nep-ent New Economics Papers
on Entrepreneurship
Issue of 2014‒04‒11
fourteen papers chosen by
Marcus Dejardin
University of Namur and Universite' Catholique de Louvain

  1. Something New: Where do new industries come from? By Feldman, Maryann; Tavassoli, Sam
  2. Risk and Success: Re-assessing Female Entrepreneurship in Late Victorian and Edwardian England By Jennifer Aston; Paolo Di Martino
  3. The gendering of entrepreneurship context By Welter, Friederike; Brush, Candida; De Bruin, Anne
  5. Understanding Incubator Value – A Network Approach to University Incubators By Catarina Roseira; Carla Ramos; Francisco Maia
  6. Occupational Choice, Human Capital, and Financing Constraints By Pavel Sevcik; Rui Castro
  7. Banks and New Firm Formation By Backman, Mikaela
  8. Does Finance Really Matter for the Participation of SMEs in International Trade? Evidence from 8,080 East Asian Firms By Jinjarak, Yothin; Mutuc, Paulo Jose; Wignaraja, Ganeshan
  9. Welfare Losses from Financial Frictions: The Role of Fixed Costs By Ahrang Lee
  10. Policy Simulation of Firms Cooperation in Innovation By Heshmati, Almas; Lenz-Cesar, Flávio
  11. Private equity and venture capital in smes in developing countries : the role for technical assistance By Divakaran, Shanthi; McGinnis, Patrick J.; Shariff, Masood
  12. The role of relational competence in the health care sector By Bertrand Pauget; Mathieu Cabrol
  13. The Determinants of Credit Default on Portuguese Start-Up Firms: .An Econometric model By Vitor Gonçalves; Francisco Vitorino Martins; Elísio Brandão
  14. Uma Análise Exploratória dos Efeitos da Política de Formalização dos Microempreendedores Individuais By Carlos Henrique L. Corseuil; Marcelo Côrtes Neri; Gabriel Ulyssea

  1. By: Feldman, Maryann (Department of Public Policy, University of North Carolina at Chapel Hill, Chapel Hill, NC, USA); Tavassoli, Sam (CITR, Blekinge Inst of Technology)
    Abstract: The focus of this paper is on the question of how new industries originate in places. There is often confusion between the process of diffusion and the locational factors that give rise to early stage creative discovery. There is a long and distinguished literature that considers the diffusion of ideas. Diffusion is important as it influences the general uptake and implementation of ideas across geography but it is a different process than our focus here. We advance the argument that the creation of new industries is a process that has inherently geographic features. Something new is created out of prior knowledge but a more complex process is required to develop an industry and reap the economic benefits.
    Keywords: new industries; Schmookler scissor; locational factors
    Date: 2014–03–31
  2. By: Jennifer Aston; Paolo Di Martino
    Date: 2014–02–25
  3. By: Welter, Friederike; Brush, Candida; De Bruin, Anne
    Abstract: The paper builds on the understanding of context as suggested by Welter (2011) who introduced different dimensions of context along a continuum of where entrepreneurship takes place and when this happens. Where context has been studied in relation to gender and women, the focus has been on the influence of social contexts such as networks, family and household embeddedness of women entrepreneurs or the institutional environment for women's entrepreneurship. We contribute to the literature by identifying three further themes, based on a systematic literature review: how to conceptualise the spatial and institutional contexts for women's entrepreneurship and their intersections, as informed by entrepreneurship, gender and geography studies; the paradox of empowering women and the debate around mumpreneurship. Our analysis highlights the influence of spatial-institutional contexts on entrepreneurship: Entrepreneurial behaviour is gendered because of place which itself is gendered, reflecting local institutions such as accepted gender norms which may force women into specific industries or business sizes. We also highlight the agency of women entrepreneurs in influencing their spatial-institutional contexts. --
    Keywords: entrepreneurship,women's entrepreneurship,gender,entrepreneurship context
    JEL: J16 L26 M13
    Date: 2014
  4. By: Backman, Mikaela (Jönköping International Business School, & Centre of Excellence for Science and Innovation Studies (CESIS)); Gabe, Todd (University of Maine); Mellander, Charlotta (Jönköping International Business School, & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: This paper examines the effects of human capital on the growth and survival of a large sample of Swedish businesses. Human capital is represented by conventional measures of the educational attainment and experience of an establishment’s workers, and skills-based measures of the types of occupations present in the company. Controlling for an establishment’s size and age, as well as its industry and region of location, we find that the human capital embodied in a company’s workers significantly affects its performance. The specific effects, however, depend on how human capital is measured and whether the analysis focuses on growth or survival.
