nep-ent New Economics Papers
on Entrepreneurship
Issue of 2013‒01‒07
nineteen papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Entrepreneurship Training and Self-Employment among University Graduates: Evidence from a Randomized Trial in Tunisia By Premand, Patrick; Brodmann, Stefanie; Almeida, Rita K.; Grun, Rebekka; Barouni, Mahdi
  2. Intergenerational Transmission of Risk Preferences, Entrepreneurship, and Growth By Fabrizio Zilibotti; Matthias Doepke
  3. Business Training and Female Enterprise Start-up, Growth, and Dynamics: Experimental evidence from Sri Lanka By de Mel, Suresh; McKenzie, David; Woodruff, Christopher
  4. Boosting Local Entrepreneurship and Enterprise Creation in Lombardy Region By Alessandra Proto; Lucia Cusmano; Neil MacCallum; Ricardo Pinto; Paolo Rosso
  5. The family – a barrier or motivation for female entrepreneurship? By Marit Rønsen
  6. Two's Company: Human Capital Composition and Performance of Entrepreneurial Pairs By Alex Coad; Bram Timmermans
  7. Entrepreneurship and economic growth in a panel of countries By Berthold, Norbert; Gründler, Klaus
  8. The Environmental Regulation Paradox for Clean Tech Ventures By Erik Stam; Neil Thompson; Andrea Herrmann; Marko Hekkert
  9. How do institutions influence the own-account worker's decision to hire employees? By André van Stel; José Maria Millán; Concepcion Roman; Ana Millán
  10. Size-Dependent Regulations, Firm Size Distribution, and Reallocation By François Gourio; Nicolas A. Roys
  11. Determinants of business and financial network formation by Japanese start-up firms: Does founder’s human capital matter? By Okamuro, Hiroyuki; Ikeuchi, Kenta
  12. Rural Innovation - Crucial, But Rarely Systemic By Freshwater, David
  13. Leveraging Training and Skills Development in SMEs: An Analysis of Two Canadian Urban Regions - Montreal and Winnipeg By Paul Bélanger; Sylvie-Ann Hart
  14. Differentiated Use of Small Business Credit Scoring by Relationship Lenders and Transactional Lenders: Evidence from Firm-Bank Matched Data in Japan By Hasumi, Ryo; Hirata, Hideaki; Ono, Arito
  15. The Impact of R&D Activities on Exports of German Business Services Enterprises: First evidence from a continuous treatment approach By Joachim Wagner
  16. Innovative capability and financing constraints for innovation: More money, more innovation? By Hottenrott, Hanna; Peters, Bettina
  17. Small business use of credit cards in the U.S. market By Susan Herbst-Murphy
  19. L'acquisition des compétences entrepreneuriales en CAE comme moyen d'améliorer l'employabilité By Emmanuelle Liebart

  1. By: Premand, Patrick (World Bank); Brodmann, Stefanie (World Bank); Almeida, Rita K. (World Bank); Grun, Rebekka (World Bank); Barouni, Mahdi (CRES, République Tunisienne)
    Abstract: In economies characterized by low labor demand and high rates of youth unemployment, entrepreneurship training has the potential to enable youth to gain skills and create their own jobs. This paper presents experimental evidence on a new entrepreneurship track that provides business training and personalized coaching to university students in Tunisia. Undergraduates in the final year of licence appliquée were given the opportunity to graduate with a business plan instead of following the standard curriculum. This paper relies on randomized assignment of the entrepreneurship track to identify impacts on labor market outcomes one year after graduation. The analysis finds that the entrepreneurship track was effective in increasing self-employment among applicants, but that the effects are small in absolute terms. In addition, the employment rate among participants remains unchanged, pointing to a partial substitution from wage employment to self-employment. The evidence shows that the program fostered business skills, expanded networks, and affected a range of behavioral skills. Participation in the entrepreneurship track also heightened graduates' optimism toward the future shortly after the Tunisian revolution.
