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on Entrepreneurship |
| By: | Milo Bianchi (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris IX - Paris Dauphine) |
| Abstract: | This paper shows that utility differences between the self-employed and employees increase with financial development. This effect is not explained by increased profits but by an increased value of non-monetary benefits, in particular job independence. We interpret these findings by building a simple occupational choice model in which financial constraints may impede the creation of firms and depress labor demand, thereby pushing some individuals into self-employment for lack of salaried jobs. In this setting, financial development favors a better matching between individual motivation and occupation, thereby increasing entrepreneurial utility despite increasing competition and so reducing profits. |
| Keywords: | Financial development; entrepreneurship; job satisfaction |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00670031&r=ent |
| By: | Mina Baliamoune-Lutz; Zuzana Brixiová; Léonce Ndikumana |
| Abstract: | Limited access of entrepreneurs to credit constrains the creation and growth of private firms. In Africa, access to credit is particularly limited for small and medium enterprises (SMEs) due to unclear property rights and the lack of assets that can be used as collateral. This paper presents a model where firm creation and growth hinge on matching potential entrepreneurs with productive technologies, while firm growth depends on acquired capital. The shortage of collateral creates a binding credit constraint on borrowing by SMEs and hence private sector growth and employment, even though the banking sectors have ample liquidity, as is the case in many African countries. The model is tested using a sample of 20 African countries over the period 2005-09. The empirical results suggest that policies aimed at easing the binding credit constraints (e.g., the depth of credit information and the strength of legal rights pertaining to collateral and bankruptcy) would stimulate productive entrepreneurship and private sector employment in Africa. |
| Keywords: | credit constraints; productive entrepreneurship; employment, policies |
| JEL: | G21 L26 D24 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:icr:wpicer:23-2011&r=ent |
| By: | Bruhn, Miriam |
| Abstract: | Different views have been put forward to explain why most firms in developing countries operate informally. One view argues that informal-business owners are entrepreneurs who do not register their firm because the regulation process is too complex. Another argues that informal-business owners are people trying to make a living while searching for a wage job. This paper contributes to recent literature that argues that both factors are at work. The author uses discriminant analysis to separate informal business owners into two groups: those with personal characteristics similar to wage workers, and those with traits similar to formal-business owners. The paper then examines how the two groups were affected by a business registration reform in Mexico. Informal-business owners from the second group were more likely to register their business after the reform. By contrast, informal-business owners from the first group were less likely to register but more likely to become wage workers after the reform. This is consistent with the finding in Bruhn (2008 and 2011) that the reform led to job creation. It also explains why the earlier papers find that the reform didn’t affect the number of new registrations by all informal business owners. |
| Keywords: | Competitiveness and Competition Policy,Business in Development,Business Environment,E-Business,Access to Finance |
| Date: | 2012–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5971&r=ent |
| By: | Gaetano Lisi; Maurizio Pugno |
| Abstract: | A matching model will explain both unemployment and economic growth by considering the underground sector and human capital. Three problems can thus be simultaneously accounted for: (i) the persistence of the underground sector, (ii) the ambiguous relationships between underground employment and unemployment, and (iii) between growth and unemployment. Key assumptions are that entrepreneurial ability is heterogeneous, skill accumulation determines productivity growth, job-seekers choose whether to invest in education. The conclusions are that the least able entrepreneurs, whose number is endogenous, set up underground firms, employ unskilled labour, and do not contribute to growth. If the monitoring rate is sufficiently low, underground employment alleviates unemployment, but the economy grows at lower rates. |
| Keywords: | Matching models, endogenous growth, underground economy, entrepreneurship, unemployment. |
| JEL: | E26 J6 J24 L26 |
| Date: | 2012–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2012_03&r=ent |
| By: | Aggarwal, Shilpa; Klapper, Leora; Singer, Dorothe |
| Abstract: | This paper evaluates how microfinance performed in providing business financing in 27 Sub-Saharan African countries. It uses data from the 2009 and 2010 Gallup World Poll, a nationally-representative survey of at least 1,000 individuals per country, conducted in up to 157 countries per year. The data, supported by rigorous statistical evidence in related literature on the use of microcredit around the world, demonstrate that economic gains from microcredit have been more modest than what was once believed. On the other hand, the analysis suggests that the poor save in order to start new businesses and that the introduction of formal products for small savings can be a key financial innovation. The authors also analyze the challenges the poor face in setting money aside to save, and discuss what policymakers can do to promote savings. |
| Keywords: | Access to Finance,Banks&Banking Reform,Debt Markets,Financial Intermediation,Emerging Markets |
| Date: | 2012–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5975&r=ent |
| By: | Ruane, Frances; Siedschlag, Iulia |
| Abstract: | A return to economic growth and higher employment requires growth in the number and sustainability of Irish enterprises. Innovation at enterprise level is essential for sustainability and competitiveness and plays a major role in increasing overall productivity. Understanding the determinants of enterprise innovation and how it affects productivity is important for designing effective innovation policies. The tight fiscal constraints and the urgency of achieving successful outcomes require that government policies aimed at enhancing enterprise innovation and raising productivity need to be very effective. This paper draws on recent international theoretical and empirical literature based on enterprise level data to explore four questions: Does innovation contribute to higher productivity? Which types of enterprises invest in innovation? Which enterprises have higher innovation expenditure per employee? Which types of enterprises are more likely to innovate successfully? We then look at what these findings imply for policy in relation to indigenous enterprises, whether the current policy mix is appropriate and how it might become more effective. |
| Keywords: | Productivity |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:ec3&r=ent |
| By: | Mario Holzner (The Vienna Institute for International Economic Studies, wiiw); F. Peci |
| Abstract: | This paper aims to identify formal and informal institutional factors in customs procedures and their impact on the performance of small and medium-sized enterprises (SMEs) involved in international trade in Kosovo based on a questionnaire conducted in 2009. The econometric findings show that one of the most important obstacles encountered by SMEs are regular appeals against customs decisions that are assumed to be inter alia a consequence of frequent changes in over-complicated laws and regulations. However, there is a positive and significant effect of the formal customs institutions that facilitate the trade of imported goods, namely of so-called customs procedures with economic impact. |
| Keywords: | customs, firm performance, formal and informal institutions, small and medium-sized enterprises, Kosovo |
| JEL: | F14 K42 L25 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:76&r=ent |
| By: | Fackler, Daniel (University of Erlangen-Nuremberg); Schnabel, Claus (University of Erlangen-Nuremberg); Wagner, Joachim (Leuphana University Lüneburg) |
| Abstract: | Using comprehensive data for West Germany, this paper investigates the determinants of establishment exit. We find that between 1975 and 2006 the average exit rate has risen considerably. In order to test various "liabilities" of establishment survival identified in the literature, we analyze the impact of establishment size and put a special focus on differences between young and mature establishments. Our empirical analysis shows that the mortality risk falls with establishment size, which confirms the liability of smallness. The probability of exit is substantially higher for young establishments which are not more than five years old, thus confirming the liability of newness. There also exists a liability of aging since exit rates first decline over time, reaching a minimum at ages 15 to 18, and then rise again somewhat. The determinants of exit differ substantially between young and mature establishments, suggesting that young establishments are more vulnerable in a number of ways. |
| Keywords: | firm exits, Germany |
| JEL: | L2 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6349&r=ent |