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on Entrepreneurship |
| By: | Färnstrand Damsgaard, Erika (National Institute of Economic Research); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)); Vasconcelos, Helder (Faculdade de Economia, Universidade do Porto) |
| Abstract: | Entrepreneurs face higher commercialization costs than incumbents. We show that this implies that entrepreneurs will choose more risky projects than incumbents, aiming to reduce their high expected marginal commercialization cost. However, entrepreneurs may select too safe projects from a social point of view, since they do not internalize the business stealing effect. We also show that commercialization support induces entrepreneurship but may lead to mediocre entrepreneurship by inducing entrepreneurs to choose less risky projects, whereas R&D support encourages entrepreneurship without affecting the type of entrepreneurship. Using Swedish patent citation data, we find empirical support for predictions of the model. |
| Keywords: | Entrepreneurship; Innovation; Start-ups; Ownership; Breakthrough; Quality |
| JEL: | G24 L10 L20 M13 O30 |
| Date: | 2012–09–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0926&r=ent |
| By: | Dawson, Christopher (Swansea University); de Meza, David Emmanuel (London School of Economics); Henley, Andrew (Aberystwyth University); Arabsheibani, Reza (Swansea University) |
| Abstract: | Extant evidence that the self-employed overestimate their returns by more than employees do is consistent with two mutually inclusive possibilities. Self-employment may generate optimism or optimists may be drawn to self-employment. This paper finds that employees who will be self-employed in the future overestimate their short-run financial wellbeing by more than those who never become self-employed. When actually self-employed they are even more optimistic. Employees aspiring to start their own business are also of above average optimism. Cross-sectional findings are therefore an amalgam of psychological disposition and environmental factors, as theory requires if optimism is to be a causal influence on entrepreneurship. |
| Keywords: | financial optimism, expectations, self-employment |
| JEL: | D84 M13 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6844&r=ent |
| By: | Fossen, Frank M. (Free University of Berlin); Büttner, Tobias J. M. (Technical University of Berlin) |
| Abstract: | We assess the relevance of formal education for the productivity of the self-employed and distinguish between opportunity entrepreneurs, who voluntarily pursue a business opportunity, and necessity entrepreneurs, who lack alternative employment options. We expect differences in the returns to education between these groups because of different levels of control. We use the German Socio-economic Panel and account for the endogeneity of education and non-random selection. The results indicate that the returns to a year of education for opportunity entrepreneurs are 3.5 percentage points higher than the paid employees’ rate of 8.1%, but 6.5 percentage points lower for necessity entrepreneurs. |
| Keywords: | returns to education, opportunity, necessity, entrepreneurship |
| JEL: | J23 J24 J31 I20 L26 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6819&r=ent |
| By: | Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Nabavi, Pardis (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Bazzazian , Navid (Strategy and Business Policy, HEC, Paris) |
| Abstract: | This paper analyzes how different innovation-strategies of incumbent firms affect the quantity and quality of their entrepreneurial spawning. Using a data set that comprises almost all patent applications by firms in Sweden for the period 1997-2008, we distinguishes between firms that are engaged in innovation activities persistently, occasionally and not at all. We do not find any statistically significant evidence that the chance of survival for a new firm can be linked back to the innovation strategy of the parent firm. In contrast, we provide strong evidence that employee start-ups from persistent innovators are more productive during the first five year on the market than other new ventures, everything else equal. |
| Keywords: | Patent; R&D; Spinoff; Productivity; Employment |
| JEL: | C23 O31 O32 |
| Date: | 2012–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0282&r=ent |
| By: | Iván Arribas (ERI-CES); Penélope Hernández (ERI-CES); Jose E. Vila (ERI-CES) |
| Abstract: | This paper analyzes the role played by two dimensions of entrepreneurs’ private social capital in the survival, growth and innovativeness of entrepreneurial service ventures: local size and preferential attachment degree. We build a bi-dimensional measure of social capital based on network models and a methodology to estimate this measure for any group of entrepreneurs. Based on a survey of service entrepreneurs who launched their business in the city of Shanghai, we show that roles played by each dimension are quite different. A large local size of the network increases the chances of survival of the new venture. However, the chance to become a dynamic venture is only related to entrepreneurs’ preferential attachment degree. This finding has relevant political and managerial implications. |
| Keywords: | social capital, networks, innovation, entrepreneurship |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:dbe:wpaper:0612&r=ent |
| By: | Dean Karlan (Economics Department, Yale University); Ryan Knight (School of Management, Yale University); Christopher Udry (Economics Department, Yale University) |
