nep-ent New Economics Papers
on Entrepreneurship
Issue of 2012‒04‒23
twelve papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. How ‘buzz’ reduces uncertainty for new firm founders By Capelleras, Joan-Lluis; Mole, Kevin F.
  2. Entrepreneurship, stages of development, and industrialization By Ács, Zoltan J.; Naudé, Wim
  3. Entrepreneurship and economic development: Theory, evidence and policy By Naudé, Wim
  4. International entrepreneurship and technological capabilities in the Middle East and North Africa By Brach, Juliane; Naudé, Wim
  5. From Tradition to Modernity: Economic Growth in a Small World By Ines Lindner; Holger Strulik
  7. Do Export Costs Matter in Determining Whether, When, and How Much African Firms Export? By Naude, Wim; Matthee, Marianne
  8. Employment effect of innovation: microdata evidence from Bangladesh and Pakistan By Waheed, Abdul
  9. The Demand for, and Consequences of, Formalization among Informal Firms in Sri Lanka By de Mel, Suresh; McKenzie, David; Woodruff, Christopher
  10. Financing of firms in developing countries : lessons from research By Ayyagari, Meghana; Demirguc-Kunt, Asli; Maksimovic, Vojislav
  11. Time series for main variables on the performance of Dutch SMEs By Ton Kwaak; Werner Liebregts
  12. De la technologie de rupture à la stratégie de rupture : Europlasma, un cas d'entrepreneuriat durable By Cecile Fonrouge

  1. By: Capelleras, Joan-Lluis; Mole, Kevin F.
    Abstract: To whom should potential new firm founders turn to for advice? This article identifies buzz as a mechanism to transfer the knowledge of who to turn to for advice. Previous work on buzz has linked it with clusters or compared local buzz with international pipelines of information. The interaction between place and business advice was examined in surveys of 599 new firm founders in England and 381 new firm founders in Catalonia (Spain). Our models exploit the denominator from a heteroskedastic probit to capture the local variation in uncertainty We show empirically how buzz can add to collective institutions outside of clusters. Our findings show that buzz influences the taking of advice and the uncertainty surrounding advice. Besides, there were strong impacts from policy on the take-up of advice in Catalonia, but it did not change the variations in uncertainty.
    Keywords: Buzz; start-ups; new firm founders; business advice;
    JEL: O18 M1 L26
    Date: 2012–04–02
  2. By: Ács, Zoltan J. (George Mason University, School of Public Policy); Naudé, Wim (UNU-MERIT/MGSoG, University of Maastricht)
    Abstract: Unlike in the past where industrial policy was either focused on creation and growth of state-owned firms or alternatively consisted merely of broadly functional policies without consideration for firm or entrepreneurial specifics, the requirement now is that future industrial policy ought to be a nuanced partnership between entrepreneurs and the state. In this paper we outline some considerations for such an industrial policy where the entrepreneur-state nexus is paramount. Moreover, we argue that such an industrial policy will need to take into consideration that the entrepreneur-state nexus is evolving, and that it depends on the stage of development of a particular country.
    Keywords: entrepreneurship, industrialization, structural change, industrial policy, innovation, development
    JEL: O32 L52 L53 M13
    Date: 2012
  3. By: Naudé, Wim (UNU-MERIT/MGSoG, Maastricht University, and Maastricht School of Management)
    Abstract: This paper provides an overview of the state of the art of the intersection of development and entrepreneurship. Given the neglect of entrepreneurship by development scholars it deals with (i) recent theoretical insights from the intersection of entrepreneurship and development studies; (ii) the empirical evidence on that relationship between entrepreneurship and development; and (iii) fresh insights for entrepreneurship policy for development that emerges from recent advanced in this area, including female entrepreneurship in developing countries.
    Keywords: Entrepreneurship, development, small business, private sector development
    JEL: M13 O10 O17 O40
    Date: 2012
  4. By: Brach, Juliane (University of Copenhagen and German Institute of Global and Area Studies, Hamburg); Naudé, Wim (UNU-MERIT/MGSoG, University of Maastricht)
    Abstract: In this paper we investigate the extent of international entrepreneurship in Algeria, Egypt, Morocco, Oman and Syria using a dataset covering 3,281 firms. We find that weak technological capabilities constrain internationalization. Firms with ISO accreditation, an own website, and those who have introduced new technology have a higher probability of entering export markets than otherwise. Firms in high-tech sectors are more likely to export early. However with foreign shareholding this advantage of high-tech firms disappears. The results suggest that early international entrepreneurs may need to pay more in informal payments if they want to increase the share of their exports once they have entered into export markets. We derive implications for policy and further research.
