nep-ent New Economics Papers
on Entrepreneurship
Issue of 2010‒05‒15
ten papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. The role of entrepreneurship education and regional context in forming entrepreneurial intentions By Dirk Dohse; Sascha G. Walter
  2. Returns for Entrepreneurs versus Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vis-à-vis Wage Employees By Mirjam van Praag; Arjen van Witteloostuijn; Justin van der Sluis
  3. Is More Entrepreneurship better? By Philipp Koellinger; Christian Roessler
  4. Industry Dynamics and Entrepreneurship: An Equilibrium Model By Dennis Fok; Andre van Stel; Andrew Burke; Roy Thurik
  5. Return migrants: The rise of new entrepreneurs in rural China By Sylvie Démurger; Hui Xu
  6. Target-Group and Quality Decisions of Inequity-Averse Entrepreneurs By Steffen Burchhardt; Christoph Starke
  7. Serving the Many or Serving the Most Needy? By Christoph Starke
  8. Entrepreneurship, Windfall Gains and Financial Constraints: Evidence from Germany By Dorothea Schäfer; Oleksandr Talavera; Charlie Weir
  9. The economic contribution of high-growth firms: Do definitions matter? By Daunfeldt, Sven-Olov; Elert, Niklas; Johansson, Dan
  10. Fiscal stimulus in a model with endogenous firm entry By Totzek, Alexander; Winkler, Roland

  1. By: Dirk Dohse (Kiel Institute for the World Economy); Sascha G. Walter (Kiel University)
    Abstract: This study examines how the extent of entrepreneurship education within university departments influences students’ entrepreneurial intentions in three careers: computer science, electrical engineering, and business. Specifically, it proposes that the effect of such education is (1) contingent on its mode (active, e.g. business plan seminars, vs. reflective, e.g. theory lectures), (2) contingent on the regional context and (3) complemented by individual-level influences such as role models or work experience. Results show that active modes of entrepreneurship education directly increase intentions and attitudes, whereas the impact of reflective modes depends on the regional context. Parental role models and work experience are found to complement entrepreneurship education in different ways. The findings have important implications for theory building as well as for the practice of teaching entrepreneurship.
    Keywords: Entrepreneurship education, entrepreneurial intentions, regional economy, knowledge spillover
    JEL: L26 M13 M59 R12
    Date: 2010
  2. By: Mirjam van Praag (University of Amsterdam); Arjen van Witteloostuijn (University of Antwerp, and Utrecht University); Justin van der Sluis (University of Amsterdam)
    Abstract: How valuable is education for entrepreneurs’ performance as compared to employees’? What might explain any differences? And does education affect peoples’ occupational choices accordingly? We answer these questions based on a large panel of US labor force participants. We show that education affects peoples’ decisions to become an entrepreneur negatively. We show furthermore that entrepreneurs have higher returns to education than employees (in terms of the comparable performance measure ‘income’). This is the case even when estimating individual fixed effects of the differential returns to education for spells in entrepreneurship versus wage employment, thereby accounting for selectivity into entrepreneurial positions based on fixed individual characteristics. We find these results irrespective of whether we control for general ability and/or whether we use instrumental variables to cope with the endogenous nature of education in income equations. Finally, we find (indirect) support for the argument that the higher returns to education for entrepreneurs is due to fewer (organizational) constraints faced by entrepreneurs when optimizing the profitable employment of their education. Entrepreneurs have more personal control over the profitable employment of their human capital than wage employees.
    Keywords: entrepreneurship; self-employment; returns to education; performance; personal control; locus of control; human capital; wages; incomes
    JEL: J23 J24 J31 J44 M13
    Date: 2009–12–08
  3. By: Philipp Koellinger (Erasmus University Rotterdam); Christian Roessler (Brown University)
    Abstract: We develop a new perspective on the boundary of the firm that is consistent with the empirical observation that the share of entrepreneurs first decreases and then increases in the course of economic development. Existing theory based on transaction costs is difficult to relate to these well-established dynamics. Our approach focuses on changing incentives to specialize and adapt, in order to access complementarities that arise from diverse abilities and access to wealth. We discuss why the efficient number of entrepreneurs is bounded and changes in the course of economic development.
    Keywords: Entrepreneurship; theory of the firm; organizations; economic development
    JEL: L26 D20 J24 O10
    Date: 2009–11–19
  4. By: Dennis Fok (Erasmus University Rotterdam); Andre van Stel (University of Amsterdam); Andrew Burke (Cranfield University, UK); Roy Thurik (Erasmus University Rotterdam)
    Abstract: This paper conducts the first general equilibrium analysis of the role of entry, exit and profits in industry dynamics. The benefit of our model is twofold. First, to discriminate between entrants’ role of performing the entrepreneurial function of creating disequilibrium and the conventional equilibrating role of moving the industry to a new equilibrium. Second, to discriminate between three aspects of industry dynamics: the effect of entry and exit on market equilibrium, duration of disequilibrium and patterns of adjustment. Using a rich data set of the retail industry, we construct a dynamic simultaneous equilibrium model of profits, entry and exit. We find that indeed entrants play an entrepreneurial function causing long periods of disequilibrium after which a new equilibrium is attained. Moreover, we find ample support for the statement that disequilibrium is the essence of economic progress.
