nep-ent New Economics Papers
on Entrepreneurship
Issue of 2014‒03‒08
six papers chosen by
Marcus Dejardin
University of Namur and Universite' Catholique de Louvain

  1. Crowdfunding, Cascades and Informed Investors By Parker, Simon C.
  2. The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology By Poschke, Markus
  3. Establishment survival in East and West Germany: A comparative analysis By Fackler, Daniel
  4. The Adoption of Information and Communication Technologies in the Design Sector and their impact on Firm Performance: Evidence from the Dutch Design Sector By Sadaf Bashir; Uwe Matzat; Bert Sadowski
  5. Firm-level Innovation Activity, Employee Turnover and HRM Practices – Evidence from Chinese Firms By Tor Eriksson; Zhihua Qin; Wenjing Wang

  1. By: Parker, Simon C. (Western University, Canada)
    Abstract: Do higher proportions of (a) informed investors and (b) high-quality projects increase the number of good projects that are ultimately financed via crowdfunding? A simple model and simulation reveals the answers to both questions to be: 'not necessarily'.
    Keywords: crowdfunding, new ventures, entrepreneurial finance, startups
    JEL: L26 C63 G23
    Date: 2014–02
  2. By: Poschke, Markus (McGill University)
    Abstract: How and why does the firm size distribution differ across countries? Using two datasets covering more than 30 countries, this paper documents that several features of the firm size distribution are strongly associated with income per capita: the entrepreneurship rate and the fraction of small firms fall with per capita income across countries, while average firm employment, the median and higher percentiles of the firm size distribution, and the dispersion and skewness of employment all rise with per capita income. The paper broadens existing evidence on the first three facts to cover more countries and newly introduces the last three to the literature. It then proposes a simple theory of skill-biased change in entrepreneurial technology motivated by recent microeconomic literature that fits with the evidence. For this, it introduces two additional features into an otherwise standard occupational choice, heterogeneous firm model a la Lucas (1978): technological change does not benefit all potential entrepreneurs equally, and there is a positive relationship between an individual's potential payoffs in working and in entrepreneurship. If some firms consistently benefit more from technological progress than others, they stay closer to the frontier, while others fall behind. Because wages rise for all workers, marginal entrepreneurs exit and become workers. Quantitatively, the model fits both the U.S. time series experience and cross-country patterns well.
    Keywords: occupational choice, entrepreneurship, firm size, skill-biased technical change
    JEL: E24 J24 L11 L26 O30
    Date: 2014–02
  3. By: Fackler, Daniel
    Abstract: Using a large administrative dataset and methods of survival analysis, I analyze for the period 1994-2008 whether new establishments' survival chances differ between East and West Germany and whether they converged over time. I find that new establishments in East Germany had relatively good survival chances between 1994 and 1997, with no big differences between East and West Germany. In 1998 and 1999 the exit hazard increased strongly in East but not in West Germany, which is likely to be due to a change in the subsidy policy affecting East Germany. Since 2000 the difference in establishments' exit hazard between East and West Germany has become smaller and towards the end of the observation period it is not statistically significant anymore. -- Anhand umfangreicher administrativer Daten untersucht diese Studie für die Jahre 1994 bis 2008 mit Methoden der Verweildaueranalyse, ob sich die Überlebenschancen neu gegründeter Betriebe zwischen West- und Ostdeutschland unterscheiden und ob sie sich im Zeitablauf angenähert haben. Die Ergebnisse zeigen, dass Betriebe in Ostdeutschland von 1994 bis 1997 relativ gute Überlebenschancen aufweisen, die sich kaum von denen westdeutscher Betriebe unterscheiden. In den Jahren 1998 und 1999 steigt die Schließungswahrscheinlichkeit in Ostdeutschland stark an, in Westdeutschland jedoch nicht, was vermutlich auf eine Änderung der Subventionspolitik für Betriebe in Ostdeutschland zurückzuführen ist. Seit dem Jahr 2000 haben sich die Schließungswahrscheinlichkeiten von Betrieben in West- und Ostdeutschland angenähert und unterscheiden sich gegen Ende des Beobachtungszeitraums nicht mehr signifikant voneinander.
