nep-ent New Economics Papers
on Entrepreneurship
Issue of 2013‒11‒29
thirteen papers chosen by
Marcus Dejardin
University of Namur and Universite' Catholique de Louvain

  1. Do women self-select as good borrowers? By Irene Comeig; Ainhoa Jaramillo-Gutiérrez; Federico Ramírez
  2. Women entrepreneurs in the informal economy: Is formalization the only solution for business sustainability? By Ramani, Shyama V.; Thutupalli, Ajay; Medovarski, Tamas; Chattopadhyay, Sutapa; Ravichandran, Veena
  3. The Power of Stereotyping and Confirmation Bias to Overwhelm Accurate Assessment: The Case of Economics, Gender, and Risk Aversion By Julie A. Nelson
  4. Migration, Risk Attitudes, and Entrepreneurship: Evidence from a Representative Immigrant Survey By Catia Batista; Janis Umblijs
  5. Entrepreneurial intention, values, and the reasoned action approach: results from a Russian population survey By Peter Schmidt; Alexander Tatarko; Natalia Amerkhanova
  6. Is individual social capital linked to the implementation of entrepreneurial intentions? By Alexander Tatarko
  7. Creativity as an integral element of social capital and its role for economic performance By Westlund , Hans; Andersson, Martin; Karlsson, Charlie
  8. Financing innovation in Italy: an analysis of venture capital and private equity investments By Valerio Vacca
  9. Technological competencies and firm performance: Analyzing the importance of internal and external competencies By Grillitsch, Markus; Nilsson , Magnus
  10. Innovation and survival of new firms in Chinese manufacturing, 2000-2006 By Zhang, Mingqian; Mohnen, Pierre
  11. Innovation diffusion, technological convergence and economic growth By R. Andergassen; F. Nardini; M. Ricottilli
  12. Internationalization and Performance of Italian Enterprises By Valeria Gattai
  13. Weibliche Solo-Selbstständigkeit zwischen Notwendigkeit und Innovationsherausforderung: Beobachtungen über Geschlecht und Unternehmertum in Deutschland By Bögenhold, Dieter; Fachinger, Uwe

  1. By: Irene Comeig (Department of Finance, U. of Virginia, USA & U. of Valencia, Spain); Ainhoa Jaramillo-Gutiérrez (LEE-Department of Economics, Universitat Jaume I-Castellón, ERICES-University of Valencia, Spain); Federico Ramírez (Department of Finance, University of Valencia, Spain)
    Abstract: A key question in credit markets is how to disclose borrowers’ private information. Typically, banks offer incentive compatible contracts (with collateral) to induce borrowers to disclose their private information. However, if men and women systematically differ in their risk taking behavior, contract choices in the self selection mechanism with collateral may differ. If women are particularly averse to financial risk, they may be classified as high risk borrowers thus not receiving the loan designed for the good borrowers, or even suffering credit rationing. In this paper, we conduct a laboratory experiment on financial decision making in three different European countries designed to study systematic gender differences in self selection. Our results show that incentive compatible contracts with collateral fail to disclose women private information, while they disclose men private information. Thus, low risk women borrowers do not self select as “theoretical” good borrowers. Beside this contribution, our results show that gender differences arise when subjects face low failure probabilities. We provide some suggestive evidence on differences in probability weighting between men and women.
    Keywords: adverse selection, behavioral finance, gender, credit screening, self-selection
    JEL: C91 D03 D82 G32
    Date: 2013
  2. By: Ramani, Shyama V. (Brunel University, UNU-MERIT, and STI4Change); Thutupalli, Ajay (UNU-MERIT); Medovarski, Tamas (STI4Change); Chattopadhyay, Sutapa (UNU-MERIT); Ravichandran, Veena (IDRC)
    Abstract: The existing marketing, strategy and economics literature have little to offer by way of recommendations to promote entrepreneurship in the informal economy, except to advocate that multinationals, local firms, state and public agencies should work together to bring the informal economy into the fold of the formal economy. In contrast, this paper argues that the business sustainability of women entrepreneurs in the informal economy depends upon their engagements or business partnerships with other women (and men) and women-focussed intermediaries. More than formalization, women entrepreneurs need 'spaces' for dialogue with other women (and men) to learn and build business capabilities. Both the State and firms wanting to penetrate the informal economy can create such spaces through partnerships with NGOs and women-focussed organizations. While formalization of entrepreneurial activity is favourable under some circumstances, it can be detrimental under others - necessitating a case by case evaluation rather than a general rule. In order to ensure the business sustainability of women's ventures in the informal economy, any sort of formalization must occur through a gradual process accompanied by intermediaries. These results are formulated through the compilation and analysis of the existing literature and the study of six detailed case studies of women entrepreneurs from developing countries validated by extensive interviews. The results are then used to propose a closed model of linkages between formal and informal economies which has novel organizational implications for firms competing to establish consumer bases and business partnerships in the Base of Pyramid (BoP) markets of developing countries.
