nep-ent New Economics Papers
on Entrepreneurship
Issue of 2010‒12‒04
eleven papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Prevalence and Determinants of Social Entrepreneurship at the Macro-level By Chantal Hartog; Brigitte Hoogendoorn
  2. The International Circulation of Elites: Knowledge, Entrepreneurialand Political By Andrés Solimano; Diego Avanzini
  3. The Community Reinvestment Act and small business lending in low- and moderate-income neighborhoods during the financial crisis By Elizabeth Laderman; Carolina Reid
  4. The Patenting Behavior of Academic Founders By Walter, Sascha G.; Schmidt, Arne; Walter, Achim
  5. Does Schumpeterian Creative Destruction Lead to Higher Productivity? The effects of firms’ entry By Carlos Carreira; Paulino Teixeira
  6. Strengthening Entrepreneurial Global Competitiveness by Utilizing Local Culture By Erman A Sumirat; Sunu Widianto
  7. The binding constraint on firms'growth in developing countries By T. Dinh, Hinh; Mavridis, Dimitris A.; Nguyen, Hoa B.
  8. The Influence of Role Models on Immigrant Self-Employment: A Spatial Analysis for Switzerland By Giuliano Guerra; Roberto Patuelli
  9. Contingency Factors and the Technology-Performance-Relationship in Start-ups By Schmidt, Arne; Walter, Sascha G.; Walter, Achim
  10. Does the Fourth Entrant Make Any Difference? Entry and Competition in the Early U.S. Broadband Market By Xiao, Mo; Orazem, Peter
  11. The E-Commerce solutions for Small and Medium Enterprises By Aditya M Salya

  1. By: Chantal Hartog; Brigitte Hoogendoorn
    Abstract: This study increases our understanding of the prevalence of social entrepreneurial activity at the country level and our comprehension of factors explaining the variation in the rate of social entrepreneurship. We introduce two measures of social entrepreneurship – “social business entrepreneurs” and “social initiators” – and link these measures to three fields of explanations: aggregate level conditions of entrepreneurship in general, aggregate individual characteristics and opportunities for social entrepreneurs. This study reveals that: (1) social entrepreneurship is indeed a phenomenon different from commercial entrepreneurship, (2) that the degree of postmaterialism in a society is a factor with significant explanatory value for the prevalence of social entrepreneurship, and (3) that opportunities for social entrepreneurs are in particular created when social initiators are part of the safety net of the welfare regime.
    Date: 2010–11–25
  2. By: Andrés Solimano; Diego Avanzini
    Abstract: International migration analysis often focuses on mass migration rather than on the international mobility of elites, which is the focus of this paper. The paper offers a three-fold classification of elites: (a) knowledge elites, (b) entrepreneurial elites and (c) political elites. We explore the concept of elites and their main motivation to move across nations and review indirect empirical evidence relevant to this type of mobility, highlighting some channels through which elites can affect international development.
    Keywords: international migration, entrepreneurial, political migrants, talent mobility
    Date: 2010
  3. By: Elizabeth Laderman; Carolina Reid
    Abstract: Over the last three years, the financial crisis and ensuing recession have led to tectonic shifts in the availability of credit, especially for small businesses. Data show that the number of loans to small businesses has dropped from 5.2 million loans in 2007 to 1.6 million in 2009. This trend is of significant concern to policy-makers, particularly given the important role that small businesses play in the US economy. Making credit accessible to small businesses, therefore, is seen as a critical component of economic recovery. Despite this policy focus, however, few studies have documented recent trends in small business lending, and even fewer have focused attention on the implications of the reduction in credit for small businesses in low- and moderate-income neighborhoods. ; In this paper, we seek to address this gap by examining trends in small business lending in low- and moderate-income (LMI) neighborhoods by large banks regulated under the Community Reinvestment Act (CRA). We find that there is a strong relationship between the boom and bust housing market cycle and patterns in small business lending, both over time and over space. While small business lending expanded rapidly between 2003 and 2007, this expansion was uneven, and neither LMI communities nor neighborhoods with a high percentage of African American residents appear to have benefited as much as other areas from the boom. Since 2007, small business lending has contracted significantly, particularly in areas that have also seen contractions in the housing sector. Our results show significant spillover effects of the mortgage crisis into small business lending—for the economy as a whole as well as for LMI areas in particular. Our findings suggest that in order to reverse the cycle of disinvestment in neighborhoods hit hard by foreclosures, we need to address the small business sector as well as housing.