| Abstract: | Many basic economic theories with perfectly functioning markets do not predict the existence of the vast number of microenterprises readily observed across the world. We put forward a model that illuminates why financial and managerial capital constraints may impede experimentation, and thus limit learning about the profitability of alternative firm sizes. The model shows how lack of information about one’s own type, but willingness to experiment to learn one’s type, may lead to short-run negative expected returns to investments on average, with some outliers succeeding. To test the model we put forward first a motivating experiment from Ghana, and second a small meta-analysis of other experiments. In the Ghana experiment, we provide inputs to microenterprises, specifically financial capital (a cash grant) and managerial capital (consulting services), to catalyze adoption of investments and practices aimed towards enterprise growth. We find that entrepreneurs invest the cash, and take the advice, but both lead to lower profits on average. In the long run, they revert back to their prior scale of operations. The small meta analysis includes results from 18 other experiments in which either capital or managerial capital were relaxed, and find mixed support for this theory. |
| Keywords: | entrepreneurship; credit constraints; business training; consulting; managerial capital |
| JEL: | D21 D24 D83 D92 L20 M13 O12 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:1014&r=ent |
| By: | Iván Arribas (ERI-CES); Mariel Fornoni (Universidad Nacional de Mar del Plata); Jose E. Vila (ERI-CES) |
| Abstract: | Abstract: Purpose – The aim of this paper is to analyze the impact of an entrepreneur’s social capital on their access to information, and how such access improves the performance of their entrepreneurial project. Design/methodology/approach – A Structural Equations Model (SEM) is estimated and validated from a database including information from 282 Argentinean entrepreneurs who answered a questionnaire specifically designed for this research. The analysis of this model allowed us to determine the impact of dependent latent variables on the performance of the start-up. Findings – The performance of an entrepreneurial project depends on an entrepreneur’s access to finance, markets and information. Specific dimensions of social capital facilitate access to these resources: the relational dimension facilitates access to information; the resources dimension makes access to finance easier; the structural dimension helps the entrepreneur to access markets. Research limitations/implications – The sample is not large enough to analyze differences among specific types of entrepreneurial projects: for instance, the role of social capital in industrial and service entrepreneurship (activity sector), the differences between the federal capital, Buenos Aires, and the rest of the country (location), and between female and male entrepreneurs (gender). Originality/value - Our results help to understand which dimensions of an entrepreneur’s social capital facilitate access to information and how these specific dimensions enhance the performance of their project. Hence, this paper has managerial and policy implications for generation of dynamic entrepreneurial projects capable of becoming development drivers. |
| Keywords: | Entrepreneur, Social Capital, Information resources, Republic of Argentina |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:dbe:wpaper:0712&r=ent |
| By: | Iván Arribas (ERI-CES); Penélope Hernández (ERI-CES); Amparo Urbano Salvador (ERI-CES); Jose E. Vila (ERI-CES) |
| Abstract: | Purpose – The aim of this paper is to analyze the compatibility between entrepreneurial and social attitudes. Specifically, we analyze if subjects with a more developed economic entrepreneurial attitude exhibit a less social attitude. Design/methodology/approach – Our methodology integrates an economic experimental approach with a standard entrepreneurial intention questionnaire to analyze the interaction between entrepreneurial and social self-perceptions and behavior. Findings – There is empirical evidence that experimental entrepreneurial behavior (characterized by detecting an opportunity and accepting risk to take an economic advantage from it in laboratory experiments) reduces the incentive for social behavior. However, this effect does not appear if just self-perceptions instead of experimental behaviors are considered. Research limitations/implications – The social attitude of entrepreneurs may be overestimated in those empirical research studies based only on data obtained from entrepreneurs’ answers to hypothetical questions in a survey. Originality/value - To the best of our knowledge, this is the first paper presenting a laboratory experiment to represent the key features of entrepreneurial behavior instead of a case-control analysis to set differences in the experimental behavior of sub-samples of subjects defined in terms of their entrepreneurial motivation or experience. |
| Keywords: | Social entrepreneur, experimental behavioral economics, risk |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:dbe:wpaper:0512&r=ent |
| By: | Kevin Levillain (CGS - Centre de Gestion Scientifique - Mines ParisTech); Blanche Segrestin (CGS - Centre de Gestion Scientifique - Mines ParisTech) |