    Keywords: Firm growth; firm survival; human capital; education; skills
    JEL: J21 J24 L25
    Date: 2014–03–25
  5. By: Catarina Roseira (FEP-U.Porto); Carla Ramos (Insper - Investigação e Ensino); Francisco Maia (FEP-U.Porto)
    Abstract: Abstract Networking represents a cornerstone for entrepreneurial action, nurturing relationships that provide access to necessary resources. Previous research shows that such relationships can be fostered as part of incubation processes. However, there is a lack of understanding of the underlying networking process, particularly in settings aimed at promoting them such as Networked Incubators (NIs). Moreover, little is known about entrepreneurs’ expectations when joining a NI, or about entrepreneurs’ satisfaction regarding the fulfilment of those expectations. We address these issues by investigating the features of networking within NIs, and by positing new ways of measuring incubator performance: performance from the entrepreneurs’ perspective. The article focuses on the start-ups located in UPTEC - Science and Technology Park of the University of Porto, a NI. A combination of qualitative and quantitative methodological tools (including content and social network analysis) is used. Findings show how entrepreneurs hold relatively high expectations for the dimensions of Legitimacy/Credibility, Infrastructure, and Networking, and lower expectations regarding the Business Support provided by the incubator. However, the UPTEC network shows low levels of Networking, raising questions regarding effectiveness of NIs. The findings also reveal a number of factors that impact the value and effectiveness of the networking process within a NI.
    Keywords: University Incubators; Networked Incubators; Business Networks; Value; Entrepreneurship; Social Network Analysis.
    JEL: M13 L24 L29
    Date: 2014–04
  6. By: Pavel Sevcik (Ecole des Sciences de Gestion, Universite du Quebec a Montreal (ESG UQAM)); Rui Castro (University of Montreal)
    Abstract: We develop a framework which allows us to study the effect of financing constraints for both firm-level investment decisions, and household-level schooling decisions. We characterize the joint determination of occupational choices, educational outcomes, and production decisions. We first evaluate the role of financial frictions in distorting resource allocation. We find significant departures from efficiency, from adverse selection effects into entrepreneurship, to distortions in both investment/schooling and production decisions. We then (i) ask whether our model helps understand observed cross-country variation in outcomes, and (ii) quantify the full effect of financing frictions for economic development, and in particular whether our framework produces an amplification of the output and productivity effects of financing frictions compared to standard models without schooling investments.
    Date: 2013
  7. By: Backman, Mikaela (Jönköping International Business School, & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: It is natural to assume that the characteristics of the bank sector are important factors for new firm formation when external capital is needed for establishing new firms. The local bank sector acts as the main provider of financial funds in Sweden since other sources of external capital are limited. In addition, the banking services needed in the start-up process tend to be sensitive to distance and are mainly supplied locally. Thus, the structure of the local bank sector is an important factor that determines the conditions for start-ups. The finding in this paper supports the hypothesis that new firm formation is positively influenced by (1) the average size of the bank branches, (2) number of independent banks and bank branches per capita, and (3) the intensity of competition level. Access to independent banks and bank branches has a stronger influence on start-ups in more rural locations.
