nep-ent New Economics Papers
on Entrepreneurship
Issue of 2012‒10‒20
thirteen papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Business Training and Female Enterprise Start-Up, Growth, and Dynamics: Experimental Evidence from Sri Lanka By de Mel, Suresh; McKenzie, David; Woodruff, Christopher
  2. The financing of young firms. How persistent are borrowing constraints? By Erik Fjærli and Diana Iancu
  3. Cant We All Be More Like Scandinavians? Asymmetric Growth and Institutions in an Interdependent World By Daron Acemoglu; James A. Robinson; Thierry Verdier
  4. Innovation and Exports of German Business Services Enterprises: First evidence from a new type of firm data By Vogel , Alexander; Wagner, Joachim
  5. What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World? By McKenzie, David; Woodruff, Christopher
  6. X-Efficiency of Innovation Processes: Concept and Evaluation based on Data Envelopment Analysis By Herimalala, Rahobisoa; Gaussens, Olivier
  7. Financing from Family and Friends By Lee, Samuel; Persson, Petra
  8. Teaching Entrepreneurship in sub-Saharan Africa – Quo Vadis? By Johan venter
  9. Youth and poverty alleviation: Empowering the youth in Egypt By Dina El Kayaly
  10. Enterprise architecture management for small and medium sized enterprises: a case study and tool support By M. BERNAERT; D. VAN DEN POEL
  11. De la société des entrepreneurs à la société entrepreneuriale. Essai sur l’analyse de la fonction de l’entrepreneur dans la dynamique économique FROM THE SOCIETY OF ENTREPRENEURS TO THE ENTREPRENEURIAL SOCIETY. ESSAY ANALYZING THE ENTREPRENEURIAL FUNCTION IN THE ECONOMIC DYNAMICS OF TODAY By Sophie BOUTILLIER; Dimitri UZUNIDIS
  12. La création d’entreprises dans l’agglomération dunkerquoise (Nord - France). La force des liens faibles ? BUSINESS CREATION IN DUNKIRK (NORTH – FRANCE) THE STRENGTH OF WEAK TIES? By Sophie BOUTILLIER
  13. L’entreprise innovante, un symbole pour son créateur By Jean Bonnet; Thomas Brau

  1. By: de Mel, Suresh (University of Peradeniya); McKenzie, David (World Bank); Woodruff, Christopher (University of Warwick)
    Abstract: We conduct a randomized experiment in Sri Lanka to measure the impact of the most commonly used business training course in developing countries, the Start-and-Improve Your Business (SIYB) program. In contrast to existing business training evaluations which are restricted to microfinance clients, we consider two more representative groups: a random sample of women operating subsistence enterprises, and a random sample of women who are out of the labor force but interested in starting a business. Both samples are randomized into three groups: a control group, a group invited to attend training, and a group invited to receive training and who receive a cash grant conditional on completing training. We track impacts over four rounds of follow-up surveys taken over two years and find that the short- and medium-term impacts differ. For women already in business, we find that although training alone leads to some changes in business practices, it has no impact on business profits, sales or capital stock. In contrast the combination of training and a grant leads to large and significant improvements in business profitability in the first eight months, but this impact dissipates in the second year. For women interested in starting enterprises, we find that business training speeds up the process of opening a business, and changes the selection of who operates a business by making the entrants less analytically skilled, but leads to no increase in net business ownership by our final survey round. Receiving a grant results in poorer women opening businesses, but again does not increase net business ownership. Training appears to have increased the profitability and business practices of the businesses started up, suggesting it may be more effective for new owners than for enhancing existing businesses.
    Keywords: business training, female self-employment, randomized experiment, business start-up, trajectory of treatment effects
    JEL: O12 J16 L26 M53
    Date: 2012–10
  2. By: Erik Fjærli and Diana Iancu (Statistics Norway)
    Abstract: Are investments by new firms constrained by access to financing? If so, are the constraints persistent or do firms overcome their financing problems during the first years of operation? We examine the role of capital constraints by estimating the relation between founders’ initial wealth and firm size during the first years of operation. Similar to previous studies, we find a positive impact of entrepreneurs’ wealth prior to start-up on the start-up size of entrepreneurial firms, but this effect decreases during the first five years of operation. We also document a high degree of economic mobility among entrepreneurial firms during the first years of operation. This is primarily driven by a disproportional increase in debt financing among the smallest firms, indicating that capital constraints for entrepreneurs are transitory.
