nep-ent New Economics Papers
on Entrepreneurship
Issue of 2012‒02‒20
twelve papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Financing Entrepreneurship and the Old-Boy Network By Inci, Eren; Parker, Simon C.
  2. Determinants of high-growth firms:why do some countries have more high-growth firms than others? By Teruel Carrizosa, Mercedes; De Wit, Gerrit
  3. The risk of growing fast By Jan de Kok; Haibo Zhou; Chantal Hartog
  4. Free to grow? Assessing the barriers faced by actual and potential high growth firms By Lee, Neil
  5. High Growth Firms and Innovation: an empirical analysis for Spanish firms By Segarra Blasco, Agustí; Teruel Carrizosa, Mercedes
  6. Evolution and the Growth Process: Natural Selection of Entrepreneurial Traits By Galor, Oded; Michalopoulos, Stelios
  7. Are the self-employed really jacks-of-all-trades? Testing the assumptions and implications of Lazear's theory of entrepreneurship with German data By Lechmann, Daniel S. J.; Schnabel, Claus
  8. Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training By Robert W. Fairlie; Dean Karlan; Jonathan Zinman
  9. Who Starts a Business and Who is Self-Employed in Germany By Fritsch, Michael; Kritikos, Alexander S.; Rusakova, Alina
  10. Do Private Equity Firms Foster Innovation? Evidence from French LBOs By Anne-Laure Le Nadant, University of Caen Basse-Normandie, CREM-CNRS, UMR 6211; Frédéric Perdreau, University of St-Etienne, COACTIS, EA 4161
  11. A new perspective on the firm size-growth relationship: Shape of profits, investment and heterogeneous credit constraints By Florian MAYNERIS

  1. By: Inci, Eren (Sabanci University); Parker, Simon C. (University of Western Ontario)
    Abstract: We study entrepreneurs' start-up financing from banks and local financiers. An informal network, whose membership cannot be observed by outsiders, conveys the good signals it gets about the hidden types of network entrepreneurs to local financiers, which are then reflected in different loan terms. We show that there are winners and losers as a result of the network even among its members. Because all projects have positive net value, it is efficient to finance them even in the absence of a network. Thus, the formation of the network is inefficient as entrepreneurs incur networking costs for purely redistributive gains in the form of better loan terms as network members.
    Keywords: entrepreneurship, financiers, networks, start-up financing
    JEL: D82 G20 L26
    Date: 2012–01
  2. By: Teruel Carrizosa, Mercedes; De Wit, Gerrit
    Abstract: High-growth firms have been shown to be a key factor for economic growth and structural change. This paper analyses the determinants of the number of high-growth firms in a country for 17 OECD countries between 1999 and 2005, using the Amadeus data set, the GEM data set, and others. The first contribution of this paper is that it is – as far as we know – the first empirical analysis of high-growth firms at the country level on the basis of actual measured growth. Second, we find indicative empirical evidence for three driving forces of high growth, viz. entrepreneurship, institutional settings, and opportunities for growth, all in accordance with theory and empirical findings in related fields of research. Third, the paper gives a tentative explanation of the differences in the average percentage of high-growth firms between countries. Finally, the paper gives some clues for policy makers how to promote high-growth firms. Keywords: high-growth firms, fast growing firms, entrepreneurship, institutional obstacles, opportunities for growth
    Keywords: Empreses -- Creixement, Emprenedoria, 33 - Economia, 65 - Gestió i organització. Administració i direcció d'empreses. Publicitat. Relacions públiques. Mitjans de comunicació de masses,
    Date: 2011
  3. By: Jan de Kok; Haibo Zhou; Chantal Hartog
    Abstract: Are firm growth and firm survival related to each other? This paper tests the hypothesis that the relationship between firm growth and firm survival can be characterised by an inverted U-shaped relation. This hypothesis is confirmed by our estimations. At the same time, the results indicate that the top of the inverted U-shaped relation occurs at very high growth rates. This suggests that for the large majority of enterprises, the relationship between firm growth and firm survival can be better described by a positive relationship rather than an inverted U-shaped relationship. Although these results are preliminary, they suggest that policies that aim to increase the number of fast-growing firms have no negative effects on the rate of firm deaths.
