nep-ent New Economics Papers
on Entrepreneurship
Issue of 2013‒07‒05
eight papers chosen by
Marcus Dejardin
University of Namur and Universite' Catholique de Louvain

  1. Patents as Signals for Startup Financing By Annamaria Conti; Jerry Thursby; Marie C. Thursby
  2. Capital Constraints and the Performance of Entrepreneurial Firms in Vietnam By Hien Thu Tran; Enrico Santarelli
  3. Industrial Concentration of Ethnic Minority- and Women-Owned Businesses in the United States By Qingfang Wang
  4. The impact of consulting services on small and medium enterprises: evidence from a randomized trial in Mexico By Bruhn, Miriam; Karlan, Dean; Schoar, Antoinette
  5. Entry regulation and formalization of microenterprises in developing countries By Bruhn, Miriam; McKenzie, David
  6. Cannibalization, Innovation and Spin-outs By James D. Campbell; April Mitchell Franco
  7. Age or Size? Determinants of Job Creation By Lawless, Martina
  8. Entrepreneuriat féminin enquête dans l’agglomération dunkerquoise (Nord – France) Women Entrepreneurship Case Study (Dunkerque - North - France) By Sophie BOUTILLIER

  1. By: Annamaria Conti; Jerry Thursby; Marie C. Thursby
    Abstract: We examine the role of patents as signals used to reduce information asymmetries in entrepreneurial finance. A theoretical model gives conditions for a unique separating equilibrium in which startup founders file for patents to signal invention quality to investors, as well as appropriating value. The theory allows for heterogeneous investors and examine the optimal match of different types of startups, as defined by the quality of their technology, to investors who differ in the amount of non financial capital they provide. The empirical analysis is consistent with the model's predictions using a novel dataset of Israeli startups that received external funding during the period 1994-2011.
    JEL: G14 O16 O3 O34
    Date: 2013–06
  2. By: Hien Thu Tran (Centre of Commerce and Management, RMIT International University, Vietnam; Department of Economics, University of Bologna, Italy); Enrico Santarelli (Department of Economics, University of Bologna, Italy; RCEA (Rimini Centre for Economic Analysis), Italy)
    Abstract: Entrepreneurship has been among the key driving forces of the emergence of a dynamic private sector during the recent decades in Vietnam. This paper addresses for Vietnam the questions “how capital constraints affect the performance of family firms” and “how entrepreneurs’ human and social capital interact with capital constraints to leverage entrepreneurial income”. A panel of 1721 firms in 4 years is used. Results are consistent with the resource dependency approach, indicating an adverse effect of capital constraints on firm performance: firms suffering capital constraints perform substantially better, suggesting that they need more capital simply to finance newly-recognized profit opportunities. Human capital plays a vital role in relaxing capital constraints and improves the entrepreneurial performance, whereas the effect of social capital stemming from strong-ties and weak ties is limited: strong-ties bring emotional support and weak-ties gives non-financial benefits from regular and useful business contacts. Advanced econometric analysis tools to take into account the endogeneity of capital constraints are used to establish relationships among relevant variables.
    Keywords: Capital constraints, Entrepreneurship, Performance of family firms, Vietnam
    JEL: G24 L26 L25 L14
    Date: 2013–05
  3. By: Qingfang Wang
    Abstract: The number of ethnic minority and women-owned businesses has increased rapidly during the past few decades. However, the characteristics of these businesses and their owners differ by race, ethnicity, and gender. Using a confidential national survey of ethnic minority and women-owned businesses in the United States, this study examines ethnic minority- and women-owned businesses segmented by industrial sectors. Consistent with gender occupational segregation, male- and female- owned businesses have distinctive sectoral concentration patterns, with ethnic minority women- owned businesses highly concentrated in a limited number of industrial sectors. However, the relationship between business sectoral concentration and business performance is not uniform across ethnic and gender groups. Concentration in specific industrial sectors does not necessarily mean poor performance when measured by sales, size of employment or payrolls. However, for women-owned businesses, those sectors obviously pay less and have marginal profits, especially if considering the size of the firms.
    Keywords: ethnic business, female entrepreneurship, labor market segmentation, gender
    Date: 2013–06
  4. By: Bruhn, Miriam; Karlan, Dean; Schoar, Antoinette
