nep-ent New Economics Papers
on Entrepreneurship
Issue of 2012‒11‒17
nine papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development By Karlan, Dean; Knight, Ryan; Udry, Christopher
  2. Are Research Spin-Offs More Innovative? Evidence from a Matching Analysis By Stephan, Andreas
  3. Determinants of Spanish Firms' Life Cycle and Job Creation: A Pseudo-Panel Approach By Roxana Gutiérrez Romero
  4. The economic importance of migrant entrepreneurship: An application of data envelopment analysis in the Netherlands By Sahin, M.; Baycan, T.; Nijkamp, P.
  5. International trade, female labor, and entrepreneurship in MENA countries By Silvio Contessi; Francesca de Nicola; Li Li
  6. Does Trust Matter For Entrepreuneurship : Evidence From A Cross-Section Of Countries By Kodila-Tedika, Oasis; Agbor Agbor, Julius
  8. Clustering and firm performance in project-based industries: The case of the global video game industry, 1972-2007 By Mathijs De Vaan; Ron Boschma; Koen Frenken
  9. Ambitious entrepreneurship: antecedents and consequences By Julie Hermans; Marcus Dejardin; Johanna Vanderstraeten; Dendi Ramdani; Erik Stam; Arjen van Witteloostuijn

  1. By: Karlan, Dean (Yale University); Knight, Ryan (Yale University); Udry, Christopher (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.
    JEL: D21 D24 D83 D92 L20 M13 O12
    Date: 2012–08
  2. By: Stephan, Andreas (Jönköping International Business School, CESIS Stockholm, DIW Berlin)
    Abstract: The purpose of the paper is to analyze whether research spin-offs, that is, spinoffs from either research institutes or universities, have greater innovation capabilities than comparable knowledge-intensive firms created in other ways. Using a sample of about 1,800 firms from high-innovative sectors, propensity score matching is used to create a sample of control firms that are comparable to the group of spin-offs. The paper provides evidence that the investigated 123 research spin-offs have more patent applications and more radical product innovations on average compared to similar firms. The results also show that research spin-offs’ superior innovation performance can be explained by their high level of research cooperation activities and by location effects. Being located in an urban region and proximity to parent institutions is conducive for innovation productivity.
    Keywords: Spin-Offs; Innovation Performance; Propensity Score Matching; Locational Factors; Cooperation
    JEL: M13 O18 R30
    Date: 2012–11–05
  3. By: Roxana Gutiérrez Romero (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)
    Abstract: This paper examines the role of human capital, individual entrepreneurial traits and the business environment on firms’ life cycle and on job creation in Spain. For this purpose, we have constructed a pseudo-panel, by using the Global Entrepreneurship Monitor survey over the period 2001-2008. We have found that the creation, maturity and survival of firms were aided by the availability of bank credit and the large immigration inflows that Spain received over this period. However, of these two factors, only bank credit had a positive effect on the creation of jobs and on improving expectations of job expansion. The relatively high levels of youth unemployment experienced even before the crises of 2008 hurt the firm’s chances of maturity and survival. The results also suggested that the gender gap in entrepreneurial activities had narrowed. In relative terms, women with higher levels of education were more likely to create mature firms than men. Based on the empirical findings and those of related literature, the paper offers policy recommendations to foster a sustainable entrepreneurial sector capable of contributing to the recovery of the Spanish economy.
    Keywords: firm's life cycle, job creation, credit, immigration, pseudo-panel, instrumental variables
    JEL: D22 D92 O16 R23 C23 C26
    Date: 2012–11
  4. By: Sahin, M.; Baycan, T.; Nijkamp, P.
    Date: 2012
  5. By: Silvio Contessi; Francesca de Nicola; Li Li
    Abstract: Middle Eastern and North African (MENA) countries stand out in international comparisons of de jure obstacles to female employment and entrepreneurship. These obstacles are mirrored in low female labor rate participation and low entrepreneurship and ownership rates. Recent research suggests a connection between international trade and female labor participation. In this article, the authors focus on the relationship between international trade and gender in the MENA countries first analyzing female labor as a production factor, and then focusing on female entrepreneurship and firm ownership. Using country and industry-level data the authors identify countries and industries characterized by comparative advantage in female-labor. They find suggestive evidence that there is a strict link between a country specialization and its measures of female labor participation consistent with theories of brain-based technological bias. Using firm-level data, the authors then study whether trade empowers female entrepreneurs in countries-industries that exhibit comparative advantage. The authors conclude that evidence supports the view that exposure to trade affects disproportionately firms in country-industries with a comparative advantage in female labor – both in terms of female employment and female entrepreneurship and ownership – in the MENA countries and for the period they study.
