nep-ent New Economics Papers
on Entrepreneurship
Issue of 2011‒12‒19
twelve papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Testing the 'Residential Rootedness' - Hypothesis of Self-Employment for Germany and the UK By Darja Reuschke; Maarten Van Ham
  2. Social Entrepreneurship: An Overview Of a Public University Alumni Survey By Kimle, Kevin; Yu, Li; Orazem, Peter; Jolly, Robert W.
  3. Entrepreneurial Choice and Knightian Uncertainty with Borrowing Constraints By Takanori Adachi; Takao Asano
  4. Does founders’ human capital matter for innovation? Evidence from Japanese start-ups By Masatoshi Kato; Hiroyuki Okamuro; Yuji Honjo
  5. Italian Firms in History: Size, Technology and Entrepreneurship By Franco Amatori; Matteo Bugamelli; Andrea Colli
  6. Firm dynamics in a closed, conserved economy: A model of size distribution of employment and related statistics By Anindya S. Chakrabarti
  7. European SMEs, external relationships and innovation: some empirical evidence By A. Lasagni
  8. Barriers to energy efficiency improvement: Empirical evidence from small-and-medium sized enterprises in China By Kostka, Genia; Moslener, Ulf; Andreas, Jan G.
  9. SMEs´ absorptive capacities and large firms´ knowledge spillovers: Micro evidence from Mexico By De Fuentes, Claudia; Dutrénit, Gabriela
  10. Small, alone and poor: a merciless portrait of insolvent French firms, 2007-2010 By Nadine Levratto; Luc Tessier; Messaoud Zouikri
  11. L'innovation : une incitation à la gestion des résultats ? By Constant Djama; Guillaume Dumas; Isabelle Martinez
  12. Starting a business in Italy: recent reforms to cut time and costs By Roberta Occhilupo

  1. By: Darja Reuschke; Maarten Van Ham
    Abstract: Based on the notion that entrepreneurship is a 'local event' , the literature argues that selfemployed workers and entrepreneurs are 'rooted' in place. This paper tests the 'residential rootedness'-hypothesis of self-employment by examining for Germany and the UK whether the self-employed are less likely to move or migrate than employees. Using longitudinal data from the German Socio-economic Panel Study (SOEP) and the British Household Panel Survey (BHPS) and accounting for transitions in employment status we found little evidence that the self-employed in Germany and the UK are more rooted in place than employees. Firstly, the self-employed are not less likely to move or migrate over the period 2001-08. Secondly, those who are currently self-employed are also not more likely to have remained in the same place over a period of three years (2008-06 and 2005-03) as compared to those who are currently employed. Thirdly, those who are continuously self-employed are not less likely to have moved or migrated over a 3-period than those in continuous paid employment. Fourthly, in contrast to the prevalent 'residential rootedness'-hypothesis in economic geography and regional studies, we found that the entry into and the exit from selfemployment are associated with internal migration.
    Keywords: Self-employment, migration, residential mobility, rootedness hypothesis, UK, Germany
    JEL: D22 J61 J62 L26
    Date: 2011
  2. By: Kimle, Kevin; Yu, Li; Orazem, Peter; Jolly, Robert W.
    Abstract: This report presents an overview of social entrepreneurship activities of public university graduates obtained from a survey. Almost 3 percent of respondents had created at least one nonprofit organization. The primary focus of the organizations founded by social entrepreneur respondents was education and youth related causes, with services geared heavily toward local needs. The nonprofit organizations founded to meet these needs were typically small, with one or two paid employees and 5 to 15 volunteers.
    Keywords: social entrepreneurship; non-profit enterprises; alumni
    Date: 2011–12–09
  3. By: Takanori Adachi (School of Economics, Nagoya University); Takao Asano (Faculty of Economics, Okayama University)
    Abstract: This paper studies the effects of Knightian uncertainty, or ambiguity, on entrepreneurial choice. By distinguishing between risk and ambiguity, we first show that ambiguity aversion makes it less likely that an individual will become an entrepreneur. It is also shown that an increase in ambiguity unambiguously reduces the amount of investment. In the presence of borrowing constraints, the less ambiguity averse is the individual, the more likely is his or her investment to be constrained. More importantly, constrained wage workers, who would become entrepreneurs in the absence of credit market imperfection, emerge if and only if the market wage is high enough. These individuals are characterized by an intermediate degree of ambiguity aversion. When interpreting these constrained wage workers as managerial and professional workers, our model predicts the rise of such workers in the process of economic development.
