nep-ent New Economics Papers
on Entrepreneurship
Issue of 2013‒02‒03
eight papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Do Entrepreneurs Matter? By Becker, Sascha O.; Hvide, Hans K.
  2. Drivers of Self-Employment - A Multivariate Decomposition Analysis for the Case of Germany By Michael Fritsch; Alexander Kritikos; Alina Sorgner
  3. Parenting with Style: Altruism and Paternalism in Intergenerational Preference Transmission By Doepke, Matthias; Zilibotti, Fabrizio
  4. Beyond environmental scarcity: Human and social capital as driving forces of bootstrapping activities By D. GRICHNICK; J. BRINCKMAN; L. SINGH; S. MANIGART
  5. New Light on Chinese enterprises in Africa: Findings from a recent survey of Chinese Firms in Kampala, the capital of Uganda By Meine Pieter van Dijk; Ward Warmerdam
  6. Does access to finance matter in microenterprise growth ? evidence from Bangladesh By Khandker, Shahidur R.; Samad, Hussain A.; Ali, Rubaba
  7. Do Firms Use the Trade Credit Channel to Manage Growth? By A. FERRANDO; K. MULIER
  8. The internalization of SMEs operating in the engineering industry By Procházková, Lenka; Kubíčková, Lea

  1. By: Becker, Sascha O. (University of Warwick); Hvide, Hans K. (University of Bergen)
    Abstract: In the large literature on firm performance, economists have given little attention to entrepreneurs. We use deaths of more than 500 entrepreneurs as a source of exogenous variation, and ask whether this variation can explain shifts in firm performance. Using longitudinal data, we find large and sustained effects of entrepreneurs at all levels of the performance distribution. Entrepreneurs strongly affect firm growth patterns of both very young firms and for firms that have begun to mature. We do not find significant differences between small and larger firms, family and non-family firms, nor between firms located in urban and rural areas, but we do find stronger effects for founders with high human capital. Overall, the results suggest that an often overlooked factor – individual entrepreneurs – plays a large role in affecting firm performance.
    Keywords: entrepreneurship, firm performance, human capital
    JEL: D21 D24 J23 L11 L25 G39
    Date: 2013–01
  2. By: Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Alexander Kritikos (German Institute for Economic Research (DIW Berlin), and University of Potsdam); Alina Sorgner (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: We analyze the sources of the rise in the levels of self-employment in Germany since reunification by applying the non-linear Blinder-Oaxaca decomposition technique. This analysis is performed separately for East and West Germany in order to account for the East German recovery of entrepreneurship after 40 years of socialist regime. We find different results for self-employed people with employees and solo- entrepreneurs. The main factors determining changes in the level of self-employment are demographic developments, the shift toward service sector employment, and a higher share of population holding a tertiary degree. The analysis also suggests that changes in personal attitudes toward self-employment might be responsible for the particular increase of solo-entrepreneurship.
    Keywords: Self-employment, non-linear Blinder-Oaxaca decomposition technique, entrepreneurship, Germany
    JEL: L26 D22
    Date: 2013–01–17
  3. By: Doepke, Matthias (Northwestern University); Zilibotti, Fabrizio (University of Zurich)
    Abstract: We construct a theory of intergenerational preference transmission that rationalizes the choice between alternative parenting styles (related to Baumrind 1967). Parents maximize an objective function that combines Beckerian and paternalistic altruism towards children. They can affect their children's choices via two channels: either by influencing their preferences or by imposing direct restrictions on their choice sets. Different parenting styles (authoritarian, authoritative, and permissive) emerge as equilibrium outcomes, and are affected both by parental preferences and by the socioeconomic environment. We consider two applications: patience and risk aversion. We argue that parenting styles may be important for explaining why different groups or societies develop different attitudes towards human capital formation, entrepreneurship, and innovation.
    Keywords: intergenerational preference transmission, altruism, paternalism, entrepreneurship, innovation
    JEL: D10 J10 O10 O40
    Date: 2012–12
    Abstract: Although entrepreneurship scholars highlight bootstrapping as an important resource acquisition approach to respond to the inherent resource constraints which nascent ventures face, little is known about what causes nascent ventures to engage in bootstrapping. Theory highlights the environment as an important determinant of bootstrapping activity. Analyzing bootstrapping behavior of 298 nascent ventures, we find that beyond environmental factors, individual characteristics of the nascent entrepreneurs and factors relating to the embeddedness of the entrepreneurs in the environment determine their venture’s bootstrapping behavior. In a more fine-grained analysis we gain insights how theses antecedents shape the use of particular bootstrap strategies. Findings contribute to our understanding of how early resource management approaches are developed in nascent ventures.
