufacturing Plants: Heterogeneous Responses to Changes in Tariffs and Real Exchange Rates By Baldwin, John R.; Yan, Beiling

  1. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Baltzopoulos, Apostolos (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper analyzes how different R&D strategies of incumbent firms affect the quantity and quality of their entrepreneurial spawning. By examining entrepreneurial ventures of ex-employees of firms with different R&D strategies three things emerge: First, firms with persistent R&D investments with a general superiority in sales, exports, productivity, profitability and wages are less likely to generate entrepreneurs than firm with temporary or no R&D investments. Second, start-ups from knowledge intensive business service (KIBS) firms with persistent R&D investments have a significantly increased probability of survival. No corresponding association between the R&D strategies of incumbents and survival of entrepreneurial spawns is found for incumbents in manufacturing sectors. Third, spin-outs from KIBS-firms are more likely to survive if they start in the same firm, indicating the importance of inherited related knowledge. The findings suggest that R&D intensive firms spur fewer entrepreneurs, but their entrepreneurial spawns tend to be of higher quality.
    Keywords: entrepreneurship; self-employment; R&D strategy; innovation; new firms; spin-off; spin-out
    JEL: J24 L26 M13 O31 O32
    Date: 2010–04–14
  2. By: Desai,Sameeksha, Acs, Zoltan and Weitzel, Utz
    Abstract: The current research on entrepreneurship as an economic phenomenon often assumes its desirability as a driver of economic development and growth. However, entrepreneurial talent can be allocated among productive, unproductive, and destructive activities. This process is theorized as driven by institutions. Although the tradeoff between productive and unproductive entrepreneurship has been examined, destructive entrepreneurship has been largely ignored. We build from existing theory and define destructive entrepreneurship as wealth-destroying. We propose three assumptions to develop a model of destructive entrepreneurship that presents the mechanisms through which entrepreneurial talent behaves in this manner. We present four key propositions on the nature and behavior of destructive entrepreneurship. We conclude by identifying policy and research streams that emerge from our model.
    Keywords: destructive entrepreneurship, entrepreneurship, allocation, rent-seeking, incentives, informal institutions
    Date: 2010
  3. By: Sathiabama K
    Abstract: Empowerment of women has emerged as an important issue in recent times. The economic empowerment of women is being regarded these days as a Sine-quo-non of progress for a country; hence, the issue of economic empowerment of women is of paramount importance to political thinkers, social scientists and reformers. The Self Help Groups (SHGs) have paved the way for economic independence of rural women. The members of SHGs are involved in Micro – Entrepreneurships. Through that, they are becoming economically independent and providing employment opportunities to others. This article deals with empowerment of rural women through entrepreneurship and the advantages entrepreneurship among the rural women. “Economic empowerment of women led to development of family and communityâ€. This statement is proved by a collective Micro Entrepreneurship in Tamilnadu.
    Keywords: SHGs, self help groups, empowerment, women, micro, Tamilnadu, employment, rural women, India, political thinkers, economically, economic,
    Date: 2010
  4. By: Erzo G. J. Luttmer (Department of Economics, University of Minnesota and Federal Reserve Bank of Minnesota)
    Abstract: Although employment at individual firms tends to be highly non-stationary, the employment size distribution of all firms in the United States appears to be stationary. It closely resembles a Pareto distribution. There is a lot of entry and exit, mostly of small firms. This paper surveys general equilibrium models that can be used to interpret these facts and explores the role of innovation by new and incumbent firms in determining aggregate growth. The existence of a balanced growth path with a stationary employment size distribution depends crucially on assumptions made about the cost of entry. Some type of labor must be an essential input in setting up new firms.
    Keywords: firm size distribution, organization capital, heterogeneous productivity, selection.
    JEL: L1 O4
    Date: 2010–04–13
  5. By: Hector Perez-Saiz
    Abstract: In many industries, firms usually have two choices when expanding into new markets: They can either build a new plant (greenfield entry) or they can acquire an existing incumbent. The U.S. cement industry is a clear example. For this industry, I study the effect of two policies on the entry behavior and industry equilibrium: An asymmetric environmental policy that creates barriers to greenfield entry and a policy that creates barriers to entry by acquisition (like an antitrust policy). In the U.S. cement industry, the comparative advantage (e.g., TFP or size) of entrants versus incumbents and the regulatory entry barriers are important factors that determine the means of expansion. To model this industry, I use a perfect information static entry game. To estimate the supply and demand primitives of my model, I apply a recent estimator of discrete games to a rich database of the U.S. Census of Manufactures for the years 1963-2002. In my counterfactual analyses, I find that a less favorable environment for mergers during the Reagan-Bush administration would decrease the acquired plants by 70% and increase the new plants by 20%. Also, I find that the Clean Air Act Amendments of 1990 increased the number of acquisitions by 7.8%. Furthermore, my simulations suggest that regulations that create barriers to greenfield entry are less favorable in terms of welfare than regulations that create barriers to entry by acquisition. Finally, I demonstrate how my parameter estimates change when I apply the traditional approach in the entry literature where entry by acquisition is not considered, and when using a simple OLS estimation.
    Date: 2010–04
  6. By: Baldwin, John R.; Yan, Beiling
    Abstract: We examine the simultaneous effects of real-exchange-rate movements and of tariff reductions on plant death in Canadian manufacturing industries between 1979 and 1996. We find that both currency appreciation and tariff cuts increase the probability of plant death, but that tariff reductions have a much greater effect. Consistent with the implications of recent international-trade models involving heterogeneous firms, we further find that the effect of exchange-rate movements and tariff cuts on exit are heterogeneous across plants - particularly pronounced among least efficient plants. Our results reveal multi-dimensional heterogeneity that current models featuring one-dimensional heterogeneity (efficiency differences among plants) cannot fully explain. There are significant and substantial differences between exporters and non-exporters, and between domestic- and foreign- controlled plants. Exporters and foreign-owned plants have much lower failure rates; however, their survival is more sensitive to changes in tariffs and real exchange rates, whether differences in their efficiency levels are controlled or not.
    Keywords: Manufacturing, Business performance and ownership, Business adaptation and adjustment, Entry, exit, mergers and growth
    Date: 2010–04–14

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