    Keywords: Bank loans ; Small business - Finance
    Date: 2010
  4. By: Walter, Sascha G.; Schmidt, Arne; Walter, Achim
    Abstract: This study explores why academic entrepreneurs patent their inventions before and after creating a firm. Drawing on start-up data combined with patent data, we specifically examine the impact of five, relatively under-researched factors (scientific field, pace of technological development, technological uncertainty, entrepreneurial orientation, and patent effectiveness. The study shows that some scientific fields, technological uncertainty, and patent effectiveness are positively related to patent propensity, both before and after founding. The effects of pace of technological development and entrepreneurial orientation were timespecific. Our study suggests that patenting by academic entrepreneurs is driven by special rationales and that prior research on full-time scientists and established firms does not necessarily generalize to them. We discuss the implications of our findings both in terms of contribution to the current literature and technology transfer policies. --
    Keywords: academic patenting
    Date: 2010–08–02
  5. By: Carlos Carreira (GEMF/Faculdade de Economia, Universidade de Coimbra, Portugal); Paulino Teixeira (GEMF/Faculdade de Economia, Universidade de Coimbra, Portugal)
    Abstract: This paper discusses the impact of newly created firms on industry productivity growth. Our central hypothesis is that there are two potential effects of new firms on productivity growth: a direct effect, as entrants may be relatively more productive than established firms; and an indirect effect, through increased competitive pressure that stimulates incumbents to elevate their productivity in order to survive. The results of the decomposition exercise of aggregate productivity growth suggest that the direct contribution of entry is small. In turn, the regression analysis on the effect of entry on productivity growth of incumbents indicates that the higher is the former, the higher is the latter, which is equivalent to say that the greater is the competitive pressure generated by new entrants, the higher is the expected aggregate productivity level.
    Keywords: Entry, Firm dynamics, Productivity growth, Competition effect
    JEL: L11 L16 L25 O12 O47 L60
    Date: 2010–09
  6. By: Erman A Sumirat (Research Division, Laboratory of Management FE UNPAD); Sunu Widianto (Research Division, Laboratory of Management FE UNPAD)
    Abstract: In the dynamic world where entrepreneurs compete internationally due to globalization, business decisions are very hard to execute for local entrepreneurs especially when determining sales price for the products. In Indonesia, Asean China Free Trade Agreement (ACFTA), the free trade agreement between Asean countries and China also carries some difficulties to local entrepreneurs especially in small and medium enterprises (SME) as local SMEs still have lack of competitiveness compare with that of Chinese products. Hence, most of the customers have shifted their preferences to Chinese products simply because of its lower price. This phenomenon has impacted local entrepreneurs negatively in terms of competitiveness and losing customer loyalty. To strengthen local entrepreneurs’ competitiveness, one of the alternatives are promoting and implementing creative economy which more utilized cultural aspects which bring clear positioning to the local products. This study examines why creative industries as proposed by UNCTAD Framework (2008) is relevant to be implemented in Indonesia. Besides providing literature studies about creative economy, this study is also presenting the case study of how entrepreneurs who exploit local culture can have significant benefits especially in fashion, art and musical businesses. Bandung, the capitol of West Java as one of major cities in Indonesia is selected as Bandung has been appointed as a creative city pilot project by British Council (2007) as many Indonesian creative entrepreneurs are coming from Bandung. Therefore, the concept of creative industries and creative economy should be transferred and promoted to local entrepreneurs in order to enhance global competitiveness Four Actors-Four Elements model is developed in this study as a framework to successfully implement creative economy to the locals. Four Actors means the involvement of government as a regulator; communities as participants and customers; companies including corporate social responsibility and community development programs as well as creditors or investors through venture capital for micro finance and SME. Also the model has covered four core elements: firstly, culture which must be properly exploited to make an uniqueness in producing goods and services including giving transfer of knowledge to customers; secondly, place where should be set up strategically to attract customers to come; thirdly, economy factor like customers’ buying power and consumer behavior which creates demand as well as entrepreneurs capacity that develops supply; lastly, branding promotion are also important so customers have brand awareness regarding the local products/services. The introduction of four actors-four core elements model is expected to make creative economy works successfully in Indonesia. In the long run, it will strengthen global competitiveness by utilizing local culture and it will make a readiness in head to head competition with Chinese products.