    Keywords: youth employment, self-employment, entrepreneurship training, program evaluation, behavioral skills, soft skills
    JEL: O12 J24 I21 L26
    Date: 2012–12
  2. By: Fabrizio Zilibotti (University of Zurich); Matthias Doepke (Northwestern University)
    Abstract: We develop a theory of the intergenerational transmission of risk preferences. Parents can instill either risk tolerance or risk aversion in their children, and face both altruistic and paternalistic motives in this process. Risk-tolerant children are more likely to benefit from profitable but risky opportunities, such as the career choice of being an entrepreneur. However, risk-tolerant children may also engage in other risky choices (such as smoking or riding motorcycles) that the parents disagree with. In our model, the transmission of risk preferences feeds back into the growth rate of the economy, because risk-taking entrepreneurs are essential for endogenous technological innovation. The theory has implications for how the extent and nature of risk in the economic environment affects the transmission of risk preferences, entrepreneurship, and growth.
    Date: 2012
  3. By: de Mel, Suresh (University of Peradeniya); McKenzie, David (World Bank); Woodruff, Christopher (University of Warwick)
    Abstract: We conduct a randomized experiment among women in urban Sri Lanka to measure the impact of the most commonly used business training course in developing countries, the Start-andImprove Your Business (SIYB) program. We work with two representative groups of women: 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. We track impacts of two treatments – training only and training plus a cash grant – over two years with four follow-up surveys and find that the short- and medium-term impacts differ. For women already in business, training alone leads to some changes in business practices but 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 entry but leads to no increase in net business ownership by our final survey round. Both profitability and business practices of the new entrants are increased by training, suggesting training may be more effective for new owners than for existing businesses. We also find that the two treatments have selection effects, leading to entrants being less analytically skilled and poorer.
    Keywords: Business training; female self-employment; randomized experiment; business startup; trajectory of treatment effects
    Date: 2012
  4. By: Alessandra Proto; Lucia Cusmano; Neil MacCallum; Ricardo Pinto; Paolo Rosso
    Abstract: Entrepreneurship and the development of Small and Medium-Sized Enterprises (SMEs) are key drivers of economic growth and job creation. The OECD review series on Boosting Local Entrepreneurship and Enterprise Creation, of which this study is a part, examines the capacity of local economies to support successful new enterprise creation and the growth of small enterprises and make recommendations on how this capacity can be enhanced through local policies. The reviews entail an assessment of entrepreneurship and SME performance at the local level, the local framework conditions affecting this performance and the policies in place to back entrepreneurship and SME development. The reviews involve a comprehensive examination of conditions and policies including the key domains of skills, financing, business support infrastructure and innovation. In the case of Lombardy, the economically most powerful region of Italy, the review includes a specific assessment of local entrepreneurship policies against the framework of the European Union’s Small Business Act (SBA). The SBA prioritises the role of business-friendly regulations for the creation of new start-ups and the development of existing small enterprises. SMEs and their clusters constitute the backbone of Lombardy economical structure. In such a context and given the impact of the persisting current financial and economic downturn, supporting the development of innovative SME and their networks is a priority for addressing the recovery challenge.
    Date: 2012–12–20
  5. By: Marit Rønsen (Statistics Norway)
    Abstract: The underrepresentation of women in entrepreneurship is consistent over cultures and countries, and is even higher in Norway than in most other industrialised societies. In spite of a growing literature, the reasons for this pattern are still not well understood. In this paper I explore an area that has been little researched so far, the family and household situation. I study the presence of children and their ages, the role of the partner’s characteristics and the household’s financial resources. The results show that women are more likely to choose self-employment over wage-work when the children are small, indicating that children are no barrier to entrepreneurship, at least not when defined as self-employment as in this paper. The self-employment propensity of both women and men are negatively related to their partner’s working hours and positively related to him (or her) being self-employed himself (herself). The causal direction of these relationships cannot be established in the present analysis and needs to be investigated closer in future research.