| Abstract: | Social Entrepreneurship causes increasing debate in the literature and represents a growing enigma for theories of the firm. Beyond the divergences in its definitions, we show that its mission to create "social value" is an identifiable common feature that cannot be satisfactorily described within the main existing theories. Indeed, social entrepreneurship is, by definition, inconsistent with the shareholder primacy advocating for the too narrow only objective of shareholder profit maximization. But it departs also from stakeholder views that focus on the survival of the firm by aligning its interests with discrepant and "overbroad" crucial stakeholders. Outwardly oriented missions in fact necessitate forgetting the dominant "principal-agent"-like settings, even if principals might be carefully and rightfully chosen. We support our arguments with the study of two empirical cases that are successful long-lasting businesses related to social entrepreneurship: John Lewis Partnership and Equal Exchange. These companies have built pioneering custom-made governance systems - ensuring both performance and social fairness - that dispense with standard implicit hypotheses: their clearly explicit mission identifies "beneficiaries" that are distinct from crucial stakeholders, financial contributors, and principals. Instead, the mission becomes a pivotal attribute to explain and design these organisations' structure and mechanisms. Consequently, we delineate three main theoretical and managerial implications of revealing this mission: it lends a strong legitimacy to the directors and officers by clearly defining the boundaries of their discretion, it specifies and justifies the participants' engagement in the management authority, and it calls for new control mechanisms that are fundamentally different from the monitoring systems of principal-agent relationships. Thus our model clarifies the firms' boundaries and escapes the traditional stakeholders' conflicts of interest. We postulate that this model opens an interesting field for future research, both on social and conventional entrepreneurship, and may entail a deep change in managerial and governance techniques that may have reached a dead-end in the recent economic crisis. |
| Keywords: | Social Entrepreneurship; Social purpose; Corporate Governance; Management Discretion |
| Date: | 2012–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00733413&r=ent |
| By: | Ghani, Ejaz; Kerr, William R.; O'Connell, Stephen D. |
| Abstract: | Policy makers in both developed and developing countries want to make cities more competitive, attract entreprepreneurs, boost economic growth, and promote job creation. The authors examine the spatial location of entrepreneurs in India in manufacturing and services sectors, as well as in the formal and informal sectors, in 630 districts spread across 35 states/union territories. They quantify entrepreneurship as young firms that are less than three years old, and define entry measures through employment in these new establishments. They develop metrics that unite the incumbent industrial structures of districts with the extent to which industries interact through the traditional agglomeration channels. The two most consistent factors that predict overall entrepreneurship for a district are its education and the quality of local physical infrastructure. These patterns are true for manufacturing and services. These relationships are much stronger in India than those found for the United States. The authors also find strong evidence of agglomeration economies in India's manufacturing sector. This influence is through both traditional Marshallian economies like a suitable labor force and proximity to customers and through the Chinitz effect that emphasizes small suppliers. India's footprints in structural transformation, urbanization, and manufacturing sector are still at an early stage. At such an early point and with industrial structures not yet entrenched, local policies and traits can have profound and lasting impacts by shaping where industries plant their roots. |
| Keywords: | Microfinance,Labor Markets,Labor Policies,Private Participation in Infrastructure,Small Scale Enterprise |
| Date: | 2012–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6198&r=ent |
| By: | McKenzie, David; Woodruff, Christopher |
| Abstract: | Business training programs are a popular policy option to try to improve the performance of enterprises around the world. The last few years have seen rapid growth in the number of evaluations of these programs in developing countries. This paper undertakes a critical review of these studies with the goal of synthesizing the emerging lessons and understanding the limitations of the existing research and the areas in which more work is needed. It finds that there is substantial heterogeneity in the length, content, and types of firms participating in the training programs evaluated. Many evaluations suffer from low statistical power, measure impacts only within a year of training, and experience problems with survey attrition and measurement of firm profits and revenues. Over these short time horizons, there are relatively modest impacts of training on survivorship of existing firms, but stronger evidence that training programs help prospective owners launch new businesses more quickly. Most studies find that existing firm owners implement some of the practices taught in training, but the magnitudes of these improvements in practices are often relatively modest. Few studies find significant impacts on profits or sales, although a couple of the studies with more statistical power have done so. Some studies have also found benefits to microfinance organizations of offering training. To date there is little evidence to help guide policymakers as to whether any impacts found come from trained firms competing away sales from other businesses versus through productivity improvements, and little evidence to guide the development of the provision of training at market prices. The paper concludes by summarizing some directions and key questions for future studies. |
| Keywords: | Financial Literacy,Primary Education,Access&Equity in Basic Education,Education For All,Competitiveness and Competition Policy |
