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on Entrepreneurship |
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Issue of 2013‒10‒05
seven papers chosen by Marcus Dejardin University of Namur and Universite' Catholique de Louvain |
| By: | Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto; OBEGEF; UTEN); Marlene Grande (University Technology Enterprise Network (UTEN)) |
| Abstract: | Academic and political interest in Academic Spin-offs (ASOs) has increased significantly in Portugal in the last few years. Although these firms, created to exploit the results of scientific research, are considered important contributors to employment and wealth creation, in the Portuguese case, their impact has been modest, at best. Based on a sample of 101 ASOs associated to the members of the University Technology Enterprise Network (UTEN), we found that ASOs are quite small (employing on average 9 full time equivalent individuals and a turnover of 300 thousand euros). Besides being highly R&D intensive, Portuguese ASOs are internationally-led with almost half of the respondent firms involved in exporting. An econometric analysis revealed the relevant role of certain types of S&T infrastructures and support mechanisms for the economic performance of ASOs In particular, access to incubators, access to skilled labour, and support in terms of business mentoring and counselling emerged as significantly and positively related with ASOs’ sales per worker. Moreover, their economic performance is extremely dependent on internationalization dynamics, with firms that export outperforming their domestically-based counterparts. The lack of economic return on R&D performed and patents registered by firms indicates that the steady investment in science, technology and innovation in Portugal in the last decade, although undoubtedly necessary, has not yet materialized sufficiently to push the system towards solid, productive and value added firms. Therefore, policies aimed at accelerating ideas and knowledge into internationally competitive ideas and products are required. |
| Keywords: | Academic Spin-offs; S&T infrastructures; Portugal; UTEN |
| JEL: | L25 L29 O34 O38 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:502&r=ent |
| By: | Morgan, Horatio M. |
| Abstract: | This paper examines whether equity-based financial slack in the form of relatively high levels of founding equity will systematically hurt new venture performance. Drawing on data on 445 single-founder new ventures over the period 2004-2007, it uses the propensity score matching method to estimate the average effect of equity-based financial slack on new venture performance. It finds a negative and statistically significant average effect. This implies that single-founder new ventures that started out with relatively high levels of founding equity subsequently had a relatively low rate of profitability on average. The underlying mechanisms behind this empirical finding are explored, and the implications for the development of existing theory and practice are discussed. |
| Keywords: | Financial slack; Founding equity; New venture; Propensity score matching. |
| JEL: | G32 L26 M13 |
| Date: | 2013–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50325&r=ent |
| By: | de Coulon, Sonia; Baltar, Fabiola |
| Abstract: | Literature regarding to the process of firm's start-ups has supported the idea that the entrepreneur fulfills a key role in the economic development, because of his strategic vision and as a result of his capacity to generate innovations, but also employment and economic growth. Nevertheless, recent empirical studies, have mainly tackled the process from the demand perspective, with focus on institutional, economical and context aspects that favours or hinders the development of the entrepreneurial capacities. In this sense, the entrepreneur's role, his skills, his decisions and actions have been less observed from the economical field and from the strategic decision area. Even though the debate about the importance of recognizing the subjectivity forecasting of the key drivers that impact and define the observed phenomenon is increasing. The aim of the article is to understand the innovative entrepreneur's role in the entrepreneurial process through the use of a biographic design method, so as to identify throughout his life the way he decides to initiate a firm, how he experiences the process and evaluates its performance. For that reason, it is proposed to analyze Enrique Eskenazi's entrepreneurial life, Grupo Petersen's President, one of the leading economic groups in the Argentinean business arena. His public recognition is associated to the YPF S.A's shares purchase in 2008 - the Leader oil company in the Argentinean market -, which has been recently nationalized. |
| Keywords: | Emprendedores; Rol; Dinámica Empresarial; Toma de Decisiones; |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:nmp:nuland:1828&r=ent |
| By: | Anaïs HAMELIN (LaRGE Research Center, Université de Strasbourg) |
| Abstract: | This paper explores whether the benefits and costs of affiliation with a business group (BG) are influenced by firm and BG size. We explore empirically this issue using a unique data set on French small businesses ownership. Our results show that affiliation with a BG has a positive influence on SMEs performance. This result holds when we account for firm size, BG size and endogeneity issues. Moreover, we observe that the benefits of BG affiliation diminish with firm size, which is consistent with the fact that the benefits of BG affiliation increase with information imperfection. Finally, affiliation with a small BG seems more beneficial than affiliation with a large BG. This paper contribute to the literature by showing that affiliation with a BG allows overcoming market imperfections related to organization size. |
