nep-ent New Economics Papers
on Entrepreneurship
Issue of 2012‒10‒27
fourteen papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Start-Up Size Strategy: Risk Management and Performance By André van Stel; Andrew Burke; José Maria Millan; Concepcion Roman
  2. R&D, Worker Training, and Innovation: Firm-level evidence By Xulia González; Daniel Miles-Touya; Consuelo Pazó
  3. The Risk of growing fast: does fast growth have a negative impact on the survival rates of firms? By Jan de Kok; Haibo Zhou; Chantal Hartog; Peter van der Zwan
  4. Investigating the impact of the technological environment on survival chances of employer entrepreneurs By André van Stel; José Maria Millan; Concepcion Roman
  5. Disentangling the effects of organizational capabilities, innovation and firm size on SME sales growth By André van Stel; Lorraine Uhlaner; Haibo Zhou; Valerie Duplat
  6. The role of local and newcomer entrepreneurs in rural development: A comparative meta-analytic study By Gulumser, A.A.; Baycan Levent, T.; Nijkamp, P.; Poot, H.J.
  7. Do firm size and firm age affect employee remuneration in Dutch SMEs? By Jan de Kok
  8. Evolution of the venture capital financing for growing small and medium enterprises in Central and Eastern Europe countries: the case of Macedonia By Lazarevski, Dimche; Mrsik, Jadranka; Smokvarski, Edi
  9. What explains big gender disparities in India ? local industrial structures and female entrepreneurship By Ghani, Ejaz; Kerr, William R.; O'Connell, Stephen D.
  10. Credit constraints and exports: Evidence for German manufacturing enterprises By Wagner, Joachim
  11. Promoting SME development in Indonesia By Annabelle Mourougane
  12. Employee motivation – a guide for entrepreneurs: managing people By Bundaleska, Elena
  13. Determinantes de la capacidad de innovación en Pymes regionales By Carlos M. Jardón
  14. Il sistema delle piccole e medie imprese e il «modello Emilia» By Alberto Rinaldi

  1. By: André van Stel; Andrew Burke; José Maria Millan; Concepcion Roman
    Abstract: Start-up size is a key strategic decision for entrepreneurs. Should entrepreneurs start up close to minimum efficient scale or should they take less risks and start-up on a smaller scale? Previously, this strategic decision appeared to be one of simply making a choice between a higher risk/reward larger start-up versus a lower risk/reward smaller scale start-up. However, recent research on the relationship between risk management and performance (Burke, 2009) indicates that in situations of greater uncertainty and where innovation is incremental, a lower risk small start-up size can enable greater reward through enhanced post start-up flexibility and agility. In this paper we provide the first statistical test of the efficacy of start-up size strategies. We focus on employer businesses that provide jobs. We find that employer businesses that originally adopted a small scale (own-account) start-up strategy have higher survival chances and entrepreneurial incomes than employer businesses that employed personnel immediately from start-up. We also find that prior entrepreneurial experience positively affects firm survival and entrepreneurial incomes. Given the high failure rates among start-ups and the associated difficulty for new enterprises to create sustainable jobs, the research results highlight how strategic choice in relation to firm start-up size and risk management can have an important bearing on new venture performance.
    Date: 2012–08–29
  2. By: Xulia González; Daniel Miles-Touya; Consuelo Pazó
    Abstract: This paper analyzes the effects of R&D and on-the-job training on innovation performance in a sample of Spanish manufacturing firms. The role of formal R&D activities has been intensively investigated, but little reserch has been carried out on the role of human capital, as measured by firm-sponsored worker training, and even less has addressed the interaction between both activities. We analyze the complementarity between the effects of R&D and training on firm innovation success while distinguishing between large and small firms. Our findings suggest that R&D is a key factor in explaining firm innovation performance and that worker training investment also has a significant effect albeit one of less magnitude. The results confirm a complementary relationship: on-the-job training reinforces the effect of R&D on innovation performance.
    Keywords: R&D, Worker Training, Innovation, Probit
    JEL: L22 L11
    Date: 2012–09
  3. By: Jan de Kok; Haibo Zhou; Chantal Hartog; Peter van der Zwan
    Abstract: Fast-growing firms are considered as the central drivers of job creation in the economy. There is an abundance of literature on the separate subjects of firm growth and firm survival. However, the relationship between survival and growth is neglected. Using the Dutch Longitudinal Enterprise Database 1993-1999, we investigate whether high employment growth rates in the recent past have a negative impact on firm survival. Our results do not find support for this relationship for the population of enterprises with a stable or growing employment development. Thus, we find no evidence that policies stimulating fast-growing firms may result in more firm deaths.
