nep-ent New Economics Papers
on Entrepreneurship
Issue of 2010‒09‒25
fifteen papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Entrepreneurship and Team Participation: An Experimental Study By Cooper, David J.; Saral, Krista Jabs
  2. The affective roots of resource heterogeneity: How founders' emotion regulation helps create social resources in startups By Zott, Christoph; Huy, Quy
  3. Succession in private firms as an entrepreneurial process – A review and suggestions of new research avenues By Wennberg, Karl; Nordqvist, Mattias; Bau’, Massimo; Hellerstedt, Karin
  4. Informal Economy Activities and Entrepreneurship: Evidence from Russia By Kim, Byung-Yeon
  5. Emergence of firms: a sociogeographic demand side perspective By Hellerstedt, Karin; Wennberg, Karl
  6. The dynamics in demand and supply - credit constraints in small business bank relationships By Kirschenmann, Karolin
  7. Location, Location, Location: Entrepreneurial Finance Meets Economic Geography By Emanuel Shachmurove; Yochanan Shachmurove
  8. Business model innovation: Creating value in times of change By Amit, Raphael; Zott, Christoph
  9. The business model: Theoretical roots, recent developments, and future research By Zott, Christoph; Amit, Raphael; Massa, Lorenzo
  10. Theorizing and strategizing with models: Generative models of business models By Seelos, Christian
  11. Guanxi Management in Chinese Entrepreneurs: a Network Approach By Arribas Fernández Iván; Vila Gisbert José E.
  12. The embeddedness of social entrepreneurship: Understanding variation across local communities By Seelos, Christian; Mair, Johanna; Battilana, Julie; Dacin, M. Tina
  13. Capital market imperfections, uncertainty or both: Evidence on economic constraints to informal enterprises in Sub-Saharan Africa By Grimm, Michael; Krüger, Jens; Lay, Jann
  14. What Explains Microfinance Distribution Surplus? A Stakeholder-oriented Approach By Anaïs Périlleux; Marek Hudon
  15. Like milk or wine: Does firm performance improve with age? By Alex Coad; Agustí Segarra; Mercedes Teruel

  1. By: Cooper, David J.; Saral, Krista Jabs
    Abstract: Entrepreneurs are surprisingly unlikely to have partners. In spite of the obvious advantages to forming partnerships, only a small minority of entrepreneurs (less than 10%, excluding family businesses) have partners. A number of possible explanations exist for this puzzling phenomenon, including an inability to locate suitable partners, fear of free-riding by partners, and a preference for not working in groups. Utilizing a diverse subject population with a high proportion of active entrepreneurs, we use a team production experiment to study whether entrepreneurs prefer to work alone or in a team. The data indicate that entrepreneurs, while no more likely to free-ride on their teammates, are substantially less interested in joining teams. This suggests that efforts to encourage partnership among entrepreneurs may run contrary to the preferences of this group.
    Keywords: Entrepreneurship; Teams; Artefactual Field Experiment
    JEL: L26 C93
    Date: 2010–02
  2. By: Zott, Christoph (IESE Business School); Huy, Quy (INSEAD)
    Abstract: Where do firms' heterogeneous resources come from? Our qualitative, inductive study of nascent firms over seven years revealed that founders' differential use of emotion regula-tion behaviors can explain differential creation of social resources at the firm level. We found that founders' emotion regulation behaviors cluster around three themes: (1) the founder's temporal perspective (short-term versus long-term); (2) the nature of founder benefits (economic versus emotional rewards); and (3) the target of founder attention (self versus others). We theorize that founders' emotion regulation behaviors according to these themes influence the incentives of founders and stakeholders and thereby enable the creation of valuable and difficult-to-imitate social resources for their ventures. Social re-sources include discretionary support provided by founders and stakeholders, as well as founder persistence and stakeholder willingness-to-help. Our study contributes to the strategy literature by showing empirically the link between specific emotion regulation behaviors and the emergence of resource heterogeneity at the firm level. It specifically contributes to resource-based theory by separating the theory's main assumptions and outcomes, reducing concerns about potential tautology.