    Keywords: International entrepreneurship, exports, entrepreneurial capabilities, innovation, Middle East, North Africa, MENA
    JEL: L26 L25 M16 O55 F23
    Date: 2012
  5. By: Ines Lindner (VU University Amsterdam); Holger Strulik (University of Goettingen)
    Abstract: This paper introduces the Small World model (Watts and Strogatz, Nature, 1998) into the theory of economic growth and investigates how increasing economic integration affects firm size and efficiency, norm enforcement, and aggregate economic performance. When economic integration is low and local connectivity is high, informal norms control entrepreneurial behavior and more integration mainly improves search for efficient investment opportunities. At a higher level of economic integration neighborhood enforcement deteriorates and formal institutions are needed to keep entrepreneurs in check. A gradual take-off to perpetual growth is explained by a feedback effect from investment to the formation of long-distance links and the diffusion of knowledge. If formal institutions are weak, however, the economy does not take off but stagnates at an intermediate income level. Structurally, the equilibrium of stagnation differs from balanced growth by the presence of relatively many small firms of low productivity.
    Keywords: modernization; economic integration; firm size; norms; networks; knowledge spillovers; growth
    JEL: O10 O40 L10 L14 Z13
    Date: 2012–04–10
  6. By: Raquel Meneses (Faculdade Economia Porto); Carlos Brito (Faculdade Economia Porto)
    Abstract: The competitive and organizational behavior of new firms has changed dramatically. Firms do not need to be big to internationalize, International New Ventures (INV) are a reality. But, they are characterized by the liability of newness and the liability of smallness. Since the nineties, scholars have devoted considerable attention to this phenomenon, but no one explains how these companies can overcome these constraints and internationalize. In this context, this paper uses a multilevel analysis, resulting in a more integrative framework. This approach extends the literature including, at the same time, the firm perspective (following the studies developed in Uppsala and the RBV), the organizational network approach and the international entrepreneur perspective. It has three units of observation and one of analysis. To understand INV dynamics it seems very important to observe, study and relate firm with network and entrepreneur. This research finds out that the entrepreneur plays a particularly important role in these new companies, ill-equipped (of relations, resources and knowledge), but the entrepreneur does not act in a vacuum; he is part of a firm integrated in a network. To internationalize early firms must use indirect knowledge, resources and history from organizational networks and from the entrepreneur.
    Keywords: Internationalization, born global, networks, international new ventures
    JEL: M16
    Date: 2012–04
  7. By: Naude, Wim; Matthee, Marianne
    Abstract: What is the impact of export costs on the speed and extent to which African firms exports? We answer this question using a sample of 49,584 (mostly formal) firms across 71 countries, including 5,839 firms in 16 African countries surveyed by the World Bank during 2002 and 2003. We find that firms in African countries face higher export costs on average than firms in other parts of the world. However we find that African firms are more likely to enter export markets, but that when they do the extent of their exports (exports as a share of their total sales) is on average less than that of firms elsewhere. Also, younger firms are more likely to start exporting than older firms. As for the impact on export costs, we establish that the costs of exporting (as measured in US dollars) lower the likelihood and the extent of African firms’ exports but not when African firms start exporting.
    Keywords: international entrepreneurship , exports , transport costs , firm heterogeneity , Africa
    Date: 2012–02–21
  8. By: Waheed, Abdul (UNU-MERIT/MGSoG, Maastricht University)
    Abstract: The analysis of the impact of innovation on employment growth is an important topic for policy makers, because (un)employment is an important social topic, and the effects of innovation on employment are often poorly understood. Despite the significant importance of this relationship, very few studies on this topic for developing countries are yet available compared with developed ones. This paper contributes to this scanty literature by investigating the employment effect of innovation for two South Asian developing countries: Bangladesh and Pakistan. We further analyze whether this relationship shows country-specific and industry-specific differences. Finally, we investigate whether complementarity between process and product innovation exists or which effect (displacement or compensation) of one particular innovation type dominates the other, in order to influence employment. One of the striking findings of our analysis is that both product and process innovation spur employment in this region as a whole, regardless of low-tech and high-tech industries, even after controlling for a number of firm-specific characteristics. Moreover, although both innovation types also have significantly positive impacts on employment growth of all Bangladeshi and of all Pakistani firms separately, they are important factors for employment growth of only high-tech Bangladeshi firms and of only low-tech Pakistani firms. Moreover, we observe a strong complementarity between both innovation types in order to stimulate employment. Contrary to the most previous studies, we witness an insignificantly negative effect of labour cost on employment change, perhaps owing to the availability of labour force to hire at cheaper rates compared with developed countries. We notice that some of the innovation determinants exert different influences across industries and across both countries. The same is the case for the determinants of employment growth.