    Date: 2012–10–18
  4. By: André van Stel; José Maria Millan; Concepcion Roman
    Abstract: In order to mitigate the negative consequences of the current economic and financial crisis, it is of utmost importance that existing jobs remain intact as much as possible. In this respect, it is crucial that firms which employ personnel, survive. In this paper we investigate the role of the technological environment in determining the survival chances of employer entrepreneurs, defined as ownermanagers of firms which employ personnel. We estimate survival models to analyse durations as an employer entrepreneur, using micro panel data from EU-15 countries drawn from the European Community Household Panel (ECHP). As indicators for the technological environment we use a country’s R&D expenditures, a country’s employment share of high-tech and knowledge-intensive sectors, and a country’s number of patent applications to the European Patent Office. We find strong support for a positive relationship between these indicators of the technological environment in country j and year t and survival chances of employer entrepreneurs in that same country and year. Our analysis also suggests that a selection effect may be part of the explanation in the sense that in a more advanced technological environment, relatively more ‘high-quality’ individuals select into entrepreneurship. An implication of our novel finding is that innovation policy may contribute to survival of employer entrepreneurs, thereby safeguarding wage jobs in Europe, and achieving a lower waste of resources associated with firm exit.
    Date: 2012–10–09
  5. By: André van Stel; Lorraine Uhlaner; Haibo Zhou; Valerie Duplat
    Abstract: This paper focuses on certain drivers of SME sales growth related to knowledge and innovation. Building on the dynamic capabilities literature, we test whether two organizational capabilities (external sourcing and employee involvement in renewal activities) predict sales growth, and if so, whether such effects are mediated by process and/or product innovation. Based on survey data from a panel study of Dutch SMEs, and controlling for several firm characteristics (firm size, sector, age and family business), we conclude that external sourcing has direct effects on both product and process innovation, with an indirect effect (mediated by process innovation) on sales growth. In line with our hypothesis development, we also find that employee involvement, while positively affecting process innovation, has a negative effect on sales growth. Firm size moderates the effects of two of the variables (external sourcing and product innovation) on sales growth, with more positive effects found for the smallest firms, results supporting the nimbleness (versus resource-based) view.
    Date: 2012–10–11
  6. By: Gulumser, A.A.; Baycan Levent, T.; Nijkamp, P.; Poot, H.J.
    Date: 2012
  7. By: Jan de Kok
    Abstract: Various studies have indicated the presence of firm size wage gaps and firm age wage gaps in the remuneration of employees. This study shows that a firm size wage gap also exists in the population of Dutch Enterprises with 1 – 100 employees, but that there is no sign of a firm age wage gap. The firm size wage gap can be partially explained by the age and educational level of the employee, as well as by the educational level of the entrepreneur. The usage of performance-related pay also varies with firm size (and not with firm age). This firm size effect can be explained fully by employee tenure (rather than age and education).
    Date: 2012–10–16
  8. By: Lazarevski, Dimche; Mrsik, Jadranka; Smokvarski, Edi
    Abstract: The objective of this paper is to examine and analyze the differences between Venture Capital development in Macedonia and several Central and Eastern Europe countries, to determine the reasons, and hence extract certain conclusions that will serve as a guideline in Macedonia’s venture capital industry development. Venture capital is an important intermediary in financial markets, providing capital to firms who otherwise have difficulties attracting financial support. Moreover, venture capital funds provide managerial expertise to the company they are investing in, and have impact on the overall economy through innovation, job creation, economic growth, increased competition and improved corporate governance. Private equity and Venture capital funds are present for over 20 years in Central and Eastern Europe. The institutional investors evaluate the individual countries’ attractiveness to identify the best investment opportunities for their asset allocation. On the basis of the performed analysis in this paper regarding the PE/VC fundraising and investment activities, conducted interviews, and Country Attractiveness Index (including the economic activities, depth of capital market, taxation, investor protection and corporate governance, human and social environment and entrepreneurial culture and opportunities), Macedonian small and medium size enterprises are obviously not on the PE/VC investors` map, according to the small amount of their investments up to now.
    Keywords: financial markets; financial institutions; venture capital; small and medium enterprises; entrepreneurship
    JEL: D53 N20 O16 L26 G24
    Date: 2012–05
  9. By: Ghani, Ejaz; Kerr, William R.; O'Connell, Stephen D.
    Abstract: Despite rapid economic growth, gender disparities in women's economic participation have remained deep and persistent in India. What explains these huge gender disparities? Is it poor infrastructure, limited education, and gender composition of the labor force and industries? Or is it deficiencies in social and business networks and a low share of incumbent female entrepreneurs?This paper analyzes the spatial determinants of female entrepreneurship in India in the manufacturing and services sectors. Good infrastructure and education predict higher female entry shares. There are strong agglomeration economies in both manufacturing and services, where higher female ownership among incumbent businesses within a district-industry predicts a greater share of subsequent entrepreneurs will be female. Moreover, higher female ownership of local businesses in related industries (similar labor needs, input-output markets) predicts greater relative female entry rates. Gender networks thus clearly matter for women's economic participation. However, there is a need to develop a better understanding of how gender networks influence aggregate efficiency. There is no doubt that gender empowerment can be the escalator to realizing human potential and for creating a robust platform for growth and job creation.