| Date: | 2012–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6202&r=ent |
| By: | Eugene Mazur |
| Abstract: | This report aims to help environmental and other competent authorities in OECD countries to promote green business practices among small and medium-sized enterprises (SMEs). It analyses different ways to establish environmental regulatory requirements for facilities with low environmental risk (most of which are SMEs). It also examines how to design and apply information and market-based tools to promote compliance with such requirements and adoption of cleaner technologies and good environmental management practices. The report suggests several ways to increase the effectiveness of these promotion tools with respect to the SME community.<P> The report addresses the roles of environmental authorities, local governments, business organisations and financial institutions in the greening of small businesses. It reviews in detail the experience of France, Ireland, Korea, the Netherlands and the UK (England and Wales and Scotland) and draws on examples of several other countries. |
| Keywords: | SMEs, green growth, environmental authorities, environmental compliance |
| JEL: | K32 K42 L53 M48 O44 O57 Q58 |
| Date: | 2012–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:oec:envaaa:47-en&r=ent |
| By: | Chahim, M.; Grass, D.; Hartl, R.F.; Kort, P.M. (Tilburg University, Center for Economic Research) |
| Abstract: | Abstract: This paper considers a firm that has the option to undertake product innovations. For each product innovation the firm has to install a new production plant. We find that investments are larger and occur in a later stadium when more of the old capital stock needs to be scrapped. Moreover, we obtain that the firm’s investments increase when the technology produces more profitable products. We see that the firm in the beginning of the planning period adopts new technologies faster as time proceeds, but later on the opposite happens. Furthermore, we find that the firm does not invest such that marginal profit is zero, but instead marginal profit is negative. Moreover, we find that if the time it takes to double the efficiency of technology is larger than the time it takes for the capital stock to depreciate, the firm undertakes an initial investment. Finally, we show that when demand decreases over time and when fixed investment cost is higher, that the firm invests less throughout the planning period, the time between two investments increases and that the first investment is delayed. |
| Keywords: | Impuls Control Maximum Principle;Optimal Control;discrete continuous system;state-jumps;product innovation;retrofitting. |
| JEL: | C61 D90 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2012074&r=ent |
| By: | Gindling, T. H.; Newhouse, David |
| Abstract: | This paper analyzes heterogeneity among the self-employed in 74 developing countries, representing two-thirds of the population of the developing world. After profiling how worker characteristics vary by employment status, it classifies self-employed workers outside agriculture as"successful"or"unsuccessful"entrepreneurs, based on two measures of success: whether the worker is an employer, and whether the worker resides in a non-poor household. Four main findings emerge. First, jobs exhibit a clear pecking order, with household welfare and worker education highest for employers, followed by wage and salaried employees, non-agricultural own-account workers, non-agricultural unpaid family workers, and finally agricultural workers. Second, a substantial minority of own-account workers reside in non-poor households, suggesting that their profits are often a secondary source of household income. Third, as per capita income increases, the structure of employment shifts rapidly, first out of agriculture into unsuccessful non-agricultural self-employment, and then mainly into non-agricultural wage employment. Finally, roughly one-third of the unsuccessful entrepreneurs share similar characteristics with their successful counterparts, suggesting they have the potential to be successful but face constraints to growth. The authors conclude that although interventions such as access to credit can benefit a substantial portion of the self-employed, effectively targeting the minority of self-employed with higher growth potential is important, particularly in low-income contexts. The results also highlight the potential benefits of policies that facilitate shifts in the nature of work, first from agricultural labor into non-agricultural self-employment, and then into wage and salaried jobs. |
| Keywords: | Income,Labor Markets,Skills Development and Labor Force Training,Economic Theory&Research,Rural Poverty Reduction |
| Date: | 2012–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6201&r=ent |
| By: | Catherine L. Mann (International Business School, Brandeis University) |
| Abstract: | Start-up firms are a key feature of the U.S. econoomy. Annually, start-ups account for about 20 percent of all companies. On average, they create 3 million jobs per year, somewhat more than 5 percent of total job creation. But, by 2009, in the depths of the Great Recession, the rate of job creation at start-ups has fallen significantly, to about 2 million jobs per year, as a result of fewer start-ups and/or fewer jobs at each start-up. Although job creation at start-ups should increase as the economy recovers, it is worth asking whether the financial crisis will have a lasting effect. |
| Keywords: | Start-up, job creation, jobs, financial crisis |
| JEL: | G32 L26 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:bui:rosgfb:03&r=ent |