nep-ent New Economics Papers
on Entrepreneurship
Issue of 2014‒06‒07
five papers chosen by
Marcus Dejardin
University of Namur and Universite' Catholique de Louvain

  1. The Development of US Policies directed at stimulating Innovation and Entrepreneurship By David Audretsch; Taylor Aldridge
  2. Necessity Entrepreneurship and Competitive Strategy By Block, Jörn; Kohn, Karsten; Miller, Danny; Ullrich, Katrin
  3. Surviving Against the Tide: Are New Businesses in Innovative Industries Less Affected by General Economic Trends? By Michael Fritsch; Florian Noseleit; Yvonne Schindele
  4. Does Innovation Affect Credit Access? New Empirical Evidence from Italian Small Business Lending By Andrea Bellucci; Ilario Favaretto; Germana Giombini
  5. Regional Branching and Smart Specialisation Policy By Ron Boschma; Carlo Gianelle

  1. By: David Audretsch (Indiana University); Taylor Aldridge (Indiana University)
    Abstract: This report explores how U.S. federal institutions fund and influence innovation in the knowledge economy context and if any agencies or particular policies could be replicated in other countries. Three key U.S. agencies are identified as having significantly contributed to innovation and growth: (1) the Small Business Innovative Research program (SBIR), (2) the Advanced Technology Program (ATP) and (3) the Defense Advanced Research Program Agency (DARPA). How these agencies have advanced US innovation is explained in detail. The beginning of the report offers a lens for understanding why and how research and development does not necessarily lead to innovation. The report explores how ideas must pass through a knowledge filter in order to become successful innovations. This filter, which may impede potential innovations, means that transfers from ideas to innovations are not linear, nor are they always successful even though conditions may be suitable. Therefore, U.S. agencies are needed to help firms pass through the Valley of Death from ideas to successful commercial innovations. The report identifies US policies which could conceivably be replicated in other countries. Most notably, the authors argue that spurring innovation from European universities, with the help of an SBIR-like institution, may offer considerable help in transforming European ideas into innovations. The report concludes that the SBIR offered significant aid to innovative firms in the US and its replication by Horizon 2020 could also offer significant advantages for commercialization of inventions and ideas. The report also points out potential problems in a adopting an SBIR-like program in other countries.
    Keywords: Innovation policies, SBIR, DARPA, ATP
    JEL: L2 L5 O3 O4
    Date: 2014–04
  2. By: Block, Jörn (University of Trier); Kohn, Karsten (KfW Bankengruppe); Miller, Danny (HEC Montreal); Ullrich, Katrin (KfW Bankengruppe)
    Abstract: Many start-ups chose to compete with incumbent firms using one of two generic strategies: cost leadership or differentiation. Our study demonstrates how this choice depends on whether the startup was founded out of necessity. Our results, based on a representative data set of 4,568 German start-ups, show that necessity entrepreneurs are more likely than other entrepreneurs to pursue a cost leadership strategy, and less likely to pursue a differentiation strategy. Decomposition analyses further show that up to half of the difference in choice of strategy can be attributed to distinct endowments of human capital, socio-economic attributes, and start-up project characteristics that correlate with necessity entrepreneurship.
    Keywords: cost leadership, competitive strategy, new venture strategy, necessity entrepreneurship, product differentiation, decomposition analysis
    JEL: L10 L26
    Date: 2014–05
  3. By: Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Florian Noseleit; Yvonne Schindele
    Abstract: We investigate the role of industry and region-specific conditions for the survival of new businesses in innovative and in other manufacturing industries. The data comprises all German manufacturing start-ups of the 1992 to 2005 period. In contrast to studies for some other countries, we find that businesses in innovative industries have higher survival rates than businesses in other manufacturing industries. Moreover, the chances of survival for innovative industries are rather immune to changes, regarding regional and industry-specific conditions, whereas businesses in the other manufacturing industries are strongly affected. These findings highlight that resistance to adverse conditions is dependent on industry specific opportunities and technological conditions.
    Keywords: New business survival, hazard rates, duration analysis, entrepreneurship, location
    JEL: C41 L25 L26 L60
    Date: 2014–06–02
  4. By: Andrea Bellucci; Ilario Favaretto; Germana Giombini
    Abstract: In this paper we analyze the access to credit of innovative firms on the price and non-price dimensions of bank lending. Using information from two datasets, we use a propensity score matching procedure to estimate the impact of the innovative nature of firms on: (a) loan interest rates; (b) the probability of having to post collateral; and (c) the probability of overdrawing. Our analysis reveals that banks trade off higher interest rates and lower collateral requirements for firms involved in innovative processes. Further, innovative firms have a lower probability of being credit rationed than their non-innovative peers.
    Keywords: innovative firms, interest rate, firm’s financing, relationship lending
    JEL: D82 E43 D40 G21
    Date: 2014–05
  5. By: Ron Boschma (CIRCLE - University of Lund); Carlo Gianelle (European Commission – JRC - IPTS)
    Abstract: This note studies the mechanisms through which regional economies diversify over time and formulates suggestions on how policy can influence such process. In particular, two closely related concepts will be defined, that is, technological relatedness and related variety. Regional diversification is a crucial process in order to develop new growth paths. It is understood as an emerging process through which new activities develop out of existing ones, but the scope and outcome of this process are fundamentally affected by technological and cognitive constraints. We discuss how technological relatedness may provide an input for effective policy making. In this respect, public policy should avoid picking winners that do not fit into the regional actual and potential industrial space and should prevent supporting declining industries that occupy a peripheral position in the industry space of a region. More in particular, we direct attention to various mechanisms through which new industries may be stimulated to connect to technologically related industries at the regional level. We also introduce the process of entrepreneurial discovery, in which entrepreneurs generate the key information guiding the selection of the domains of future regional specialization, and discuss its relationship with policy schemes based on related diversification.
    Keywords: European cohesion policy, Structural Funds, smart specialisation, related variety, regional branching, entrepreneurial discovery process
    Date: 2014–05

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