nep-ent New Economics Papers
on Entrepreneurship
Issue of 2012‒01‒25
sixteen papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. ‘Surfeiting, The Appetite May Sicken’: Entrepreneurship and the Happiness of Nations By Wim Naudé; José Ernesto Amorós; Oscar Cristi
  2. Market Size and Entrepreneurship By SATO Yasuhiro; TABUCHI Takatoshi; YAMAMOTO Kazuhiro
  3. Entrepreneurship and Economic Development By Jean Bonnet, University of Caen Basse-Normandie - CREM-CNRS, France
  4. The Effect of Relative Standing on Considerations about Self-employment By Stefan Schneck
  5. The Global Financial Crisis and Development: Implications for the Entrepreneurial Economy By Wim Naudé
  6. Self – Employment, Labor Market Rigidities and Unemployment Over the Business Cycle By Gonzalo Castex; Miguel Ricaurte
  7. Drivers of international development for born global companies founded by Italian entrepreneurs By Giusy Cannone; Gaia Costantino; Alessia Pisoni; Alberto Onetti
  8. Innovation and Education: Is there a ‘Nerd Effect’? By Goldbach, Stefan
  9. Access to finance for innovation: the role of venture capital and the stock market By Francesco Bogliacino; Matteo Lucchese
  10. Exporters, Spin-outs and Firm Performance By Lööf, Hans; Nabavi, Pardis
  11. Intangible resources: the relevance of training for European firms’ innovative performance By Daria Ciriaci
  12. Demasking the impact of microfinance By Helke Waelde
  13. How a Smart Follower Becomes a Top Performer: An Institutional Innovation Perspective on Competitive Advantage By Jacques Brook
  14. Foreign Aid for Innovation: The Missing Ingredient in Private Sector Development? By Wim Naudé
  15. No Appealing Future For High Growth – Low Profitability Firms: Evidence from Turkey’s Top 1000 By Nuri Yildirim
  16. Les trajectoires des entrepreneurs néo-ruraux By Séverine Saleilles

  1. By: Wim Naudé (Maastricht School of Management, The Netherlands and UNU‐WIDER, Helsinki, Finland.); José Ernesto Amorós (Universidad del Desarrollo, Santiago, Chile.); Oscar Cristi (Universidad del Desarrollo, Santiago, Chile.)
    Abstract: We know that entrepreneurs – at least those driven by opportunities – can contribute to economic growth, productivity improvements and competitiveness in national economies.. But do they contribute to happiness on the country level? In other words, does the happiness of nations depend on its entrepreneurs? And what about happy nations – are they better places for entrepreneurs to start‐up new businesses? In this paper we survey the literature on entrepreneurship and happiness, and use various data sources, primarily from the Global Entrepreneurship Monitor, to find tentative evidence of an inverse U‐shape relationship between entrepreneurship and national happiness We also find a bi‐directional causality between entrepreneurship and happiness on a country level On an individual level however, national happiness is found to have a negative effect on the probability of becoming an entrepreneur. We conclude that entrepreneurship may make nations happier, but as nations become happier, their need and imperative for entrepreneurship seems to decline. Hence, not everybody should become entrepreneurs and the happiness of a nation cannot be –indefinitely increased by increasing the numbers of entrepreneurs.
    Keywords: Happiness, life and job satisfaction, self‐employment, aspirations, development, Global Entrepreneurship Monitor, double‐probit estimator.
    JEL: I31 M13 O50
    Date: 2011–05
  2. By: SATO Yasuhiro; TABUCHI Takatoshi; YAMAMOTO Kazuhiro
    Abstract: In order to examine the impacts of market size on entrepreneurship, we estimate a monopolisticcompetition model that involves the workers' decisions to pursue entrepreneurship by using dataon Japanese prefectures. Our results show that a larger market size in terms of populationdensity leads to a higher incentive for individuals to become entrepreneurs. A 10% increase inthe population density increases the share of people who wish to become entrepreneurs byapproximately 1%. In contrast, such a positive effect on the self-employment rate is observedonly for prefectures with very high or very low densities. The self-employment ratio isnegatively associated with population density in prefectures with medium densities.
