nep-ent New Economics Papers
on Entrepreneurship
Issue of 2011‒04‒02
four papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Exploiting opportunities at all cost? Entrepreneurial intent and externalities By Diemo Urbig; Utz Weitzel; Stephanie Rosenkranz; Arjen van Witteloostuijn
  2. Entrepreneurship and the Discipline of External Finance By Ramana Nanda
  3. The Influence of Role Models on Immigrant Self-Employment: A Spatial Analysis for Switzerland By G. Guerra; R. Patuelli
  4. Small businesses in Springfield, Massachusetts: a look at Latino entrepreneurship By Ana Patricia Muñoz; with Lynn Browne; Sol Carbonell; Prabal Chakrabarti; DeAnna Green; Yolanda K. Kodrzycki; Anna Steiger; Richard Walker; Bo Zhao

  1. By: Diemo Urbig; Utz Weitzel; Stephanie Rosenkranz; Arjen van Witteloostuijn
    Abstract: Do potential entrepreneurs exploit welfare-destroying opportunities as much as they exploit welfare-enhancing opportunities as it is assumed in several normative models? Do we need to prevent potential entrepreneurs from being destructive or are there intrinsic limits to harm others? We experimentally investigate how people with different entrepreneurial intent exploit risky investment opportunities that are associated with negative and positive externalities. We find that participants who consider entrepreneurship as a future occupation invest significantly less than others in destructive opportunities. Nevertheless, our results support prior evidence that the entrepreneurially talented invest more in destructive opportunities. The latter effect seems to be entrepreneurship-specific, because the investment behavior of the generally more talented does not differ from that of other participants. Taken together, our results suggest that people who are willing to exploit destructive opportunities do not only do this in private ventures, but also - and maybe even more so - in wage employment.
    Keywords: Social Psychology, Entrepreneurship, Externalities, Laboratory, Individual Behavior
    JEL: L26 D62 C91
    Date: 2011–03
  2. By: Ramana Nanda (Harvard Business School, Entrepreneurial Management Unit)
    Abstract: I confirm the finding that the propensity to start a new firm rises sharply among those in the top five percentiles of personal wealth. This pattern is more pronounced for entrants in less capital intensive sectors. Prior to entry, founders in this group earn about 6% less compared to those who stay in paid employment. Their firms are more likely to fail early and conditional on survival, less likely to be make money. This pattern is only true for the most-wealthy individuals, and is attenuated for wealthy individuals starting firms in capital intensive industries. Taken together, these findings suggest that the spike in entry at the top end of the wealth distribution is driven by low-ability individuals who can afford to start (and sometimes continue running) weaker firms because they do not face the discipline of external finance.
    Date: 2010–05
  3. By: G. Guerra; R. Patuelli
    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.
    JEL: C21 J24 J61 O15 R13
    Date: 2011–03
  4. By: Ana Patricia Muñoz; with Lynn Browne; Sol Carbonell; Prabal Chakrabarti; DeAnna Green; Yolanda K. Kodrzycki; Anna Steiger; Richard Walker; Bo Zhao
    Abstract: The Federal Reserve Bank of Boston has been collaborating with community leaders in Springfield, Massachusetts, on exploring revitalization strategies. Latino entrepreneurship is playing an important and increasing role in Springfield's economic development—providing new jobs and services and maintaining storefronts that might otherwise be vacant. An analyst in the Fed's community development unit, Ana Patricia Muñoz, has recently completed a discussion paper on this topic, "Small Business in Springfield, Massachusetts: A Look at Latino Entrepreneurship." Among the implications: if Springfield stakeholders were to expand their support and technical assistance, these small businesses could broaden their role in the city's comeback. Adds Muñoz, "Although Latino self-employment has been growing, gaps relative to whites, to Massachusetts, and to the United States persist. It is therefore important to have strategies geared to Latino entrepreneurs and to reach out to them." The Fed is looking into whether the paper's recommendations might also benefit other postindustrial cities in New England.
    Keywords: Small business - Massachusetts ; Hispanic Americans - Massachusetts
    Date: 2011

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