    Keywords: Entrepreneurship; self-employment; gender; work and family; partner’s characteristics
    JEL: L26 J13 J16 J22
    Date: 2012–12
  6. By: Alex Coad; Bram Timmermans
    Abstract: We study the effects of diverse team composition on the survival and growth of new ventures using the Danish Linked Employer-Employee database. To get cleaner measures of diverse team composition, we focus on entrepreneurial dyads, and also investigate the asymmetric effects of team composition by distinguishing between the `primary' and the `secondary' founder. We complement existing work by showing that heterogeneity in team composition is affected by the asymmetric hierarchical structure within the team, and that a unidimensional diversity indicator (which is usually applied) fails to capture a number of performance effects of heterogeneous team composition. Ventures with a STEM-educated primary founder and a Business-educated secondary founder have high employment growth, while the opposite combination (Business first, STEM second) has low employment growth. Pairs of younger individuals have lower survival chances but higher employment growth. Family firms have lower employment growth, especially when formed with your mother.
    Keywords: Diversity; Entrepreneurial Teams; Survival; Growth; Team Composition
    JEL: L25 L26 J21
    Date: 2012
  7. By: Berthold, Norbert; Gründler, Klaus
    Abstract: We study the effect of entrepreneurship on economic growth. First, we illustrate that entrepreneurship affects the investment decision in horizontal and vertical innovations within endogenous growth models. As a direct consequence, the level of entrepreneurship exerts significant growth stimuli. We then evaluate this prediction empirically applying 3SLS estimations based on the approach proposed by Barro (1991, 2000, 2003). Using data of 188 countries between 1980-2010, we show that entrepreneurship has a significantly positive effect on growth, even when controlling for a wide range of commonly used political and state variables suggested by the standard growth model. Our sensitivity analysis that takes into account different proxies of entrepreneurship supports our results. It turns out that the level of uncertainty avoidance - perhaps the purest proxy of entrepreneurship - excerts negative effects on economic growth. The extent of entrepreneurship can thus be considered an adequate additional determinant in growth models to explain differences in per capita income. --
    Keywords: Entrepreneurship,Economic Growth
    JEL: L26 O31 O47
    Date: 2012
  8. By: Erik Stam; Neil Thompson; Andrea Herrmann; Marko Hekkert
    Abstract: Traditionally, regulations are seen as harmful for the starting and growing of firms. However, strict environmental regulation can also trigger the discovery and introduction of clean technologies, and this innovation might improve the competitiveness of the firm (the so-called Porter hypothesis). This project focuses on the environmental regulation paradox in the context of new venture growth. The key questions are: 1) to what extent do new ventures perceive environmental regulation to be a bottleneck; and 2) how does environmental regulation affect the growth of clean tech ventures? The characteristics of a panel of new ventures are analyzed during their emergence, and in particular the effect of environmental regulation on the subsequent growth of these new ventures. These analyses are also performed on a subsample of firms that is especially liable to environmental regulations, namely clean tech ventures. The empirical evidence shows the paradox of environmental regulation for clean tech ventures: they more often perceive this to be a bottleneck, but environmental regulation also seems to drive their growth. Our interpretation of the environmental regulation paradox is that environmental regulation should be treated as a barrier to growth: entrepreneurs that aim to expand their business in markets that are sensitive to environmental regulation face these regulations as a bottleneck for their activities, but this necessary evil informs them how to successfully expand in these markets giving them a competitive edge over other less well informed firms. Without this hurdle they would probably not be sufficiently informed about the possibilities and impossibilities in these markets. This especially counts for clean tech ventures, but also for the group of non-clean tech ventures that is active on markets liable to environmental regulations. This interpretation does justice to the initial Porter hypothesis - environmental regulation can trigger innovation that may partially or more than fully offset the costs of complying with them – as environmental regulation is both perceived as a cost, but in the end seems to more than fully offset these costs indicated by the growth inducing effect of environmental regulation.  
    Date: 2012–12–18
  9. By: André van Stel; José Maria Millán; Concepcion Roman; Ana Millán
    Abstract: This paper examines the impact of the institutional environment on the individual decision of ownaccount workers to hire employees. In particular, we investigate whether variations in degree of employment protection, expenditure on employment incentives and taxation frameworks influence this decision. In conducting this analysis, discrete choice models are applied to individual level data drawn from the European Community Household Panel for the EU-15 countries. The institutional macro proxies we include are developed by OECD. Our results show that the strictness of employment protection legislation is negatively related to the probability that own-account workers hire employees and hence, become employers. We also find that the decision to hire employees is positively related to the expenditure on employment incentives and negatively related to corporate income tax rates. This new evidence may be useful for governments aiming to create a more enabling macro-environment for employment growth.