    Keywords: Banks&Banking Reform,Housing&Human Habitats,Water and Industry,E-Business,Gender and Law
    Date: 2012–10–01
  10. By: Wagner, Joachim (Leuphana University, Lueneburg and CESIS, Stockholm)
    Abstract: This study uses newly available enterprise level data for firms from manufacturing industries in Germany to test for the link between credit constraints, measured by a credit rating score from the leading credit rating agency Creditreform, and exports. In line with hypotheses from theoretical model we find a positive link between a better credit rating score of a firm and both the probability that the firm is an exporter and a higher share of exports in total sales. This link, though statistically highly significant, is not very strong from an economic point of view. While empirical evidence for the hypothesis that credit constrained firms are less likely to start to export is at best weak, we find no evidence for a statistically significant difference in credit rating scores between firms that stopped to export and firms that continued to export.
    Keywords: Credit constraints; exports; Germany
    JEL: F14
    Date: 2012–10–15
  11. By: Annabelle Mourougane
    Abstract: Micro, small and medium-sized firms (MSMEs) are a key source of employment and economic growth in Indonesia. They contributed to the country’s economic resilience during the 2008-09 financial crisis. But many suffer from low productivity, curbing their role in boosting living standards. There are several ways to spur MSME productivity growth over the medium term. The first route would be to encourage the formalisation of small firms. Lessening red tape through simplification of the licensing process and lower tax compliance costs would help. Avoiding excessive rises in the minimum wage in provinces where it is already at a reasonable level would also be important. Looking forward, it would be useful to remove rigidities in the formal labour markets, while moving to some form of unemployment benefit system to insure workers against job-loss risks. The second route would be to boost investment. Clarifying property rights for real estate, and making the information collected by the credit bureau available to all financial institutions would ease access to finance. At the same time, the development of financing alternatives such as venture capital, leasing or micro-finance would enhance credit supply. The poor state of infrastructure, in particular in the transportation and electricity sectors, is also perceived as an important impediment to investment and could be remedied by increasing public infrastructure spending on cost-effective projects. The third route would be to enhance the quality of human resources. The country suffers from a lack of skilled workers, and policies should aim both at increasing the pool of workers and making education and training institutions more responsive to evolving labour-market demand. Indonesia has a long tradition of supporting MSMEs. But responsibilities between the different levels of government and within the central government need to be clarified to minimise overlap and inefficiencies. A rigorous assessment of existing programmes would allow schemes to be consolidated and scarce public funds to be directed to their most cost-effective uses.<P>Promouvoir le développement des PME en Indonésie<BR>Les micro, petites et moyennes entreprises (MPME) sont une source majeure d’emplois et de croissance économique en Indonésie. Elles ont contribué à la résistance de l’économie durant la crise financière de 2008-09. Cependant, beaucoup de ces entreprises souffrent d’une faible productivité, ce qui limite leur rôle dans l’amélioration des niveaux de vie. Il existe plusieurs moyens de stimuler la croissance de la productivité des MPME sur le moyen terme. Le premier moyen serait d’encourager les petites entreprises à s’engager dans l’économie formelle. Il serait utile, à cet effet, de réduire la bureaucratie en simplifiant les procédures d’octroi de licences et d’abaisser les coûts du respect des obligations fiscales. Il serait aussi important d’éviter toute hausse excessive du salaire minimum dans les provinces où il atteint déjà un niveau raisonnable. Dans le future, il conviendrait de réduire les rigidités sur le marché du travail formel, tout en adoptant une forme de système d’indemnisation du chômage afin d’assurer les travailleurs contre le risque de perte d’emploi. Le deuxième moyen serait de stimuler l’investissement. La clarification des droits de propriété immobilière, et la mise à la disposition des informations recueillies par le bureau du crédit à toutes les institutions financières faciliteraient l’accès aux financements. En même temps, le développement d’autres solutions de financement telles que le capital-risque, le crédit-bail ou le microcrédit renforcerait l’offre de crédit. Le mauvais état des infrastructures, en particulier dans les secteurs des transports et de l’électricité, est aussi perçu comme un obstacle à l’investissement, auquel il serait possible de remédier en accroissant les dépenses publiques pour financer des projets d’infrastructure rentables. Le troisième moyen serait de rehausser la qualité des ressources humaines. Le pays souffre d’une pénurie de travailleurs qualifiés, et il faudrait mettre en oeuvre des politiques visant à accroître le nombre de travailleurs disponibles et à rendre les établissements d’enseignement et de formation plus réactifs à l’évolution de la demande sur le marché du travail. L’Indonésie a depuis de longues années une politique de soutien aux MPME. Il est cependant nécessaire de clarifier les responsabilités entre les différents niveaux d’administration et au sein de l’administration centrale afin de réduire au minimum les doubles emplois et l’inefficience. Une évaluation rigoureuse des programmes existants permettrait de consolider les dispositifs en place et d’allouer les maigres ressources publiques à leurs usages les plus rentables. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de l’Indonésie 2012 (ésie).
