nep-ent New Economics Papers
on Entrepreneurship
Issue of 2013‒12‒06
eleven papers chosen by
Marcus Dejardin
University of Namur and Universite' Catholique de Louvain

  1. Innovation, Entrepreneurship and Knightian Uncertainty By Amarante, M; Ghossoub, M; Phelps, E
  2. Housing Collateral and Entrepreneurship By Martin C. Schmalz; David A. Sraer; David Thesmar
  3. Local Clusters of Entrepreneurs -neighborhood peer effects in entrepreneurship? By Andersson, Martin; Larsson , Johan P.
  4. The Decision to Become an Entrepreneur and the Firm Size Distribution: A Unifying Framework for Policy Analysis By Poschke, Markus
  5. Entrepreneurial Opportunity Recognition and Exploitation in the Academia: a Dynamic Process of Networking? By Huang Vogel, Eleonore
  6. Entrepreneurial tail risk: implications for employment dynamics By Thorsten Drautzburg
  7. Job machine, think tank, or both: What makes corporate spinoffs different? By Fryges, Helmut; Müller, Bettina; Niefert, Michaela
  8. External capital access and new product launch in start-up firms with uncertain intellectual property rights By Heger, Diana; Hussinger, Katrin
  9. Non-standard Employment, Working Time Arrangements, Establishment Entry and Exit By Jochen Späth
  10. Innovation Determinants over Industry Life Cycle By Tavassoli, Sam
  11. Barreiro – Modelo para a implementação de um Agência de Investimento Local By Rosa, Frederico