    Keywords: Informal economy, entrepreneurship, gender, business sustainability
    JEL: L26 B54 E26
    Date: 2013
  3. By: Julie A. Nelson
    Abstract: Behavioral research has revealed how normal human cognitive processes can tend to lead us astray. But do these affect economic researchers, ourselves? This article explores the consequences of stereotyping and confirmation bias using a sample of published articles from the economics literature on gender and risk aversion. The results demonstrate that the supposedly “robust†claim that “women are more risk averse than men†is far less empirically supported than has been claimed. The questions of how these cognitive biases arise and why they have such power are discussed, and methodological practices that may help to attenuate these biases are outlined.
    Keywords: stereotyping, bias, confirmation bias, gender, risk aversion, effect size, index of similarity
    JEL: D83 D03 D81 J16 B41 C9
    Date: 2013–11
  4. By: Catia Batista (Universidade Nova de Lisboa); Janis Umblijs (Ragnar Frisch Centre for Economic Research)
    Abstract: Do more risk loving migrants opt for self-employment? This is a question especially relevant for policy makers designing selective immigration policies in countries of destination. In order to provide a rigorous answer to it, we use a novel vignette-adjusted measure of risk preferences in the domain of work to investigate the link between risk aversion and entrepreneurship in migrant communities. Using a representative household survey of the migrant population in the Greater Dublin Area, we find a significant negative relationship between risk aversion and entrepreneurship. In addition, our results show that the use of vignettes improves the significance of the results, as they correct for differential item functioning (where respondents interpret the self-evaluation scale in different ways) between entrepreneurs and non-entrepreneurs, and corrects for variation in the use of self-evaluation scales between migrants from different countries of origin.
    Keywords: Migration, Risk Aversion, Entrepreneurship
    JEL: F22 J01 J15 J61 L26
    Date: 2013–11
  5. By: Peter Schmidt (University of Giessen and National Research University Higher School of Economics (HSE) Moscow, Russia.); Alexander Tatarko (National Research University Higher School of Economics(HSE) Moscow, Russia.); Natalia Amerkhanova (National Research University Higher School of Economics(HSE) Moscow, Russia.)
    Abstract: This article examines the relationship between value orientations and entrepreneurial intention according to the reasoned action approach. The empirical base of this study are the results of a representative survey conducted in 2 regions of Russia (Central Federal District and the North Caucasian Federal District). The effective total sample size was 2,058 and a subsample of 269 was selected. The subsample was composed of the respondents intending to open a business in the next 2 years. The results of research, carried out in the framework of reasoned action approach, allowed us to confirm the validity of the theory of planned behavior (TPB) in the Russian sample. It was also found that the values included in the block of self-direction autonomy of action are positively associated with the components of model of entrepreneurial planned behavior (attitudes, subjective norm, perceived behavioral control)
    Keywords: theory of planed behavior, theory of basic individual values, entrepreneurial behavior.
