nep-ent New Economics Papers
on Entrepreneurship
Issue of 2013‒04‒06
eight papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Team Heterogeneity in Startups and its Development over Time By Kaiser, Ulrich; Müller, Bettina
  2. The Impact of City Contracting Set-Asides on Black Self-Employment and Employment By Chatterji, Aaron K.; Chay, Kenneth Y.; Fairlie, Robert W.
  3. Does Easy Start-Up Formation Hamper Incumbents' R&D Investment? A Theoretical and Empirical Analysis By Colombo, Luca; Dawid, Herbert; Piva, Mariacristina; Vivarelli, Marco
  4. Entrepreneurs, Jobs, and Trade By Bulent Unel; Elias Dinopoulos
  5. Performance of Newly Listed Firms: Evidence from Japanese firm and venture capital data By MIYAKAWA Daisuke; TAKIZAWA Miho
  6. Could informality be the solution? An instrumental variable approach on the informality of M/SE in Egypt By Nesma Magdi
  7. Adoption of energy-efficiency measures in SMEs - An empirical analysis based on energy audit data By Tobias Fleitera; Joachim Schleich; Ployplearn Ravivanpong
  8. Entrepreneurship and Human Capital: Empirical study using a survey of entrepreneurs in Japan (Japanese) By BABA Ryota; MOTOHASHI Kazuyuki

  1. By: Kaiser, Ulrich (University of Zurich); Müller, Bettina (ZEW Mannheim)
    Abstract: We investigate the workforce heterogeneity of startups with respect to education, age and wages. Our explorative study uses data on the population of 1,614 Danish firms founded in 1998. We track these firms until 2001 which enables us to analyze changes in workforce composition over time. Such a dynamic analysis constitutes a hitherto neglected area of entrepreneurship research. To assess relative workforce heterogeneity, we construct a simulated benchmark to which we compare observed workforce heterogeneity. We find that the initial workforce is relatively homogeneous compared to our benchmark. Our result holds both for non-knowledge-based and, to a lesser extent, knowledge-based startups. This seems surprising since a vast management literature advocates heterogeneous teams. The difficulties associated with workforce heterogeneity (like affective conflict or coordination cost) as well as "homophily" (people's inclination to bound with others with similar characteristics) hence appear to generally overweigh the benefits of heterogeneity (like greater variety in perspectives or more creativity). We also document that workforces become more heterogeneous over time – startups add workers with skills different from the workforce at startup. The initial supposedly "poor" mix of workforce characteristics is hence adjusted as the startup matures. This increase in workforce heterogeneity is, however, smaller compared to our benchmark but substantially larger than is team additions had the same characteristics as the initial team members.
    Keywords: entrepreneurship, start-ups, skill heterogeneity, team dynamics
    JEL: C10 L26 M13
    Date: 2013–03
  2. By: Chatterji, Aaron K. (Duke University); Chay, Kenneth Y. (Brown University); Fairlie, Robert W. (University of California, Santa Cruz)
    Abstract: In the 1980s, many U.S. cities initiated programs reserving a proportion of government contracts for minority-owned businesses. The staggered introduction of these set-aside programs is used to estimate their impacts on the self-employment and employment rates of African-American men. Black business ownership rates increased significantly after program initiation, with the black-white gap falling three percentage points. The evidence that the racial gap in employment also fell is less clear as it is depends on assumptions about the continuation of pre-existing trends. The black gains were concentrated in industries heavily affected by set-asides and mostly benefited the better educated.
    Keywords: contracting, African-American, black, race, self-employment, entrepreneurship, affirmative action
    JEL: J15 L26
    Date: 2013–03
  3. By: Colombo, Luca (Università Cattolica del Sacro Cuore); Dawid, Herbert (University of Bielefeld); Piva, Mariacristina (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: This paper investigates, both theoretically and empirically, the implications that complementary assets needed for the formation of start-ups – proxied by the ease of access to financial resources – have on the innovative efforts of incumbent firms. In particular, we develop a theoretical model, highlighting a strategic incentive effect by which the innovative efforts of incumbent firms are decreasing in the availability of the complementary assets needed for the creation of a start- up. The empirical relevance of this effect is investigated by using firm level data drawn from the third Italian Community Innovation Survey covering the period 1998-2000. The results of our empirical analysis support our theory-based insights.
    Keywords: R&D, innovation, start-up, complementary assets
    JEL: O31 L26
    Date: 2013–03
  4. By: Bulent Unel; Elias Dinopoulos
    Abstract: We propose a simple theory of personal income distribution, equilibrium unemployment, and interindustry trade, in which product markets are perfectly competitive and labor markets exhibit search related frictions. Individuals, based on their managerial talent, choose to become self-employed entrepreneurs and acquire more managerial capital, or they become workers and face the prospect of unemployment. We analyze the effects of trade on a small-open jobless economy and a two-country global economy. In the case of a small-open economy, improvements in international competitiveness raise the possibility of immiserizing recessions with higher unemployment, lower GDP, and lower aggregate welfare. Reductions in the costs of acquiring managerial capital or appropriate job-vacancy subsidies generally lead to lower unemployment rate, higher aggregate welfare, and higher income inequality. In a two-country global economy, a country exports the good with lower labor-market frictions or lower costs of managerial capital acquisition. Unilateral job-creating policies have asymmetric effects on income inequality and unemployment across countries, and ambiguous effects on welfare in each country.
