nep-ent New Economics Papers
on Entrepreneurship
Issue of 2011‒11‒07
fourteen papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Intelligence, Self-confidence and Entrepreneurship By Asoni, Andrea
  2. The Contribution of Universities to Growth: Empirical Evidence for Italy By M. Carree; A. Della Malva; E. Santarelli
  3. Investment Cycles and Startup Innovation By Ramana Nanda; Matthew Rhodes-Kropf
  4. Debt Financing of High-growth Startups By Timo Fischer; Gaétan de Rassenfosse
  5. Another Perspective on Gender Specific Access to Credit in Africa By Henrik Hansen; John Rand
  6. Firm-level determinants and impacts of finance-seeking behaviour and outcomes for small and medium-sized enterprises (SMEs) in Australia By Dong Xiang; Andrew C Worthington; Helen Higgs
  7. Disentangeling gut feeling: Assessing the integrity of social entrepreneurs By Achleitner, Ann-Kristin; Lutz, Eva; Mayer, Judith; Spiess-Knafl, Wolfgang
  8. Obstacles to Financing Micro and Small Enterprises: Empirical Evidence from a Small Island Developing State By Parmendra Sharma; Neelesh Gounder
  9. Entry, growth, and survival in the green industry By De Silva, Dakshina G.; Hubbard, Timothy P.; McComb, Robert P.; Schiller, Anita R.
  10. A Survey of Venture Capital Research By Da Rin, M.; Hellmann, T.; Puri, M.L.
  11. The capital gains tax: A curse but also a blessing for venture capital investment By Achleitner, Ann-Kristin; Bock, Carolin; Watzinger, Martin
  12. Corporate Taxation and SMEs: The Italian Experience: The Italian Experience By Marco Manzo
  13. Bedürfnisse von Existenzgründern in der Gründungsphase By Durst, Susanne; Leyer, Michael
  14. Mutual Guarantee Institutions (MGIs) and small business credit during the crisis By Paolo Emilio Mistrulli; Valerio Vacca; Gennaro Corbisiero; Silvia del Prete; Luciano Esposito; Marco Gallo; Mariano Graziano; Maurizio Lozzi; Vincenzo Maffione; Daniele Marangoni; Andrea Migliardi; Alessandro Tosoni

  1. By: Asoni, Andrea (Research Institute of Industrial Economics (IFN))
    Abstract: I investigate the effect of human capital on entrepreneurship using the National Longitudinal Survey of Youth - 1979. I find that individuals with higher measured intelligence and self-confidence are more likely to be entrepreneurs. Furthermore I present evidence suggesting that intelligence and self-confidence affect business ownership through two different channels: intelligence increases business survival while self-confidence increases business creation. Finally, once we control for intelligence and self-confidence the effect of formal college education almost completely vanishes. These results are robust to controlling for selection into entrepreneurship and selection into college.
    Keywords: Entrepreneurship; College Education; Intelligence; Self-confidence
    JEL: C41 J24 L26
    Date: 2011–10–24
  2. By: M. Carree; A. Della Malva; E. Santarelli
    Abstract: New entrepreneurial ventures may represent a viable and effective mechanism to transform academic knowledge into regional economic growth. We test this notion for the Italian provinces between 2001 and 2006. We evaluate three outputs of academic activities: teaching, research and Intellectual Property Rights (IPR) activities management. New ventures may be able to transform the mentioned outputs into improved economic performance. The findings show that the effects of academic outputs on provincial economic growth (all sectors) are appreciable when they are associated with sustained entrepreneurial activities in the province. It suggests that academic inquiry may provide new ventures with valuable commercial opportunities overseen by established companies.
    JEL: I23 O18 O34 R11
    Date: 2011–10
  3. By: Ramana Nanda (Harvard Business School, Entrepreneurial Management Unit); Matthew Rhodes-Kropf (Harvard Business School, Entrepreneurial Management Unit)
    Abstract: We find that VC-backed firms receiving their initial investment in hot markets are less likely to IPO, but conditional on going public are valued higher on the day of their IPO, have more patents and have more citations to their patents. Our results suggest that VCs invest in riskier and more innovative startups in hot markets (rather than just worse firms). This is true even for the most experienced VCs. Furthermore, our results suggest that the flood of capital in hot markets also plays a causal role in shifting investments to more novel startups - by lowering the cost of experimentation for early stage investors and allowing them to make riskier, more novel, investments.
