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on Entrepreneurship |
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Issue of 2013‒12‒15
twelve papers chosen by Marcus Dejardin University of Namur and Universite' Catholique de Louvain |
| By: | Danakol, Seçil Hülya (Utrecht University); Estrin, Saul (London School of Economics); Reynolds, Paul (Aston University); Weitzel, Utz (Radboud University Nijmegen) |
| Abstract: | This paper explores the effects of foreign direct investment, measured by mergers and acquisitions, on domestic entrepreneurial entry. We use a micro‐panel of more than two thousand individuals disaggregated by industry in seventy countries including both developed and developing economies, 2000‐2009. The theory yields ambiguous predictions about the relationship between FDI and entrepreneurship; positive spillovers via dissemination of technology or negative because of crowding out. Our empirical analysis is conducted at three levels of aggregation. We find the relationship between FDI and domestic entrepreneurship in aggregate and intra‐industry to be negative. Policies need to consider how to counteract this effect. |
| Keywords: | foreign direct investment, entrepreneurship, new firm entry, spillovers |
| JEL: | F23 M13 L26 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7796&r=ent |
| By: | Stel, Nora (Maastricht School of Management); Naudé, Wim (Maastricht School of Management) |
| Abstract: | The instability and informality that characterize hybrid political orders and its effects on entrepreneurs remains largely unexplored in the scholarly literatures. In this paper we provide initial findings from the case of entrepreneurs' access to electricity in Lebanon. Using quantitative and qualitative methods we find that political connections significantly influence the investment decisions of entrepreneurs and the performance of their firms. In general, a hybrid political order imposes a 'tax' on entrepreneurship by channelling entrepreneurial talent into lobbying and bribery; by reinforcing male and family-owned dominance in business; and by skewing investment decisions. Specifically, we find that family firms whose entrepreneurs engage in bribery, and who obtain government contracts alleviate electricity problems and perform better. |
| Keywords: | entrepreneurship, development, political economy, electricity, infrastructure, Middle East, Lebanon, hybrid political order |
| JEL: | L26 M48 O17 O53 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7795&r=ent |
| By: | Batista, Catia (Universidade Nova de Lisboa); Umblijs, Janis (Ragnar Frisch Centre for Economic Research) |
| Abstract: | Do more risk loving migrants opt for self-employment? This is a question especially relevant for policymakers 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 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7781&r=ent |
| By: | James Benjamin Bailey |
| Abstract: | Is the difficulty of purchasing health insurance as an individual or small business a major barrier to entrepreneurship in the United States? I answer this question by taking advantage of the natural experiment provided by the Affordable Care Actâs dependent coverage mandate, which allowed many 19-25 year olds to acquire health insurance independently of their employment. This mandate provides a means to estimate the number of potential entrepreneurs discouraged by the current system of employer-based health insurance. A difference-in-difference strategy finds that the dependent coverage mandate led to a 13-24% increase in self-employment among the treated group. The effect is found to be larger for women and for unincorporated businesses. An instrumental variables strategy finds that those actually receiving health insurance coverage as dependents were much more likely to start businesses. |
| JEL: | L26 J20 I13 I18 |
| Date: | 2013–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:jmp:jm2013:pba1129&r=ent |
| By: | Akcigit, Ufuk (University of Pennsylvania and NBER); Kerr, William R. (Harvard University and NBER) |
| Abstract: | We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multi-product firms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with firm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and growth differences across the firm size distribution. We also incorporate patent citations into our theoretical framework. The framework generates a simple test using patent citations that indicates that entrants and small firms have relatively higher growth spillover effects. |
| Keywords: | endogenous growth; innovation; exploration; exploitation; research and development; patents; citations; scientists; entrepreneurs |
| JEL: | L16 O31 O33 O41 |
| Date: | 2013–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofrdp:2013_028&r=ent |
| By: | Muñoz, Félix (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Encinar, María Isabel (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Otamendi, Francisco Javier (Departmento de Economía Aplicada I, Universidad Rey Juan Carlos, Madrid.) |