  5. By: MIYAKAWA Daisuke; TAKIZAWA Miho
    Abstract: This paper investigates the effect of Initial Public Offerings (IPOs) on firm performance. To single out the economic effects on firm performance brought about by issuing IPOs, we employ propensity-score matching difference-in-differences estimation. Using a unique firm-level panel dataset that allows us to identify newly listed firms and those keeping unlisted status, we find that the former showed better performance than their never-listed counterparts prior to their IPO while the difference in performance partly diminished after the IPO. This implies that firms' distorted behavior originating from, for example, empire building motives prevents newly listed firms from performing. This result is mainly driven by the sample firms going public during a "hot market". Using the information on venture capital (VC) investment, we also find that the participation of VC in investments exacerbates such negative impacts of IPOs on firm performance. The adverse impact on firm performance is more sizable among IPO firms which are invested in by VC syndicates consisting of a smaller number of less heterogeneous VC, or not including foreign VC. These results suggest that the timing of going public and the composition of VC syndicates are related to the post-IPO performance of newly listed firms.
    Date: 2013–03
  6. By: Nesma Magdi (UP1 UFR02 - Université Paris 1, Panthéon-Sorbonne - UFR d'Économie - Université Paris I - Panthéon-Sorbonne)
    Abstract: The expansion of the informal sector constitutes one of the major issues in Egypt. Yet, micro and small enterprises (M/SEs) proved their important role on the social and economic level, but most of them are running on an informal basis. That's why this paper tries to estimate the impact of informality on the performance of M/SEs. Relying on an instrumental variable approach, the results showed that the higher is the probability of operating in the formal sector, the higher is the productivity of the firm. This effect is subject to the realization of a specific channel, which accounts for the characteristics of the firm, the entrepreneur and all the constraints faced by the firm. These findings highlight the importance of formalization policies to reduce the expansion of the informal sector.
    Keywords: Égypte, productivité, économie souterraine, micro-entreprises
    Date: 2012–06
  7. By: Tobias Fleitera (ISI - a Fraunhofer Institute for Systems and Innovation Research - a Fraunhofer Institute for Systems and Innovation Research); Joachim Schleich (MTS - Management Technologique et Strategique - Grenoble École de Management (GEM), ISI - Fraunhofer Institute for Systems and Innovation Research - Fraunhofer Institute for Systems and Innovation Research); Ployplearn Ravivanpong (ISI - Fraunhofer Institute for Systems and Innovation Research - Fraunhofer Institute for Systems and Innovation Research)
    Abstract: This paper empirically investigates the factors driving the adoption of energy-efficiency measures by small and medium-sized enterprises (SMEs). Our analyses are based on cross-sectional data from SMEs which participated in a German energy audit program between 2008 and 2010. In general, our findings appear robust to alternative model specifications and are consistent with the theoretical and still scarce empirical literature on barriers to energy efficiency in SMEs. More specifically, high investment costs, which are captured by subjective and objective proxies, appear to impede the adoption of energy-efficient measures, even if these measures are deemed profitable. Similarly, we find that lack of capital slows the adoption of energy-efficient measures, primarily for larger investments. Hence, investment subsidies or soft loans (for larger invest-ments) may help accelerating the diffusion of energy-efficiency measures in SMEs. Other barriers were not found to be statistically significant. Finally, our findings provide evidence that the quality of energy audits affects the adoption of energy-efficiency measures. Hence, effective regulation should involve quality standards for energy au-dits, templates for audit reports or mandatory monitoring of energy audits.
    Keywords: Energy efficiency in SMEs; adoption of energy-efficiency measures; barriers to energy efficiency;
    Date: 2012
  8. By: BABA Ryota; MOTOHASHI Kazuyuki
    Abstract: Entrepreneurship activities are low in Japan, and it is often discussed that possible reasons are the lack of venture capital and a rigid labor market. However, it is rare to find a study that analyzes the human capital aspect of entrepreneurs based on a large scale sample survey. In this study, the characteristics of the human capital of entrepreneurs, such as education and job experience, are analyzed based on a survey of entrepreneurs conducted by the Research Institute of Economy, Trade and Industry (RIETI) in 2012. The entire process of entrepreneurship is divided into three phases—(1) planning, (2) execution, and (3) achieving success in business—and the determinants of each step, not only the education and job background, but also personal relationships with the entrepreneur and his/her personality, are investigated. It is found that broad experiences while attending universities such as extra-curriculum activities are an important factor at the planning and execution stage. In contrast, broader job experiences but within a limited number of companies can explain the probability of entrepreneurship success well. Therefore, promotion of entrepreneurship activity in Japan including forming a spin-off company requires both a variety of extra-curriculum activities experienced at universities and facilitating employees to develop broad professional experiences.
    Date: 2013–03

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