    JEL: Z
    Date: 2013
  6. By: Alexander Tatarko (National Research University Higher School of Economics. International Laboratory of Socio-Cultural research. Senior Researcher)
    Abstract: The present study reveals the role of individual social capital in the implementation of a person’s intention to start their own business and reveals how individual social capital contributes to this action. The basic premise of our study is that individual social capital facilitates people’s implementation intention to start their own business. The sample consists of a group of respondents (N=269) who intended to start their own business (intenders) and another group (non-intenders) who did not intend to (N=270). We combined the reasoned action approach (Fishbein & Aizen, 2010) with the individual social capital approach (Van Der Gaag & Snijders, 2004) to study intention and implementation. The study showed that the intenders had more resources provided by formal (organizations and associations) and informal networks and relationships. These resources had a direct and indirect impact (through the perceived behavioral control) on their intention to start their own business. We concluded, that individual social capital can facilitate the implementation of entrepreneurial intention. A year later, we performed panel research and carried out another study by re-interviewing respondents who had expressed their intention to start their own business in the next 2 years. It was found that respondents who opened a business only a year later had higher social capital than those who did not. To explain the psychological mechanism underling the relation between intention and implementation, we use the term “the buffering effect of social support”, which means that people who feel potential support are less susceptible to stressful situations and circumstances than people who do not feel potential support.
    Keywords: words: individual social capital, entrepreneurial intention, theory of planned behavior, the buffering effect of social support, perceived behavioral control
    JEL: Z13
    Date: 2013
  7. By: Westlund , Hans (Royal Institute of Technology Stockholm & Jönköping International Business School); Andersson, Martin (CIRCLE, Lund University & Blekinge Institute of Technology, Karlskrona); Karlsson, Charlie (CESIS, Jönköping International Business School & Blekinge Institute of Technology, Karlskrona)
    Abstract: In this paper, we focus on the connections between creativity, social capital and economic performance and growth. Our working hypothesis is that both creativity and social capital influences the economy, both each per se, but also through their influence on each other. We regard creativity as one of the sources of entrepreneurship and innovation (although creativity also can have ‘bad’ consequences if bad actors such as criminals perform it). Depending on the types of networks and the norms and values being distributed in them, social capital can promote entrepreneurship and innovation and thus economic growth, but social capital can have an inhibiting effect on entrepreneurship and innovation. Social capital can contribute to creativity by dynamic networks and/or values and attitudes that promote experimentation, but social capital can also counteract creativity by rigid networks and values that support status quo. Efforts to defend status quo might be creative in a sense, but the creativity that we focus on in this paper, that with positive impact on economic growth, is only found in the social capitals that support economic growth and change.
    Keywords: Creativity; social capital; norms; values; attitudes; institutions; networks; innovation; entrepreneurship; economic performance; economic growth
    JEL: D80 L14 L26 O31 O43 R11
    Date: 2013–11–22
  8. By: Valerio Vacca (Bank of Italy)
    Abstract: Using a unique data set, this paper describes the main features of the venture capital industry in Italy. Operations by Italian specialised venture capitalists are only in part devoted to small, young firms from advanced industries, have a rather short duration and are weakly focused on a few firms or sectors. Furthermore, young innovative firms receiving private-equity capital – from both ‘venture-capital’ funds and other private-equity funds – are usually also financed by banks, both at the start and the end of the investment, and the fund’s commitment tends to reduce the cost of credit to only a limited extent. Overall, an ‘equity-then-credit’ sequence does not clearly emerge in the financing strategies of young and high-tech Italian firms, suggesting that funds play a weak signalling or scouting role vis-à-vis the banking system.
    Keywords: venture capital, SMEs, innovation financing
    JEL: G21 G23 G24
    Date: 2013–10
  9. By: Grillitsch, Markus (CIRCLE, Lund University); Nilsson , Magnus (CIRCLE, Lund University)
    Abstract: In this paper, we analyze the relationship between technological competencies (TC) and firm performance. Theoretically, the importance of TC is well established and widely accepted. Therefore, it is surprising that a number of empirical studies have been unable to confirm a substantial positive relationship between TC and firm performance. We identify two major reasons for this: [i] affected by the availability and choice of indicators existing studies are often biased towards large firms; and [ii] they frequently do not consider both internal and potential access to firm-external TC. This paper discusses conceptually the interplay between firm-internal and firm-external TC as well as the mediating effect of firm size. These relationships are then analyzed empirically using Swedish micro data on 15,682 firms in 290 Swedish municipalities. Novel indicators based on occupational statistics are combined with measures of time-distance accessibility to study internal and external TC. The results provide evidence for a positive relationship between firm growth and TC. In particular, the combination of firm-internal and firm-external competencies seems to be conducive for growth. Lastly, our study suggests that firm size is an important factor to further our understanding about these relationships. Based on this we identify a number of future research questions to be addressed.