    Keywords: startups,firm exits,East Germany
    JEL: L2 D22 M13 P27 C41
    Date: 2014
  4. By: Sadaf Bashir; Uwe Matzat; Bert Sadowski
    Abstract: This paper analyzes processes and effects of ICT enabled innovation in the Dutch design sector. Although the adoption of Information and Communication Technologies (ICT) is considered as vital in the design sector, little is known about whether and how ICTs affect the firm performance of small and medium-sized companies (SMEs) in the industry. In introducing a conceptual distinction between ICT supporting the information processing and communication, the paper first examines the determinants of ICT adoption. Next, we analyze the effects of ICT adoption on product and process innovation as well as on firm performance, focusing on the mediating role of the innovation processes. The analyses rest on survey data of a sample of 189 Dutch companies in the Web, Graphic, and Industrial Design Sector in the Netherlands. The results indicate that information processing role of ICT supports the exploitation and communication role facilitates the exploration in organizational learning. The exploitation enables process innovation while exploration enables product innovation. Lastly, Information processing technologies and product innovation are important determinants of superior firm performance.
    Keywords: ICT, design, innovation
    Date: 2014–02
  5. By: Tor Eriksson (Department of Economics and Business, Aarhus University, Denmark); Zhihua Qin (Renmin University, China,); Wenjing Wang (Department of Economics and Business, Aarhus University, Denmark)
    Abstract: This paper examines the relationship between employee turnover, HRM practices and innovation in Chinese firms in five high technology sectors. We estimate hurdle negative binomial models for count data on survey data allowing for analyses of the extensive as well as intensive margins of firms’ innovation activities. Innovation is measured both by the number of ongoing projects and new commercialized products. The results show that higher R&D employee turnover is associated with a higher probability of being innovative, but decreases the intensity of innovation activities in innovating firms. Innovating firms are more likely to have adopted high performance HRM practices, and the impact of employee turnover varies with the number of HRM practices implemented by the firm.
    Keywords: Innovation, HRM Practices, Employee Turnover
    JEL: L22 M50 O31
    Date: 2014–02–25
  6. By: Ashwini Deshpande (Department of Economics, Delhi School of Economics, Delhi, India); Smriti Sharma (Department of Economics, Delhi School of Economics, Delhi, India)
    Abstract: Using the India Human Development Survey data for 2004-05, we employ two methodologies to estimate the earnings structure of household nonfarm businesses owned by Scheduled Castes and Tribes (SCSTs) and non-SCSTs: OLS estimation of mean earnings, and quantile regressions. Correspondingly, we use two decomposition methods: the conventional Blinder-Oaxaca decomposition and Melly's (2006) refinement of the Machado and Mata (2005) decomposition of quantile gaps. We find clear differences in characteristics between SCST-owned and non-SCST owned businesses. The Blinder-Oaxaca decomposition reveals that depending on the specification of explanatory variables, as much as 70 percent of the earnings gap could be attributed to the "unexplained" or the discriminatory component. Quantile regressions reveal that gaps are higher at lower deciles than the higher ones (both raw gaps, as well as after controlling for characteristics), and the decompositions show that the unexplained component is higher at the lower deciles than higher, suggesting that SCST-owned businesses at the lower end of the conditional distribution face greater discrimination, as compared to those at the higher end. Thus, we find strong evidence of a "sticky floor", a phenomenon observed for gender wage gaps in developing countries (incontrast to a "glass ceiling" in developed countries).
    Keywords: Caste, discrimination, household nonfarm business, earning gaps, quantile regressions, earnings decomposition.
    JEL: J31 J71 C21 O15 O17
    Date: 2014–02

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