nep-ent New Economics Papers
on Entrepreneurship
Issue of 2012‒04‒10
ten papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Taxes and the Choice of Organizational Form by Entrepreneurs in Sweden By Edmark, Karin; Gordon, Roger
  2. Measuring dynamic market selection by persistent scale inefficiencies - applied to EU business services By Kox, Henk L.M.; Leeuwen, George van
  3. Small Business Social Responsibility and the Missing Link: The Local Context. By Mara Del Baldo; Paola Demartini
  4. Does a picture paint a thousand words ? evidence from a microcredit marketing experiment By Gine, Xavier; Mansuri, Ghazala; Picon, Mario
  5. Endogenous Entry, Product Variety and Business Cycles By Florin Bilbiie; Fabio Ghironi; Marc Melitz
  6. The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico By Bruhn, Miriam; Karlan, Dean; Schoar, Antoinette
  7. Strategy innovation as business model reconfiguration By Leonardo Buzzavo
  8. Slack financier et forte croissance dans la PME By Nathalie Claveau; Muriel Perez; Isabelle Prim-Allaz; Christine Teyssier
  9. Offshoring of Japanese Small and Medium Enterprises (Japanese) By KWON Hyeog Ug
  10. Changes in the Size Distribution of Manufacturing Establishments: Analysis in view of industrial structure and firm dynamics (Japanese) By GOTO Yasuo

  1. By: Edmark, Karin (Research Institute of Industrial Economics (IFN)); Gordon, Roger (Research Institute of Industrial Economics (IFN))
    Abstract: This paper makes use of individual data for 2004 to 2008 on owners of closely-held businesses in Sweden to estimate the role of both tax and non-tax determinants in the choice to be a closely-held corporation vs. a proprietorship. While lower-income individuals face relatively neutral incentives, higher income households face strong tax incentives to be corporate. The data suggest a strong response to these tax incentives. Many conventional non-tax determinants are confirmed in the data as well.
    Keywords: Self-employment; Entrepreneurship; Taxation of closely-held businesses; Business organizational form
    JEL: G32 G38 H25
    Date: 2012–03–26
  2. By: Kox, Henk L.M.; Leeuwen, George van
    Abstract: The paper proposes a new way of analysing the efficiency of dynamic market selection, based on the persistence of scale economies. The persistence of scale-related inefficiencies is used as an indicator for the effectiveness of market selection. We use a DEA method to construct the productivity frontier by sub-sector and size class, for business services in 13 EU countries. From this we derive scale economies and their development over time. Our results indicate malfunctioning competitive selection. Between 1999 and 2005 we observe a persistence of scale diseconomies, with scale efficiency falling rather than growing over time. In panel regressions we find the distance to the productivity frontier (within and between size classes) to be significantly explained by regulatory policies that hamper entry and exit dynamics and labour adjustment, and by a lack of import penetration and domestic start-ups. The results suggest that policy reform and more market openness may have positive productivity effects. This holds for business services itself, but also wider, because of business services’ large role in intermediary production inputs.
    Keywords: dynamic market selection; scale economies; market contestability; regulation; EU economy; business services
    JEL: D40 D24 L80
    Date: 2012–03
  3. By: Mara Del Baldo (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Paola Demartini (Department of Management and Law, University of Rome 3, Italy)
    Abstract: A further development in the socially responsible management debate my consider the following question: is SMEs’ orientation towards Corporate Social Responsibility sustained by entrepreneurs’ values and facilitated by environmental factors – that is, of an anthropological and socio-cultural nature – present in the territory where entrepreneurs and SMEs are sited? The chapter aims at proposing thoughts upon the contribution of SMEs in spreading the philosophy and practices of CSR and sustainability focusing on the importance of entrepreneurial values and the relationship with the local context to which the SMEs and entrepreneurs are profoundly rooted. In developing the research question, the analysis may be divided on two levels: one deductive and the other inductive, which correspond to the two main sections of the chapter. The first section (1-2) presents the theoretical framework by way of recalling threads of study on entrepreneurship and on business ethics centred upon behaviour, motivations and business values. The analysis then concludes by presenting a review of the international studies on the theme of the relationship between managerial culture and territory. The second section (3-4) is developed by way of a qualitative research methodology centred upon the analysis of behavior towards CSR and sustainability of a sample of SMEs belonging to the Marche Region, Italian territory “cradle” of the small-sized company and craft traditions. Empirical evidence presented, highlights how best practices of socially-oriented Marche SMEs - who are excellent examples of “convivial enterprises” strongly rooted in their territories - contribute to a model of Territorial Social Responsibility (TSR) that progresses within the particular socio-economic context of the region. The “social capital”, enriched by values, cultures and traditions tied to a specific community-space, synthesizes intangible factors that favour the development of CSR and the sustainability of SMEs. The economic model of “gentle capitalism” centred around “territorial” SMEs, which can be found in the business contexts under discussion, leans on the construction of a large consensus both within and external to the company, as well as on an environment which is neither restraint or limitation, rather it is an opportunity. The possible pathway of territorial CSR based on the culture of doing “good” in the local context, may offer a possible alternative to the often, unfortunately, short-sighted “turbo-capitalism” of the major transnational companies, which are not rooted in the area where they are located and “nomadic” in their character.