| Abstract: | The problem to allocate effort to innovation activities is defined and modelled for any single entrepreneur according to its propensity to innovate, which combines pure innovation and rent-seeking strategies. The allocation problem is solved both analytically and via simulation. The individual decisions measured in units of innovation are then aggregated to calculate the innovation quantity for a given population based on the distribution of heterogeneous entrepreneurs. The entrepreneurship rate and the implications for economic growth are also quantified. Consequently, policy makers should focus on reducing the entry barriers and the costs of production in order to stimulate the entrepreneurial activity and maximize the innovation quantity. They should also foster the attitude and propensity towards innovation. |
| Keywords: | entrepreneurial heterogeneity; propensity to innovate; endogenous growth |
| JEL: | M13 O12 O40 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:uam:wpaper:201306&r=ent |
| By: | Bozkaya, Ant (MIT); Kerr, William R. (Harvard University, Bank of Finland, and NBER) |
| Abstract: | European nations substitute between employment protection regulations and labor market expenditures (e.g., unemployment insurance benefits) for providing worker insurance. Employment regulations more directly tax firms making frequent labor adjustments than other labor market insurance mechanisms. Venture capital investors are especially sensitive to these labor adjustment costs. Nations favoring labor market expenditures as the mechanism for providing worker insurance developed stronger venture capital markets over 1990-2008, especially in high volatility sectors. In this context, policy mechanisms are more important than the overall level of worker insurance. |
| Keywords: | employment protection regulations; dismissal costs; unemployment insurance benefits; private equity; venture capital; entrepreneurship |
| JEL: | G24 J21 J65 L26 M13 O31 O32 O52 |
| Date: | 2013–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofrdp:2013_030&r=ent |
| By: | Roman Kraussl; Stefan Krause (LSF) |
| Abstract: | After nearly two decades of US leadership during the 1980s and 1990s, are Europe s venture capital (VC) markets in the 2000s finally catching up regarding the provision of financing and successful exits, or is the performance gap as wide as ever? Are we amid an overall VC performance slump with no encouraging news? We attempt to answer these questions by tracking over 40,000 VC-backed firms stemming from six industries in 13 European "countries and the US between 1985 and 2009; determining the type of exit ? if" any ? each particular firm s investors choose for the venture. |
| Keywords: | Venture capital, private equity, entrepreneurial activity, performance gap |
| JEL: | G24 G3 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:crf:wpaper:13-6&r=ent |
| By: | Vaillant, Julia; Nordman, Christophe Jalil |
| Abstract: | We use a representative sample of informal entrepreneurs in Madagascar to add new evidence on the magnitude of the gender performance gap. After controlling for business and entrepreneur characteristics, female-owned businesses exhibit a value added 28 percent lower than their male counterparts. Correcting for endogenous selection into informal self-employment raises the gap by 5 percentage points. We then investigate the role of sharing norms and gender-differentiated allocation of time within the household in the gender performance gap, by estimating their effect on the technical inefficiency of female and male entrepreneurs. Only male entrepreneurs seem subject to pressure to redistribute from the distant network. Our findings are consistent with situations where women working at home would essentially feel negatively the burden of their own community due to intense social norms and obligations in their workplace but also of domestic chores and responsibilities. We find evidence of females self-selecting themselves into industries in which they can combine marketoriented and domestic activities. |
| Keywords: | Gender; entrepreneurship; informal sector; sharing norms; household composition; Madagascar; |
| JEL: | D13 D61 O12 J16 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/12203&r=ent |
| By: | Birgit Aschhoff; Georg Licht; Paula Schliessler |
| Abstract: | Europe’s innovation potential is currently dominated by well-established large companies. In most member countries the bulk of R&D expenditures is spend by large companies. Following OECD data, SME’s share in total R&D spending amount to 8% in Germany or Japan, around 15% in US, France, Korea or Italy, about 20% in Sweden, Finland or Switzerland, about 30% in Netherlands, Austria or Poland, and about 50% in Poland, Ireland, Slovakia or Greece. First of all, these figures point to a considerable heterogeneity with regard to the importance of SMEs in national R&D activities. However, young companies are said to be the driving force behind radical innovation which will be a source of employment and growth in future. In addition, the weakness of Europe is not only the small number of hightech