    Keywords: Bootstrapping, Human capital, Social capital, Environmental munificence, Nascent ventures
    JEL: G01 G21 G28 H6
    Date: 2013–01
  5. By: Meine Pieter van Dijk (Professor at Maastricht School of Management); Ward Warmerdam (PhD student at ISS of EUR)
    Abstract: In this paper five issues will be analyzed. In the first place that no separation is made between providing Chinese aid, developing trade relations with China and starting investment activities in Africa. Secondly, is it true that the Chinese government helps Chinese entrepreneurs to get started in Africa. In the third place it is often suggested that Chinese entrepreneurs start after a Chinese aid project or construction job. Another issue is the presence of Chinese traders: what is the role of Chinese whole sale or retail traders in Africa and why are these entrepreneurs so successful? Finally we will look at employment and environmental issues in which Chinese entrepreneurs are said to be involved. Based on interviews of 42 Chinese enterprises in Uganda evidence is presented concerning what types of enterprises moved into Uganda and for which reason? We will analyze to what extent Chinese enterprises employ Chinese workers and Ugandan managers. What motivates these Chinese entrepreneurs to invest in Uganda and how do they deal with the challenges such as labour and environmental legislation? Which problems do they face? The relations between Uganda and China are influenced by the influx of Chinese enterprises in Uganda and the issues this raises. African countries are sensitive to the issue of Chinese companies competing with African firms. Many African countries question whether Chinese (small) traders are necessary to sell Chinese products in Africa. To what extent are 'wholesale' shops in Uganda in fact involved in retail business and how does Uganda react to this? The analysis challenges some of the generalizations concerning China's presence in Africa. We conclude that Uganda is becoming increasingly proactive in its relationship and tries to increase the contribution of Chinese enterprises to the Ugandan economy, while defining the terms on which Chinese citizens can come to work in Uganda.
    Date: 2012–10
  6. By: Khandker, Shahidur R.; Samad, Hussain A.; Ali, Rubaba
    Abstract: In less-developed economies such as Bangladesh, the farm sector is the major source of employment and income, while the rural nonfarm sector provides as an additional source of income. But the rural nonfarm sector increasingly plays an important role in fostering the development of the rural economy. A significant share of this sector is made up of microenterprise activities, which requires investment and access to adequate funds. This paper investigates the role access to finance plays in promoting the efficiency and growth of microenterprise activities. The findings suggest that households engaged in microenterprise activities, in addition to farm and other nonfarm activities, are much better off (in terms of income, expenditure and poverty) than those not engaged in such activities. Fewer than 10 percent of the enterprises have access to institutional finance (formal banks or microcredit), although the rate of return on microenterprise investments is more than sufficient (36 percent per year) to repay institutional loans. The research suggests that credit constraints may reduce the enterprises'profit margin by as much as 13.6 percent per year. As the returns to microenterprise investment are found to be high, microfinance institutions can play a larger role in supporting microenterprise growth in Bangladesh.
    Keywords: Access to Finance,Debt Markets,Investment and Investment Climate,Banks&Banking Reform,Economic Theory&Research
    Date: 2013–01–01
    Abstract: While many theories of accounts payable and receivable are related to firm performance, there has not been a direct test whether firms actively use them to manage their growth. We argue that it is not just the accounts payable but also the accounts receivable that matter. While the former help to alleviate imperfections in the financial market, the latter do so in the product market. Using over 2.5 million observations for 600.000 firms in 8 euro area countries in the period 1993-2009, we show that firms use the trade credit channel to manage growth. In countries where the trade credit channel is more present, the marginal impact is lower, but the total impact is still bigger. Further, firms that are more vulnerable to financial market imperfections, and therefore more likely to be financially constrained, rely more on the trade credit channel to manage growth. Finally, we show that also the overall conditions of the financial market matter for the importance of the trade credit channel for growth.
    Keywords: firm performance, trade credit, accounts payable, accounts receivable
    JEL: C23 E44 G32 L25
    Date: 2012–11
  8. By: Procházková, Lenka; Kubíčková, Lea
    Abstract: The importance of small and medium enterprises (SMEs) in the national economies of EU countries has been always growing. For these reasons, the increasing attention is paid to small and mediumsized enterprises also in the Czech economy. The paper is focused on the globalization of small and medium enterprises, in particular, identifying the key success factors of small and medium-sized businesses that operate in the engineering industry. For the purpose of fulfi lling the objective of the article, the level of success of SMEs in foreign markets is established with the aggregate indicator of success. Subsequently the results of the primary research among the Czech engineering companies are presented, based on this research the factors aff ecting the success of these entities of engineering industry in foreign markets are defi ned.
    Keywords: small and medium-sized enterprises; foreign markets; success; key success factors; engineering industry
    JEL: M00
    Date: 2012

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