nep-ent New Economics Papers
on Entrepreneurship
Issue of 2010‒11‒13
ten papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Growth Through Heterogeneous Innovations By Ufuk Akcigit; William R. Kerr
  2. Personality Traits, Self-Employment, and Professions By Michael Fritsch; Alina Rusakova
  3. The Effect of Market Entry on Innovation: Evidence from UK University Incubators By Christian Helmers
  4. Bridging the Financing Gap for Pro-Poor Innovation: Towards a Framework By Sonne, Lina
  5. Loan Officer Authority and Small Business Lending.Evidence from a survey. By benvenuti, m.; casolaro, l.; del prete, s.; mistrulli, p. e.
  6. Bridging the gap between migrants and the banking system. By albareto, g.; mistrulli, p.e.
  7. La teoria economica del fattore imprenditoriale. Note a margine di alcune letture suggerite - The economic theory of the entrepreneurial factor. Notes on a small reading list By Massimo Florio
  8. Business Subsidies in Finland: The Dynamics of Application and Acceptance Stages By Heli Koski; Jukka Tuuli
  9. Innovation strategy, firm survival and relocation: The case of Hong Kong-owned manufacturing in Guangdong province, China By Sharif, Naubahar; Huang, Can

  1. By: Ufuk Akcigit; William R. Kerr
    Abstract: We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multi-product firms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with firm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and growth differences across the firm size distribution. We also incorporate patent citations into our theoretical framework. The framework generates a simple test using patent citations that indicates that entrants and small firms have relatively higher growth spillover effects.
    JEL: L16 O31 O33 O41
    Date: 2010–11
  2. By: Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Alina Rusakova (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: We investigate the effect of broad personality traits-the Big Five-on an individual's decision to become self- employed. In particular, we test an overall indicator of the entrepreneurial personality. Since we find that the level of self-employment varies considerably across professions, we also perform the analysis for different types of professions, namely, those classified as being in the "creative class" as compared to the noncreative class. The analysis is based on micro data for individuals of the German Socio Economic Panel (SOEP). We find a significant association between personality traits and the propensity be become self-employed. However, the strength of this link is fairly weak and differs across professions, indicating an important effect of an individual's profession on his or her decision to run an own business.
    Keywords: Entrepreneurship, self-employment, personality traits, the Big Five, professions
    JEL: L26 Z1
    Date: 2010–11–02
  3. By: Christian Helmers
    Abstract: This paper investigates the effect of market entry of new firms on incumbent firms'innovative activity measured as patent applications. The basic assumption is that the effect ofentry varies by geographical distance between entrants and incumbents due to the presence oflocalized unobserved spillovers. In order to avoid endogeneity problems commonlyassociated with the timing of entry and entrants' location choice, I analyze entry induced bythe establishment of university business incubators, which are usefully exogenous in time andspace. The results show that entry has a statistically and economically significantly positivestrategic effect on incumbent patenting which is attenuated by the geographical distancebetween entrant and incumbent.
    Keywords: Patents, market entry, incubators, spillover
    JEL: L22 L26 O34
    Date: 2010–09
  4. By: Sonne, Lina (UNU-MERIT)
    Abstract: In many developing countries, pro-poor entrepreneurship and innovation is facing a financing gap. Such innovation suffers from a lack of finance especially from the mainstream (or core) of the financial system. Instead, the little support that exists comes from alternative sources at the periphery of the financial system. This substantial gap in finance for rural PEBI, which remains unexplored, is the focus of this paper. To start, a number of barriers to access to finance are considered, from which a conceptual framework is constructed. The framework considers the financial system as made up of a core (the banks) and a periphery, where the way knowledge flows within the system, the type of knowledge that can be accessed and accumulated, and the kind of relationships that exists matter. It is suggested that at the core, path dependence and institutional lock-in together with a closed network of similar knowledge types and a dependence on collateral rather than relationships, result in a rigid and a closed system. The periphery organisations are better able to obtain and act on new knowledge (and provide finance) for a number of reasons which form the basis for a set of insufficient but necessary (INUS) condition. Accordingly, the organisations may posit the following characteristics: a dynamic and flexible approach to finance; a wide network of actors with varied knowledge; relationship focused; an emphasis on tacit knowledge, feedback loops and learning; ability to innovate close to users; and a systemic and integrated approach to finance.