    Date: 2012–01
  3. By: Jean Bonnet, University of Caen Basse-Normandie - CREM-CNRS, France
    Abstract: Cet article examine les relations entre l’entrepreneuriat et le développement économique. Le modèle économique actuel donne à l’entrepreneuriat une importance cruciale dans le développement économique des années récentes. A ce titre le rôle, la culture, l’éducation, la volonté de créer des entreprises de croissance sont déterminants pour le développement économique de même qu’un certain nombre de caractéristiques institutionnelles dont le fonctionnement du marché du travail.
    Keywords: Entrepreneur, innovation, développement économique, marché du travail, culture entrepreneuriale
    JEL: B4 L26
    Date: 2012–01
  4. By: Stefan Schneck
    Abstract: This paper uses unique German data to examine the effects of the relative standing on the individual propensity to become self-employed in the next two years. The results suggest that the relationship between relative wage positions and propensity to become self-employed is U-shaped. This is interpreted as evidence that low status translates into entrepreneurial motivation for workers in low relative wage positions. Employees with high relative standing, in turn, seem to be more concerned about the lack of future career prospects in paid employment and consider self-employment as a next step on the individual career ladder.
    Keywords: Relative wage position, status, self-employment
    JEL: L26 L29
    Date: 2011
  5. By: Wim Naudé (Maastricht School of Management, Endepolsdomein 150, 6229 EP Maastricht, The Netherlands and UNU‐ WIDER, Katajanokanlaituri 6b, 00160 Helsinki, Finland)
    Abstract: This paper provides an evaluation of the state of global development two years after the global financial crisis of 2008. It argues that in the wake of the crisis a number of re‐assessments of global development has taken place, especially with respect to (i) the surprising origins of the crisis, (ii) the surprising resilience of the developing world, and (iii) the shortcomings of the global financial architecture (GFA). Despite these re‐assessments, progress in dealing with the deep causes of the crisis has been slow, and there are strong vested interests against reform of the GFA due to the incentives that many years of deregulation and regulatory capture has created. These incentives influences entrepreneurial and managerial behaviour in ways that may frustrate reform and re‐regulation and leave global development vulnerable to further financial (and other) crises. The paper draws out some implications for the entrepreneurial economy.
    Keywords: Global financial crisis, international trade, finance, developing countries, entrepreneurship
    JEL: F33 O11 M13
    Date: 2011–01
  6. By: Gonzalo Castex; Miguel Ricaurte
    Abstract: In a general equilibrium context, we analyze the impact of changes in institutional labor market conditions, such as access to financing and efficiency, on the composition of employment and unemployment, considering the nature of formal labor contracts and the entrepreneurial capacity of the labor force. We extend the Mortensen - Pissarides model to allow for two types of formal job contracts: temporary and permanent; and we also allow for self-employment. We show that labor market efficiency as well as access to selfemployment financing played a key role in the evolution of employment in Chile during the last 15 years. Additionally, and not surprisingly, tougher access to financing adversely affects self-employment
    Date: 2011–12
  7. By: Giusy Cannone (Department of Industrial Engineering – Polytechnic University of Turin); Gaia Costantino (Department of Industrial Engineering – Polytechnic University of Turin); Alessia Pisoni (Department of Economics, University of Insubria, Italy); Alberto Onetti (Department of Economics, University of Insubria, Italy)
    Abstract: The rise of “born global” companies, i.e. companies that internationalize their activities from inception or shortly thereafter led researchers to explore the various aspects related to early internationalization. Nevertheless, authors argue that further evidence and analysis on these firms is required (Oviatt and McDougall, 1997). Based on a multiple case study research the paper aims at providing further evidence on this phenomenon. An in-depth qualitative analysis has been performed based on eight startups founded by Italian entrepreneurs that showed an early internationalization towards the US and the Silicon Valley in particular. They have been interviewed with the goal of validating the major drivers of internationalization the literature attributes to born global companies. The cross case study analysis carried out highlights that not all the drivers seem to be equally relevant. The major findings of the study are twofold. First, the importance of professional networks built by entrpreneurs before establishing the company. Secondly, how the entrepreneur’s prior experience abroad (either as entrepreneur or as employee or for studying reasons) triggers and orients the internationalization path of a company
    Keywords: born global, early internationalization, innovation, entrepreneurship, startup
    Date: 2012–01
  8. By: Goldbach, Stefan
    Abstract: This paper investigates whether entrepreneurs with technical education are more innovative in high-tech industries than economists. The main contribution to the literature is in using the type of education as main explanatory variable for innovation. To analyze this question, the KfW/ZEW Start-Up Panel between 2005 and 2007 is used. Two independent OLS regressions are conducted for entrepreneurs with university degree and practical education. The results suggest that education matters for individuals with a university degree in high-tech industries but not for people with practical education. Having an economics degree is correlated with higher innovativeness. Therefore, for the underlying sample we do not find a ‘nerd effect’. The results depend on the underlying definition of innovation, as robustness checks show.