    Keywords: Resource heterogeneity; resource-based view; emotion regulation; entrepreneurship;
    Date: 2010–07–19
  3. By: Wennberg, Karl (The Ratio Institute and Stockholm School of Economics); Nordqvist, Mattias (Jönköping International Business School); Bau’, Massimo (University of Udine); Hellerstedt, Karin (Jönköping International Business School)
    Abstract: In considering firm succession as the acts of both entrepreneurial exit and entry, this paper adds to work that seeks to integrate entrepreneurship and family business research. We provide a comprehensive literature review of succession research over the past 35 years and identify seven thematical clusters within which succession can be understood as a distinct part of the entrepreneurial process, and three areas of particular interest for future research seeking to advance the literatures on entrepreneurship, family firms, and governance in private firms. The paper explores theoretical, conceptual, and methodological ways of integrating these findings into the research on entrepreneurship and family business.
    Keywords: Family firms; Succession; Entrepreneurship
    JEL: L26 M13
    Date: 2010–09–14
  4. By: Kim, Byung-Yeon
    Abstract: This paper uses the Russian Longitudinal Monitoring Survey (RLMS) from 1998 to 2004 to analyze the effect of previous informal economy activities on the creation of official entrepreneurship. We find that previous participation in the informal economy is positively associated with the probability to become registered entrepreneurs in the present. We also find that that self-employment is used as a transition mechanism to entrepreneurship and moonlighters in the past are more active in actual job changes. Furthermore, a survival function analysis suggests that previous experience as self-employed moonlighters enhances the probability of success as official entrepreneur. Workers who moonlighted as selfemployed in the past represent 16-22% of the new entrepreneurs. --
    Keywords: Informal economy,entrepreneurs,Russia
    JEL: J22 J24 O17 P20
    Date: 2010
  5. By: Hellerstedt, Karin (Jönköping International Business School); Wennberg, Karl (The Ratio Institute and Stockholm School of Economics)
    Abstract: This paper presents an analysis of regional start-up rates in the knowledge intensive services and high-tech industries. To supplement prevailing frameworks focusing mainly on supply-side economic factors, we integrate insights from economic geography and population ecology to the entrepreneurship literature as to present a theoretical framework that captures both supply-and demand-side factors, with a specific emphasis on the demand side. Using a rich multi-level data material on all knowledge intensive start-ups across the 286 Swedish municipalities between 1994 and 2002, the empirical analysis focuses on how characteristics of the economic milieu of regions influence firm births. We find that economically affluent regions dominate entrepreneurial activity in terms of firm births, yet a number of much smaller rural region revealed high levels of start ups. Both economic and sociological variables such as knowledge spillovers from universities and firm R&D, and the political regulatory regime within the municipality, exhibit strong influences on firm births. These patterns points to strong support for the notion that ‘the geographic connection’ is important for analyzing entrepreneurial processes.
    Keywords: Firm birth; Geography; Entrepreneurship
    JEL: M13 R11 R23
    Date: 2010–09–14
  6. By: Kirschenmann, Karolin
    Abstract: This paper studies how credit constraints develop over bank relationships. I analyze a unique dataset of matched loan application and loan contract information and measure credit constraints as the ratio of requested to granted loan amounts. I find that the most important determinants of receiving smaller than requested loan amounts are firm age and size at the time of the first interaction between borrower and bank. Over loan sequences, credit constraints decease most pronouncedly in the beginning of relationships and for the initially young and small firms. Moreover, the structure of the dataset allows me to disentangle the demand and supply effects behind these observed credit constraints. I find that the gap between requested and granted loan amounts decreases because both sides converge. If previous credit constraints were large, requested amounts increase more moderately, while granted amounts increase more strongly than in the case of small previous constraints. The findings are a sign of the use of dynamic incentives at the bank side to overcome information problems when contracting repeatedly with opaque borrowers. The results further suggest that, particularly in the beginning of a bank relationship, borrowers learn from their previous experience with credit constraints and adjust their demand accordingly. --
    Keywords: Relationship lending,credit constraints,small business lending,asymmetric information,learning
    JEL: D82 G20 G21 G30
    Date: 2010
  7. By: Emanuel Shachmurove (Independent); Yochanan Shachmurove (Department of Economics,The City College of the City University of New YorkAuthor-Name:)
    Abstract: Economic Geography maintains that economic activities are not randomly distributed across space. This paper examines the impact of industrial and regional characteristics on venture capital activities in the United States from 1995 until 2009. The unique database allows for stratifications into seventeen industries within nineteen regions of the United States. This study affirms the significance of both Location and industry in venture capital investment. Both statistical and graphical methods are employed in order to better ascertain the dynamic nature of the data.