  1. By: Amarante, M; Ghossoub, M; Phelps, E
    Date: 2013–11–08
  2. By: Martin C. Schmalz; David A. Sraer; David Thesmar
    Abstract: This paper shows that collateral constraints restrict entrepreneurial activity. Our empirical strategy uses variations in local house prices as shocks to the value of collateral available to individuals owning a house and controls for local demand shocks by comparing entrepreneurial activity of homeowners and renters operating in the same region. We find that an increase in collateral value leads to a higher probability of becoming an entrepreneur. Conditional on entry, entrepreneurs with access to more valuable collateral create larger firms and more value added, and are more likely to survive, even in the long run.
    JEL: G3
    Date: 2013–11
  3. By: Andersson, Martin (CIRCLE, Lund University, Sweden and Blekinge Institute of Technology); Larsson , Johan P. (Centre for Entrepreneurship and Spatial Economics (CEnSE), Department of Economics, Finance and Statistics, Jönköping International Business School (JIBS), Jönköping)
    Abstract: Entrepreneurial activity is significantly predicted by the presence of other entrepreneurs in the residential neighborhood. One plausible source of such spatial clustering is local peer effects, where individuals’ decisions to become entrepreneurs are influenced by entrepreneurial neighbors. Using geo-coded matched employer-employee data for Sweden, we find that sharing residential neighborhood with established entrepreneurs has a statistically significant and robust influence on the probability than an individual leaves employment for entrepreneurship. An otherwise average neighborhood with a 5 percentage point higher entrepreneurial intensity all else equal produces between 7 and 8 more entrepreneurs per square kilometer, each year. Local peer effects appear as important in explaining local clusters of entrepreneurs, and imply a local feedback-effect in which the presence of established entrepreneurs in a neighborhood breeds new local entrepreneurs
    Keywords: entrepreneurship; clusters; peer effects; local social interactions; role models; neighborhood; social network externalities; path dependence
    JEL: J24 L26 R12 R23
    Date: 2013–11–25
  4. By: Poschke, Markus (McGill University)
    Abstract: Developing and emerging economies have high entrepreneurship rates and relatively many small firms. There is enormous heterogeneity among these firms and entrepreneurs. This paper presents a simple occupational choice model that captures motives for entrepreneurship at both edges of the size distribution. The model is then used to analyse the effects of productivity growth, distortions, financial and labor market frictions, and risk. Capturing entrepreneurship across the size distribution allows for different reactions of high- and low-ability entrepreneurs to changes in policies and the environment. These may result in powerful general equilibrium effects. In particular, policies affecting high-ability entrepreneurs potentially running large firms can indirectly have a strong effect on entry by low-ability entrepreneurs and thus on the prevalence of small firms.
    Keywords: entrepreneurship, firm entry and exit, development, labor market regulation
    JEL: J24 L26 O11 O17
    Date: 2013–11
  5. By: Huang Vogel, Eleonore (CSIR, Blekinge Inst of Technology)
    Abstract: Academic Entrepreneurship has drawn large research interest over the last decade. However, few research focus on the processes behind entrepreneurial behavior in favor of more “linear” perspectives such as the individuals´ transformation from an academic to an entrepreneur measured by e.g. number of start-ups. This paper focuses on entrepreneurial opportunities, its nature and source, and speaks for the usefulness of a social network perspective on academic entrepreneurship. Inter-disciplinary literature is reviewed for research on the significance of social network to entrepreneurial behavior of academics, or more precisely; social networks significance to opportunity recognition, evaluation and exploitation among entrepreneurial academics. Academic entrepreneurial actions are viewed as non-isolated, non-deterministic, and dynamic co-creations through social networks. Finally concluding remarks, hypotheses and research ideas are presented in which the commercialization process may not be seen as a linear but dynamic process, the opportunity may be created or originate in new knowledge and in turn may be recognized by any member within the academic´s social network and that encouragement and various resources necessary for entrepreneurial action may be added by yet others within the network.
    Keywords: academic entrepreneurship; networks; opportunity recognition; innovation; co-creation
    JEL: I23 I24 L26 O31
    Date: 2013–11–29
  6. By: Thorsten Drautzburg
    Abstract: New businesses are important for job creation and have contributed more than proportionally to the expansion in the 1990s and the decline of employment after the 2007 recession. This paper provides a framework for analyzing determinants of business creation in a world where new business owners are exposed to idiosyncratic risk due to initial imperfect diversification. This paper uses this framework to analyze how entrepreneurial risk has changed over time and how this has affected employment in the US. Conditions are provided under which entrepreneurial risk can be identified using micro data on the size distribution of new businesses and their exit rates. The baseline model considers both upside and downside risk. Applied to US time series data, structural estimates suggest that higher upside risk explains much of the high job creation in the late 1990s. Time variation in risk explains around 40% of the variation in employment of new businesses. Reduced form results show that this relationship is strongest in IT-related industries. When restricting the model to a single risk factor, the explanatory power for employment drops by 25% to 50% compared to the baseline estimates.
    Keywords: Employment ; Entrepreneurship ; Risk
    Date: 2013
  7. By: Fryges, Helmut; Müller, Bettina; Niefert, Michaela
    Abstract: One way through which knowledge and technology transfer can take place is through the foundation of new firms by former employees of incumbent private firms. In this paper, we examine whether knowledge transferred from the incumbent causally affect employment growth and postentry innovation activities of the new firm. We focus on start-ups for which a new idea (a new product, technology, production process or management concept), which the founder developed during her work as an employee, was essential for setting up the new business. These firms are denoted corporate spinoffs. Using data from German start-ups founded in the period from 2005 to 2008, we apply nearest neighbour propensity score matching. We find that corporate spinoffs outperform other start-ups founded by former employees of incumbent private firms that are not based on an essential idea in terms of post-entry innovation activities. However, we cannot show that corporate spinoffs benefit from the transferred idea in terms of employment growth. We conclude that a transferred idea is primarily an input factor and a stimulus for subsequent post-entry innovation activities of corporate spinoffs. --
    Keywords: knowledge and technology transfer,corporate spinoffs,propensity score matching,KfW/ZEW Start-Up Panel
    JEL: L26 L25 O31 C21
    Date: 2013
  8. By: Heger, Diana; Hussinger, Katrin
    Abstract: Classical patent literature assumes that patents grant well-defined legal rights to exclude others from practicing an invention. In this scenario, start-up companies benefit from the exclusive right to commercialize patent-protected inventions and the certification effect of patents which signals the ventures' 'quality' to investors. If the decision about patent applications is pending at the patent office patent rights become probabilistic and both effects may not realize. We show that start-up companies are reluctant to launch new products if patents are pending. Further, pending patents attract risk-seeking investors (venture capitalists), while more cautious investors (banks) do not react on pending patents. --
    Keywords: start-ups,patents,probabilistic patents,pending patents,access to finance,new product launch
    JEL: L26 O31 O34
    Date: 2013
  9. By: Jochen Späth
    Abstract: This paper addresses the issue if and to what extent young firms differ from incumbents regarding the use of non-standard employment, trust-based working time arrangements and overtime hours in the light of the qualitative changes of employment structures that are taking place in industrialized countries, such as rising shares of non-standard employment and borders between work and private life that become increasingly blurred. Based on a microeconometric analysis of the IAB Establishment Panel, a representative survey of about 16,000 employers in Germany, we find that young establishments rely significantly more often on limited contracts and freelance work than incumbent businesses in order to hedge the higher risks and uncertainties of young firms. Likewise, trust-based working time arrangements and overtime hours are more an issue in young than in incumbent firms, indicating a higher level of subjectivated work in young firms. Additionally, we provide basic evidence that these differences are not purely transitory but on the contrary rather stable as the firms grow older, which makes young firms contribute a substantial part to the ongoing qualitative changes of employment structures.
    Keywords: start-ups, trust-based working hours, overtime, team work, job quality, non-standard employment
    JEL: L26 J23 D22
    Date: 2013–11
  10. By: Tavassoli, Sam (CSIR, Blekinge Inst of Technology)
    Abstract: This paper analyzes how the influence of firm-level innovation determinants varies over the industry life cycle. Two sets of determinants are distinguished: (1) determinants of a firm’s innovation propensity, i.e. the likelihood of being innovative and (2) determinants of its innovation intensity, i.e. innovation sales. By combining the literature emphasizing firms’ internal resources (micro level) with the research strand on the role of the industry context (meso-level), the paper develops hypotheses about the relative importance of firm-level innovation determinants over the industry life cycle. Estimation of a firm-level model of innovation in Sweden, while acknowledging the stage of the life cycle of the industry a firms belongs to, shows that the importance of the determinants of innovation propensity and intensity are not equal over the stages of an industry’s life cycle.
    Keywords: Determinants of innovation; innovation intensity; innovation propensity; Industry Life Cycle (ILC); Community Innovation Survey (CIS4)
    Date: 2013–12–02
  11. By: Rosa, Frederico
    Abstract: This document, intended to be discuss and criticized, aims for the implementation on the city of Barreiro, Portugal, of a Local Investment Agency. The final objective of such project is to allow entrepreneurs and investors to build in the city new ventures that can create employment, build an entrepreneurship culture, and develop local talent. It also focus on networking as the foundation to gain efficiency and economies of scale that can turn local and small SME´s into a large cooperation that, with the managerial and strategic help of the agency, can produce results in external markets.
    Keywords: PME; Start-ups; Agencia Investimento; Economia Local; Empreendedorismo; Financiamento; Capital de Risco; Emprego; Internacionalização; Networks; Estratégia
    JEL: F00 F12 F22 H89 M10 M13 M21 O43 O49
    Date: 2013–06

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