    Keywords: productivity, Indonesia, micro and small firms, productivité, Indonésie, micro et petites entreprises
    JEL: G1 I2 J3 O4
    Date: 2012–10–17
  12. By: Bundaleska, Elena
    Abstract: The success of a good entrepreneur does not depend only on his/her innova-tiveness, education, specialized knowledge, talent, boldness, similar, but very much so on his/her abilities to manage people. The aim of this article is to suggest practical rec-ommendations for entrepreneurs on how to develop or improve their people management skills. The recommendations are not all-inclusive. They are just a starting point. Each en-trepreneur should develop from there, based on personal experience.
    Keywords: Entrepreneur; management skills; motivation; delegating; instructing
    JEL: L26 M13
    Date: 2010–10
  13. By: Carlos M. Jardón
    Abstract: The innovativeness is a core competence to innovate and therefore enhancing competitiveness, especially in small and medium enterprises (SMEs). Such capability is constrained by internal and external factors. This article discusses how the company combines these factors to improve innovativeness. The company produces a core competence called human resource management and technology from internal intellectual capital. In addition, the company organizes another competency called core resource management and territorial relations from tangible resources associated with territory and intellectual capital as a result of the relationship with the environment. Using partial least squares techniques applied to a sample of small and medium enterprises in a region in northwest Spain is shown that both factors influence innovativeness. This study helps to define what the factors that enhance innovativeness are and how those factors associated company, indicating which the process of building core competencies to improve their innovativeness is. As a result, the article suggests for thought to develop policies to support business innovation. Resumen: La capacidad de innovación es una competencia distintiva que permite innovar y, en consecuencia, potencia la competitividad, especialmente en las pequeñas y medianas empresas (PYME). Dicha capacidad se ve condicionada por factores internos y externos. Este artículo analiza como combina la empresa dichos factores para mejorar la capacidad de innovación. Por un lado, la empresa genera una competencia distintiva denominada gestión de los recursos humanos y tecnológicos a partir del capital intelectual interno. Por otro lado, organiza otra competencia distintiva denominada gestión de los recursos y relaciones territoriales a partir de los recursos tangibles asociados al territorio y del capital intelectual fruto de las relaciones con el entorno. Mediante técnicas de Mínimos cuadrados parciales aplicados en una muestra de pequeñas y medianas empresas en una región del noroeste de España se demuestra que ambos factores influyen en la capacidad de innovación. Este estudio contribuye a delimitar cuales son los factores que potencian la capacidad de innovación y como la empresa asocia esos factores, indicando cual es el proceso de construcción de competencias básicas para mejorar su capacidad de innovación. Como consecuencia, el artículo sugiere elementos de reflexión para elaborar políticas de apoyo a la innovación empresarial.
    Keywords: Innovativeness, regional SME, core competency
    JEL: M21 M14 M10
    Date: 2012–09
  14. By: Alberto Rinaldi
    Abstract: The Emilia-Romagna region is an exemplary case of industrial development based on systems of small and medium-sized enterprises. Since the 1980s it has become a common reference in the international debate on Post-Fordism. This paper analyzes the role of small and medium-sized enterprises in the development of region’s economy. After presenting a short profile of the dynamics and structural features of the region’s industrialization, the paper reconstructs the debate among economists and politicians about the role of small and medium-sized enterprises in the Emilian economy: from the dominant positions in the mid-20th century economic theory that saw them as unavoidably backward and inefficient, to Togliatti’s innovative proposal for a strategic alliance between the working class and the small entrepreneurs, the debate on productive decentralization, the discovery of industrial districts up to the more recent analysis on the rise of district lead firms and medium-sized firms of the «forth capitalism»
    Keywords: Economia; Pci; Piccole imprese; Emilia-Romagna;
    JEL: B2 L6 N9
    Date: 2012–05

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