    Keywords: International trade ; Women - Employment ; Entrepreneurship
    Date: 2012
  6. By: Kodila-Tedika, Oasis; Agbor Agbor, Julius
    Abstract: To the extent that trust is necessary to conduct informal sector business activities, its absence could possibly constrain entrepreneurial spirit and overall economic growth. This paper tests the hypothesis that differences in trust levels between countries explain the observed differences in entrepreneurial spirit amongst them. Analyzing a cross-section of 60 countries in 2010, our findings suggest that about half of the variation in entrepreneurial spirit across countries in the world is driven by trust considerations. This result is robust to regional clustering and to alternative conditioning variables. The findings of the study suggest that while formal incentives to nurture entrepreneurship must be maintained, policy-makers should also pay attention to the role of trust cultivated through informal networks.
    Keywords: Entrepreneurship; Trust; Institutions
    JEL: D2 P48 L26 Z13
    Date: 2012–10–29
  7. By: Peter Friedrich; Kadri Ukrainski
    Abstract: Quangos and public entrepreneurship are closely related. The economic theory of quangos allows us to develop a quango theory and highlight the effects of public entrepreneurship. By considering principal agent relations we show how public entrepreneurship of government and quango influence each other in the framework of vertical competition. Also horizontal competition between a quango and other quangos as well as to private enterprises influences the political entrepreneurship. Reference is made to a duopoly model for a competing quango of version 2. Considering the measurement of success of political entrepreneurship, we find that when it is related to increasing output the output development of the quangos may be used as measure of public entrepreneurship success which is relatively high in case of output maximising management. With other types of management the success turns out lower. If the political success is measured by effects of quango on third parties additional difficulties arise. A model of voters reactions on quango production within a model of public sector shows measurement of public political and public quango entrepreneurship and the budgets which result from these entrepreneurships. As there is no satisfying effect measurement models for quangos, which are empirically verified. Moreover, no social welfare function or a general social indicator function is available. Also social success in the sense of welfare maximisation by benefit-cost measurement through willingness to pay measurement is not applicable. Therefore, the success should be measured at the quango level by application of output oriented criteria. Examples from Germany and Estonia show chances and limits of public entrepreneurship within and through quangos.
    Keywords: Quango, public office, public enterprise, vertical competition, horizontal competition, entrepreneurship, public management, success measurement
    JEL: L32 L33 D73 H83
    Date: 2012
  8. By: Mathijs De Vaan; Ron Boschma; Koen Frenken
    Abstract: Explanations of spatial clustering based on localization externalities are being questioned by recent empirical evidence showing that firms in clusters do not outperform firms outside clusters. We propose that these findings may be driven by the particularities of the industrial settings chosen in these studies. We argue that in project-based industries, negative localization externalities associated with competition grow proportionally with cluster size, while positive localization externalities increase more than proportionally related to cluster size. By studying the survival patterns of 4,607 firms and 1,229 subsidiaries in the global video game industry, we find that the net effect of clustering becomes positive after a cluster reaches a critical size. We further unravel the subtleties of the video game industry by differentiating between exits by failure and exit by acquisition, and conclude that being acquired is best considered as a sign of success rather than as a business failure.
    Keywords: localization externalities, survival analysis, acquisition, spinoff, cluster, video game industry
    JEL: L25 R11 R12
    Date: 2012–11
  9. By: Julie Hermans (University of Namur); Marcus Dejardin (University of Namur, Catholic University of Louvain); Johanna Vanderstraeten (University of Antwerp); Dendi Ramdani (University of Namur); Erik Stam (Utrecht University); Arjen van Witteloostuijn (University of Antwerp, University of Tilburg)
    Abstract: In the recent literature on entrepreneurship, a growing body of knowledge recognizes that some entrepreneurs have higher ambitions than others and that these entrepreneurial ambitions are an important antecedent of actual firm success. Consequently, it is not surprising that ambitious entrepreneurship gradually becomes a topic of high interest for policy makers and scholars (e.g., Gundry and Welsch, 2001; Van Gelderen, 2006). Nevertheless, there does not yet exist a clearly defined overview of what is known (and not known) about this topic. Moreover, although authors advocate that the difference between high and low entrepreneurial ambitions should be recognized (Cassar 2007), few studies actually distinguish between ambitious entrepreneurs and their less-ambitious counterparts. In this paper, we address this gap and provide a structured overview of existing literature on ambitious entrepreneurship. Our analysis confirms that ambitious entrepreneurs might be an interesting population for the research community as well as for policy makers and other practitioners. Indeed, it suggests that ambitious entrepreneurs have a specific impact upon the economy and contribute to the quality of entrepreneurial activity. From a conceptual point of view, the review reveals that there is no consensus with regard to the operationalization of ambitious entrepreneurship and growth ambitions in general. As outcomes of this review, we indentify promising paths for future research and we propose the concept of a projecting process to clarify the link between growth attitude, growth intention and growth expectation.
    Keywords: ambition, motivations, growth, entrepreneurship
    JEL: D84 L25 L26 M13
    Date: 2012–11

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