    Keywords: Entrepreneurship, Knightian Uncertainty, Risk, Borrowing Constraints
    JEL: L26 D8
    Date: 2011–12
  4. By: Masatoshi Kato (School of Economics, Kwansei Gakuin University); Hiroyuki Okamuro (Graduate School of Economics, Hitotsubashi University); Yuji Honjo (Faculty of Commerce, Chuo University)
    Abstract: Using a sample from an original questionnaire survey in Japan, this paper explores whether and how founders’ human capital affects innovation outcomes by start-ups. The results provide evidence that founders with greater human capital are more likely to yield innovation outcome. However, because certain types of founders’ human capital may boost R&D investment, which possibly results in innovation outcomes, we estimate the determinants of innovation outcomes by an instrumental variable probit model taking into account the endogeneity of R&D investment. Our findings suggest that specific human capital for innovation, such as founders’ prior innovation experience, is directly associated with innovation outcomes after start-up, while generic human capital, such as founders’ educational background, indirectly affects innovation outcomes through R&D investment.
    Keywords: Founder, Human capital, Innovations, R&D investment
    JEL: L24 M13 O31
    Date: 2011–12
  5. By: Franco Amatori (Università Commerciale "Luigi Bocconi", Milan); Matteo Bugamelli (Bank of Italy); Andrea Colli (Università Commerciale "Luigi Bocconi", Milan)
    Abstract: The economic performance of a country depends, among other things, on the strategies and structures of its firms. In the framework that is designed by institutions and policies and determined by technology and macroeconomic cycles, entrepreneurs decide how to allocate available resources in order to face off competitors and to hook up with demand cycles. This paper looks at the evolution of the Italian economy across the last 150 years from a business history perspective. Analyzing Italian firms over the long-term cycles of the global economy and with respect to the different paradigms of the three industrial revolutions, we identify some structural features that explain successes and failures of the Italian economy. In doing this we explicitly connect the micro level of the business enterprise to the macro one of the national business system and explain the comparatively good performance of the Italian economy from the end of the 19th century to the 1970s. Over the last three decades this performance has turned negative, highlighting the role played by the small average size of firms and the failure of institutions to provide incentives for growth.
    Keywords: firm size, technological paradigms, innovation, entrepreneurship
    JEL: N83 N84 P12 O33 O38
    Date: 2011–10
  6. By: Anindya S. Chakrabarti
    Abstract: We address the issue of the distribution of firm size. To this end we propose a model of firms in a closed, conserved economy populated with zero-intelligence agents who continuously move from one firm to another. We then analyze the size distribution and related statistics obtained from the model. Our ultimate goal is to reproduce the well known statistical features obtained from the panel study of the firms i.e., the power law in size (in terms of income and/or employment), the Laplace distribution in the growth rates and the slowly declining standard deviation of the growth rates conditional on the firm size. First, we show that the model generalizes the usual kinetic exchange models with binary interaction to interactions between an arbitrary number of agents. When the number of interacting agents is in the order of the system itself, it is possible to decouple the model. We provide some exact results on the distributions. Our model easily reproduces the power law. The fluctuations in the growth rate falls with increasing size following a power law (with an exponent 1 whereas the data suggests that the exponent is around 1/6). However, the distribution of the difference of the firm-size in this model has Laplace distribution whereas the real data suggests that the difference of the log sizes has the same distribution.
    Date: 2011–12
  7. By: A. Lasagni
    Abstract: This paper investigates the role of external relationships as key drivers of small business innovation. An empirical analysis is based on data for approximately 500 small- and medium-sized enterprises (SMEs) in six European countries. The results indicate that innovation performance is higher in SMEs that are proactive in strengthening their relationships with innovative suppliers, users and customers. Furthermore, the findings of this paper support the view that SMEs will have better new product development results if they improve their relationships with laboratories and research institutes.