| Keywords: | Business group, SME, Performance, Size. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:lar:wpaper:2013-10&r=ent |
| By: | FERRAGINA, Anna Maria (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy) |
| Abstract: | This report summarizes the findings of a research project using firm level data on Italian and Turkish manufacturing industries. In this project we study the dynamics of firm survival and growth, and the spillover effects from foreign-owned to domestic firms. First, we investigate the differences in survival patterns of foreign-owned and domestic firms and test the hypothesis that foreign multinational enterprises (FMNEs) display “foot-loose” behavior. Secondly, we analyse the effects of FDI on the survival and growth prospects of domestic firms by disentangling horizontal and vertical spillovers. We use hazard models for the econometric analysis of firm survival and the system-GMM and Heckman selection models for the analysis of firm (employment) growth. In the case of Italy, a comparison of survival rates of domestic and foreign firms shows that foreign firms are more likely to survive than domestic firms, although the survival rates of foreign firms are not much different than those of Italian multinational firms. To check for a more general applicability of this preliminary finding, we estimate the hazard functions for the domestic and foreign firms, controlling for a number of sector-specific and firm-specific characteristics. The results reveal that foreign firms are more “foot-loose” compared to their domestic counterparts while Italian multinationals exhibit lower hazard rates with respect to both domestic non-multinational firms and to foreign multinationals. Besides, the foreign firms’ likelihood of exit compared to domestic firms is higher in sectors with low technology- and knowledge-intensity. In the Turkish case, the simple comparison of survival rates also highlights that foreign firms are more likely to survive than Turkish firms, although the survival rates of foreign firms are not different from those of large domestic firms. Since foreign firms usually start with a larger size, use more capital-intensive technologies, survival rates may reflect the impact of entry characteristics. The hazard function estimates reveal that, when we control for sector-specific variables, foreign firms still have higher survival probabilities, but once firm-specific variables are included in the hazard function model, they appear more “foot-loose” for the 1983-2001 period. Foreign firms are more likely to survive than the domestic firms in the 2003-2009 period even after firm-specific variables are taken into account, but the inclusion of firm-specific variables reduces the impact of foreign ownership on the likelihood of survival considerably. These results for Italy and Turkey indicate that foreign ownership has not necessarily a positive impact on firm survival. Conversely, there is evidence that multinational experience matters for survival because multinational firms have larger size and may employ more capital-intensive technologies thanks to their superior financial strength and experience in other markets. Other firm-level characteristics (size, skill level, etc) are also crucial for survival. The exit behavior of foreign firms is also quite related to the technological environment due to the role played by opportunity costs, which are more relevant in low-tech industries, and by sunk investments costs, which (on average) are lower in more traditional sectors. The mixed results for Turkey across the two periods considered also highlight the importance of the institutional setting for firm survival and growth. Turkey experienced two different policy and growth regimes in the 1990s and 2000s. The 1990s, which is labeled by some researchers as the “lost decade”, is characterized by extreme uncertainty and boom-and-bust cycles, whereas the Turkish economy achieved a high and stable growth performance in the 2000s. In terms of industrial policy, the foot-loose behavior of foreign multinationals should be taken into account in designing investment incentives to attract foreign multinationals also pursuing sector specific policies and institutional reforms ensuring that managers have the right incentives to make long-term investment and to enhance absorptive capacity development. Besides, to improve the likelihood of firm survival, policy makers should target firm-specific characteristics that are crucial determinants of performance gaps in survival, primarily size, productivity and multinational activities. Concerning the issue of how the presence of foreign firms affects the domestic firms’ survival and employment growth, our findings suggest that there is a huge degree of heterogeneity across firms, periods and sectors in both countries. However, positive evidence in favour of positive spillovers is not overwhelming. In the case of Italy, the survival of domestic firms is positively affected by the increased presence of foreign firms within the same industry, but this only occurs in low- and medium-low tech industries. This result may be due to the fact that domestic firms in medium-high tech industries have not enough absorptive capacity to benefit from FDI spillovers. The relevance of domestic firms’ absorptive capacity for spillover effects is confirmed by our analysis: only domestic firms that have smaller technology gap vis-à-vis foreign firms benefit from significant horizontal and vertical (upstream) spillovers on survival. From the system GMM growth estimates we find that, in terms of FDI spillovers, there is evidence of a negative impact on domestic firms employment growth if the foreign firm share in the region employment increases (negative local spillovers), .and a negative employment impact for firms with a higher technology gap is detected if