    Keywords: Pro-poor innovation, entrepreneurship, rural innovation, financing innovation, financing entrepreneurship
    JEL: O16 O18 O31 R51 I32
    Date: 2010
  5. By: benvenuti, m.; casolaro, l.; del prete, s.; mistrulli, p. e.
    Abstract: A vast literature has emphasized that small banks are at a comparative advantage in small business lending. In this paper, we show that apart from size, which is negatively correlated with bank specialization in small business lending, organizational characteristics affect bank loan portfolio choices. By using a unique dataset based on a recent survey of Italian banks, we find that after having controlled for bank size, a branch loan officer’s authority has a key role in explaining bank specialization in small business lending. In particular, banks which delegate more decision-making power to their branch loan officers are more willing to lend to small firms than other banks. We approximate loan officers’ authority by controlling for several factors which shape their incentives: loan officer turnover, the amount of money up to which they are allowed to lend autonomously, their role in loan approval and in setting loan interest rates, the kind of information (soft versus hard information) used for screening and monitoring borrowers, and the structure of their compensation schemes.
    Keywords: Bank organization; Small business lending; Loan officer
    JEL: L22 L15 G21
    Date: 2010–09
  6. By: albareto, g.; mistrulli, p.e.
    Abstract: In this paper, we address two related issues. First, we test whether micro firms run by migrants pay more for credit than firms run by native entrepreneurs. Second, we verify whether the differences in the cost of credit between these two groups of entrepreneurs decrease as long as the informational and cultural gap narrow. To this aim we employ a large and unique data set providing us with detailed information about each overdraft loan granted by banks to sole proprietorships based in Italy. We find that firms run by migrants pay, on average, almost 70 basis points more for credit than those run by entrepreneurs born in Italy. The interest rate differential is lower for entrepreneurs born in Italy whose parents were natives of other countries (“second generation” migrants) and, among those born abroad, for migrants whose parents were natives of Italy (“Italian migrants”). These results suggest that cultural differences may matter for the functioning of the credit market. A lengthening in credit history may help migrants to “bridge the gap”. We find that, on average, interest rates lower with the length of the credit history. Furthermore, and more importantly from the paper perspective, firms run by migrants benefit more from a repeated interaction with the banking system. Finally, we find that the size of the migrant community and the improvements in bank ability to deal with cultural diversity both contribute to narrow the interest rate differential between migrant and Italian entrepreneurs.
    Keywords: credit; financial integration; migration;
    JEL: Z10 G21
    Date: 2010–10–05
  7. By: Massimo Florio (DEAS, Universit di Milano)
    Abstract: This note discusses some contributions and ideas on the role of entrepreneurs in Economics, from Adam Smith to the Austrian tradition. The paper observes that there are different forms of entrepreneurship and that realism is needed to understand the social availability of entrepreneurship across types of organisations.