    Keywords: new firm formation; local bank sector; Sweden
    JEL: G21 L26 R11
    Date: 2014–03–31
  8. By: Jinjarak, Yothin (Asian Development Bank Institute); Mutuc, Paulo Jose (Asian Development Bank Institute); Wignaraja, Ganeshan (Asian Development Bank Institute)
    Abstract: This paper studies factors associated with firm participation in export markets, focusing primarily on firm size and access to credit, based on a survey sample comprising observations of 8,080 small and medium enterprises (SMEs) (with fewer than 100 employees) and non-SME firms in developing East Asian countries across sectors. The main findings suggest the interdependent relationships between export participation, firm size, and access to credit. SMEs participating in export markets tend to gain more access to credit, while potential scale economies (firm sizes) of SMEs are positively associated with participation in export markets. The estimation results also point to the supportive influences of foreign ownership, worker education, and production certification on export participation, and the positive effects of financial certification, managerial experience, and collateral/loan value on access to credit for SMEs.
    Keywords: small and medium enterprises; sme; international trade; export markets
    JEL: D22 E44 F14 L16 O14
    Date: 2014–03–31
  9. By: Ahrang Lee (The Bank of Korea)
    Abstract: Are fixed costs to using financial intermediation quantitatively important in explaining income differences across-countries? I introduce fixed costs into an entrepreneurship model with financial frictions where agents are heterogeneous in their financial assets, entrepreneurial ability and labor productivity. I find that the fraction of agents using financial intermediation substantially decreases as fixed costs increase. Fixed costs as low as 11 per cent of typical year's income lower the intermediated population from almost one to one fifth. Fixed costs also reduce accumulation of capital by 20 per cent as they restrict the intermediated population. Lastly, barriers to financial intermediation play an important role in increasing wealth inequality within an economy and across economies. Aforementioned fixed costs raise the wealth Gini index from 0.78 to 0.92 and reduce income by 10 per cent. That is, the fixed costs alone can explain 10% of income difference between Belgium and Guyana.
    Date: 2013
  10. By: Heshmati, Almas (Centre of Excellence for Science and Innovation Studies (CESIS), & Department of Economics, Sogang University); Lenz-Cesar, Flávio (Ministry of Communications, Esplanada dos Ministério)
    Abstract: This study utilizes results from an agent-based simulation model to conduct public policy simulation of firms’ networking and cooperation in innovation. The simulation game investigates the differences in sector responses to internal and external changes, including cross-sector spillovers, when applying three different policy strategies to promote cooperation in innovation. The public policy strategies include clustering to develop certain industries, incentives to encourage cooperative R&D and spin-off policies to foster entrepreneurship among R&D personnel. These policies are compared with the no-policy alternative evolving from the initial state serving as a benchmark to verify the gains (or loses) in the number of firms cooperating and networking. Firms’ behavior is defined according to empirical findings from analysis of determinants of firms’ participation in cooperation in innovation with other organizations using the Korean Innovation Survey. The analysis based on manufacturing sector data shows that firms’ decision to cooperate with partners is primarily affected positively by firm’s size and the share of employees involved in R&D activities. Then, each cooperative partnership is affected by a different set of determinants. The agent-based models are found to have a great potential to be used in decision support systems for policy makers. The findings indicate possible appropriate policy strategies to be applied depending on the target industries. We have applied few examples and showed how the results may be interpreted. Guidelines are provided on how to generalize the model to include a number of extensions that can serve as an optimal direction for future research in this area.
    Keywords: agent-based simulation; collaborative R&D; innovation networks; simulation game; policy strategy;
    JEL: C15 C71 D21 D85 L20 O31
    Date: 2014–03–27
  11. By: Divakaran, Shanthi; McGinnis, Patrick J.; Shariff, Masood
    Abstract: This paper discusses the constraints for private equity financing of small and medium enterprises in developing economies. In addition to capital, private equity investors bring knowledge and expertise to the companies in which they invest. Through active participation on the board of directors or in partnership with management, private equity investors equip companies with critical improvements in governance, financial accounting, access to markets, technology, and other drivers of business success. Although private equity investors could help to create, deepen, and expand growth of small and medium enterprises in developing economies, the vast majority of private equity in such markets targets larger or more established enterprises. Technical assistance, when partnered with private equity, can unlock more investor commitments and considerably enhance the ability of small and medium enterprises in emerging markets to raise private equity capital. Technical assistance provides funding that allows private equity funds to extend their reach to smaller companies. Technical assistance can mitigate some level of risk and increase the probability of successful investments by funding targeted operational improvements of investee companies. Dedicated technical assistance facilities financed by third parties, such as development finance institutions, governments, or other parties, have emerged to fill this critical need.The paper discusses the provision of investment capital twinned with technical assistance, which is now more accepted by limited partners and general partners or fund managers and is becoming more of a market model for private equity finance focused on small and medium enterprises.