    Keywords: entrepreneurship, innovation, education
    Date: 2012–01–11
  9. By: Francesco Bogliacino (JRC-IPTS); Matteo Lucchese (University of Urbino)
    Abstract: Financial constraints for young and small firms can prevent them from supporting innovation and employment creation. We analyze two of the various institutional mechanisms which have been proposed to circumvent it: the development of venture capital market and the stock market access. We will use the information provided by two Scoreboards - used to monitor innovative activity in Europe: the Innovation Union Scoreboard and the R&D Scoreboard. With the first, we study the determinants of the venture capital/GDP intensity in Europe. With the second, we try to assess the contribution of stock market to R&D investment. In the first part, we show that venture capital market complements structural feature such as R&D intensity and market capitalization, is more volatile and seems not affected by anticompetitive regulations. In the second part, we show that unlisted SMEs are more research intensive.
    Keywords: Venture Capital, R&D, European Policy, Random Effect, Propensity Score Matching.
    JEL: M13 O31 O38
    Date: 2011–11
  10. By: Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Nabavi, Pardis (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper analyzes the relationship between exporters, spin-outs and firm performance. A large body of research has shown that exporters perform better than non-exporters. But are also firms spawn out from exporters better than other new firms in terms of survival, productivity and growth? Using a panel of about 2,000 ex-employee starts ups, their parent companies and 10 000 other new firms in Sweden observed over a sequence of 5 years, we provide new evidence on spinouts as a channel of transferring knowledge from exporting firms to new ventures.
    Keywords: Exports; new firms; spin-out; spillovers; productivity
    JEL: J24 L26 M13 O31 O32
    Date: 2012–01–13
  11. By: Daria Ciriaci (JRC-IPTS)
    Abstract: This paper assesses whether European firms’ innovative performance is impacted by investments in training directly aimed at developing and/or introducing innovation, in addition to the scale of a firm's investments in innovation proxied by the number of R&D personnels. In particular, it explores the complementarity between these two factors (in the presence of a well-trained workforce, the knowledge created by a firm’s R&D personnel can be better exploited), and their dependence on a firm's knowledge intensity (high versus low % of tertiary-educated workforce) and size (SMEs versus large firms). Using European CIS non-anonymised data for the period 1998-2000, this paper estimates a system of simultaneous equations in which investments in training and stock of R&D personnel are treated as endogenous in relation to the innovative sales on which they are presumed to have an effect. The choice to use this time period rather than more recent ones – to which I had access at the Eurostat Safe Centre – is data-driven. It has better information on training expenditures and it is the last period to provide firm-level information on the number of employees with tertiary education. Unlike the majority of CIS-based studies, the main variables of interest are continuous ones, while dummy variables are used as controls only. Empirical evidence confirms most previous results – investment in training and stock of R&D personnel positively affects firms' innovativeness – but also provides some important additional insights. Ceteris paribus, returns to training and R&D personnel are not affected by the knowledge intensity of the firm, while are always statistically significantly higher in large than in small and medium sized firms. However, while in the case of training the differences in returns between SME and large firms are small, in the case of R&D personnel are quite pronounced.
    Keywords: Intangibles, R&D investment, human capital, CIS, CDM model
    JEL: O30 O31 O32 D83 D62
    Date: 2011–12
  12. By: Helke Waelde (KfW Entwicklungsbank, Frankfurt am Main, Germany)
    Abstract: We reconsider data from a randomized control trial study in India. The data reveal the impact of a microloan program. We extend the often used randomized impact evaluation and di¤erence-in-di¤erence approach by quantile regression and the consideration of the quantile treatment effects. The use of additional, more advanced, evaluation methods allows a more detailed consideration of borrowers at the lower and at the upper end of the wealth distribution. We find a strong negative and signi.cant time-trend. Furthermore, we observe a negative impact of the provi- sion of microfinance loans such that the overall impact is even more negative. This is particularly well seen for entrepreneurs in the lower and in the higher quantiles. As we learn that poor entrepreneurs use microloans for consumption, we doubt that micro.nance is the right instrument for them. The data suggest that providing microloans for average entrepreneurs, who can hire very poor entrepreneurs, might be an effective solution for that dilemma.