    Keywords: Entrepreneurship; borrowing constraints; growth
    JEL: L11
    Date: 2012–10
  3. By: Daron Acemoglu; James A. Robinson; Thierry Verdier
    Abstract: Because of their more limited inequality and more comprehensive social welfare systems, many perceive average welfare to be higher in Scandinavian societies than in the United States. Why then does the United States not adopt Scandinavian-style institutions? More generally, in an interdependent world, would we expect all countries to adopt the same institutions? To provide theoretical answers to this question, we develop a simple model of economic growth in a world in which all countries benefit and potentially contribute to advances in the world technology frontier. A greater gap of incomes between successful and unsuccessful entrepreneurs (thus greater inequality) increases entrepreneurial effort and hence a country’s contribution to the world technology frontier. We show that, under plausible assumptions, the world equilibrium is asymmetric: some countries will opt for a type of “cutthroat capitalism” that generates greater inequality and more innovation and will become the technology leaders, while others will free- ride on the cutthroat incentives of the leaders and choose a more cuddly form of capitalism. Paradoxically, those with cuddly reward structures, though poorer, may have higher welfare than cutthroat capitalists; but in the world equilibrium, it is not a best response for the cutthroat capitalists to switch to a more cuddly form of capitalism. We also show that domestic constraints from social democratic parties or unions may be beneficial for a country because they prevent cutthroat capitalism domestically, instead inducing other countries to play this role.
    JEL: O33 O40 P10 P16
    Date: 2012–10
  4. By: Vogel , Alexander (Leuphana University Lueneburg); Wagner, Joachim (Leuphana University Lueneburg and IZA, Bonn)
    Abstract: This paper contributes to the literature by providing the first evidence on the link between innovation activities (measured by the share of engineers and scientists in the workforce) and exports of German business services firms based on a large representative longitudinal sample of enterprises. The data combine for the first time information at the firm-level that is taken from data produced by the Statistical Offices and by the Federal Labour Agency. We document that R&D activities are positively linked with exports, and that this link is present when observed firm characteristics (including firm size, productivity, and human capital intensity) and unobserved time-invariant firm characteristics are controlled for. From an economical point of view the effect is, however, rather small. Furthermore, we find some evidence for self-selection of innovative services firms on export markets. We have to admit, however, that the panel is too short, and that the number of firms that start to export and start to perform R&D during the period under investigation is too small, for any convincing attempt to investigate the direction of the causal link between exports and innovation activities.
    Keywords: Innovation; export; business services; Germany
    JEL: F14
    Date: 2012–10–11
  5. By: McKenzie, David (World Bank); Woodruff, Christopher (University of Warwick)
    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. We undertake 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. We find 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. We conclude by summarizing some directions and key questions for future studies.
    Keywords: business training, consulting, randomized experiments, firm productivity
    JEL: O12 J16 L26 M53
    Date: 2012–10
  6. By: Herimalala, Rahobisoa; Gaussens, Olivier
    Abstract: This paper investigates X-(in)efficiency of innovation processes in Small and Medium-sized Enterprises (SMEs). We have adopted the following approach: (a) we provide both a concept of X-(in)efficiency and a model of innovation processes for each SME; (b) from this model we evaluate both the dimensions of the innovation processes and the X-(in)efficiency of these processes using a variant of the Data Envelopment Analysis (DEA) model; (c) finally, we characterize X-inefficiency by using techniques of exploratory analysis derived from an empirical analysis. Our approach has been applied to regional SMEs in Normandy (France) with a representative random sample of 80 innovative businesses. The results show the existence of X- inefficiency in the innovation processes of SMEs in 71% of cases. This X-inefficiency arises primarily from the difficulties that entrepreneurs face in implementing the interacting rules and standards of exploitation and exploration activities.
