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on Entrepreneurship |
| By: | Michael Fritsch |
| Abstract: | This paper reviews the current state of knowledge about the effect of new business formation on regional development. After a brief sketch of the origins of research on this issue, the main results of different lines of inquiry are discussed. Main issues are the development of start-up cohorts, the relative magnitude of direct and indirect effects, and results by type of entry and by industry, as well as differences in the effects that have been found for different types of regions. After interpreting the results based on a common framework, I put forward a number of important questions for further research and draw some conclusions for entrepreneurship policy. |
| Keywords: | Entrepreneurship, new business formation, employment regional development |
| JEL: | L26 M13 O1 O18 R11 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1127&r=ent |
| By: | Michael Fritsch; Alexandra Schroeter |
| Abstract: | This paper investigates the impact of new firms' quality on the magnitude of their employment effects. Our results clearly show that the quality of start-ups, measured by their affiliation with sectors and innovative industries, strongly influences the direct and the overall employment contribution of new firms. In particular, start-ups in manufacturing industries generate larger direct and overall growth effects than those in services. Moreover, new businesses in innovative manufacturing and in knowledge-intensive service industries make a larger direct contribution to employment than start-ups affiliated with other industries. We also find a relatively strong overall effect of new business formation in knowledge-intensive service industries. However, the impact of start-ups in innovative manufacturing industries on overall regional employment growth is not statistically significant, which may be mainly due to their rather small share in all start-ups and because they impact more on firms and employment in other regions than do start-ups in non-innovative manufacturing. Finally, we discuss the implications for entrepreneurship policy that can be derived from our findings. |
| Keywords: | Entrepreneurship, new business formation, innovative industries, regional development, entrepreneurship policy |
| JEL: | L26 M13 O1 O18 R11 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1128&r=ent |
| By: | Nyström, Kristina (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | Entrepreneurship is often claimed to be important for generating employment. However, the empirical evidence on the relationship between entrepreneurship is not always convincing. Most of the studies that analyse the relationship between new firm formation and employment growth perform their analysis on cross-country or regional data. At the micro-level, we still know little about the labour dynamics and re-allocation effects induced by new firm formation. Which role do new firms play regarding labour reallocation? This paper intends to explore the individual and firm characteristics for employees in new Swedish firms. Do new firm start-ups absorb outsiders in the labour market or do they recruit employees from already incumbent firms? The paper use unique matched firm-employees dataset that makes it possible to link new firm formation and information about the individuals employed in these new firms. The empirical results indicate that the individual and firm characteristics associated with employees differ between new and incumbent firms. In particular, the share of immigrants, recently graduated employees and people entering the labor market is slightly higher in new firms. Hence, new firms might play a more important role for outsiders in the labor market. |
| Keywords: | Entrepreneurship; labour mobility; employment |
| JEL: | L21 L26 L62 |
| Date: | 2011–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0250&r=ent |
| By: | Fairlie, Robert W. (University of California, Santa Cruz); Chatterji, Aaron K. (Duke University) |
| Abstract: | The economic expansion of the late 1990s created many opportunities for business creation in Silicon Valley, but the opportunity cost of starting a business was also high during this period because of the exceptionally tight labor market. A new measure of entrepreneurship derived from matching files from the Current Population Survey (CPS) is used to provide the first test of the hypothesis that business creation rates were high in Silicon Valley during the "Roaring 90s." Unlike previous measures of firm births based on large, nationally representative datasets, the new measure captures business creation at the individual-owner level, includes both employer and non-employer business starts, and focuses on only hi-tech industries. Estimates indicate that hi-tech entrepreneurship rates were lower in Silicon Valley than the rest of the United States during the period from January 1996 to February 2000. Examining the post-boom period, we find that entrepreneurship rates in Silicon Valley increased from the late 1990s to the early 2000s. Although Silicon Valley may be an entrepreneurial location overall, we provide the first evidence that the extremely tight labor market of the late 1990s, especially in hi-tech industries, may have suppressed business creation during this period. |