    Date: 2012–02–02
  4. By: Lee, Neil
    Abstract: A small proportion of high growth firms create the majority of all new jobs. For policymakers, it is important to know (1) the obstacles faced by high growth firms are and (2) the obstacles faced by firms with the potential to achieve high growth, but which are yet to achieve this. This investigates these issues using the UK Small Business Survey. It highlights six areas where high growth firms experience problems: obtaining finance, cash flow, recruiting staff, skill shortages, managerial skills and the availability and cost of premises. Potential high growth firms argue that cash flow, recruiting, the availability and cost of premises and managerial skills are important. They also argue that competition is a significant obstacle to their growth, perhaps implying their business strategy is problematic.
    Keywords: High growth firms; Barriers; gazelles; SMEs; Firm growth
    JEL: L0 D21 L2 L10
    Date: 2011–11–01
  5. By: Segarra Blasco, Agustí; Teruel Carrizosa, Mercedes
    Abstract: This paper analyzes the effect of firms’ innovation activities on their growth performance. In particular, we observe how important innovation is for high-growth firms (HGFs) for an extensive sample of Spanish manufacturing and services firms. The panel data used comprises diverse waves of Spanish CIS over the the period 2004-2008. First, a probit analysis determines whether innovation affects the probability of being a high-growth firm. And second, a quantile regression technique is applied to explore the determinants and characteristics of specific groups of firms (manufacturing versus service firms and high-tech versus low-tech firms). It is revealed that R&D plays a significant role in the probability of becoming a HGF. Investment in internal and external R&D per employee has a positive impact on firm growth (although internal R&D presents a significant impact in the last quantiles, external R&D is significant up to the median). Furthermore, we show evidence that there is a positive impact of employment (sales) growth on the sales (employment) growth. Keywords: high-growth firms, firm growth, innovation activity JEL Classifications: L11, L25, O30
    Keywords: Empreses -- Innovacions tecnològiques -- Espanya, Empreses -- Creixement, 33 - Economia, 65 - Gestió i organització. Administració i direcció d'empreses. Publicitat. Relacions públiques. Mitjans de comunicació de masses,
    Date: 2011
  6. By: Galor, Oded (Brown University); Michalopoulos, Stelios (Brown University)
    Abstract: This research suggests that a Darwinian evolution of entrepreneurial spirit played a significant role in the process of economic development and the dynamics of inequality within and across societies. The study argues that entrepreneurial spirit evolved non-monotonically in the course of human history. In early stages of development, risk-tolerant, growth promoting traits generated an evolutionary advantage and their increased representation accelerated the pace of technological progress and the process of economic development. In mature stages of development, however, risk-averse traits gained an evolutionary advantage, diminishing the growth potential of advanced economies and contributing to convergence in economic growth across countries.
    Keywords: risk aversion, growth, technological progress, evolution, natural selection
    JEL: O11 O14 O33 O40 J11 J13
    Date: 2012–01
  7. By: Lechmann, Daniel S. J.; Schnabel, Claus
    Abstract: Using a large representative German data set and various concepts of self-employment, this paper tests the 'jack-of-all-trades' view of entrepreneurship by Lazear (AER 2004). Consistent with its theoretical assumptions we find that self-employed individuals perform more tasks and that their work requires more skills than that of paid employees. In contrast to Lazear's assumptions, however, self-employed individuals do not just need more basic but also more expert skills than employees. Our results also provide only very limited support for the idea that human capital investment patterns differ between those who become self-employed and those ending up in paid employment. -- Unter Verwendung eines großen, repräsentativen Datensatzes für Deutschland und verschiedener Abgrenzungen der Selbständigkeit überprüft diese Arbeit die 'jack-of-all-trades'-Sicht des Unternehmertums von Lazear (AER 2004). In Übereinstimmung mit ihren theoretischen Annahmen finden wir, dass Selbständige mehr verschiedene Tätigkeiten ausüben und Kenntnisse aus mehr verschiedenen Gebieten benötigen als nicht-selbständige Arbeitnehmer. Im Gegensatz zu Lazear's Annahmen benötigen Selbständige allerdings nicht nur mehr Grundkenntnisse sondern auch mehr Fachkenntnisse als Nicht-Selbständige. Unsere Ergebnisse liefern zudem nur wenig Unterstützung für die Behauptung, dass sich die Muster der Humankapitalaneignung zwischen Selbstständigen und abhängig beschäftigten Arbeitnehmern sichtbar unterscheiden.
    Keywords: entrepreneurship,self-employed,Germany
    JEL: J23 J24
    Date: 2011
  8. By: Robert W. Fairlie; Dean Karlan; Jonathan Zinman
    Abstract: We use randomized program offers and multiple follow-up survey waves to examine the effects of entrepreneurship training on a broad set of outcomes. Training increases short run business ownership and employment, but there is no evidence of broader or longer run effects. We also test whether training mitigates market frictions by estimating heterogeneous treatment effects. Training does not have strong effects (in either relative or absolute terms) on those most likely to face credit or human capital constraints, or labor market discrimination. Training does have a relatively strong short-run effect on business ownership for those unemployed at baseline, but not at other horizons or for other outcomes.
