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on Entrepreneurship |
| By: | Ben R Craig; William E Jackson, III; James B Thomson |
| Abstract: | Information problems in small enterprise credit markets can result in a market equilibrium characterized by credit rationing. These information problems are potentially more severe during sharp economic downturns such as the recent Great Recession. Government interventions to alleviate credit constraints on small firms need to be designed to correct the specific market failure resulting in socially suboptimal credit flows. We argue that Small Business Administration loan guarantees are a potentially appropriate intervention and provide a review of empirical research that supports our contention. |
| Keywords: | Small business - Finance ; Small Business Administration ; Financial markets |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1116&r=ent |
| By: | Christian Cordes; Peter J. Richerson; Georg Schwesinger |
| Abstract: | In infant industries, a great share of new market opportunities is depleted by firms that spinoff from incumbents. A model emphasizing the relation between incumbents' evolving corporate cultures and the generation of spinoffs explains this regularity in industry evolution. Organizations reach a critical size that entails the collapse of a cooperative culture and triggers the exodus of personnel founding own firms. Thereby, organizations with a cooperative culture active in a dynamic business environment provide ideal training grounds for potential founders. We relate our findings to empirical evidence on developmental patterns in industries, such as genealogies and performance of spinoffs. |
| Keywords: | Spinoff Formation, Critical Firm Size, Firm Performance, Industry Evolution, Corporate Culture Length 23 pages |
| JEL: | C61 D21 L25 L26 M13 M14 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2011-11&r=ent |
| By: | Marcel Fafchamps; David McKenzie; Simon Quinn; Christopher Woodruff |
| Abstract: | Standard models of investment predict that credit-constrained firmd should grow rapidly when given additional capital, and that how this capital is provided should not affect decisions to invest in the business or consume the capital. We randomly gave cash and in-kind grants to male- and female- owned microenterprises in urban Ghana. Our findings cast doubt on the ability of caoital alone to stimulate the growth of female microenterprises. First, while the average treatment effects of the in-kind grants are large and positive for both males and females, the gain in profits is almost zerp fpr women with itital profits below the median, suggesting that capital alone is not enough to grow subsistence enterprises owned by women. Second, for women we strongly reject equality of the case and in-kind grants; only in-kind grants lead to growth in business profits. The results for men also suggest a lower impact of cash, but differences between cash and in-kind grants is assoicated more with a lack of self-control than with external pressure. As a result, the manner in which funding is provided affects microenterprise growth. |
| Keywords: | microenterprises; ghana; Conditionality; Asset intergration |
| JEL: | O12 O16 C93 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2011-11&r=ent |
| By: | Terttu – Deschryvere Luukkonen |
| Abstract: | This paper compares the post-investment value-added activities performed by governmental venture capital (GVC) and independent venture capital (IVC) for their portfolio companies, and controls for the selection effect that the different investment profiles of these investors might have on the forms of value added. The study uses a unique data set based on a survey addressed to new VC-backed, technology-based firms from seven European countries. The study focused on the importance of the contribution by the first lead investor in a variety of activity areas, as assessed by the investee companies. The study also pays attention to potential adverse effects of the post-investment engagement of the investors on the firm. Using a composite indicator of the extent of the value added, we find no statistically significant difference between the two types of investors. However, the type of value added differs across investor type and, in particular, IVC’s contribution proves to be significantly higher than that of GVCs in a number of areas, including the development of the business idea, professionalisation and exit orientation. |
| Keywords: | venture capital |
| JEL: | G24 G32 O16 |
| Date: | 2011–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1257&r=ent |
| By: | Oliver Falck; Christina Guenther; Stephan Heblich; William R. Kerr |
| Abstract: | We identify the impact of local firm concentration on incumbent performance with a quasi natural experiment. When Germany was divided after World War II, many firms in the machine tool industry fled the Soviet occupied zone to prevent expropriation. We show that the regional location decisions of these firms upon moving to western Germany were driven by non-economic factors and heuristics rather than existing industrial conditions. Relocating firms increased the likelihood of incumbent failure in destination regions, a pattern that differs sharply from new entrants. We further provide evidence that these effects are due to increased competition for local resources. |
| Keywords: | Agglomeration, competition, firm dynamics, labor, Germany |
| JEL: | R10 L10 H25 O10 J20 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0088&r=ent |
| By: | Traci L. Mach; John D. Wolken |
| Abstract: | This paper examines the effects of credit availability on small firm survivability over the period 2004 to 2008 for non-publicly traded small enterprises. Using data from the 2003 Survey of Small Business Finances, we develop failure prediction models for a sample of small firms that were confirmed to have been in business as of December 2003, with particular attention to the impact of credit constraints. We find that credit constrained firms were significantly more likely to go out of business than non constrained firms. Moreover, credit constraint and credit access variables appear to be among the most important factors predicting which small U.S. firms went out of business during the 2004-2008 period even though an extensive set of firm, owner, and market characteristics were also included as explanatory factors. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2011-35&r=ent |
| By: | Jakub Growiec; Fabio Pammolli; Massimo Riccaboni |