    JEL: E43 E52 E58 D44
    Date: 2011–11–09
  13. By: Jacques Brook (Maastricht School of Management, the Netherlands)
    Abstract: The competitive advantage literature has tended to establish a strong relation between innovation leadership and high firm performance. However, we found that this is not always true. Inspired by the failure of many firms to be leaders in innovation, many other firms prefer to orient their corporate innovation strategy towards being a smart follower. Here their objective is to reduce the risks of innovations and to achieve a sustained competitive advantage. Smart followers move beyond the traditional notion of follower that focuses on the decision of not becoming a leader in particular technology domain and how to gain a cost advantage by learning from the leader. This paper discusses an institutional innovation framework based on a business system thinking approach. The objective is to assist the leadership in firms in synergizing capabilities in the interactions between the innovation dimensions. We found that firms that choose to be smart followers can become top performer if they pursue institutional innovation.
    Keywords: Innovation Strategy, Institutional Innovation, Competitive advantage, Business model innovation, technology innovation, process innovation, service and product innovation, social and sustainable innovation, performance.
    JEL: M12 M14
    Date: 2011–10
  14. By: Wim Naudé (Maastricht School of Management, Maastricht Graduate School of Governance, University of Maastricht, and United Nations University (UNU-MERIT), Maastricht, The Netherlands, e-mail:
    Abstract: Adoption and adaptation of foreign technology is an important catch-up mechanism for developing countries and can contribute towards the achievement of the millennium development goals. Despite this until now very little foreign aid has been specifically targeting innovation in developing countries - more substantial aid has been promoting ‘private sector development’ (PSD) – or entrepreneurship – so that one can see PSD initiatives to have been the major channel through which donors have been promoting innovation in developing countries. Whether this has been an appropriate channel, with appropriate instruments, is the first of two main questions that will be addressed in this paper. The second main question is how PSD initiatives should be adapted or fine-tuned to provide greater and more effective support for appropriate innovation activities in developing countries – and by implication make foreign aid more effective. In this regard two aspects that will receive particular attention are the entrepreneurship-government relationship, and the innovation policy-stage of development dimension.
    JEL: O32 O38 F35
    Date: 2011–12
  15. By: Nuri Yildirim (Yasar University)
    Abstract: The view that profitability, not growth, is the driving force behind the firm performance, and unprofitable high growth can not lead to financial success has often been discussed in the literature. In this study, I tested this hypothesis on Turkey’s top 1000 data using an extended version of the method of Davidson et al. (2009). My sample strongly supports the hypothesis that controlling for leverage, low growth-high profitability (profit) firms outperform high growth-low profitability (growth) firms regarding both directions of their transition to an upper state and a lower state in subsequent periods. The hypothesis that controlling for type of firm (growth or profit firm), leverage matters with respect to firm’s future performance is weakly supported by 3-year transition data.
    Keywords: Firm performance, growth, profitability, Turkey
    Date: 2011
  16. By: Séverine Saleilles (COACTIS - Université Lumière - Lyon II : EA4161 - Université Jean Monnet - Saint-Etienne)
    Abstract: Alors que les pouvoirs publics accordent de plus en plus d'importance à l'accueil d'urbains souhaitant créer une entreprise en milieu rural, la littérature souligne les particularités des entrepreneurs néo-ruraux mais reste assez limitée quant aux cheminements de ces derniers vers la création d'entreprises à la campagne. Une étude menée dans les monts et montagne d'Ardèche permet de compléter cette littérature et de montrer la diversité des entrepreneurs néo-ruraux. Chacun suit un cheminement très individualisé en fonction de la place de l'acte entrepreneurial dans son parcours, d'une combinaison de motivations et de buts qui lui est propre, ainsi que de l'importance que prend l'environnement local dans la préparation, puis la réalisation de son projet. Nous montrons que l'accompagnement des entrepreneurs néo-ruraux doit être non seulement spécifique, mais également adapté à ces différents profils.
    Keywords: Périurbanisation ; Contre-urbanisation ; Entrepreneurs néo-ruraux ; Motivations ; Profils entrepreneuriaux ; Accompagnement
    Date: 2010–11–01

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