nep-ent New Economics Papers
on Entrepreneurship
Issue of 2010‒06‒11
nine papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. The Allocation of Entrepreneurial Talent and Destructive Entrepreneurship By Sanders, Mark; Weitzel, Utz
  2. Entrepreneurship, Structural Change and a Global Economic Crisis By Gries, Thomas; Naude, Wim
  3. Entrepreneurship and the National System of Innovation: What is Missing in Turkey? By Bascavusoglu-Moreau, Elif
  4. Foreign Bank Presence and its Effect on Firm Entry and Exit in Transition Economies By Olena Havrylchyk
  5. Small Business Credit Scoring: Evidence from Japan By HASUMI Ryo; HIRATA Hideaki
  7. Resource access needs and capabilities as mediators of the relationship between VC firm size and syndication By E. VERWAAL; H. BRUINING; M. WRIGHT; S. MANIGART; A. LOCKETT;
  8. Business closure and financial loss: Who foots the bill? Evidence from German small business closures By Metzger, Georg
  9. Innovation and Productivity: a Firm Level Study of Ukrainian Manufacturing Sector By Ganna Vakhitova; Tetyana Pavlenko

  1. By: Sanders, Mark; Weitzel, Utz
    Abstract: Entrepreneurship is generally regarded as a force of change, innovation, and development in modern economies. Entrepreneurs bring new and better products to markets, restore allocative efficiency through arbitrage and reinvest their profits. However,
    Keywords: destructive entrepreneurship, allocation of talent, development, institutions
    Date: 2010
  2. By: Gries, Thomas; Naude, Wim
    Abstract: Building on a Lewis-type model of structural change and entrepreneurship we show how a global economic crisis consisting of a financial and a trade shock can undermine structural change in developing countries via the start-up and innovation activities of
    Keywords: entrepreneurship, global economic crisis, structural change
    Date: 2010
  3. By: Bascavusoglu-Moreau, Elif
    Abstract: Although very dynamic and flexible, Turkish SMEs are less innovative than their European counterparts. The analysis undertaken in this paper allows to assess whether this low level of innovative activities is related to a lack of entrepreneurial behaviour
    Keywords: entrepreneurship, national systems of innovation, SMEs, innovative capabilities,
    Date: 2010
  4. By: Olena Havrylchyk
    Abstract: This study investigates the impact of foreign bank penetration in Central and Eastern Europe on firm entry. We demonstrate that the acquisition of domestic banks by foreign investors has led to reduced firm creation, smaller average size of entrants and increased firm exit in opaque industries compared to transparent ones. At the same time, the entry of greenfield foreign banks spurred firm creation and exit. Unlike previous studies, which use interchangeably the notions of opacity and size, we define opacity in terms of technological process and show that economic significance of foreign bank entry is larger for opaque industries than for industries with large shares of small firms. Our findings can be interpreted as evidence of increased credit constraints and are consistent with theories that argue that foreign bank presence exacerbates informational asymmetries.
    Keywords: Entrepreneurship; foreign bank entry; asymmetric information; credit constraints
    JEL: E51 G21 M13
    Date: 2010–06
  5. By: HASUMI Ryo; HIRATA Hideaki
    Abstract: This paper studies the Japanese credit scoring market using data on 2,000 SMEs and a small business credit scoring model widely used in the market. After constructing a model for determining a bankfs profit maximization, we find the optimum loan sizes and profit levels, and point out some lending pitfalls based on small business credit scoring. We show that solving the problems of adverse selection and window dressing are the most important things to do to increase the profitability of SBCS lending. In addition, omitted variable bias and transparency of financial statements are also important.
    Date: 2010–06
    Abstract: This study explores the impact of venture capital (VC) characteristics on the value of their portfolio companies in investment rounds. Based upon a unique hand-collected sample of 362 investment rounds in 180 VC backed firms, we show that university VC firms and government VC firms value firms lower compared to independent VC firms. Further, while controlling for differences in organizational VC firm structure, international VC firms value firms higher compared to domestic VC firms. The results remain robust after controlling for investee firm characteristics and potential selection bias. Overall, our findings suggest that VC investor type impacts the value of entrepreneurial firms in investment rounds.
    Date: 2010–02
    Abstract: Drawing from the resource-based view and transaction costs economics, we develop a theoretical framework to explain why small and large firms face different levels of resource access needs and resource access capabilities, which mediate the relationship between firm size and hybrid governance. Employing a sample of 317 venture capital firms, drawn across 6 European countries, we empirically assess our framework in the context of venture capital syndication. We estimate a path model using structural equation modeling and find, consistent with our theoretical framework, mediating effects of different types of resource access needs and resource access capabilities between VC firm size and syndication frequency. These findings advance the small business literature by highlighting the trade-offs that size imposes on firms that seek to manage their access to external resources through hybrid governance strategies.
    Keywords: venture capital, firm size, investment syndication, resource access capabilities, resource access needs, transaction cost economics, hybrid governance
    JEL: G2 G3 D8
    Date: 2010–03
  8. By: Metzger, Georg
    Abstract: This paper explores how different reasons for business closure impact the probability that financial loss will be suffered by creditors. Using German small business data, the study finds that business closure due to financial problems is strongly correlated with a likelihood of financial loss. By contrast, closures that take place based on expectations about a business' future development or because the owner takes a different earning opportunity are less likely to entail losses for creditors. The findings suggest that creditors are better off when entrepreneurs have a clear picture of their own abilities and shortcomings, and don't suffer from all-too-frequent over-optimism. Consequently, creditors stand to gain from helping clients to assess financial prospects. --
    Keywords: Bankruptcy,business closure,financial loss
    JEL: G33 L26 M13
    Date: 2010
  9. By: Ganna Vakhitova (Kyiv School of Economics, Kyiv Economic Institute); Tetyana Pavlenko (Kyiv School of Economics)
    Abstract: TThere is a large literature on innovation contribution to productivity for EU countries including CEE states. At the same time very little is known about CIS countries. We apply the same framework and select the same period (2004-2006) to make our study comparable. The modified CDM model considers not only companies that report formal innovation expenditures but the entire sample of manufacturing firms. This approach accounts for underreporting of innovative firm’s efforts, especially among small firms. Additionally, we allow dynamic two-direction relationship between productivity and innovation input and test “success breeds success” hypothesis. Our major attention is given to the impact of the government support on firm’s R&D expenditures, innovations and productivity. The results show that government financial support has positive effect on the probability and amount of firm’s innovation expenditures but not on the probability of innovation itself, neither for process nor for product innovation. The latter finding emphasizes that only the effective government innovation policy may actual positively contribute to the productivity after all. We found that both parts of the "success breeds success" hypothesis work. Firms which have introduced new or significantly improved product in the past are more likely to invest into R&D and to come up with a product innovator in the future. Our results also suggest that amount of innovation expenditures in the following period is influenced by firm’s productivity in the previous period. Empirical evidence of this is quite rare in the literature. Finally, similar to Estonia during late transition only process innovation has been found to contribute to productivity of Ukrainian firms.
    Keywords: R&D, innovation, productivity, "success breeds success", transition, Ukraine
    JEL: C33 D24 F14 O31 O33 O47 L60
    Date: 2010–06

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