    Keywords: Debt Markets,Access to Finance,Emerging Markets,Investment and Investment Climate,Microfinance
    Date: 2014–04–01
  12. By: Bertrand Pauget (IREBS - Institut de recherche de l'European Business School - European Business School); Mathieu Cabrol (IREGE - Institut de Recherche en Gestion et en Economie - Université de Savoie - Institut d'Administration des Entreprises (IAE) - Savoie Mont-Blanc)
    Abstract: The role of entrepreneurs is highly regarded in our societies. It is widely recognized that their roles are not limited to the private sector, but can affect all sectors of the economy. In view of this, we focus on entrepreneurs acting in the healthcare sector. We concentrate more particularly on these entrepreneurs' specific competences. We propose to conceptualise the concept of relational competence, defined as the act of building and structuring relationships in order to adapt and innovate in a given environment. The aim of this exploratory study is to better understand why this type of competence is expected on the construction site of a new hospital in France.
    Keywords: Entrepreneur; relational processes; relational competence; hospital; healthcare system
    Date: 2013
  13. By: Vitor Gonçalves (Phd Student of Finance, FEP.UP); Francisco Vitorino Martins (Professor FEP.UP); Elísio Brandão (Professor of Finance, FEP.UP)
    Abstract: In this paper we investigate the behaviour of credit default in start-up companies. Using a logit regression technique on a panel data of 1430 start-ups and considering a tracking period of three years, we tested the impact on the probability of occurrence of the first credit event in financing agreements due to variables grouped into three categories: financial capital, human capital and industry dynamics. We concluded from a financial point of view, that the support provided by partners in the financing of the company’s activity, the intensity of use of assets under management and reduced debt pay-back periods, were decisive in mitigating risk of default. In addition we found that the occurrence of a credit event will only be as limited as higher the quality of human capital held by the promoter of the project in terms of educational background and management experience.
    Keywords: Credit Default; Start-Up; Financial Capital; Human Capital; Industry Dynamics
    JEL: G33 M13
    Date: 2014–04
  14. By: Carlos Henrique L. Corseuil; Marcelo Côrtes Neri; Gabriel Ulyssea
    Abstract: Este texto apresenta uma análise exploratória dos potenciais impactos da Lei do Empreendedor Individual (LMEI). O objetivo é trazer evidências que contribuam para esclarecer, ainda que parcialmente, se a política teve êxito em promover: i) o microempreendedorismo no Brasil; e ii) a formalização dos empreendedores individuais. Em relação à promoção do microempreendedorismo, há evidências de que a política pode ter atingido este objetivo. Cabe destacar, no entanto, que as evidências deste trabalho são compatíveis com empresários maiores reduzindo a escala para se enquadrarem no programa, e também com a possibilidade de que algumas empresas, em particular as menores, estejam usando o programa para trocar uma relação de trabalho assalariado por uma de prestação de serviços. A formalização dos empreendedores individuais parece ter sido afetada positivamente pela política no que diz respeito à contribuição para a previdência, mas não à inscrição no Cadastro Nacional de Pessoa Jurídica (CNPJ). This paper provides a preliminary analysis of the potential impacts from a formalization policy introduced in Brazil targeted at micro entrepreneurs with at most one employee. Our goal is to provide evidence to shed light on the following points: i) Did the program fostered micro entrepreneurship? ii) Did the program lead to greater formalization rates? The evidence suggests that the program might have positive effects on both points.
    Date: 2014–03

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