    Keywords: Venture Capital; Economic Geography; Location; Biotechnology; Business Products and Services; Computers and Peripherals; Consumer Products and Services; Electronics and Instrumentation; Financial Services; Healthcare Services; Industrial and Energy; Information Technology Services; Media and Entertainment; Medical Devices and Equipment; Networking and Equipment; Retailing and Distribution; Semiconductors; Software; Telecommunications.
    JEL: C12 D81 D92 E22 G24 G3 M13 M21 O16 O3
    Date: 2010–08–27
  8. By: Amit, Raphael (The Wharton School); Zott, Christoph (IESE Business School)
    Abstract: We highlight business model innovation as a way for general managers and entrepreneurs to create and appropriate value, especially in times of economic change. Business model innovation, which involves designing a modified or new activity system, relies on recombining the existing resources of a firm and its partners, and it does not require significant investments in R&D. We offer managers and researchers a conceptual primer on business model innovation emphasizing the importance of system-level thinking.
    Keywords: Business model; innovation; activity system; design; value creation;
    JEL: L22 L26 M10
    Date: 2010–07–17
  9. By: Zott, Christoph (IESE Business School); Amit, Raphael (The Wharton Sschool); Massa, Lorenzo (IESE Business School)
    Abstract: The paper provides a broad and multifaceted review of the received literature on business models, in which we attempt to explore the origin of the construct and to examine the business model concept through multiple disciplinary and subject-matter lenses. The review reveals that scholars do not agree on what a business model is, and that the literature is developing largely in silos, according to the phenomena of interest to the respective researchers. However, we also found some emerging common ground among students of business models. Specifically, i) the business model is emerging as a new unit of analysis; ii) business models emphasize a system-level, holistic approach towards explaining how firms do business; iii) organizational activities play an important role in the various conceptualizations of business models that have been proposed, and iv) business models seek not only to explain the ways in which value is captured but also how it is created. These emerging themes could serve as important catalysts towards a more unified study of business models.
    Keywords: Business model; strategy; technology management; innovation; literature review;
    Date: 2010–06–01
  10. By: Seelos, Christian (IESE Business School)
    Abstract: The ambiguity surrounding model-based science is exemplified by the proliferation of meanings of the term "business model". We argue that a clearer specification of the analytical, theoretical and ontological validity of models is an opportunity to learn about and understand complex organizational phenomena more systematically. We apply this to research on social entrepreneurship and pro-poor business models that has been criticized as being overly theoretical and conceptually ambiguous. Business models are presented as narratives that integrate various actors, actions, stories, and outcomes, without a clear perspective of why these elements were selected and what we can learn from them. This paper outlines an explicit modeling process as an investigative tool that enables transparent and systematic theorizing of business models. Using an illustrative case study, we develop a generative model that accounts for the social mechanisms that explain how business models achieve multiple strategic objectives and multiple dimensions of economic and social value creation.
    Keywords: Business model; social mechanisms; generative model; retroduction;
    Date: 2010–05–01
  11. By: Arribas Fernández Iván (University of Valencia; Ivie); Vila Gisbert José E. (University of Valencia)
    Abstract: This working paper analyzes the role played by two dimensions of entrepreneurs’ private social capital in the performance of an entrepreneurial venture: local size and degree of preferential linking. To fulfill this objective, we build a bi-dimensional measure of social capital based on network models and a methodology to estimate this measure for any group of entrepreneurs. Based on a survey of service entrepreneurs who launched their business in the city of Shanghai, we show that social capital or guanxi is relevant for business success. Moreover, we show that roles played by each dimension are quite different. A large local network, i.e. a large set of agents able to advise or support the entrepreneur, increases the chances of survival of the new venture but has no impact to make it go beyond a self-employment business. To reach this level, entrepreneurs need to generate a high degree of preferential attachment; in other words, they need to generate a social network that allows them to get advice and support from those agents placed in critical positions within Shanghai’s global socio-economic network. This finding has relevant political and managerial implications and generates new questions to be answered in future research.