startups but more specifically the number of hightech startups which accomplish continuing, rapid growth. However, there might be significant technology specific heterogeneity with regard to the contribution of SMEs and young firms to innovation. The central question of the paper is whether SMEs and young firms might be agents with a special contribution to new growth path in Europe. We took new renewable energy technologies as an example at test whether the contribution of SMEs and young firms is larger in this technology area compared to invention as measured by patenting. In order to focus on the most valuable patents we use patent applications at the European Patent Office which were also applied for patent production at the USPTO and the Japanese Patent Office (“triadic patent applications”). The analysis proceed in two steps: The paper looks first at trends in international patenting and compares triadic patent application in the field of energy with all triadic patent application by country of inventors. The idea is to highlight the role of EU and its member states in invention activity in a technology-field which is of special relevance for a new, sustainable growth path. In the second step we look at the contribution for SMEs and young firms to such a new growth path by a detail analyses of triadic patent application by German companies as the SMEs share to R&D is the smallest compared to all other EU member states as well as compared to OECD member states (except Japan). The focus on Germany is motivated for two reasons - to ease the analysis and to focus on the most extreme case of the firm-size R&D distribution which is observed in EU and OECD member states. The study employs the WIPO “Green Inventory” classification to identify energy-related patents via the international patent classification used by all patent offices to assign patents by technology and potential fields of application. This classification comprise as main technology classes alternative energy production, transportation, energy storage, waste management, agriculture/forestry, regulatory and design aspects, and nuclear power generation. The number of green inventory patents increased from 1991 to 2007 by a factor of 2.5 to 12.500 patent applications. The majority of this increase is observable in renewable energy product, storage of energy, design and management of energy systems, and waste management. Patents related to nuclear power account for 4% of green inventory patents and this share declined even more to 1% in 2007. Surprisingly, the increase of green inventory patent applications at the EPO more or less equals the increase in overall patent applications at the EPO. Hence, the share of green inventory patents in total patent application at EPO was constant and fluctuating always between 8-10% with not visible trend. Similarly, albeit the increase in the number of triadic patents is less impressive (only by a factor of 1.4) the structural features are the same. Overall, the importance of green patent activities does not greatly vary between countries or regions. In 2007, the share of green patent applications in all patent applications at the EPO lies between 7% and 12%. Interestingly, the new member states and southern Europe are at the upper end of the range (12% and 10%, respectively) - besides Japan (11%) and the US (10%). Green patents are slightly less important for Northern Europe and China (both 7%). Focusing on more valuable patent application (“triadic patent application”), green technologies become more important in Germany, Korea and China and lose importance in Southern Europe. The second step linked sustainable growth to the “entrepreneurial” economy by examining to which degree small and young firms are driving sustainable patenting. We find SMEs to be responsible for about 15% of all patent applications. This is the same for the WIPO Green Inventory classified “green” patents. Around half of patent applications of SMEs are made by young firms. About one half of all patent applications by SMEs are filed by micro firms. When narrowing down the analysis to triadic patents, we find the contribution of SMEs to decrease to about 9% of all patent applications which is probably caused by the larger costs of applying and maintaining triadic patents than EPO patents. The contribution to green patenting is even lower for triadic patents with only 6% of all green patents coming from SMEs. In the third step of the analysis, based on the link of German firm data to patent applications at the European Patent Office, we analyzed at the firm level whether small and young firms are more or less likely to file sustainable patents than other firms. The results show that large firms are significantly more likely to file both patents in general and green patents. We do find that, for micro, small and medium size firms, the negative effect on patenting compared to the reference category of a large firm is less strong for the younger firms. This effect exists both for the generation of patents in general and the generation of green patents. Therefore there does not