    Keywords: technological competencies; firm performance; accessibility; knowledge; innovation; geography
    JEL: L25 O18 O30
    Date: 2013–09–19
  10. By: Zhang, Mingqian (Shanghai International Studies University); Mohnen, Pierre (UNU-MERIT / MGSoG)
    Abstract: Using a large dataset of over 100,000 Chinese firms created between 2000 and 2006, we explore whether there is a link between innovation effort (R&D) or innovation output (the share of innovative sales) and the firm's duration of survival. We estimate a complementary log-log model with time-varying explanatory variables controlling for individual heterogeneity. We find that innovative firms tend to survive longer, more so because of R&D than because of introducing new products. There seems to be an inverted-U relationship between R&D or innovation output and long-term survival, suggesting that too much R&D or product innovation can cause firms to die, perhaps because of excessive risk. Survival has a cyclical behaviour, and it varies across provinces. It also varies with ownership. State-owned firms have a higher hazard rate than privately-owned firms, which have a higher hazard rate than foreign-owned firms.
    Keywords: firm survival, complementary log-log duration models, China, innovation
    JEL: L25 O32 O38
    Date: 2013
  11. By: R. Andergassen; F. Nardini; M. Ricottilli
    Abstract: The paper investigates the mechanics through which novel technological principles are developed and diffused throughout an economy consisting of a technologically heterogeneous ensemble of firms. In the model entrepreneurs invest in the discovery and in the diffusion of a technological principle and their profit flow depends on how many firms adopt the innovation and on how long it takes other entrepreneurs to improve it. We show that technological convergence emerges from the competition among entrepreneurs for the profit flow and characterize the economy's growth rate.
    JEL: O31 O33 O41 E19
    Date: 2013–11
  12. By: Valeria Gattai
    Abstract: This paper surveys recent contributions about internationalization and performance of Italian enterprises. It covers both theoretical and empirical studies taking a microeconomic perspective and studying a potential link between firms’ global involvement and heterogeneity in economic, human capital & innovation and financial measures. The discussion is organized in an intuitive and non-technical way. More than 40 papers are analyzed from a multifaceted perspective, considering their research outline, internationalization measures, performance indicators, causality and results.
    Keywords: Internationalization, Performance, Italy, Firm-level data, Survey
    JEL: F1 F2 L2
    Date: 2013–11
  13. By: Bögenhold, Dieter; Fachinger, Uwe
    Abstract: The paper combines conceptual thoughts on the development of self-employment within stratified modern societies with empirical reflections based on public census data for Germany. Talk about the rise and future of self-employment must be linked to the discussion about changes in the structure of occupations, labour markets and regulations. The more or less steady increase of the service sector as well as the continuous rise of the liberal professions mirror changes within the category of self-employment. All different items are embedded into a general trend of a growing knowledge society. A fundamental question is how gender matters when investigating these trends. Do we find specific “gender patterns” within recent developments of an increasing expansion of self-employment e.g. in Germany, or will the new chances and risks lead to a greater equality of opportunities? Is the increase of solo-self-employment of females driven by the need to earn a living, or is it the result of females taking the risk e.g. to become more economically independent? Prima facie, we learn to acknowledge that the rise of self-employment is mostly supported by the rise of micro-firms and solo-self-employment, of which especially solo-self-employment is a female domain. The independent liberal professions also indicate a significant revival of female labour. The research tries to delve deeper into the different segments of the employment system and to connect empirical findings with the theoretical discussion on professional groups in modern capitalist societies. One basic question is whether female solo-self-employment is primarily driven by necessity in order to take part in the labour market or if those emerging activities reflect new innovative modes of labour market integration and reveal new opportunities and markets which are, in wide parts, especially due to the development of the service and health care sector.
    Keywords: Weibliche Solo-Selbständigkeit, Gender, freiberufliche Tätigkeit
    JEL: Z1 Z13
    Date: 2013

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