nep-ent New Economics Papers
on Entrepreneurship
Issue of 2012‒05‒02
seven papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Effectiveness and Efficiency of SME Innovation Policy By Foreman-Peck, James
  2. Small Business Redefined: A Quasi-Linear Fuzzy Classification of Firm Size By Sasan Bakhtiari
  3. How bribery distorts firm growth : differences by firm attributes By Seker, Murat; Yang, Judy S.
  4. Innovation Barriers across Firms and Countries By Werner Hölzl; Jürgen Janger
  5. Economic growth and inequality patterns in the presence of costly technology adoption and uncertainty By Ziv Chinzara; Radhika Lahiri
  6. Geography and high-tech employment growth in U.S. counties By Fallah, Belal; Partridge, Mark
  7. Local Multipliers and Human Capital in the US and Sweden By Moretti, Enrico; Thulin, Per

  1. By: Foreman-Peck, James (Cardiff Business School)
    Abstract: This paper assesses UK innovation policy impact on a large, population weighted, sample of both service and manufacturing SMEs. By focussing on self-reported innovation the study achieves a wider coverage of the effects of SME innovation policy than possible with more traditional indicators. Propensity score matching indicates that SMEs receiving UK state support for innovation were more likely to innovate than unsupported comparable enterprises. Innovating enterprises are shown to have grown significantly faster over the years 2002-4 when other growth influences are appropriately controlled. Combining these two results and comparing the outlays on SME innovation policy with the estimated effects suggests that policy was efficient as well as effective. There is evidence that SME tax credits were expensive compared with earlier support instruments. But the overall high returns estimated suggest that, even in times of public spending cuts, persisting with SME innovation policy would be prudent.
    Keywords: Innovation; State Aid; SME; Policy Evaluation
    JEL: L25 R38
    Date: 2012–01
  2. By: Sasan Bakhtiari (School of Economics, The University of New South Wales)
    Abstract: The quasi-linear fuzzy modelling of Filev (1991) is used to estimate the relationship between the number of managers and employees in a firm. The results form the basis for the classification of firms into small and large businesses. Application to a data of Australian firms shows an evolution episode during which firms are driven by various transitional forces. The composition of the transition region suggests that the 2011 small business tax-break cap set by Australian Taxation Office falls short of fully supporting growth as intended. The implications pave the way for improvement to the business tax code aiming at growth and job creation.
    Keywords: fuzzy logic, small business, job creation, business taxation.
    JEL: C38 C61 D23 H25
    Date: 2012–04
  3. By: Seker, Murat; Yang, Judy S.
    Abstract: How corruption affects economic performance has been studied for over a decade. Yet the lack of detailed firm-level data has limited research regarding who is carrying the real burden of corruption. This study shows that for firms in the Latin America and Caribbean region, bribery significantly distorts firm growth. Firms that pay bribes when conducting business transactions -- such as applying for permits, electricity, or water connections -- have 24 percent lower annual sales growth than firms that do not face such solicitations. Moreover, these distortions are more severe for low-revenue-generating and young firms. Using the instrumental variables method, the authors show that these results are robust to different specifications and the use of different sub-samples.
    Keywords: Public Sector Corruption&Anticorruption Measures,E-Business,Microfinance,Corruption&Anticorruption Law,Access to Finance
    Date: 2012–04–01
  4. By: Werner Hölzl (WIFO); Jürgen Janger (WIFO)
    Abstract: This paper studies differences in the perception of innovation barriers between innovative and non-innovative firms for 18 EU countries. The countries are grouped by their distance to the technological frontier using Community Innovation Surveys for the years 2002-2004 and 2004-2006. The results show that non-innovators interested in innovation are much more likely to perceive barriers than non-innovators that are not interested in innovation activities. With regard to differences between country groups there is a clear indication that innovation barriers related to the availability of skilled labour, innovation partners and knowledge are more important for firms located in countries close to the frontier, while the opposite is true regarding the availability of external finance. Although the share of innovators decreases with the distance to the technological frontier, the share of barrier-related innovators increases. The results demonstrate the usefulness of the innovation barrier approach to understand the determinants of innovative activity at the firm level and to priority-setting within innovation policies.
    Keywords: Innovation barriers, Europe, innovation policy
    Date: 2012–04–25
  5. By: Ziv Chinzara (QUT); Radhika Lahiri (QUT)
    Abstract: We develop a stochastic endogenous growth model to explain the diversity in growth and inequality patterns and the non-convergence of incomes in transitional economies where an underdeveloped financial sector imposes an implicit, fixed cost on the diversification of idiosyncratic risk. In the model endogenous growth occurs through physical and human capital deepening, with the latter being the more dominant element. We interpret the fixed cost as 'learning by doing' cost for entrepreneurs who undertake risk in the absence of well developed financial markets and institutions that help diversify such risk. As such, this cost may be interpreted as the implicit returns foregone due to the lack of diversification opportunities that would otherwise have been available, had such institutions been present. The analytical and numerical results of the model suggest three growth outcomes depending on the productivity differences between the projects and the fixed cost associated with the more productive project. We label these outcomes as poverty trap, dual economy and balanced growth. Further analysis of these three outcomes highlights the existence of a diversity within diversity. Specifically, within the 'poverty trap' and 'dual economy' scenarios growth and inequality patterns differ, depending on the initial conditions. This additional diversity allows the model to capture a richer range of outcomes that are consistent with the empirical experience of several transitional economies.
    Keywords: Overlapping generations model, costly technology adoption, uncertainty, economic growth, inequality
    Date: 2012–03–19
  6. By: Fallah, Belal; Partridge, Mark
    Abstract: This paper investigates the role of geography in high-tech employment growth across U.S. counties. The geographic dimensions examined include industry cluster effects, urbanization effects, proximity to a research university, and proximity in the urban hierarchy. Growth is assessed for overall high-tech employment and for employment in various high-tech sub-sectors. Econometric analyses are conducted separately for samples of metropolitan and nonmetropolitan counties. Among our primary findings, we do not find evidence of positive localization or within-industry cluster growth effects, generally finding negative growth effects. We instead find evidence of positive urbanization effects and growth penalties for greater distances from larger urban areas. Universities also appear to play their primary role in creating human capital rather than knowledge spillovers for nearby firms. Quantile regression analysis confirms the absence of within-industry cluster effects and importance of human capital for counties with fast growth in high-tech industries.
    Keywords: High-tech industries; employment growth; regional growth
    JEL: O18
    Date: 2012
  7. By: Moretti, Enrico (Department of Economics); Thulin, Per (Swedish Entrepreneurship Forum)
    Abstract: We show that every time a local economy generates a new job by attracting a new business in the traded sector, a significant number of additional jobs are created in the non-traded sector. This multiplier effect is particularly large for jobs with high levels of human capital and for high tech industries. These findings are important for local development policies, as they suggest that in order to increase local employment levels, municipalities should target high tech employers with high levels of human capital.
    Keywords: Local multipliers; Local labor markets; Labor demand
    JEL: J23 R11 R12 R23
    Date: 2012–04–13

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