    Keywords: Corporate social responsibility, Entrepreneurial values, Local context, Small and medium enterprises, Territorial companies.
    JEL: M14
    Date: 2012
  4. By: Gine, Xavier; Mansuri, Ghazala; Picon, Mario
    Abstract: Female entrepreneurship is low in many developing economies partly because of constraints on women's time and mobility, which are often reinforced by social norms. This paper analyzes a marketing experiment designed to encourage women to adopt a new microcredit product. A brochure with the same content but two different covers was randomly distributed among male and female borrowing groups. One cover featured five businesses run by men, while the other showed identical businesses run by women. Men and women responded to psychological cues. Among men who were not business owners, had lower measured ability and whose wives were less educated, the responses to the female brochure were more negative, as did female business owners with low autonomy within the household. Women with relatively high levels of autonomy had a similar negative response to the male brochure, while there was no effect on female business owners with autonomy. Overall, these results suggest that women's response to psychological cues, such as positive role models, may be affected by their level of autonomy at home, and more intensive interventions may be required for more disadvantaged women.
    Keywords: Access to Finance,Debt Markets,Business in Development,Competitiveness and Competition Policy,Banks&Banking Reform
    Date: 2012–04–01
  5. By: Florin Bilbiie (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Fabio Ghironi (Department of Economics - Boston College); Marc Melitz (Department of Economics - Harvard university (Cambridge, USA))
    Abstract: This paper builds a framework for the analysis of macroeconomic fluctuations that incorporates the endogenous determination of the number of producers and products over the business cycle. Economic expansions induce higher entry rates by prospective entrants subject to irreversible investment costs. The sluggish response of the number of producers (due to sunk entry costs and a time-to-build lag) generates a new and potentially important endogenous propagation mechanism for real business cycle models. The return to investment (corresponding to the creation of new productive units) determines household saving decisions, producer entry, and the allocation of labor across sectors. The model performs at least as well as the benchmark real business cycle model with respect to the implied second-moment properties of key macroeconomic aggregates. In addition, our framework jointly predicts procyclical product variety and procyclical profits even for preference specifications that imply countercyclical markups. When we include physical capital, the model can simultaneously reproduce most of the variance of GDP, hours worked, and total investment found in the data.
    Keywords: Business cycle propagation; Entry; Markups; Product creation; Profits; Variety
    Date: 2012
  6. By: Bruhn, Miriam (World Bank); Karlan, Dean (Yale University); Schoar, Antoinette (MIT)
    Abstract: We test whether managerial human capital has a first order effect on the performance and growth of small enterprises in emerging markets. In a randomized control trial in Puebla, Mexico, we randomly assigned 150 out of 432 small and medium size enterprises to receive subsidized consulting services, while the remaining 267 enterprises served as a control group that did not receive any subsidized training. Treatment enterprises were matched with one of nine local consulting firms and met with their consultants once a week for four hours over a one year period. Results from a follow-up survey, conducted after the intervention, show that the consulting services had a large impact on the performance of the enterprises in the treatment group: monthly sales went up by about 80 percent; similarly, profits and productivity increased by 120 percent compared to the control group. We also see a significant increase in the entrepreneurial spirit index for the treatment group, a set of questions designed to illicit the SME owners' confidence in their ability to manage their business and deal with any future difficulties. However, we do not find any significant increase in the number of workers employed in the treatment group.
    JEL: D21 D24 L20 M13 O12
    Date: 2012–02
  7. By: Leonardo Buzzavo
    Abstract: Strategy innovation gained popularity during the 1990s as a notion applying to firms that reinvented competition in an industry. Throughout the 2000s business model innovation drew much of the spotlight. The key traits of both these concepts (and how they relate to each other) are often implicit or unclear. Through a literature review and by applying the key elements to some innovative firms for illustrative purposes, this paper discusses the emergence of the notion of strategy (and business model) innovation aiming to bridge these concepts while identifying their basic constituents. Successful firms manage to envision and implement new combinations along different routes, but always exploiting the complementarities through self-reinforcing mechanisms. Finally, the paper argues that strategy innovation triggers the need to broaden the interpretative schemes in the field of strategy, as it resembles more an art than a science.