| Keywords: | entrepreneurship, high-technology, Silicon Valley, economic geography, regional clusters |
| JEL: | J26 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5726&r=ent |
| By: | Fairlie, Robert W. (University of California, Santa Cruz) |
| Abstract: | The "Great Recession" resulted in many business closings and foreclosures, but what effect did it have on business formation? On the one hand, recessions decrease potential business income and wealth, but on the other hand they restrict opportunities in the wage/salary sector leaving the net effect on entrepreneurship ambiguous. The most up-to-date microdata available – the 1996 to 2009 Current Population Survey (CPS) – are used to conduct a detailed analysis of the determinants of entrepreneurship at the individual level to shed light on this question. Regression estimates indicate that local labor market conditions are a major determinant of entrepreneurship. Higher local unemployment rates are found to increase the probability that individuals start businesses. Home ownership and local home values for home owners are also found to have positive effects on business creation, but these effects are noticeably smaller. Additional regression estimates indicate that individuals who are initially not employed respond more to high local unemployment rates by starting businesses than wage/salary workers. The results point to a consistent picture – the positive influences of slack labor markets outweigh the negative influences resulting in higher levels of business creation. Using the regression estimates for the local unemployment rate effects, I find that the predicted trend in entrepreneurship rates tracks the actual upward trend in entrepreneurship extremely well in the Great Recession. |
| Keywords: | entrepreneurship, great recession, unemployment, self-employment |
| JEL: | L26 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5725&r=ent |
| By: | Oded Galor; Stelios Michalopoulos |
| Date: | 2011–05–22 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levarc:786969000000000116&r=ent |
| By: | Felipe Starosta de Waldemar (Centre d'Economie de la Sorbonne) |
| Abstract: | It has been shown that corruption has a negative effect on firm productivity, but what about its impact on product innovation ? We find that corruption, functioning as a bribe tax, diminishes the probability of new product introduction. We use a World Bank Enterprise Survey from India in 2005, with 1600 firms answering if they introduced a new product to the firm and on the average quantity of bribe paid by firms. Controlling for innovation determinants, firm characteristics, location choice, multi-product firms and other business environment variables, sector-location bribe averages have a negative and significant impact on product innovation. |
| Keywords: | innovation, corruption, firm performance. |
| JEL: | O31 D73 L25 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:11033&r=ent |
| By: | Gabriele Pellegrino (DISCE, Università Cattolica); Mariacristina Piva (DISCE, Università Cattolica); Marco Vivarelli (DISCE, Università Cattolica) |
| Abstract: | This paper discusses the determinants of product innovation in young innovative companies (YICs) by looking at in-house and external R&D and at the acquisition of external technology in its embodied and disembodied components. These ‘innovative’ input-output relationships are tested on a sample of 2,713 innovative Italian firms. A sample-selection approach is applied to study both the determinants of product innovation and the factors affecting the intensity of innovation. Results show that in-house R&D is linked to the propensity to introduce product innovation both in mature firms and YICs; however, innovation intensity in the YICs is mainly dependent on embodied technical change from external sources, while in-house R&D does not play a significant role. |
| Keywords: | R&D; Embodied technological change; Product innovation; New firms; Sample selection |
| JEL: | O31 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie2:dises1068&r=ent |
| By: | Batabyal, A.A.; Nijkamp, P. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2011-7&r=ent |
| By: | Fossen, Frank M. |
| Abstract: | A personal bankruptcy law that allows for a 'fresh start' after bankruptcy reduces the individual risk involved in entrepreneurial activity. On the other hand, as risk shifts to creditors who recover less of their credit after a debtor's bankruptcy, lenders may charge higher interest rates or ration credit supply, which can hamper entrepreneurship. Both aspects of a more forgiving personal bankruptcy law are less relevant for wealthy potential entrepreneurs who still risk losing their wealth, but tend not to face higher interest rates because they provide collateral. This paper illustrates these effects in a model and tests the hypotheses derived by exploiting the introduction of a 'fresh start' policy in Germany in 1999 as a natural experiment, based on representative household panel data. The results indicate that the insurance effect of a more forgiving personal bankruptcy law exceeds the interest effect and on balance encourages less wealthy individuals to enter into entrepreneurship. -- |