    Keywords: Data Envelopment Analysis; Multiple Projections; X-Efficiency; Innovation Process
    JEL: D0 C43 Q55 O32 C67
    Date: 2012–10
  7. By: Lee, Samuel (Stern School of Business); Persson, Petra (Research Institute of Industrial Economics (IFN))
    Abstract: The constraint on informal finance is commonly taken to be high costs and limited supply. But the majority of informal investors – family and friends – is often willing to supply funds at negative returns, and yet many borrowers tap family and friends only as a last resort. We explain this paradox with a theory based on altruistic ties between the entrepreneur and his family and friends, and propose an alternative explanation of the limits of informal finance: Altruistic ties reduce agency problems in financing. But such ties also increase the entrepreneur’s aversion to failure. This makes financing from family and friends unattractive, and undermines the entrepreneur’s willingness to take risks. Altruistic ties thus constrain growth even though they relax financing constraints. We relate this insight to the limited success of group-based microfinance in generating entrepreneurial growth. Our theory underscores the value of impersonal transactions, and implies that even counterparties with social ties benefit from formal contracts and third-party intermediation. This sheds light on social-formal financial institutions, such as community funds, crowd funding, and social lending intermediaries.
    Keywords: Informal finance; Family loans; Social ties; Altruism; Peer-to-peer lending; Small business;
    JEL: D19 D64 G21 G32 O16 O17
    Date: 2012–10–11
  8. By: Johan venter (Maastricht School of Management, the Netherlands)
    Abstract: This paper explores approaches to entrepreneurship training and education based on the experiences of interventions by institutes of higher education in sub-Saharan Africa (South Africa, Tanzania and Zambia). The paper explores such approaches against the nature of labour market demands in Africa, notably abject poverty and a paucity of job opportunities for especially the youth, notwithstanding commendable economic growth figures for many countries. Achievements and pitfalls were abounding. It would seem however from the experience of the initiatives, a clear and focused approach to entrepreneurship training has the potential to deliver results. Foremost is the acknowledgement of certain targeted groups such as rural communities, women and especially the youth, all with their particular and sometimes unique needs. Thereafter the issues of Business Development Services (BDS), infusing entrepreneurship training and blended learning, and their particular pedagogical and approaches, should be carefully considered.
    Date: 2012–09
  9. By: Dina El Kayaly (Enrolled for DBA Maastricht School of Management – Netherland; research areas: Market Research, Market Research Methodologies, Market Research Applications, Enterpreneurnship, Poverty. E-mail
    Abstract: Purpose – The purpose of this paper is to determine the major long-term role that entrepreneurship could play in poverty alleviation and job creation in Egypt. This is done against a background of low deployment of entrepreneurship among Egyptian youth. Design/methodology/approach – The paper uses desk research and qualitative analysis depending on industry experts’ interviews collected in Egypt. Findings – The poverty map issued in 2009 by the Ministry of Economic Development indicated that the number of poorest villages has reached 1141 and most of them are concentrated in rural areas of Upper Egypt. The official poverty alleviation measures / program and the efforts of the NGOs helped some of the poor in the short term. While the entrepreneurship education and training could give poor SMEs’ owners opportunities to break the poverty cycle to them as well as to others. Practical implications – As shown by the findings of the study there is an opportunity for growth for SMEs in many areas in Egypt. Educating and training entrepreneurs and other poor persons with potentials could open their eyes to opportunities around them and encourage them to improve their economic situation and maybe participate in job creation to others on the long-term. Originality/value – It highlights the shortcomings of the current poverty alleviation strategy in Egypt. It also highlights the need for youth empowerment as they represent the hope for Egypt.
    Keywords: Entrepreneurs, Poverty, Empowerment, Disadvantaged groups, Egypt.
    Date: 2012–09
    Abstract: Enterprise architecture (EA) is used as a holistic approach to keep things aligned in a company. Some emphasize the use of EA to align IT with the business, others see it broader and use it to also keep the processes aligned with the strategy. Enterprise architecture management (EAM) enables companies to keep up with a rapidly changing business environment. Although a lot of research is being done on EA and EAM, still hardly anything is known about their use in the context of a small and medium sized enterprise (SME). Because of some specific characteristics of SMEs, it is interesting to look how EA and its management can be applied in a SME. In this paper, the authors present an approach for EA and EAM for SMEs, which combines four dimensions to get a holistic overview, while keeping things aligned. The approach is developed with special attention towards the characteristics of SMEs. A case study in a Belgian SME is used to ground and apply the presented approach. With this case study, the authors show how EA can be applied and managed in a SME. A tool is presented which can be used to implement the approach. The tool enables the EA model to be developed, to be kept up-to-date, and to be used to make analyses.