    Keywords: creative industry, SME, competitiveness, local entrepreneurs
    JEL: G0
    Date: 2010–06
  7. By: T. Dinh, Hinh; Mavridis, Dimitris A.; Nguyen, Hoa B.
    Abstract: Firms in developing countries face numerous and serious constraints on their growth, ranging from corruption to lack of infrastructure to inability to access finance. Countries lack the resources to remove all the constraints at once and so would be better off removing the most binding one first. This paper uses data from World Bank Enterprise Surveys in 2006-10 to identify the most binding constraints on firm operations in developing countries. While each country faces a different set of constraints, these constraints also vary by firm characteristics, especially firm size. Across all countries, access to finance is among the most binding constraints; other obstacles appear to matter much less. This result is robust for all regions. Smaller firms must rely more on their own funds to invest and would grow significantly faster if they had greater access to external funds. As a result, a low level of financial development skews the firm size distribution by increasing the relative share of small firms. The results suggest that financing constraints play a significant part in explaining the"missing middle"-- the failure of small firms in developing countries to grow into medium-size or large firms.
    Keywords: Access to Finance,Environmental Economics&Policies,Microfinance,Debt Markets,Banks&Banking Reform
    Date: 2010–11–01
  8. By: Giuliano Guerra (Institute for Economic Research (IRE), University of Lugano, Switzerland); Roberto Patuelli (Institute for Economic Research (IRE), University of Lugano, Switzerland; The Rimini Centre for Economic Analysis, Italy)
    Abstract: Theoretical and empirical research suggests a connection between the presence of role models and the emergence of entrepreneurs. Existing entrepreneurs may act as role models for self-employment candidates by providing successful examples. By explicitly considering the self-employment rates of the natives, which may influence locally the decisions of immigrants towards entrepreneurship, we develop a simple model that explains immigrant self-employment rates for a sample of 2,490 Swiss municipalities. In addition, we accommodate for the presence of spatial spillovers in the distribution of rates, and test a spatial autoregressive model which takes into account the average self-employment rates of immigrants living in nearby municipalities. Our evidence shows a significant (positive) effect of such spatial network effects, which are characterized by a quick distance decay, suggesting spatial spillovers at the household and social network level. Additionally, we show that local conditions and immigrant pool characteristics differ, with respect to self-employment choices, when examining separately urban and rural contexts.
    Keywords: immigrants, self-employment, role models, Switzerland, spatial lag
    JEL: C21 J24 J61 O15 R23
    Date: 2010–11
  9. By: Schmidt, Arne; Walter, Sascha G.; Walter, Achim
    Abstract: This study identifies the pace of technological development and market heterogeneity as crucial environmental conditions shaping start-ups’ performance when commercializing radical technologies. Using a unique dataset that combines survey and patent data for 85 technology-based start-ups, we found that technological radicalness has a positive effect on performance when the development pace in a start-up’s technological field is high. Contrarily, under heterogeneous market conditions, technological radicalness diminishes a start-up’s performance. The results emphasize that the impact of technological radicalness on start-ups’ performance is context specific. Overall, these findings contribute to a better understanding of when technological radicalness represents an asset or a liability for technology-based startups. --
    Keywords: technological radicalness
    Date: 2010–08–02
  10. By: Xiao, Mo; Orazem, Peter
    Abstract: We study the importance of sunk costs in determining entry conditions and inferences about firm conduct in an adapted Bresnahan and Reiss (1991, 1994) framework. In our framework, entrants incur sunk costs to enter, while incumbents disregard these costs in deciding on continuation or exit. We apply this framework to study entry and competition in the local U.S. broadband markets from 1999 to 2003. Ignoring sunk costs generates unreasonable variation in firms’ competitive conduct over time. This variation disappears when entry costs are allowed. Once the market has one to three incumbent firms, the fourth entrant has little effect on competitive conduct.
    Keywords: entry; market structure; Sunk Costs; Broadband Market
    JEL: L13 L8
    Date: 2010–11–27
  11. By: Aditya M Salya (Department of Management and Business, Faculty of Economy, Padjadjaran University)
    Abstract: Studies have shown that small and medium enterprises have embraced e-commerce to strengthen their competitive. The e-commerce is supposed to be useful in reaching out to markets. In this case of the best distro companies in Bandung, Indonesia: unkl347 and ouvalresearch that focus on selling apparel and clothing for teen segment. In this paper, we discuss findings from the support and barriers of e-commerce to entry the market, How social media such as: Google and face book could help their buyer and seller, the governement support on internet access and protection toward online customer and at the end the impact of e-commerce for their business in the future.
    Keywords: E-commerce, small medium enterprise
    JEL: G0
    Date: 2010–11

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