    Date: 2012–12–18
  10. By: François Gourio; Nicolas A. Roys
    Abstract: In France, firms with 50 employees or more face substantially more regulation than firms with less than 50. As a result, the size distribution of firms is visibly distorted: there are many firms with exactly 49 employees. We model the regulation as a sunk cost that must be paid the first time the firm reaches 50 employees, and we estimate the model using indirect inference by fitting these salient features of the size distribution. The key finding is that the legislation acts like a sunk cost equivalent to approximately one year of an average employee salary. Removing the regulation improves labor allocation across firms, leading to a productivity gain of around 0.3%, holding the number of firms fixed. However, if firm entry is elastic, the steady-state gains are significantly smaller.
    JEL: E23 L11 L25 O1
    Date: 2012–12
  11. By: Okamuro, Hiroyuki; Ikeuchi, Kenta
    Abstract: Business start-ups are expected to make major contributions to economic growth. However, most of them lack internal business resources that are necessary for survival and growth. Therefore, business and financial networks that provide business opportunity and external resources are essential for the post-entry performance of start-ups. However, previous studies have regarded such networks as exogenous and not explicitly investigated the determinants of network formation. We argue that the formation of business and financial networks by start-up firms depends on founder’s human capital measured by university education and work experience, and empirically test it with our original survey data of recent Japanese start-ups. Moreover, we focus not only on the size of such networks, but also their quality measured as the status of major partners. Empirical results show that founder’s industry experience for 10 or more years has positive and significant effect on the size of both business and financial networks, while founder’s university education positively affects not only the size, but also the quality of both business and financial networks. Moreover, we also find that founder’s specific strength and personality also significantly affect network formation. We find no distinct differences between the determinants of business and financial network.
    Keywords: business network, financial network, start-up, founder, human capital
    JEL: L25 L26 M13
    Date: 2012–12
  12. By: Freshwater, David
    Abstract: Innovation is largely held to be unlikely in rural regions. This reflects the current emphasis on regional innovations systems that are driven by large expenditures on formal science based activity that results in patentable outcomes. From this metric the observation about rural innovation is largely true. However, a broader concept of innovation, which includes the actions of individual inventors/entrepreneurs opens the possibility of rural innovation. Not only do we see significant innovation in rural regions, some of these innovations have been globally disruptive and led to major changes in important industries. For rural regions innovation can be a key driver of productivity since the success of a single firm can play a major role in eh economic growth of the region. Fostering entrepreneurship provides a way for rural regions to also increase the level of innovation.
    Keywords: rural development, innovation, economic growth, entrepreneurship, productivity, Community/Rural/Urban Development, Production Economics, Productivity Analysis, L260.0310, R110, R120,
    Date: 2012
  13. By: Paul Bélanger; Sylvie-Ann Hart
    Abstract: This paper looks at a study carried out among 80 small and medium sized enterprises (SMEs) in two Canadian cities, Montréal and Winnipeg, based on a survey and case studies, which show the importance of innovation among Canadian SMEs. These innovations in turn create new demands for skill development, both through formal training and in informal activities. The outcomes of the study show two significant trends. First, an uneven development of learning activities among SMEs is related not only to the size of firms, but also to their orientation towards innovation and shared productivity measures. Second, because they do not have enough internal resources and flexibility to drive productivity growth through learning and training by themselves, SMEs need some form of group based mechanisms to solve this structural problem. However, it is noted that participation of unskilled employees in both formal and informal learning remains an important challenge for the great majority of SMEs.
    Date: 2012–12–20
  14. By: Hasumi, Ryo; Hirata, Hideaki; Ono, Arito
    Abstract: This paper examines the ex-post performance of small and medium enterprises (SMEs) that obtained small business credit scoring (SBCS) loans by using a unique Japanese firm-bank matched dataset. The ex-post probability of default after the SBCS loan was provided significantly increased for SMEs that obtained an SBCS loan from a transactional lender. Also, the lending attitude of relationship lenders during the recent global financial crisis was more severe if a transactional lender had extended an SBCS loan to a firm. These findings suggest that SBCS loans by a transactional lender are detrimental to a relationship lender’s incentive to monitor SMEs and maintain relationships.