    Keywords: Enterprise architecture management Small and medium sized enterprises Business architecture CHOOSE
    Date: 2012–05
  11. By: Sophie BOUTILLIER (Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO); Dimitri UZUNIDIS (Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO)
    Abstract: Le capitalisme se transforme en permanence. Depuis le début des années 1980, la société entrepreneuriale a émergé. L’emploi salarié reste dans les économies développées la forme principale d’emploi, mais l’emploi devient plus précaire (travail intérimaire, contrat de travail à durée déterminée, augmentation du chômage, etc.). D’un autre côté, la création d’entreprise est conçue dans le cadre de politiques économiques comme un moyen de créer des emplois, d’innover ou de créer une activité économique dans des régions en déclin. L’objet de ce document est de présenter les caractéristiques de la société entrepreneuriale à partir de la situation de l’économie française, mais aussi de l’agglomération dunkerquoise toute à fait caractéristique sur le sujet en raison de lourd passé industriel. Capitalism changes continuously. Since the beginning of the 1980s the entrepreneurial society has emerged. In developed countries salaried employment is still the main form of employment, but it has become more precarious, due to factors such as an increase in unemployment, temporary employment, fixed-term contracts, etc. On the other hand new business start-ups are now understood by politicians as constituting a tool for job creation, innovation, and the redevelopment of areas in crisis. The aim of this paper is to describe some of the characteristics of this new entrepreneurial society, taking examples from the French economy in general, but also from the Dunkirk area, which forms a good example because of its industrial past and the changes which are taking place.
    Keywords: innovation, entrepreneur, société des entrepreneurs, société entrepreneuriale
    JEL: L26 O31
    Date: 2012–01
  12. By: Sophie BOUTILLIER (Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO)
    Abstract: L’objectif de cet article est de présenter les résultats d’une enquête réalisée en 2011 auprès des nouveaux entrepreneurs dunkerquois. Cette enquête s’inscrit dans la durée puisqu’elle fait suite à une série d’enquêtes menée depuis 1993 par le Lab.RII. 80 nouveaux entrepreneurs ont été interrogés. Ils ont créé leur entreprise entre 2008 et 2011. L’objectif était de définir leur potentiel de ressources (un ensemble de ressources qu’ils valorisent pour créer leur entreprise : connaissances, ressources financières et réseau de relations sociales). L’analyse du réseau de relations sociales s’appuie sur l’analyse de Granovetter. Nous avons distingué les liens forts (famille, amis, collègues de travail, banques, etc.) des liens faibles (institutions d’aide à la création d’entreprise, banques, Chambre de commerce, etc.). Dans une agglomération ouvrière, comme Dunkerque, à faible tradition entrepreneuriale, la force des liens fiables se vérifie. Les institutions publiques apportent aux entrepreneurs les ressources qui leur manquent. The aim of this article is to present the results of case study achieved in 2011 on the new entrepreneurs in the city of Dunkrik (North of France). This research is a part of in a long term study which has been managed by the Lab.RII since 1993. 80 entrepreneurs have been interviewed. They have created their enterprise between 2008 and 2011. The objective was to define their resources potential (a set of resources that they valorized to create their enterprise: knowledge, financial resources and social networks). The analysis of the social network is based on the Granovetter’s approach. We have distinguished “strong ties” (family, friends, colleagues and so on) and “weak ties” (agencies to support creation of enterprises, board of trade, banks, and so on). In a working-class town, like Dunkirk, characterized by a poor entrepreneurial tradition, the theory of “strength of weak ties” is verified. Public institutions supply the entrepreneurs with the resources they lack.
    Keywords: entrepreneur, territoire, attractivité
    JEL: H7 L26
    Date: 2012–06
  13. By: Jean Bonnet (University of Caen Basse-Normandie - CREM UMR CNRS 6211, France); Thomas Brau (Docteur en Sciences Economiques, chargé de mission)
    Abstract: Highlighting that the new innovative company is a symbol has the advantage to characterize in a simple way the complex psychological operations among the entrepreneurs. Despite this advantage this field of investigation has not been explored in entrepreneurship. To fill the gap this article shows that the symbol exists and discloses a form of control of the environment that have existed in last jobs of the creator in four areas: creativity, intellectual stimulation, variety and altruism.
    Keywords: entrepreneurship, socioeconomic challenges, education, sustainability, regulation
    JEL: L26 D87 D89
    Date: 2012–10

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