    Keywords: Venture Capital, Innovation, Market Cycles, Financing Risk
    JEL: G24 G32
    Date: 2011–10
  4. By: Timo Fischer; Gaétan de Rassenfosse
    Abstract: We study the business model of venture debt firms, specialized institutions that provide loans to high-growth startups. Venture debt represents an apparent contradiction with traditional debt theory since startups have negative cash flows and lack tangible assets to secure the loan. Yet, we estimate that the U.S. venture debt industry provides at least one venture debt dollar for every seven venture capital dollars invested. We aim to provide the first empirical evidence on the determinants of the lending decision. Building on existing field interviews and case studies, we design a choice experiment of the lending decision and conduct experiments with 55 senior venture lenders. We find support for the hypothesis that backing by venture capital firms substitutes for startups’ cash flow. Furthermore, we illustrate the signaling effect of patents and their role as collateral to facilitate the lending decision.
    Keywords: Venture capital; startups; patents
    JEL: G24 O31
    Date: 2011
  5. By: Henrik Hansen (Institute of Food and Resource Economics, University of Copenhagen); John Rand (Institute of Food and Resource Economics, University of Copenhagen)
    Abstract: Using firm level data from eight Sub-Saharan Africa countries we examine credit constraint differentials between male and female manufacturing entrepreneurs. Enterprises owned by female entrepreneurs are less likely to be credit constrained compared to their male counterparts. The magnitude of this credit constraint gap varies with constraint and ownership definitions but the direction of the gap does not. Using a generalized Blinder-Oaxaca decomposition, we investigate if the gap is due to differences in observable characteristics or to unexplained variations in the returns to these characteristics. We find the gap to be associated with the unexplained component. We argue that the finding is mainly due to female gender favoritism in loans to micro and small firms because (i) the gap is reversed for medium size enterprises and, (ii) we find no sign of superior female entrepreneurial performance in terms of capacity utilization, labor productivity or firm size growth.
    Keywords: Credit, Entrepreneurship, Gender, Private Sector, SMEs
    JEL: G21 J16 L25
    Date: 2011–10
  6. By: Dong Xiang; Andrew C Worthington; Helen Higgs
    Keywords: Small and medium-sized enterprises, financing decisions, debt and equity, discouraged borrower
    JEL: C25 G32 L21
    Date: 2011
  7. By: Achleitner, Ann-Kristin; Lutz, Eva; Mayer, Judith; Spiess-Knafl, Wolfgang
    Abstract: This paper analyzes how social investors evaluate the integrity of social entrepreneurs. Based on an experiment with 40 professionals and 40 students, we investigate how five attributes of the entrepreneur contribute to the assessment of integrity. These attributes are the entrepreneur's personal experience, professional background, voluntary accountability efforts, reputation and awards/fellowships granted to the entrepreneur. We find that social investors focus largely on voluntary accountability efforts of the entrepreneur and the entrepreneur's reputation when judging integrity. For an overall positive judgment of integrity, it was sufficient if either reputation or voluntary accountability efforts of the entrepreneur were high. By comparing professionals with students, we show that experience leads to a simpler decision model focusing on key attributes. --
    Keywords: social entrepreneur,social investor,integrity,conjoint analysis,venture philanthropy
    JEL: M13 M14
    Date: 2011
  8. By: Parmendra Sharma; Neelesh Gounder
    Keywords: Fiji, South Pacific, financing obstacles, micro and small enterprises (MSEs)
    Date: 2011–10
  9. By: De Silva, Dakshina G.; Hubbard, Timothy P.; McComb, Robert P.; Schiller, Anita R.
    Abstract: Economists have, for some time, studied the factors that induce firm entry, lead to growth, and help firms succeed in various markets. Unfortunately, such patterns have not been considered for the so-called "green industries." Although policymakers might like to stimulate development of the green sectors in encouraging sustainable growth, one difficulty has been defining exactly what constitutes the green economy. We employ a recent, narrow definition proposed by the Bureau of Labor Statistics to investigate and identify important factors for the green industries within the State of Texas. We find some differences between the green industries and all other industries, but these effects are often small relative to other major explanatory factors like agglomeration. The definition also partitions the green industry into five subcategories and we leverage this feature to study the importance of these factors for the intra-green industries and to identify the comparative advantage each county has within the green economy.