    Keywords: small business credit scoring, lending technology, relationship lending
    JEL: G21 G32
    Date: 2012–12
  15. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: This study uses newly available representative data from German business services firms and a continuous treatment approach based on the generalized propensity score to test for a causal effect of R&D activities (measured by the share of engineers and natural scientists in all employees) on the share of exports in total sales. We find evidence for a positive and statistically significant but small causal effect. This result is in line with the (non-causal) results reported in Vogel and Wagner (2012) based on regression models with and without control for unobserved time-invariant firm characteristics. The bottom line, then, is that R&D activity does matter for success of German business services firms on export markets – but not much.
    Keywords: Innovation, export, business services, Germany
    JEL: F14
    Date: 2012–12
  16. By: Hottenrott, Hanna; Peters, Bettina
    Abstract: This study presents a novel empirical approach to identify financing constraints for innovation based on the concept of an ideal test (Hall 2008). Firms were offered a hypothetical payment and were asked to choose between alternatives of use. If they selected additional innovation projects, they must have had some unexploited investment opportunities that were not profitable using more costly external finance. We attribute constraints for innovation not only to lacking financing, but also to firms' innovative capability. Econometric results show that financial constraints do not depend on the availability of internal funds per se, but that they are driven by innovative capability. --
    Keywords: innovation,financing constraints,innovative capability,multivariate probit models
    JEL: O31 O32 C35
    Date: 2012
  17. By: Susan Herbst-Murphy
    Abstract: America’s small businesses have adopted credit cards as both a payment method and a borrowing vehicle. The segment also uses other payment card products, including debit, charge, and prepaid cards. The dollar volume of spending with cards designed for small businesses increased by 230 percent over the five-year period from 2003-2008. But the recession of 2007-2009 and contemporaneous changes in the regulatory environment had effects on both the supply to and demand of small businesses with respect to credit cards. To obtain an update on these issues, the Payment Cards Center hosted a workshop facilitated by Frank Martien, a partner with First Annapolis Consulting. During the workshop, Martien presented evidence of improved supply and demand conditions for small business credit cards. In addition to these positive post-recession observations, Martien described how the symmetry between a small firm’s accounts receivable cycle and the billing cycle for a credit card may help explain why credit card use is so attractive to this segment. This summary also discusses recent developments in the small business debit card market.
    Keywords: Small business ; Credit cards ; Cash flow ; Credit
    Date: 2012
  18. By: Trmcic, Snezana; Milinkovic, Ozrislava; Trmcic, Marko
    Abstract: Small and Medium Enterprise (SME) development is one of the key factors in the process of European Integration of Serbia. SMEs are significant source of business relations with other European countries and significantly help the process of integration of Serbia into the broader European economic framework. The European Union (EU) pays particular attention to the development of SMEs and the European Commission in the June 2008 adopted a special document entitled “Small Business Act for Europe” which establishes the principles and actions for the activities in the SME sector in EU countries. Purpose of this essay is to stress on the importance of SME development in Serbia as the engine of economic development with special emphasis on agribusiness in transition period in the process of European integration of Serbia.
    Keywords: SME development, agriculture / organic farming, European Integration, Republic of Serbia, Agribusiness,
    Date: 2012–10–25
  19. By: Emmanuelle Liebart (URCA UFR SESG - URCA - UFR des Sciences économiques, sociales et de gestion - Université de Reims - Champagne Ardenne)
    Abstract: Les CAE donnent-elles l'occasion d'acquérir des compétences entrepreneuriales afin d'augmenter l'employabilité des individus ? Pour tenter de répondre à cette question, nous éclaircirons ce que sont les CAE et notre cadre théorique d'étude à propos des compétences entrepreneuriales elles-mêmes. Ensuite, nous exposerons la démarche de recherche, le terrain et la méthode. Puis, pour finir, nous tenterons de répondre à notre problématique grâce aux résultats de nos recherches.
    Date: 2012–06–29

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