| Keywords: | personal bankruptcy law,insolvency,entrepreneurship,fresh start |
| JEL: | K35 G33 L26 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:20118&r=ent |
| By: | Adeline Saillard (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Thomas Url (WIFO - Austrian Institute of Economic Research) |
| Abstract: | The determinants of venture capital investment have attracted a significant amount of attention from both academics and policymakers. We use a version of the Keuschnigg-Nielsen model for venture-capital-financed projects to condition our analysis on a reasonable set of exogenous variables but we focus on one determinant : financial market structure. The type of financial market structure (bank -or market-based) contributes substantially to explaining differences among countries with respect to the extent of venture capital investments in the initial business stages. We will use the cross country and time series variation from a panel of 19 industrial countries to support the hypothesis that venture capital thrives within market-based financial systems and is confined to an ancillary role in bank-based systems. |
| Keywords: | Venture capital, financial market structure, local stock markets, panel data. |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00593962&r=ent |
| By: | Kourtit, K.; Nijkamp, P. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2011-4&r=ent |
| By: | Akgun, A.A.; Baycan Levent, T.; Nijkamp, P. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2011-8&r=ent |
| By: | Penelope Douglas; Lauren Friedman Dixon |
| Abstract: | There is a steady call for policies and programs to help small business lead the charge in hiring more workers and helping to restore prosperity to areas that have been hurt by the recession. To be successful, however, it is time for academics, policymakers, investors, community leaders, and business owners to have a more fruitful discussion about what small business actually needs. Such a discussion is imperative now, during a time of financial crisis, but it is also necessary if we are to help move the sector forward in the coming years. In this paper, we are proposing that we adopt a common language based on a new small business taxonomy that can make this conversation more productive by bridging the communication gaps between various stakeholders. In an effort to create that common language, support policy creation, and enhance future discussions, this paper lays out a a system of policies and programs – a support structure – for small business using a simple taxonomy of small-business categories based on revenue. Ideally, this will lead to more efficient models for small business growth, including much needed job growth as the nation emerges from the recession. |
| Keywords: | Small business ; Small business - Finance |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfcw:2011-02&r=ent |
| By: | Karen Crabbe; Karolien De Bruyne |
| Abstract: | The goal of this paper is to analyse the impact of interactions between tax rates and agglomeration rents on location decisions of firms within Belgium. In the theoretical literature it is argued that both location determinants may weaken each other’s impact. Using the number of new firms at the sector level for 43 Belgian districts, we show that local effective tax rates either have no or a negative impact on location decisions. Moreover, both types of agglomeration rents in a district are important for location decisions. The presence of firms in a district attracts new firms, while the presence of firms in the same sector deters firm entry due to competition. However, the interaction effect between taxes and agglomeration rents on firm entry is significant. We show that a higher effective tax rate in a district weakens the positive impact of the agglomeration rents on location decisions of firms. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ete:vivwps:15&r=ent |
| By: | Francisco Covas; Shigeru Fujita |
| Abstract: | This paper studies the quantitative properties of a general equilibrium model where a continuum of heterogeneous entrepreneurs are subject to aggregate as well as idiosyncratic risks in the presence of a borrowing constraint. The calibrated model matches the highly skewed wealth and income distributions of entrepreneurs. The authors provide an accurate solution to the model despite the significant nonlinearities that are absent in the economy with uninsurable labor income risk. The model is capable of generating the average private equity premium of roughly 3 percent and a low risk-free rate. The model also produces procyclicality of the risk-free rate and countercyclicality of the average private equity premium. The countercyclicality of the average equity premium is largely driven by tightening (loosening) of financing constraints during recessions (booms). |
| Keywords: | Risk ; Private equity ; Business cycles |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:11-18&r=ent |