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on Entrepreneurship |
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Issue of 2013‒06‒24
ten papers chosen by Marcus Dejardin University of Namur and Universite' Catholique de Louvain |
| By: | Matthias Doepke; Fabrizio Zilibotti |
| Abstract: | We discuss the two-way link between culture and economic growth. We present a model of endogenous technical change where growth is driven by the innovative activity of entrepreneurs. Entrepreneurship is risky and requires investments that affect the steepness of the lifetime consumption profile. As a consequence, the occupational choice of entrepreneurship hinges on risk tolerance and patience. Parents expecting their children to become entrepreneurs have an incentive to instill these two values in their children. Cultural transmission is Beckerian, i.e., parents are driven by the desire to maximize their children's happiness. We also consider, in an extension, a paternalistic motive for preference transmission. The growth rate of the economy depends on the fraction of the population choosing an entrepreneurial career. How many entrepreneurs there are in a society hinges, in turn, on parental investments in children's patience and risk tolerance. There can be multiple balanced-growth paths, where in faster-growing countries more people exhibit an "entrepreneurial spirit." We discuss applications of models of endogenous preferences to the analysis of socio-economic transformations, such as the British Industrial Revolution. We also discuss empirical studies documenting the importance of culture and preference heterogeneity for economic growth. |
| JEL: | J20 O10 O40 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19141&r=ent |
| By: | Vera Rocha (Universidade do Porto, cef.up and CIPES); Anabela Carneiro (Universidade do Porto and cef.up); Celeste Amorim Varum (Universidade de Aveiro, DEGEI and GOVCOPP) |
| Abstract: | This paper conducts a comprehensive study on entrepreneurship dynamics using a large longitudinal matched employer-employee dataset. We identify the transition of over 200,000 nascent business-owners and follow their survival patterns in the respective businesses using discrete time competing risks models. Different profiles of new business-owners are identified, taking into account their entry routes and how such entry choices impact on their persistence in the firm. Exits by dissolution are distinguished from exits by ownership transfer. We also analyze how previous labor market experiences and macroeconomic environment shape the individuals' decision to become and persist as business-owners. Controlling for a set of individual and previous job characteristics, we found that those experiencing a recent displacement are more likely to become entrepreneurs and to persist longer in the business. Concerning macroeconomic conditions, nascent entrepreneurs entering via start-up enter counter-cyclically, while all other nascent business-owners behave in line with the "prosperity-pull" hypothesis. Business-owners' entry choices significantly affect their post-entry persistence and exit modes. Particular experiences in the labor market while paid employees are also found to significantly influence the way individuals enter into and exit from entrepreneurship. |
| Keywords: | Entrepreneurship, Business Ownership, Entry, Exit |
| JEL: | J24 L26 M13 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:por:cetedp:1310&r=ent |
| By: | Nyström, Kristina (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Elvung, Gulzat Zhetibaeva (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | In this paper, we explore the role of new firms as an entry point to the labor market. Because the vast majority of new firms are short-lived, it is a risky decision to accept employment in a new venture. It can be argued that individuals with little (or no) labor market experience are more willing to accept the high risks associated with employment in new firms. Hence, new firms may work as an entry point to the labor market. Nevertheless, some research concludes that one disadvantage of employment in a new firm is that new firms pay less (Shane, 2009). However, this empirical conclusion is primarily based on literature on the wage penalty of small firms. In this paper, we study whether the wage penalty of employment in a new firm persists if we focus solely on labor market entrants. In the empirical analysis, we employ an employer-employee matched dataset that covers the Swedish population during the period from 1998-2008. We use the Propensity Score Matching (PSM) method to study the wage differences between labor market entrants employed in new and incumbent firms. We find an average wage penalty of 2.9 percent for labor market entrants employed in new firms over the studied period. |
| Keywords: | new firms; labor market entrants; wage penalty; propensity score matching; average treatment effect |
| JEL: | C21 J21 J31 M13 |
| Date: | 2013–06–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0319&r=ent |
| By: | Quatraro, Francesco (University of Nice Sophia-Antipolis); Vivarelli, Marco (Università Cattolica del Sacro Cuore) |
| Abstract: | The aim of this paper is to provide an updated survey of the "state of the art" in entrepreneurial studies, with a particular focus on developing countries (DCs). In particular, the same concept of "entrepreneurship" will be critically discussed, then moving to the institutional, macroeconomic and microeconomic conditions affecting the entry of new firms and the post-entry performance of newborn firms. |
| Keywords: | entrepreneurship, new firm, innovation, development |
| JEL: | L26 O12 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7436&r=ent |
| By: | Teresa C. Fort; John Haltiwanger; Ron S. Jarmin; Javier Miranda |
| Abstract: | There remains considerable debate in the theoretical and empirical literature about the differences in the cyclical dynamics of firms by firm size. This paper contributes to the debate in two ways. First, the key distinction between firm size and firm age is introduced. The evidence presented in this paper shows that young businesses (that are typically small) exhibit very different cyclical dynamics than small/older businesses. The second contribution is to present evidence and explore explanations for the finding that young/small businesses were hit especially hard in the Great Recession. The collapse in housing prices accounts for a significant part of the large decline of young/small businesses in the Great Recession. |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:13-30&r=ent |
| By: | Hightower, Lisa S.; Brennan, Mark A. |