| Abstract: | We provide a detailed analysis of a model of innovation and corporate dy- namics that encompasses the Gibrat’s Law of Proportionate Effect and the Simon growth process as particular instances. The predictions of the model are derived in terms of (i) firm size distribution, (ii) the distribution of firm growth rates, and (iii-iv) the relationships between firm size and the mean and variance of firm growth rates. We test the model against data from the worldwide pharmaceutical industry and find its predictions to be in good agreement with empirical evidence on all four dimensions. |
| Keywords: | Business firm size; firm growth distribution; GibratÕ Law; Pareto distribution; lognormal distribution, size-variance relationship. |
| JEL: | C49 L11 L25 L65 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:trt:disawp:1017&r=ent |
| By: | John Foster; J. Stan Metcalfe |
| Abstract: | The standard neoclassical approach to economic theorizing excludes, by definition, economic emergence and the related phenomenon of entrepreneurship. We explore how the most economic of human behaviours, entrepreneurship, came to be largely excluded from mainstream economic theory. In contrast, we report that evolutionary economists have acknowledged the importance of understanding emergence and we explore the advances that have been made in this regard. We go on to argue that evolutionary economics can make further progress by taking a more 'naturalistic' approach to economic evolution. This requires that economic analysis be fully embedded in complex economic system theory and that associated understandings as to how humans react to states of uncertainty be explicitly dealt with. We argue that 'knowledge,' because of the existence of uncertainty is, to a large degree 'conjectural' and, thus, is closely linked to our emotional states. Our economic behaviour is also influenced by the reality that we, and the systems that we create, are dissipative structures. Thus, we introduce the notions of 'energy gradients' and 'knowledge gradients' as essential concepts in understanding economic emergence and resultant economic growth. |
| Keywords: | Length 34 pages |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2011-12&r=ent |
| By: | Lynne G. Zucker; Michael R. Darby; Jason Fong |
| Abstract: | Data availability is arguably the greatest impediment to advancing the science of science and innovation policy and practice (SciSIPP). This paper describes the contents, methodology and use of the public online COMETS (Connecting Outcome Measures in Entrepreneurship Technology and Science) database spanning all sciences, technologies, and high-tech industries; its sibling COMETSandSTARS database which adds more data at organization and individual scientist-inventor-entrepreneur level restricted by vendor licenses to onsite use at NBER and/or UCLA; and their prototype Nanobank covering only nano-scale sciences and technologies. Some or all of these databases include or will include: US patents (granted and applications); NIH, NSF, SBIR, STTR Grants; Thomson Reuters Web of Knowledge; ISI Highly Cited; US doctoral dissertations; IPEDS/HEGIS universities; all firms and other organizations which ever publish in ISI listed journals beginning in 1981, are assigned US patents (from 1975), or are listed on a covered grant; additional nanotechnology firms based on web search. Ticker/CUSIP codes enable linking public firms to the major databases covering them. A major matching/disambiguation effort assigns unique identifiers for an organization or individual so that their appearances are linked within and across the constituent legacy databases. Extensive geographic coding enables analysis at country, region, state, county, or city levels as well as computation of distances between any two addresses. The databases provide very flexible sources of data for serious research on many issues in the science of science and technology. |
| JEL: | C81 J44 J61 J62 M13 O31 O33 O34 O38 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17404&r=ent |
| By: | Farole, Thomas; Winkler, Deborah |
| Abstract: | Using a cross-section of more than 40,000 manufacturing and services firms in 79 developing countries from the World Bank's Enterprise Surveys Database, this paper assesses how firm location determines the likelihood and extent of exporting in developing countries. Descriptive statistics confirm higher export participation (but not intensity) for firms in core versus non-core regions, despite the finding that firms in the core assess many aspects of the investment climate more negatively. Results from a probit model show that, in addition to firm-specific characteristics, both regional investment climate and agglomeration factors have a significant impact on export participation. Specifically, customs clearance and electricity quality matter for export participation for manufacturing firms. Although localization economies and export spillovers are associated with increased exporting, the opposite is found for urbanization economies for both manufacturing and services firms. The analysis finds that firm-level determinants of exporting matter more for firms located in non-core regions, while regional determinants and agglomeration economies play a larger role in core regions. The findings point to the presence of congestion costs in the core, and suggest that policy interventions to target export participation are likely to have a greater impact if they are focused on core regions over non-core regions, where firm-specific factors predominate. Moreover, the importance of export spillovers and localization economies highlights the potential value of efforts to remove barriers to natural agglomeration both in core and non-core regions, for example through investments in infrastructure, the provision of social services, and regional integration arrangements. |
| Keywords: | Regional Economic Development,Microfinance,E-Business,Banks&Banking Reform,Private Participation in Infrastructure |
| Date: | 2011–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5780&r=ent |
| By: | Marcus Dejardin (Faculté des Sciences économiques, sociales et de gestion, FUNDP - Facultés Universitaires Notre-Dame de la Paix) |
| Abstract: | In this chapter, we propose a primer of the treatment that has received in the economic literature the problematic of entrepreneurship and rent-seeking behavior. It comprises the introduction of employed concepts, the discussion of the allocation of entrepreneurs between different types of economic projects, namely between innovative entrepreneurship and rent-seeking, as well as the explicative factors of the allocation. Interactions between entrepreneurship, rent-seeking and growth are considered (also for a reference situation departing from the first best). Some policy implications are finally briefly evoked. |
| Keywords: | entrepreneurship, rent-seeking, economic development |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00616302&r=ent |