    Keywords: entry; exit; profits; equilibrium; industrial dynamics; retailing
    JEL: B50 J01 L00 L1 L26
    Date: 2010–01–13
  5. By: Sylvie Démurger (Université de Lyon, Lyon, F-69003, France; CNRS, GATE Lyon St Etienne, UMR 5824, 93, chemin des Mouilles, Ecully, F-69130, France; ENS-LSH, Lyon, France ; CNRS, CEFC, USR 3331 Asie Orientale, Hong Kong); Hui Xu (Université de Lyon, Lyon, F-69003, France; CNRS, GATE Lyon St Etienne, UMR 5824, 93, chemin des Mouilles, Ecully, F-69130, France; ENS-LSH, Lyon, France ; Center for Modern Chinese City Studies (CCMC), East China Normal University, Shanghai, China)
    Abstract: This paper analyzes return migrants' occupational choice upon their return to their home village, by using an original rural household survey conducted in Wuwei county (Anhui province, China) in 2008. We apply two complementary approaches : a horizontal comparative analysis of occupational choice between non-migrants and return migrants, and a vertical investigation of the impact of migration experience on returnees only. Two main findings are drawn up from the estimation of probit models which account for potential selection bias and endogeneity. First, return migrants are more likely to be self-employed and to opt for higher ability jobs than non-migrants. Second, both return savings and the frequency of job changes during migration increase the likelihood for return migrants to become self-employed. These findings suggest that (a) working experience during migration enhances individual's human capital and entrepreneurial ability, and (b) repatriated migration experience is a key stimulating factor in promoting rural entrepreneur activity.
    Keywords: Return migrants, occupational change, entrepreneurship, Asia, China
    JEL: O15 J62 L26 O53
    Date: 2010
  6. By: Steffen Burchhardt (Department of Economics and Management, Otto-von-Guericke University Magdeburg); Christoph Starke (Department of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: Limited donations force nonprofit entrepreneurs to ration needy individuals by deciding on who is served at what quality level. We propose a positive model of this allocation for applicants with differing incomes under the assumption of perfect user-fee discrimination. By following recent experimental economic research on social preferences, we assume that entrepreneurs behave inequity averse, i.e. they care about the relative consumption possibilities of others. We find that less inequity-averse entrepreneurs prefer to serve wealthier individuals at high reference quality. In contrast, more inequity-averse entrepreneurs care for the poorest individuals but offer minimum quality. Furthermore, as input costs increase, entrepreneurs with low inequity aversion change the target group, while entrepreneurs with high aversion do not.
    Keywords: inequity aversion, nonprofit, quality, rationing, social entrepreneur, user fees
    JEL: L31 H41 D45
    Date: 2010–04
  7. By: Christoph Starke (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: For free, subsidized or cost-covering? The decision on how much to charge for a good or service is fundamental in social business planning. The higher the fee paid by the recipient, the more people in need can be served by the additional revenues. But charging a fee means simultaneously to exclude the very poor from consumption. This paper argues that the entrepreneur’s trade off between both effects is governed by her level of poverty aversion, i.e., her preference intensity for the service of needy people with different incomes. Additionally, we account for the possibility of excess demand for the provided good and assume that applicants are rationed by non-price allocation mechanisms. We thereby contribute to the extensive literature on the pricing and rationing behaviour of nonprofit firms. Within our theoretical model, we find ambiguous reactions of the entrepreneur to a cut in donations. Given a sufficiently low level of status-quo donations, entrepreneurs with relatively high poverty aversion tend to increase the project volume, while those with relatively low poverty aversion do the opposite.
    Keywords: allocation mechanism, donation, nonprofit, poverty aversion, social entrepreneur, user fee
    JEL: L31 H41 D45
    Date: 2010–01
  8. By: Dorothea Schäfer (DIW Berlin); Oleksandr Talavera (School of Economics, University of East Anglia); Charlie Weir (Aberdeen Business School)
    Abstract: We investigate the link between the propensity to become an entrepreneur and exogenous release from financial constraints in Germany. This is defined in terms of the movement from employment to self-employment on receipt of a financial windfall. A theoretical framework developing Evans and Jovanovic (1989) is set up and tested with panel data from German households. The results show that financial constraints do exist given that individuals are more likely to start a personal business after receiving a windfall gain. The value of windfall gains has a significant but non linear effect on the decision to become self employed. The data reveal that differences in ability and income affect the change in employment status. We also report that there is no evidence that becoming self employed involves the anticipation of windfall gains.
    Keywords: Entrepreneurship, windfall gains, financial constraints
    JEL: G20 M13
    Date: 2010–05–03
  9. By: Daunfeldt, Sven-Olov (The Ratio Institute and Dalarna University); Elert, Niklas (The Ratio Institute); Johansson, Dan (The Ratio Institute)
    Abstract: Prior studies have defined high-growth firms (HGFs) in terms of sales or employment, and analyzed their contribution to employment growth. We define HGFs by employment and sales and add definitions of value added and productivity. We examine the contribution of HGFs to employment growth, economic growth, productivity growth, and sales growth. All HGFs give a disproportionately large positive contribution to economic growth and most also give large positive contributions to growth in employment, productivity and sales. Although HGFs of different definitions are usually not the same firms, young firms are more likely to be HGFs irrespective of definition.
    Keywords: Gazelles; Firm growth; High-impact firms
    JEL: D24 L25 L26
    Date: 2010–05–10
  10. By: Totzek, Alexander; Winkler, Roland
    Abstract: This paper explores different fiscal stimuli within a business cycle model with an endogenous number of firms. We demonstrate that a changing number of firms is a crucial dimension for evaluating fiscal policy since it accelerates the impacts of fiscal policy. In the presence of demand stimuli fiscal multipliers are small and the number of firms may decline, in particular under distortionary tax financing. Policies that disburden private agents from income taxes, on the other hand, are effective in boosting economic activity and new firm creation. --
    Keywords: Fiscal Multipliers,Firm Entry,Product Variety
    JEL: E62 E32 E22
    Date: 2010

This nep-ent issue is ©2010 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.