nep-ent New Economics Papers
on Entrepreneurship
Issue of 2011‒11‒28
seven papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Transitions to Entrepreneurship and Industry-Specific Barriers By Lofstrom, Magnus; Bates, Timothy; Parker, Simon C.
  2. Innovation, Spillovers and Venture Capital Contracts By Dessi, Roberta
  3. The Employment Dynamics of Less Educated Men in the United States: The Role of Self-Employment By Taehyun Ahn
  4. Public Procurement and Rent-Seeking: The Case of Paraguay By Auriol, Emmanuelle; Flochel, Thomas; Straub, Stéphane
  5. Impact of the Global Economic Crisis on Taipei,China’s Industrial Structure and Firm Activity By Hou, Jack W.
  6. Informal Sector and Economic Growth: The Supply of Credit Channel By Massenot, Baptiste; Straub, Stéphane

  1. By: Lofstrom, Magnus (Public Policy Institute of California); Bates, Timothy (Wayne State University, Detroit); Parker, Simon C. (University of Western Ontario)
    Abstract: Drivers of entrepreneurial entry are investigated in this study by examining how entry into small-business ownership is shaped by industry-specific constraints. The human- and financial-capital endowments of potential entrepreneurs entering firms in various industries are shown to differ profoundly, depending on the type of venture entered. The educational credentials of highly educated potential entrepreneurs, in particular, predict avoidance of small-firm ownership in some industries as well as attraction to others. Recognizing that individuals choose an industry sector jointly with their decision to enter entrepreneurship, we find that the conventional practice of conflating different industry types in empirical analyses of transitions to entrepreneurship generates misleading findings about the determinants of entrepreneurship.
    Keywords: entrepreneurship, self-employment, capital constraints, transitions, entry barriers, business start-ups
    JEL: J24 L26 M13
    Date: 2011–11
  2. By: Dessi, Roberta (IDEI, Toulouse School of Economics)
    Abstract: Innovative start-ups and venture capitalists are highly clustered, benefiting from localized spillovers: Silicon Valley is perhaps the best example. There is also substantial geographical variation in venture capital contracts: California contracts are more "incomplete". This paper proposes an economic explanation for these observations, often attributed to regional cultural differences. In the presence of significant spillovers, it becomes optimal for an innovative start-up and its financier to adopt contracts with fewer contingencies: these contracts maximize their ability to extract (part of) the surplus they generate through positive spillovers. This relaxes ex-ante financing constraints and makes it possible to induce higher innovative effort.
    JEL: D82 D86 G24 L22
    Date: 2011–09–13
  3. By: Taehyun Ahn (Department of Economics, Sogang University, Seoul)
    Abstract: Using data from the 1979 National Longitudinal Survey of Youth, I construct a sample of less educated men, all of whom are observed from age 22 to age 41, and examine the employment dynamics with a particular focus on the role of self-employment. I find that ¡°ever self-employed¡± workers tend to spend less time in nonemployment after they experience self-employment. The results from my dynamic logit model confirm the positive aspects of self-employment by indicating that men who were self-employed in the previous year are less likely than those who were paid workers to be nonemployed in the next year.
    Keywords: self-employment; less educated men
    JEL: J20 J60
    Date: 2011
  4. By: Auriol, Emmanuelle (TSE); Flochel, Thomas (University of Edinburgh); Straub, Stéphane (TSE)
    Abstract: A model of entrepreneurial choices in an economy with a corrupt public procurement sector is built, providing predictions along two main dimensions. First, corruption is more frequent in sectors where public institutions are large buyers. Second, firms favoured with corrupt contracts enjoy extra returns, so that procurement related activities attract the best entrepreneurs. A large scale microeconomic database, including all public procurement operations over a 4 year period in Paraguay, amounting annually to approximately 6% of the country’s GDP, is then used to corroborate these predictions.
    Keywords: Procurement, Corruption, Rent-seeking, Development
    JEL: H57 D73 D72 O5
    Date: 2011–02–18
  5. By: Hou, Jack W. (Asian Development Bank Institute)
    Abstract: Given the dominance of small and medium-sized enterprises (SMEs) in Taipei,China (97.6% of business establishments, and 77.1% of employment), it is of vital importance to develop ways to aid SMEs in surviving the current global economic crisis. Indeed, the government can utilize this crisis to reform and strengthen SMEs so they can continue to be the backbone of Taipei,China’s economy. This paper discusses the strengths and weaknesses of SMEs in Taipei,China. Policy recommendations are presented to address the weaknesses of SMEs, including short-run and long-run approaches.
    Keywords: sme; global economic crisis; industrial organization
    JEL: F14 G10 O53
    Date: 2011–11–22
  6. By: Massenot, Baptiste; Straub, Stéphane
    Abstract: A standard view holds that removing barriers to entry and improving judicial enforcement would reduce informality and boost investment and growth. We show, however, that this conclusion may not hold in countries with a concentrated bank- ing sector or with low financial openness. When the formal sector becomes larger in those countries, more entrepreneurs become creditworthy and the higher pres- sure in the credit market increases the interest rate. This reduces future capital accumulation. We show some empirical evidence consistent with these predictions.
    Date: 2011–09
  7. By: Prof. Dr. Bidyadhar Behera (Social science researcher, Senior faculty member, Commerce in P.N., Autonomous College, Khurdha, Odisha ,India)
    Abstract: Entrepreneurial development and management has come to be recognized as the key to rapid and sustainable economic development as well as the welfare and progress of the mankind. Traditionally, the informal sector units including micro and small enterprises(MSEs) attract a very small portion of the banks’ portfolio. Banks along with other institutions, by and large, responsible for providing finance are more accustomed to dealing with more confident, literate borrowers of urban areas. Given this scenario, micro finance(MF) as a means of alleviating poverty has gained momentum in the last couple of decades across India vis-à-vis Odisha, a province fraught with the twin problems of poverty and unemployment. At the same time, MSEs contribute significantly to economic growth, social stability and equity. Assuming lot of significance for a Mao-infested Province like Odisha, these informal sector units operate under the conditions of extreme resource crunch. Besides, their qualitative and quantitative limitations due to outdated technologies result in a low level of productivity and extremely high cost
    Keywords: Micro and Small Enterprise (MSE), Self Help Group (SHG), Sustainable Livelihood (SL), Joint Liability Group (JLG)
    JEL: M0
    Date: 2011–10

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