    Keywords: Bangladesh, Employment growth, Pakistan, Product innovation, Process innovation Process innovation
    JEL: J23 O31 O33
    Date: 2012
  9. By: de Mel, Suresh (University of Peradeniya); McKenzie, David (World Bank); Woodruff, Christopher (University of Warwick)
    Abstract: The majority of firms in most developing countries are informal. We conducted a field experiment in Sri Lanka which provided incentives for informal firms to formalize. Offering only information about the registration process and reimbursement for direct registration costs had no impact on formalization. Adding payments equivalent to one-half to one month's profits for the median firm leads to registration of around one-fifth of firms. A larger payment equivalent to two month's median profits induces half of the firms to register. Among the firms not registering after being offered this larger incentive, many faced issues related to ownership of land. Three follow-up surveys at 15 to 31 months after the intervention measure the impact formalizing has on these firms. Although mean profits increase, this appears largely due to the experiences of a few firms which grew rapidly, with most firms experiencing no increase in income as a result of formalizing. We also find little evidence for most of the channels through which formalization is hypothesized to benefit firms, although formalized firms do advertise more. Finally, formalizing is found to result in a large increase in trust in the state.
    Keywords: informality, small enterprises, entrepreneurship
    JEL: O17 O12 C93 D21 L26
    Date: 2012–03
  10. By: Ayyagari, Meghana; Demirguc-Kunt, Asli; Maksimovic, Vojislav
    Abstract: This paper reviews and synthesizes theoretical and empirical research on the role of finance in developing countries. First, the paper presents the stylized facts about firms in developing nations as well as the legal, financial and broader institutional framework in which these firms operate. Next, the paper focuses on the financing choices available to small and medium firms in developing countries and highlights areas needing additional research.
    Keywords: Debt Markets,Access to Finance,Emerging Markets,Financial Literacy,Banks&Banking Reform
    Date: 2012–04–01
  11. By: Ton Kwaak; Werner Liebregts
    Abstract: National Accounts provide detailed information on the development of the economy detailed by sector of industry. However, a disaggregation by enterprise size class is not available. The available data on the size class structure of the economy shows huge and unrealistic fluctuations and can therefore not directly be used to disaggregate the information from National Accounts. This paper reviews some methods to smooth developments shown in source data with respect to the share of small, medium-sized and large enterprises. It appears that in principle, the Hodrick-Prescott filter is most suited to fulfill this task. A modified Hodrick-Prescott filter is used. In particular, the simultaneous smoothing of interrelated series, taking into account the definitional relations existing between them, performs quite well. The methodology has been tested for two rather different sectors of industry, i.e. chemical industry (large-scaled, business-to-business oriented, capital-intensive) and retail trade (small-scaled, oriented towards consumers, labor-intensive). It appears that adjusted series, according to industry experts, give a more realistic description of historical developments than the original series do.  
    Date: 2012–03–20
  12. By: Cecile Fonrouge (IRG - Institut de Recherche en Gestion - Université Paris XII - Paris Est Créteil Val-de-Marne : EA2354 - Université Paris Est Marne-la-Vallée)
    Abstract: Sur un marché traditionnel, une entreprise nouvellement créée tente de faire sa place grâce à une technologie de rupture. Peut elle être qualifiée d'agent perturbateur ? Telle est la question qui se pose à l'examen du cas Europlasma qui, dans un premier temps, essayer d'imposer son standard technologique avant d'aborder une stratégie de valorisation qui peut être qualifiée de stratégie de rupture. L'objet de cet article est d'analyser ce cheminement stratégique qui va d'une technologie à une stratégie de rupture en confrontant ses différentes étapes aux théories qui les éclairent. Une démarche longitudinale fondée sur l'étude de cas a permis d'approcher en profondeur la compréhension des changements stratégiques vécus par l'entreprise Europlasma. Sa technologie révolutionnaire porte sur la vitrification des déchets dans le secteur traditionnel du traitement de ceux-çi. Les résultats de cette recherche montrent que l'implication d'Europlasma dans un processus d'entrepreneuriat durable lui permet d'espérer créer un nouvel espace de marché afin de dépasser l'impasse constituée par le fait de vouloir marquer de sa technologie d'avant garde le marché peut-être encore conservateur du traitement des déchets.
    Keywords: Strategie de rupture;rupture,innovation stratégique,déchet,entrepreneuriat durable;durable;
    Date: 2012–01–01

This nep-ent issue is ©2012 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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