    Keywords: Green industry; firm entry; employment growth; firm survival
    JEL: R30 O49 Q56
    Date: 2011–10–31
  10. By: Da Rin, M.; Hellmann, T.; Puri, M.L. (Tilburg University, Center for Economic Research)
    Abstract: This survey reviews the growing body of academic work on venture capital. It lays out the major data sources used. It examines the work on venture capital investments in companies, looking at issues of selection, contracting, post-investment services and exits. The survey considers recent work on organizational structures of venture capital firms, and the relationship between general and limited partners. It discusses the work on the returns to venture capital investments. It also examines public policies, and the role of venture capital in the economy at large.
    Keywords: Venture capital;private equity;alternative assets;IPOs;acquisitions;corporate venture capital;public policy;limited partners;institutional investors;syndication;innovation;venture capital returns.
    JEL: G24 G21 G23
    Date: 2011
  11. By: Achleitner, Ann-Kristin; Bock, Carolin; Watzinger, Martin
    Abstract: This article documents a statistical association between the number and success of venture capital investments and the capital gains tax rate. To do this, we analyze investment data and taxes of 32 countries from 2000 to 2010. In our data, higher capital gains tax rates are associated with fewer firms financed and a lower probability for ventures receiving follow-up funding. However, if the first investment is received when taxes are high, the probability of a firm eventually going public or being acquired increases. We conclude that high tax rates are associated with fewer, but on average more successful companies. --
    Keywords: capital gains tax,venture capital,investment
    JEL: G24 H25 H32
    Date: 2011
  12. By: Marco Manzo
    Abstract: This paper focuses on the tax impediments faced by small and medium-sized enterprises in Italy. The fact that small businesses are characterized by financing constraints and have less access to bank loans is often emphasized as an argument in favour of a special tax treatment for small enterprises. On the one hand, however, the evidence that SMEs suffer severe financing constraints is not overwhelming; on the other hand, tax relief for SMEs is not necessarily the best response to financial market imperfections.
    Date: 2011–11–03
  13. By: Durst, Susanne; Leyer, Michael
    Abstract: Start-ups are a dominant factor for the economic development of a country. However, the foundation of a company is a complex procedure and many start-ups fail. External support is available from many sources as e.g. business angels, tax advisors, chambers of industry and commerce, banks and venture capitalists. Here, the main question is, which needs do the company founders really have and which external source is preferred for a support of these needs. To answer this question an empirical study was conducted, questioning company founders. The results show that the needs of company founders for external support are on an average level. If the company founders require external help, they prefer different sources. Thus, regional networks of different actors should be set up to support the process of setting up a company. This enhances the chances of the external actors and the company founder to set up a sustainable successful collaboration. --
    Keywords: entrepreneurship,analysis of needs,empirical study
    JEL: L26 M13
    Date: 2011
  14. By: Paolo Emilio Mistrulli (Banca d'Italia); Valerio Vacca (Banca d'Italia); Gennaro Corbisiero (Banca d'Italia); Silvia del Prete (Banca d'Italia); Luciano Esposito (Banca d'Italia); Marco Gallo (Banca d'Italia); Mariano Graziano (Banca d'Italia); Maurizio Lozzi (Banca d'Italia); Vincenzo Maffione (Banca d'Italia); Daniele Marangoni (Banca d'Italia); Andrea Migliardi (Banca d'Italia); Alessandro Tosoni (Banca d'Italia)
    Abstract: The recent economic and financial crisis has drawn attention to how mutual guarantee institutions (MGIs) facilitate small and medium enterprises in accessing bank financing. The aim of this paper is twofold. First, we describe the structural features of the Italian market for mutual guarantees and its significance for small business credit. To this end, we use extensive databases (the Central Credit Register and the Central Balance Sheet Register) as well as specific surveys, which allow us to fill information gaps about this industry and to quantify regional diversity. Second, we investigate whether MGIs’ support to small firms continued to be effective in 2008-09, when credit constraints to Italian firms peaked. We find that MGIs played a role in avoiding a break-up in credit flows to affiliated firms, which also benefited from a lower cost of credit. However, this came at the cost of a deterioration in credit quality, which was more intense for customers with guarantees from MGIs.
    Keywords: microfinance, peer monitoring, small business finance
    JEL: D82 G21 G30
    Date: 2011–10

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