    Keywords: Entrepreneurship, Firms’s Size, History of Economic Ideas
    JEL: L26 L25 B00
    Date: 2010–06–30
  8. By: Heli Koski; Jukka Tuuli
    Abstract: We use a comprehensive database concerning the application and allocation of business subsidies in Finland merged with the firm-level data comprising about 330 000 firms from the year 2004 to 2008. We find strong continuities in participation both within and between the different public support programs. Continuity in the firms’ participation in the same support programs arises both from the application and acceptance stages. A firm that has once received subsidy from an agency, tends to apply it again, and it also seems that the agencies target their support to the firms they have previously subsidized. We further find that the firms that have once entered the Finnish subsidy system not only actively seek further support from the same organization but also from the other agencies allocating busi-ness subsidies. In addition, a firm’s probability to apply subsidy from one agency is posi-tively related to its probability to apply subsidy simultaneously from another agency. In line with the previous empirical findings, and against the general public policy aims to target particular support for the SMEs, we find that all agencies favor larger companies. Also, contradictory to the learning hypothesis related to firm age, and on the other hand, supporting public policy lines favoring newly established or start-up companies in subsidy funding decisions, we find that younger firms both are more likely to apply for and to receive subsidies than the older ones. TIiivistelmä : Raportoitu tutkimus perustuu laajaan aineistoon yritystukien hakemisesta ja jakamisesta Suomessa yhdistettynä yritystason tietoihin noin 330 000 yrityksestä vuosilta 2004-2008. Yritysten osallistumisessa eri organisaatioiden tukiohjelmiin on havaittavissa jatkuvuutta yli ajan sekä eri tukiohjelmien sisällä että niiden välillä. Jatkuvuus tukiohjelmien sisällä selittyy sillä, että aiempaa tukea joltakin organisaatiolta saaneet yritykset hakevat tukea tältä organisaatiolta muita yrityksiä todennäköisemmin ja lisäksi tuen myöntäjät suosivat rahoituspäätöksissään yrityksiä, joita ne ovat jo aiemmin tukeneet. Aiempaa tukea joltakin organisaatiolta saaneet yritykset hakevat myös muiden organisaatioiden tarjoamia tukia muita yrityksiä todennäköisemmin. Lisäksi yrityksen eri organisaatioille osoitettujen samanaikaisten tukihakemusten välillä näyttäisi olevan positiivinen riippuvuussuhde. Aiempia empiirisiä tutkimustuloksia tukien, ja vastoin yleisiä PK-yritysten tukemista painottavia politiikkalinjauksia, kaikki tukia myöntävät organisaatiot näyttävät suosivan isoja yrityksiä. Toisaalta, tukipolitiikkatavoitteiden mukaisesti, nuoremmat yritykset sekä hakevat että saavat tukea todennäköisemmin kuin vanhemmat yritykset.
    Keywords: business subsidies, selection process, continuity
    JEL: D21 L53 O25
    Date: 2010–11–03
  9. By: Sharif, Naubahar (Division of Social Science, The Hong Kong University of Science and Technology); Huang, Can (UNU-MERIT, Maastricht University)
    Abstract: Based on a survey adapted from the Fourth European Community Innovation Survey (CIS-4), this study finds that, in the changing manufacturing environment of Guangdong province in China, Hong Kong-owned businesses that generate a higher share in new product sales as a percentage of total sales or engage in R&D or collaborative innovation activities in China are more likely to survive and remain in Guangdong. The study fills a gap in the literature by investigating the effects of innovation on the survival and relocation of Hong Kong-owned manufacturing firms in Guangdong. The results support policy initiatives that strengthen collaborative ties among key innovation system actors.
    Keywords: Innovation, Survival, Relocation, Community Innovation Survey, Asia, China
    JEL: D21 L25 L52 O31 R11
    Date: 2010
  10. By: Aubépine Dahan (LATTS - Laboratoire Techniques, Territoires et Sociétés - CNRS : UMR8134 - Université Paris-Est - Ecole des Ponts ParisTech); Charles Dhanaraj (Kelley School of Business - Indiana University); Vincent Mangematin (MTS - Management Technologique et Strategique - Grenoble Ecole de Management)
    Abstract: Whether based on the figure of institutional entrepreneur or the dynamic of social movements, models of institutional change have yet to solve the paradox of embedded agency. Studying institutional change from the angle of practices allows introducing a channel by which seeds of change enter the field without modifying logics at first. Political entrepreneurship or grassroots initiative will play a critical role in institutional change as long as they can rely on existing practices. Evolution of conditions to perform day to day activities introduces new problems; solutions trigger the development of new activities. Routinization of new activities leads the emergence of new practices. Non-adoption of practices hinders institutional change. Practices thus inspire, support and limit institutional change. Basing our observations from a case study of the French Doctorate defined as an institution, shifting from research and study to professionalizing diploma, we build a process model of institutional change integrating the dynamic of practices.
    Date: 2010

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