    Abstract: Using a randomized evaluation with 432 Mexican small and medium enterprises, this paper shows that access to management consulting led to better firm performance: one-year results show positive effects on return-on-assets and total factor productivity. Owners also had large increases in"entrepreneurial spirit"(an entrepreneurs'managerial confidence index). Using Mexican social security data, the analysis finds a large increase in the number of employees and total wage bill several years after the program. The paper documents large heterogeneity in the specific managerial practices that improved as a result of the consulting, but there is no singular mechanism as a panacea for all firms.
    Keywords: Access to Finance,E-Business,Microfinance,Economic Theory&Research,Business in Development
    Date: 2013–06–01
  5. By: Bruhn, Miriam; McKenzie, David
    Abstract: The majority of microenterprises in most developing countries remain informal despite more than a decade of reforms aimed at making it easier and cheaper for them to formalize. This paper summarizes the evidence on the effects of entry reforms and related policy actions to promote firm formalization. Most of these policies result only in a modest increase in the number of formal firms, if at all. Less is known about the impact of other forms of business regulations on the performance of low-scale enterprises. Most informal firms appear not to benefit on net from formalizing, so ease of formalization alone will not lead to most of them formalizing. Increased enforcement of rules can increase formality. Although there is a fiscal benefit of doing this with larger informal firms, it is unclear whether there is a public rationale for trying to formalize subsistence enterprises.
    Keywords: Microfinance,Small Scale Enterprise,E-Business,Business in Development,Competitiveness and Competition Policy
    Date: 2013–06–01
  6. By: James D. Campbell; April Mitchell Franco
    Abstract: When an idea for a new product arrives, will it be developed and by whom? We develop a spatial model in which an idea arrives to a researcher within the firm. Products are imperfectly substitutable, so that developing a new product that is close to an existing product will cannibalize some amount of the existing product's sales, and the cost to develop a new product is higher the further it is from an existing product. Together these forces mean that there exist ideas that can be developed more efficiently by the researcher as a spin-out than by the firm (due to the cost of fit) but that the firm prefers to buy out the researcher and either develop itself or discard (due to the potential loss from cannibalization). These inefficient outcomes occur for ideas at intermediate distance from the firm's existing portfolio, and are likelier and more severe the higher is demand and the greater the degree of substitutability.
    Keywords: -
    Date: 2013
  7. By: Lawless, Martina (Central Bank of Ireland)
    Abstract: Small firms have often been identified as drivers of job creation, although the evidence on their contribution to net employment growth has been disputed. This paper shows that job turnover and firm growth vary systematically across firm size groups and that smaller firms do indeed make an important contribution to new job creation. There is a significant caveat, however; we find that it is not firm size per se that is driving these results but rather firm age. The considerable overlap between the two properties, as young firms overwhelmingly tend to be small, has perhaps led to much of the effect of firm age being misattributed to size. We show that younger firms are consistently more dynamic than older firms and this holds across all size classes, not just amongst smaller firms. In addition, a relationship between lagged employment and firm growth is found to exist only for young firms.
    Date: 2013–04
  8. By: Sophie BOUTILLIER (Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO)
    Abstract: Les femmes ont toujours travaillé. Mais, leur activité n’a été reconnue officiellement qu’à partir de la fin du 19e siècle avec le développement de l’emploi salarié et les premières lois sociales. En matière d’entrepreneuriat, la situation est comparable, la femme a joué un rôle important dans l’entreprise en tant que conjoint. A l’heure actuelle, les femmes représentent 30% des entrepreneurs. Mais, la femme est-elle un entrepreneur comme les autres ? Pour répondre à cette question, nous avons mené une enquête à Dunkerque (Nord, France), ville dans laquelle l’emploi a été longtemps salarié (ouvrier) et masculin. L’entrepreneuriat féminin est un phénomène nouveau à Dunkerque. Women have always worked, but their activity was only recognized by the law at the end of the 19th century with the development of salaried employment and the first social laws. The situation is quite the same for entrepreneurship; the woman has played an important role in the entreprise with the status of the entrepreneur’s wife. Today 30% of the entreprises are founded by women. But is woman an entrepreneur like the others? We will try to answer to this question with an investigation achieved in Dunkirk (North of France), where employment was during a long time salaried employment for (men) workers. In this town, female entrepreneurship is a new phenomenon.
    Keywords: entrepreneuriat féminin, Dunkerque, Nord
    JEL: L26
    Date: 2013–05

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