    JEL: D04 D14 D22 H32 H43 I38 J21 J24
    Date: 2012–02
  9. By: Fritsch, Michael (University of Jena); Kritikos, Alexander S. (University of Potsdam, DIW Berlin); Rusakova, Alina (University of Jena)
    Abstract: Based on representative data, the German Micro-Census, we provide an overview of the development of self-employment and entrepreneurship in Germany between 1991 and 2010, the first two decades after reunification. We investigate the socioeconomic background of these individuals, their education, previous employment status, and their income level. We observe a unique increase in self-employment in Germany by 40 percent which can partly be attributed to the transformation process of East Germany and to the shift to the service sector. We notice a yearly start-up rate of 1 percent among the working population (almost 20 percent of them being restarters), a decision that pays for the majority of individuals in terms of income. Contrary to other countries, in Germany there is a positive relationship between educational levels and the probability of starting a business.
    Keywords: entrepreneurship, self-employment, start-ups, Germany
    JEL: L26 D22
    Date: 2012–01
  10. By: Anne-Laure Le Nadant, University of Caen Basse-Normandie, CREM-CNRS, UMR 6211; Frédéric Perdreau, University of St-Etienne, COACTIS, EA 4161
    Abstract: Agency theory has historically presented buyouts as a superior governance framework that generates economic efficiencies in the short term but these transactions might have a negative impact on long-term growth and innovation. In this study, we use a strategic entrepreneurship perspective to argue that private equity firm's extensive network and relationships, and expertise and competencies help managers to innovate. Using a propensity score methodology, we provide an empirical analysis of the innovative efforts of a sample of 89 French manufacturing firms that underwent a buyout between 2001 and 2005. The matching estimates (average treatment on the treated, ATT) of the effect of LBOs on firm level of innovation expenditures in 2006 show no significant differences between LBO targets and comparable companies that did not go through an LBO. In contrast, we find significant effects of LBOs on both service innovation and marketing innovations in design and packaging and product promotion. Results suggest that private equity firms provide marketing capabilities or encourage managers of LBO targets to build new innovation strategies.
    Keywords: Buyouts, Innovation, Private Equity Firms, Strategic Entrepreneurship
    JEL: G24 G34 O30
    Date: 2012–01
  11. By: Florian MAYNERIS (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE))
    Abstract: This paper shows that the diverging results obtained in the literature on the firm size-growth relationship can be reconciled in a very general theoretical framework featuring firm-level heterogeneity and investment decision. Three main elements determine the nature and the intensity of the relationship between firm-level size and investment: the shape of operating profits with respect to size, the shape of marginal returns to investment (in terms of size) with respect to initial size and the shape of marginal cost of investment with respect to size. Any difference across countries, industries or periods in one of these three dimensions can modify the sign and the intensity of the firm size-investment and the firm size-growth relationship at equilibrium. As an example, I show that in France, heterogeneous credit constraints, which affect the shape of the marginal cost of investment, can explain cross-sectoral variations in the firm size-investment and firm size-growth relationship over the 1996-2002 period. As a consequence, from a macroeconomic view point, firm size distribution is, all else equal, more right-skewed in sectors where small firms are disproportionately credit constrained and small firms participate less to sectorial growth in these sectors. The analytical framework proposed in this paper is general enough to apply to the analysis of any heterogeneous response of economic agents.
    Keywords: Investment, size, firm size-growth relationship, financial constraints
    JEL: D21 D22 L11 L25
    Date: 2011–11–29
  12. By: Barbara Pistoresi; Valeria Venturelli
    Abstract: In this paper we investigate the relationship between finance and regional economic growth. The dataset consists of a panel of 53 regions belonging to three countries, Germany, Italy and Spain, for the period 1995-2008. To avoid a problem of endogeneity, we estimate a dynamic panel using the generalised method of moments (GMM). The results underline the important role played by bank lending in regional economic growth. The distinction between mutual and commercial credit suggests that both types of bank are important for regional growth but the role of mutual banks is greater in economically deprived areas [EDAs]. Similar results are obtained for the venture capital variable
    Keywords: regional economic growth, relationship lending, venture capital, economically deprived areas, dynamic panel techniques
    JEL: C21 G21 G24 O43 O57
    Date: 2012–01

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