seem to be a particular advantage for small or young firms in producing sustainable, green patents. Even more, SMEs and young firms seem to face larger obstacles to start inventing in green energy technologies than in other technology fields. In any case SMEs and young firms will probably not an important driver of new technologies like in some other fields of technology. Of course we have to admit that our same only covers international patent applications for the priority year 2007 or earlier. Hence, things might have changed in the meantime due to e.g. extended government support for innovation in green energy fields. However, this question can only be examined with future editions of the PATSTAT data which fully covers more recent years. In addition, we cannot rule out the SMEs and/or young firms are especially important for patents which are radical driver of technological change. To address this question several measurement issues need to be solved and/or existing measurement approaches need verification. However, this is beyond the limits of our study. What might be the contribution to the central questions of the wwwforEurope project? First of all, young and small firms might not able to drive the technology development towards a more sophisticated use of energy resources and renewable energies. Like in most other fields of technology the direction of technical change is determined by established large firms. Hence, under the current framework of innovation and industrial policies, the development of the “more entrepreneurial economy” will probably not form forerunners on the ways towards a new growth path. Secondly, private sector’s production of invention activities became not stronger directed towards technologies which aim at production, storage, distribution, and management of new energy technologies compared to other fields of technology. Given the societal need for new energy technologies the paper speaks in favor of government regulation, invention and incentives to stimulate research, development, and implementation new energy technologies. However, we do not find arguments that such stimuli should favor SMEs or young firms. |
| Keywords: | Green patents, sustainable patenting, SMEs, young firms |
| JEL: | O31 M13 C81 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:feu:wfewop:y:2013:m:11:d:0:i:47&r=ent |
| By: | Backman, Mikaela (Centre of Excellence for Science and Innovation Studies (CESIS), Jönköping International Business School, Centre for Entrepreneurship and Spatial Economics (CEnSE), & Royal Institute of Technology (KTH)); Kohlhase, Janet (University of Houston) |
| Abstract: | Our paper investigates how diversity of the labor force influences the rate of new firm formation and the performance of new firms in urban areas. A diversified labor force within the firm and in the external environment influences the formation, survival and growth of firms. We explore these issues with both aggregate data at the municipal level and individual data at the firm level for the years 1993-2010. We measure diversity using entropy measures that account for a wider range of differences than is typically used. Our empirical analysis finds a positive influence of diversity of the labor force on the rate of new firm formation at the municipal level. At the level of an individual firm, we find that the diversity of the firm’s labor force is positively associated with the survival and growth of new firms. Our results add to the literature on the workings of agglomeration economies through variations in human capital, information spillovers and innovation. |
| Keywords: | Diversity; labor force; education; occupation; industry; new firms; formation; survival; growth |
| JEL: | C31 C33 L25 L26 R10 |
| Date: | 2013–12–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0337&r=ent |
| By: | Sungur, Onur; Dulupçu, Murat Ali |
| Abstract: | There are many support mechanisms for supporting newly established firms. Business incubators, one of them, are generally focused on supporting and promoting entrepreneurship, increasing employment through creating new job opportunities, enhancing local, regional and national R&D and innovativeness. The term of “incubator” is used to define supporting institutions to growth and survival of new firms. Business incubators are becoming a basic component of regional and national economic development strategies in many countries. In this study, the importance of business incubators in terms of local and regional economic development is discussed. Firstly, the concept of “business incubator” will be examined in terms of theoretical and conceptual perspective. Secondly, the importance of business incubators for regional development will be mentioned. Then, some recommendations based on the findings of the literature will be presented for using business incubators as a tool for regional development. |
| Keywords: | Business Incubators, Firm Theory, Regional Development, Business Development Centers (ISGEMs) |
| JEL: | D02 D04 M13 |
| Date: | 2013–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51833&r=ent |