nep-ent New Economics Papers
on Entrepreneurship
Issue of 2013‒11‒16
eight papers chosen by
Marcus Dejardin
University of Namur and Universite' Catholique de Louvain

  1. Here Be Startups: Exploring a young digital cluster in Inner East London By Max Nathan; Emma Vandore
  2. Intergenerational Transmission of Self-Employed Status in the Informal Sector: A Constrained Choice or Better Income Prospects? Evidence from seven West-African Countries By Pasquier-Doumer, Laure
  3. ENTREPRENEURSHIP OVER THE BUSINESS CYCLE By Yu, Li; Orazem, Peter; Jolly, Robert W.
  4. The Local Dimension of SME and Entrepreneurship Issues and Policies in Mexico By Jonathan Potter; Marco Marchese; Maryann Feldman; Tom Kemeny; Helen Lawton-Smith; Andy Pike
  5. Liquidity, Risk, and Occupational Choices By Bobba, Matteo; Bianchi, Milo
  6. Creative Destruction with Credit Inflation By Qichun He; Heng-fu Zou
  7. Patent Value and Citations: Creative Destruction or Strategic Disruption? By David S. Abrams; Ufuk Akcigit; Jillian Popadak
  8. Collective institutional entrepreneurship and contestations in wind energy in India By Suyash Jolly; Rob Raven