    Keywords: Social capital, network analysis, entrepreneurship in China
    Date: 2010–09–20
  12. By: Seelos, Christian (IESE Business School); Mair, Johanna (IESE Business School); Battilana, Julie (Harvard Business School); Dacin, M. Tina (Queen's School of Business)
    Abstract: Social enterprise organizations (SEOs) arise from entrepreneurial activities with the aim of achieving social goals. SEOs have been seen as alternative and/or complementary to the actions of governments and international organizations to address poverty and poverty-related social needs. Using a number of illustrative cases, we explore how variations in local institutional mechanisms shape the local "face of poverty" in different communities and how this relates to variations in the emergence and strategic orientations of SEOs. We develop a model of the productive opportunity space for SEOs as a basis of, and an inspiration for, further scholarly inquiry.
    Keywords: social entrepreneurship; Social mechanisms; poverty; opportunity; institutions;
    Date: 2010–05–03
  13. By: Grimm, Michael; Krüger, Jens; Lay, Jann
    Abstract: This paper investigates the patterns of capital entry barriers into informal activities and capital returns in a number of Sub-Saharan African economies using a unique micro data set on informality covering seven West-African countries. Our assessment of initial investment of micro and small enterprises (MSEs) suggests that while few activities seem to exhibit considerable entry barriers, some informal entrepreneurs incur substantial initial investment, in particular when compared to their earnings levels. We find very heterogeneous patterns of capital returns in informal MSEs. At very low levels of capital, marginal returns are high, but rapidly decreasing. In a medium range of capital between 150 and 1 000 international dollars, marginal returns tend to be low and unstable. Only at higher levels of capital, they become more stable and can be fairly high again. These results are partly consistent with a dichotomous informal sector where subsistence activities co?exist with more capital intensive activities. --
    Keywords: Microenterprises,Informality,Sub-Saharan Africa
    Date: 2010
  14. By: Anaïs Périlleux; Marek Hudon
    Abstract: What are the drivers of productivity surplus distribution to microfinance stakeholders? This paper shows that the size of the institution is the main indicator that can explain the gain in productivity surplus but also the surplus given to clients (decrease of interest rates) and staff. Moreover, cooperatives keep a significantly lesser part of their surplus for future growth, reserve, or distribution to investors. Finally, larger, more subsidised MFIs, and particularly cooperatives, tend to give a greater part of their surplus to their employees.
    Keywords: Microfinance; Surplus; Governance; Size; Subsidies; Cooperatives
    JEL: O16 O50 G21
    Date: 2010–09
  15. By: Alex Coad (Max Planck Institute of Economics, Evolutionary Economics Group, Kahlaische Strasse 10, D-07745 Jena, Germany); Agustí Segarra (Universitat Rovira i Virgili, Grup de Recerca d’Indústria i Territori, Avda. Universitat 1, 43204 Reus, Spain); Mercedes Teruel (Universitat Rovira i Virgili, Grup de Recerca d’Indústria i Territori, Avda. Universitat 1, 43204 Reus, Spain)
    Abstract: Our empirical literature review shows that little is known about how firm performance changes with age, presumably because of the paucity of data on firm age. For Spanish manufacturing firms, we analyse the firm performance related to firm age between 1998 and 2006. We find evidence that firms improve with age, because ageing firms are observed to have steadily increasing levels of productivity, higher profits, larger size, lower debt ratios, and higher equity ratios. Furthermore, older firms are better able to convert sales growth into subsequent growth of profits and productivity. On the other hand, we also found evidence that firm performance deteriorates with age. Older firms have lower expected growth rates of sales, profits and productivity, they have lower profitability levels (when other variables such as size are controlled for), and also that they appear to be less capable to convert employment growth into growth of sales, profits and productivity.
    Keywords: firm age, firm growth, LAD, financial structure, vector autoregression
    JEL: L25 L20
    Date: 2010–09

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