    Keywords: Strategy; Innovation; Business Model
    Date: 2012–03
  8. By: Nathalie Claveau (COACTIS - Université Lumière - Lyon II : EA4161 - Université Jean Monnet - Saint-Etienne); Muriel Perez (COACTIS - Université Lumière - Lyon II : EA4161 - Université Jean Monnet - Saint-Etienne); Isabelle Prim-Allaz (COACTIS - Université Lumière - Lyon II : EA4161 - Université Jean Monnet - Saint-Etienne); Christine Teyssier (COACTIS - Université Lumière - Lyon II : EA4161 - Université Jean Monnet - Saint-Etienne)
    Abstract: Historiquement, la notion de slack a été avancée par l'approche ressources (Penrose, 1959) pour expliquer la croissance. Paradoxalement, face aux arguments de ses détracteurs (relevant principalement de la théorie de l'agence), les études empiriques se sont surtout attachées à étudier le rôle d'un slack dans la performance de l'entreprise, celle-ci étant essentiellement mesurée en termes de profit. Ces études ont abouti à des résultats très contrastés, mais avec tout de même la mise en évidence de divers types de slack aux fonctions potentiellement assez différentes dans la performance. L'intention générale de cette étude est de tester empiriquement d'une part les types de slack financier qui influencent ou non la croissance et d'autre part ceux qui contribuent le plus à l'entrée en forte croissance. Les résultats témoignent au final de l'influence de deux types de slack sur la forte croissance : un slack potentiel (la capacité d'endettement) et un slack absorbé (la rotation des actifs). La croissance forte reposerait davantage sur la capacité de l'entreprise à tirer parti de ses ressources, que sur des niveaux de ressources en soi.
    Keywords: La PME - Croissance - Finance - Slack
    Date: 2012–03–20
  9. By: KWON Hyeog Ug
    Abstract: This paper uses firm-level data to examine the determinants and impacts of offshoring of small and medium enterprises (SMEs) in Japan, comparing results with those for larger firms from existing studies. The results of this paper can be summarized as follows. First, offshoring of Japanese SMEs is largely determined by the time preference and overseas experience of the chief executive officer (CEO) and not by the productivity level. In fact, existing studies using data for larger firms found mixed results on the effect of productivity on offshoring decisions. Second, while intra-firm offshoring does not seem to improve productivity, arm's-length offshoring has a positive effect. This is opposite to the result using data for larger firms. Finally, offshoring of SMEs does not significantly affect the level of domestic employment, while it leads to a higher demand for more educated workers. This result is consistent with results for larger firms.
    Date: 2012–04
  10. By: GOTO Yasuo
    Abstract: This paper analyzes changes in the weight of small establishments in the overall industrial structure and the factors behind them in view of the size distribution of firms using data on domestic and overseas manufacturing establishments. The international comparison of long time series shows that the proportion of small establishments has generally been in decline in Japan while those of other advanced countries shifted to an upward trend in and around the 1970s. This difference was caused by changes in the industrial composition and a decrease in the proportion of small establishments within respective industries, as confirmed by the decomposition analysis of contributing factors with an eye on changes in the industrial structure. A key factor contributing to the changes in the industrial composition is the decline of industries that tend to have a large proportion of small firms, such as the textile industry. Regarding the decrease in the proportion of small-sized firms across industries, very small firms with four to nine employees have shown a particularly sharp decline. Analyzing this phenomenon by focusing on the dynamics of firm evolution, i.e., the entry, growth, and exit of firms, we find that the number of entries has mostly decreased compared with that of exits over the past few decades. During the same period of time, firm growth—another factor contributing to changes in firm size distribution—has worked to shift the size distribution toward smaller firms, which is contradictory to the findings in preceding studies on other countries. While the changes in industrial composition that have worked to lower the proportion of small establishments in the overall industrial structure can be understood as a response to various changes in the business environment, the low number of new entries is a disturbing factor that may undermine the industrial vitality of Japan. The implementation of government policy for small and medium-sized firms needs to be underpinned firmly by the thorough understanding of factors contributing to changes in the weight of small-sized firms in the overall industrial structure.
    Date: 2012–04

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