    Keywords: : SMEs, open innovation, networks, external relationships
    JEL: L60 O31
    Date: 2011
  8. By: Kostka, Genia; Moslener, Ulf; Andreas, Jan G.
    Abstract: This paper analyzes barriers for energy efficiency investments for small-and medium-sized enterprises (SMEs) in China. Based on a survey of 480 SMEs in Zhejiang Province, this study assesses financial, informational, and organizational barriers for energy efficiency investments in the SME sector. The conventional view has been that the lack of appropriate financing mechanisms particularly hinders SMEs to adopt cost-effective energy efficiency measures. As such, closing the financing gap for SMEs is seen as a prerequisite in order to promote energy efficiency in the sector. The econometric estimates of this study, however, suggest that access to information is an important determinant of investment outcomes, while this is less clear with respect to financial and organizational factors. More than 40 percent of enterprises in the sample declared that that they are not aware of energy saving equipments or practices in their respective business area, indicating that there are high transaction costs for SMEs to gather, assess, and apply information about energy saving potentials and relevant technologies. One implication is that the Chinese government may assume an active role in fostering the dissemination of energy-efficiency related information in the SME sector. --
    Keywords: energy efficiency,SMEs,China,energy policies,information access
    Date: 2011
  9. By: De Fuentes, Claudia (CIRCLE, Lund University); Dutrénit, Gabriela (Universidad Autónoma Metropolitana-Xochimilco)
    Abstract: The aim of this paper is to analyze the relationship between large firms´ knowledge spillovers and small and medium enterprises absorptive capacities. We build ad-hoc indicators for these two concepts following a factor analysis methodology, and we carry out a structural equations analysis to determine the relationship between them. Based on firm level original data from a survey that focuses on SMEs in a Mexican locality, this paper argues that in a low-tech and mature sector, such as the machine shop sector, that operates in a loosely articulated local system, two knowledge spillover mechanisms are relevant: the backward linkages and the employees´ mobility. Regarding SMEs’ absorptive capacities they are strongly influenced by organizational capabilities and innovation and learning activities. We also argue that large firms’ knowledge spillovers are strongly correlated to SMEs absorptive capacities within the sector and locality analyzed.<p>
    Keywords: Absorptive capacities; Knowledge spillovers; SME-large firms interaction; Mexico
    JEL: O30
    Date: 2011–01–20
  10. By: Nadine Levratto; Luc Tessier; Messaoud Zouikri
    Abstract: This empirical paper investigates the path to bankruptcy for a sample of French firms in default, in particular the decision to file a petition for bankruptcy, the arbitrage between rescuing and liquidation and the effective survival. The procedure is depicted as a sequence of three steps in which judges play a crucial role as they decide whether a company is insolvent or not and determine whether an insolvent company deserves to be rescued or, on the contrary, should be liquidated, the market having the last word since the effective success depends on the capability of the firm to recover from the judicial proceedings. We test different hypotheses about the variables influencing each possibility which include i) the role of the market in the firm's health, ii) the influence of financial structures, iii) the importance of corporate governance and iv) the inherent corporate factors of probable survival. Using three linked LOGIT models, our first finding is that the probability to default depends mainly on the market. Secondly the probability to be rescued depends essentially on the financial structure. Finally, the probability for the firm to remain in business in the long term is largely influenced by the market and profitability. Our results also support the idea that governance, size and resources are the main determinants of exit from the market or success of any company.
    Keywords: Insolvency, bankruptcy, firm default, financial indicators, size, logit models.
    JEL: D20 G32 G33 K20
    Date: 2011
  11. By: Constant Djama (CRM - Centre de Recherche en Management - IAE de Toulouse - Université Toulouse I Capitole - CNRS : EAC5032); Guillaume Dumas (LGC - Laboratoire de Gestion et de Cognition - Université Paul Sabatier - Toulouse III); Isabelle Martinez (LGC - Laboratoire de Gestion et de Cognition - Université Paul Sabatier - Toulouse III)
    Abstract: L'innovation est-elle une incitation à la gestion des résultats comptables ? C'est à cette question de recherche que nous tentons ici de répondre. Pour ce faire, un échantillon d'entreprises innovantes a été constitué sur la base des critères définis par OSEO. Sur cet échantillon, nous mesurons en 2009 la gestion des résultats par les variables comptables de régularisation discrétionnaires. Les résultats révèlent une gestion à la hausse des résultats comptables et confortent l'hypothèse selon laquelle l'innovation, qui est une activité complexe, risquée et incertaine, accroît l'asymétrie informationnelle et donc la latitude managériale. Quant aux facteurs susceptibles d'expliquer le comportement comptable des entreprises innovantes, ni l'endettement, ni la structure des actifs ne sont statistiquement significatifs.
    Keywords: Innovation ; gestion des résultats ; variables comptables de régularisation
    Date: 2011
  12. By: Roberta Occhilupo (Banca d'Italia)
    Abstract: Regulatory complexity and bureaucracy inefficiencies increase the time needed and the cost of starting a business and therefore reduce the competitiveness of a country. Since the early 1990s Italy, in the same way as other developed countries, has been trying to introduce some reforms to boost the efficiency of general government and reduce bureaucracy. This has only been partially successful results. In 2010 two new reforms were introduced. The first allows an entrepreneur to start a business by electronically filing a form (named SCIA, Segnalazione Certificata di Inizio Attività) declaring that the firm complies with all the legal requirements. The SCIA replaces ex ante with ex post public administration controls. The second reform improves the local one-stop-shops regulation (the SUAP, Sportello Unico per le Attività Produttive). This paper evaluates the effectiveness of the two reforms. The time required and the cost of starting a business can be effectively reduced only if the administrative simplification tools are coupled with other reforms that eliminate unnecessary regulatory barriers, rationalize regulation, and reorganize the public administration.
    Keywords: time and costs for starting a business, regulation entry, public administration control, administrative simplification
    JEL: D73 H7 K2
    Date: 2011–11

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