nep-ent New Economics Papers
on Entrepreneurship
Issue of 2012‒07‒01
five papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. University Innovation, Local Economic Growth, and Entrepreneurship By Naomi Hausman
  2. Growth Through Heterogeneous Innovations By Ufuk Akcigit; William R. Kerr
  3. Information Technology Intensity, Diffusion, and Job Creation By Catherine L. Mann
  4. The risks of innovation : are innovating firms less likely to die ? By Fernandes, Ana M.; Paunov, Caroline
  5. Agglomerative Forces and Cluster Shapes By William R. Kerr; Scott Duke Kominers

  1. By: Naomi Hausman
    Abstract: Universities, often situated at the center of innovative clusters, are believed to be important drivers of local economic growth. This paper identifies the extent to which U.S. universities stimulate nearby economic activity using the interaction of a national shock to the spread of innovation from universities - the Bayh-Dole Act of 1980 - with pre-determined variation both within a university in academic strengths and across universities in federal research funding. Using longitudinal establishment-level data from the Census, I find that longrun employment and payroll per worker around universities rise particularly rapidly after Bayh-Dole in industries more closely related to local university innovative strengths. The impact of university innovation increases with geographic proximity to the university. Counties surrounding universities that received more pre-Bayh-Dole federal funding - particularly from the Department of Defense and the National Institutes of Health - experienced faster employment growth after the law. Entering establishments - in particular multi-unit firm expansions - over the period from 1977 to 1997 were especially important in generating long-run employment growth, while incumbents experienced modest declines, consistent with creative destruction. Suggestive of their complementarities with universities, large establishments contributed more substantially to the total 20-year growth effect than did small establishments.
    Keywords: CES,economic,research,micro,data,microdata, clusters, innovation, local economic growth, universities
    Date: 2012–06
  2. By: Ufuk Akcigit; William R. Kerr
    Abstract: We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multiproduct firms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with firm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and growth differences across the firm size distribution. We also incorporate patent citations into our theoretical framework. The framework generates a simple test using patent citations that indicates that entrants and small firms have relatively higher growth spillover effects.
    Keywords: CES,economic,research,micro,data,microdata,endogenous growth, innovation, exploration, exploitation, research and development, patents, citations, scientists, engineers
    JEL: O31 O33 O41 L16
    Date: 2012–06
  3. By: Catherine L. Mann (International Business School, Brandeis University)
    Abstract: Using the detailed Statistics of US Business and the Annual Input-Output accounts, this paper addresses the employment dynamics of establishments of different sizes, in different sectors, and of different intensity of use of information technology hardware, software and IT-services over the time period 2001 to 2009. Findings include (1): IT-using sectors that are above-average in IT-intensity started out being three times more IT-intensive and ended up being more than four-times the IT-intensity as the below-average using sectors. Hence, there is widening dispersion in IT-intensity across sectors in the US economy. (2) IT producers are a small part of the economy, only about 3% of employment. However, IT-software and services establishments have tended to add jobs on net, particularly at smaller establishments (size 1-99 employees). This suggests that IT again is the hot-bed of entrepreneurship. (3) Small IT-intensive service establishments account for only about 5% of overall employment. However, net job creation at these small-IT-intensive using establishments accounted for between 13% and 68% of the economy-wide net job change from 2001 to 2009. Entrepreneurship in these IT-using services appears to be promoted by the availability of IT-software and IT-services themselves. (4) Establishments that use IT-intensively both in the manufacturing and services sectors, expand and contract employment over the business cycle relatively more than non-IT-intensive manufacturing and service establishments. This employment management strategy is more dramatic for manufacturing than for services. (5) Three approaches to quantifying the direct and indirect gains to the US economy of lower IT prices and increased IT-intensity add up to between $810 and $935 billion for the five years considered 2002-2007. Including IT-services such as computer design, yields a ball-park round $1 trillion as reasonable figure for the gain to the US economy of broad-based use of information technology hardware, software and IT-services for the mid-decade 2000s five-year time period.
    Keywords: Information technology, Social surplus, Startups, Small business
    Date: 2012–03
  4. By: Fernandes, Ana M.; Paunov, Caroline
    Abstract: While innovation is a source of competitiveness, it may expose plants to survival risks. Using a rich set of plant-product data for Chilean manufacturing plants during the period 1996-2006 and discrete-time hazard models controlling for unobserved plant heterogeneity, this paper shows that innovating plants have higher survival odds. However, risk plays an important role for the innovation-survival link: only innovators that retain diversified sources of revenues survive longer. Single-product innovators are at greater risk of exiting. In addition, only innovators facing lower market risk, measured by fewer innovative competitors, low-pricing strategies, or lower sales volatility in the new products'markets, see their odds of survival increase significantly. Technical risk, measured by the proximity of product innovations to the plants'past expertise, the degree of sophistication of new products, or their novelty to the Chilean market, does not play a substantial role in the innovation-survival link. Engaging in risky innovation is not an irrational decision, since plants reap big payoffs -- higher productivity, employment and sales growth -- from such innovations. However, those payoffs are not always higher than those from cautious innovation, suggesting that constraining factors, such as credit constraints, force plants to take on more risk when innovating. An implication of the findings for industry dynamics is that among innovators, only the survival of cautious innovators is guaranteed. Since engaging in cautious innovation may not be feasible for all plants, there could be a role for policy in reducing innovators'exposure to risks and providing assistance to deal with failed innovations, while setting the right incentives.
    Keywords: Labor Policies,E-Business,Markets and Market Access,Innovation,Knowledge for Development
    Date: 2012–06–01
  5. By: William R. Kerr; Scott Duke Kominers
    Abstract: We model spatial clusters of similar firms. Our model highlights how agglomerative forces lead to localized, individual connections among firms, while interaction costs generate a defined distance over which attraction forces operate. Overlapping firm interactions yield agglomeration clusters that are much larger than the underlying agglomerative forces themselves. Empirically, we demonstrate that our model’s assumptions are present in the structure of technology and labor flows within Silicon Valley and its surrounding areas. Our model further identifies how the lengths over which agglomerative forces operate influence the shapes and sizes of industrial clusters; we confirm these predictions using variations across both technology clusters and industry agglomeration.
    Keywords: CES,economic,research,micro,data,microdata, agglomeration, clusters, industrial organization, Silicon Valley, entrepreneurship, labor markets, technology flows, patents, natural advantages
    JEL: J2 J6 L1 L2 L6 O3 R1 R3
    Date: 2012–06

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