  1. By: Max Nathan; Emma Vandore
    Abstract: The digital industries cluster known as 'Silicon Roundabout' has been quietly growing in East London since the 1990s. Now rebranded 'Tech City', it is now the focus of huge public and government attention. National and local policymakers wish to accelerate the local area's development: such cluster policies are back in vogue as part of a re-awakened interest in industrial policy in many developed countries. Surprisingly little is known about Tech City's firms or the wider ecosystem, however, and existing cluster policies have a high failure rate. This paper performs a detailed mixed-methods analysis, combining rich enterprise-level data with semi-structured interviews. We track firm and employment growth from 1997-2010 and identify a number of distinctive features: branching from creative to digital content industries, street-level sorting of firms, the importance of local amenities and a lack of conventional cluster actors such as universities or anchor businesses. We also argue that the existing policy mix embodies a number of tensions, and suggest areas for improvement.
    Keywords: Digital economy, cities, clusters, innovation, London, Silicon Roundabout, Tech City
    JEL: L2 L52 M13 O18 O31 R11
    Date: 2013–11
  2. By: Pasquier-Doumer, Laure
    Abstract: This paper aims at highlighting the debate on firm heterogeneity in the informal sector by testing whether entrepreneurial familial background impacts informal businesses outcomes in the West African context. In the USA, a literature aiming at understanding the high intergenerational correlation of the self-employed status shows that children of self-employed have better business performance than children of wage earners. However, it is not obvious that this result could be generalised to developing countries. Using 1-2-3 surveys collected in the commercial capitals of seven West African countries in 2001–02, this paper shows that children of self-employed, who own an informal business, do not have better business outcomes than children of wage earners, except when they choose a familial tradition in the same sector of activity. Thus, in the West African context, having a self-employed father seems not sufficient for the transmission of valuable skills and does not provide any advantage in terms of value added or sales if the activity is different from that of the father. On the other hand, informal entrepreneurs who have chosen a specific enterprise based on familial tradition have a competitive advantage. Their competitive advantage is partly explained by the transmission of enterprise-specific human capital, acquired through experiences in the same type of activity and by the transmission of social capital that guarantees a better clientele and a reputation.
    Keywords: informal sector; Entrepreneurship; Intergenerational link; Human capital; secteur informel; entreprenariat; lien intergénérationnel; capital humain;
    JEL: L26 J24 J62
    Date: 2013
  3. By: Yu, Li; Orazem, Peter; Jolly, Robert W.
    Abstract: The fraction self-employed rises in recessions because wage work is more sensitivethan self-employment to the business cycle, not because of necessityentrepreneurship. Graduating during a recession reduces the probability of starting a business forthe next 11 years.
    Keywords: Entrepreneurship; Boom; Bust; Delay; Graduates
    JEL: J2
    Date: 2013–10–28
  4. By: Jonathan Potter; Marco Marchese; Maryann Feldman; Tom Kemeny; Helen Lawton-Smith; Andy Pike
    Abstract: This report presents the results of the local component of the OECD Review of SME and Entrepreneurship Issues and Policies at National and Local Levels in Mexico. It draws on case studies conducted in the two states of Morelos and Queretaro and examines regional disparities in entrepreneurship activity in Mexico; the governance of entrepreneurship and SME policies, focusing on coordination between national and local policies and how national programmes are tailored to the different state development needs; and policies at state level to support workforce and entrepreneurship skills, business innovation and industry-university knowledge flows, access to finance, and improvements in business regulations.
    Date: 2013–10–31
  5. By: Bobba, Matteo; Bianchi, Milo
    Abstract: We explore which financial constraints matter the most in the choice of becoming an entrepreneur. We consider a randomly assigned welfare program in rural Mexico and show that cash transfers signi cantly increase entry into entrepreneurship. We then exploit the cross-household variation in the timing of these transfers and nd that current occupational choices are signi cantly more responsive to the transfers expected for the future than to those currently received. Guided by a simple occu- pational choice model, we argue that the program has promoted entrepreneurship by enhancing the willingness to bear risk as opposed to simply relaxing current liquidity constraints.
    Keywords: insurance; entrepreneurship; Financial constraints; liquidity;
    JEL: O16 G20 L26
    Date: 2013–04
  6. By: Qichun He (Central University of Finance and Economics); Heng-fu Zou (Development Research Group, World Bank)
    Abstract: We propose creative destruction as the channel for inflation to impact growth. The banks reap revenue from higher rates of credit growth, attracting more labor into banks and decreasing the profit of entrepreneurs. But when the revenue is achieved by issuing more credit to entrepreneurs, part of the revenue goes to entrepreneurs, attracting more resources into R&D. When banks retain a larger share of the revenue, the former effect dominates and credit inflation retards growth. When entrepreneurs get the larger share, the latter effect dominates and credit inflation increases growth. The welfare implications are also analyzed. Empirical evidence from the U.S. and China is provided.
    Keywords: Creative Destruction, Credit Inflation, Credit Demand Function, Nash Bargaining
    JEL: E31 G21 O31
    Date: 2013–08
  7. By: David S. Abrams (Penn Law School & Wharton Business Economics & Public Policy Department, University of Pennsylvania,); Ufuk Akcigit (Department of Economics, University of Pennsylvania & NBER); Jillian Popadak (Wharton Business Economics & Public Policy Department, University of Pennsylvania)
    Abstract: Prior work suggests that more valuable patents are cited more and this view has become standard in the empirical innovation literature. Using an NPE-derived dataset with patent-specific revenues we find that the relationship of citations to value in fact forms an inverted-U, with fewer citations at the high end of value than in the middle. Since the value of patents is concentrated in those at the high end, this is a challenge to both the empirical literature and the intuition behind it. We attempt to explain this relationship with a simple model of innovation, allowing for both productive and strategic patents. We find evidence of greater use of strategic patents where it would be most expected: among corporations, in fields of rapid development, in more recent patents and where divisional and continuation applications are employed. These findings have important implications for our basic understanding of growth, innovation, and intellectual property policy.
    Keywords: productive innovation, defensive innovation, patents, creative destruction, citations, patent value, competition, intellectual property, entrepreneurship, strategic patenting, defensive patenting, patent thickets, fencing patents.
    JEL: O3 L2 K1
    Date: 2013–11–05
  8. By: Suyash Jolly; Rob Raven
    Abstract: With 19550 MW installed in 2013, India is considered a success story in terms of net installed capacity of wind power. Few existing studies on wind energy in India have highlighted the important role of institutions, and most lack a detailed account of how influential institutions came about through the work of advocacy groups, or tend to focus on short time periods. This paper uses the notion of collective institutional entrepreneurship to analyse institutionalisation of wind energy in India across three time periods (1985–1995, 1995-2003, and 2003-2013). The analysis shows that wind power development in India was driven by efforts of collective institutional entrepreneurs using two aggregated strategies, i.e. (1) creation of supportive techno-economic and socio-political networks; (2) creation of an indigenous innovation infrastructure. The paper highlights setbacks, controversies, contestations and tensions between various actor groups in collective institutional entrepreneurship and argues that actions must be taken for inclusion of actors who have been marginalized in the process.
    Keywords: wind energy, India, collective institutional entrepreneurship
    Date: 2013–11

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