the foreign firm share in the sector increases. For Turkey, the regional share of foreign firms has a weak negative static impact on the survival rate, and an increase in the share of foreign firms in a sector also has a negative impact on survival in the 2003-2009 period. The foreign share of users seems to have positive coefficients, i.e., domestic firms will be more likely to survive if users are foreign, but these results are statistically significant only if firm-specific effects are not controlled for in the 2003-2009 period. Moreover, there is some evidence of a negative effect on survival if downstream firms are foreign in the 2003-2009 period. Regarding firm growth, foreign suppliers and change in regional share of foreign firms have strong negative impact on domestic firms' growth rates, i.e., those firms supplied by upstream foreign firms, and those firm operating in regions with an increasing foreign presence experience lower growth rates. There is also a weak negative impact of sectoral foreign share on growth whereas a weak positive impact is observed for the change in sectoral foreign share. These results do not support the broad conclusion that FDI have positive impact on firms’ indigenous survival and growth dynamics. Conversely, our findings provide not a favorable picture in terms of the balance between displacement/competition versus spillover effects of FDI on domestic firms. We also obtain evidence indicating that the interaction between the presence of foreign firms and domestic firm survival is markedly affected by the technological environment that shapes up domestic firms’ absorptive capacity. The displacement effect in dynamic industries implies that the damage is concentrated on high-tech firms, which should be the higher quality segment of national production. In terms of industrial policy, this implies that the desire to encourage FDI and simultaneously building up a stable supply of indigenous enterprises is more challenging in dynamic sectors, where a trade-off in terms of these objectives appears to exist. |
| Keywords: | International investment; Multinational firms; Duration analysis; Firm performance; International Linkages to Development |
| JEL: | C41 F21 F23 L25 O19 |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:sal:celpdp:0127&r=ent |
| By: | Manuel Portugal Ferreira (Instituto Politécnico de Leiria); Fernando Ribeiro Serra (Uninove – Universidade Nove de Julho); Benny Kramer Costa (Uninove – Universidade Nove de Julho); Emerson Maccari (Uninove – Universidade Nove de Julho); Hergos Couto (Uninove – Universidade Nove de Julho) |
| Abstract: | The ability to generate innovations and capture the rents from innovation are important for firms’ competitive advantage. Increasingly firms seek knowledge abundant locations, or industry clusters, to access novel knowledge and generate innovations through knowledge recombinations (Schumpeter, 1934). We examine how different types of clusters impact on the innovation output, the knowledge flows among the clustered firms and, ultimately, on who captures the rents from innovation. The type of cluster reflects the configuration of firms and the interactions among firms, individuals and agencies in the cluster and is likely to be a major driver of both the innovative output and of which firms will be more likely to capture the rents from innovation. Extant research has noted that the social and business networks binding firms in clusters are excellent vehicles for the flow of knowledge that eases innovations, but different types of clusters may lead to different outcomes. |
| Keywords: | clusters; types of clusters; innovation; appropriation of rents; innovation rents |
| JEL: | M0 M1 |
| Date: | 2013–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:pil:wpaper:102&r=ent |
| By: | Andrea Caggese (Pompeu Fabra University) |
| Abstract: | This paper develops the model of an industry with heterogeneous firms, and studies the effect of financing frictions and bankruptcy risk on innovation and aggregate productivity growth. The model has two main features: i) the technology of firms gradually becomes obsolete. Firms can counter this process by innovating, but the innovation outcome is risky. ii) Financial frictions cause the inefficient default of financially fragile firms, deter entry, and reduce competitive forces in the industry. I calibrate and solve the model and simulate several industries, and show that financing frictions have two distinct effects on innovation: a "direct effect", for firms that cannot innovate because of lack internal funds to invest, and an "indirect effect", where the changes in competition and profitability change also the incentives to innovate. Simulation results first show that, for realistic parameter values, the indirect effect of financing frictions is much more important than the direct effect in determining the innovation decisions. Second, they show that "Safe innovation" (where firms invest to upgrade their technology and are certain to increase their productivity) is increased by the presence of financing frictions, because the reduction in competition increases the return on innovation. Conversely "Risky innovation" (where firms invest to improve their productivity, but with some probability fail to do so and end up reducing their productivity instead), is discouraged by financing frictions. This happens because the reduction in competition implies that firms remain profitable for a longer time and therefore they wait longer before attempting a risky innovation process. I test these predictions and their implications for productivity growth on a sample of Italian manufacturing firms, and I find that the life cycle and innovation decisions of firms are fully consistent with the model with risky innovation. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed013:300&r=ent |