| Abstract: | African immigrants in the United States (U.S.) experience immense challenges in the form of poverty, unemployment, and underemployment. Limited English language proficiency often restricts African immigrants to low-paying, unskilled positions. Ethnic entrepreneurship in the form of small-scale farming provides some African immigrants with an alternative to mainstream employment. Key to the success of many African immigrants is participation in beginning farmer programs. These programs operate as social networks, connecting immigrant farmers to training, farming resources, and members of the local community who provide access to additional resources and markets. Drawing from social capital theory, this mixed methods study investigates economic outcomes and social capital development within immigrant farmer programs. Immigrant farmer programs are analyzed as social networks that connect immigrants to technical training, farming resources, and community members who can provide access to markets. Data were collected through a survey of 112 agricultural educators working with immigrant farming programs across the United States. Data were also collected through case studies of programs in Ohio and Virginia. Bivariate correlation tests found the following agricultural training topics were significantly associated with economic outcomes, specifically training on farm equipment use, organic certification, and pest management. Ten marketing training topics were associated with economic outcomes, including business management, identifying markets, and introduction to direct markets. Social network ties were also associated with economic outcomes. These relationships were with the following organizations: farmers markets, community-supported organizations, the Extension Service, local farm supply stores, restaurants, and the Farm Bureau. Multiple regression tests found that 24.8% of the variance in economic outcomes could be accounted for by social network development, market training, and agricultural training. |
| Keywords: | Ethnic entrepreneurship, social capital, social networks, immigrant farmers, African immigrants, local food systems, Agribusiness, Community/Rural/Urban Development, Teaching/Communication/Extension/Profession, |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149696&r=ent |
| By: | Krzysztof Szczygielski; Wojciech Grabowski; Richard Woodward |
| Abstract: | Differences in the growth of firms remain a major topic in economics and strategy research.In this paper we investigated the link between innovation performance and employment growth. First we discuss the problem from the theoretical point of view and then we analyze the relationship between innovation performance and the dynamics of employment in the Polish service firms in 2004-2009. Firms that introduced new services or marketing techniques experienced stronger growth. Process innovations contributed to employment reduction. Tellingly, this effect could only be observed in 2008-2009, a subperiod which saw the lowest levels of aggregate demand. This conclusion yields support to the presumption formulated by Pianta (2005) that the impact of innovation on employment growth depends on the macroeconomic situation. |
| Keywords: | Poland, services, innovation, firm growth, quantile regression |
| JEL: | D22 L25 L80 O33 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:sec:cnstan:0453&r=ent |
| By: | Düllmann, Klaus; Koziol, Philipp |
| Abstract: | Our paper addresses firm size as a driver of systematic credit risk in loans to small and medium enterprises (SMEs). Key contributions are the use of a unique data set of SME lending by over 400 German banks and relating systematic risk to the size dependence of regulatory capital requirements. What sets our sample apart is its comprehensive coverage of the particularly rich and well developed credit market for SMEs in Germany. We estimate asset correlations as the key measure of systematic risk from historical default rates. Our results suggest that systematic risk tends to increase with firm size, conditional on the respective rating category. We also compare the size of this effect with the capital relief that has been granted in Basel II for SMEs relative to large firms. For SME loans in the corporate portfolio of the Internal Ratings-Based Approach and also for SME loans treated under the revised standardized approach of Basel II, our asset correlation estimates suggest a significantly larger relative difference from large firms than reflected in the regulatory capital requirements. -- |
| Keywords: | Asset Correlation,Basel II,Minimum Capital Requirements,Single Risk Factor Model |
| JEL: | G21 G33 C13 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:222013&r=ent |
| By: | Robert A. Margo |
| Abstract: | In a famous paper, Kenneth Sokoloff argued that the labor input of entrepreneurs was generally not included in the count of workers in manufacturing establishments in the early censuses of manufacturing. According to Sokoloff, this biased downward econometric estimates of economies of scale if left uncorrected. As a fix Sokoloff proposed a particular “rule of thumb” imputation for the entrepreneurial labor input. Using establishment level manufacturing data from the 1850-80 censuses and textual evidence I argue that, contrary to Sokoloff’s claim, the census did generally include the labor of entrepreneurs if it was economically relevant to do so, and therefore Sokoloff’s imputation is not warranted for these census years. However, I also find that the census did understate the labor input in small relative to large establishments as Sokoloff asserted, but for a very different reason. The census purported to collect data on the average labor input but, in fact, the data most likely measure the typical number of workers present. For very small establishments the reported figures on the typical number of workers are biased downwards relative to a true average but this is not the case for large establishments. As a result, the early censuses of manufacturing did overstate labor productivity in small relative to large establishments but the size of the bias is smaller than alleged by Sokoloff. |
| JEL: | N61 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19147&r=ent |
| By: | Pietro F. Peretto |
| Abstract: | This paper develops a theory of the emergence of modern innovation-driven Schumpeterian growth. It uses a tractable model that yields a closed-form solution, consisting of an S-shaped (i.e., logistic-like) time path of firm size and a set of equations that express the relevant endogenous variables – GDP, product variety and product quality, consumption, the shares of GDP earned by the factors of production – as functions of firm size. It also obtains closed-form solutions for the dates of the events that drive the economy's phase transitions as functions of the fundamentals. The resulting path of GDP per capita consists of a convex-concave profile replicating the key feature of long-run data: an accelerating phase followed by a deceleration with convergence to a stationary growth rate. Compared to other availables theories, the paper focuses on the within-industry forces that regulate the response of firms and entrepreneurs to Smithian market expansion. |
| Keywords: | Endogenous Growth, Firm Size, Market Structure, Take-off |
| JEL: | E10 L16 O31 O40 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:duk:dukeec:13-10&r=ent |