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on Entrepreneurship |
| By: | Leyden, Dennis (University of North Carolina at Greensboro, Department of Economics); Link, Albert (University of North Carolina at Greensboro, Department of Economics) |
| Abstract: | This paper models the entrepreneurial process as both creation and discovery composed of an iterative two-step process where entrepreneurs create social networks based on subjective expectations about the future effectiveness of those networks, and then choose the innovation to pursue and map a search process to discover how to bring the innovation to fruition. Critical to this process is the mix of strong ties and weak ties that make up social networks and the ability to carry forward the social capital embodied in such networks. The tendency of long-existing entrepreneurs to be less innovative can be explained using this model. |
| Keywords: | entrepreneurship; social networks; innovation; technology |
| JEL: | L26 M13 O31 O33 |
| Date: | 2014–08–14 |
| URL: | http://d.repec.org/n?u=RePEc:ris:uncgec:2014_004&r=ent |
| By: | Vincent Sterk (University College London); Petr Sedlacek (Bonn University) |
| Abstract: | This paper shows that job creation of cohorts of U.S. firms is strongly influenced by aggregate conditions at the time of their entry. Using data from the Business Dynamics Statistics (BDS) we follow cohorts of young firms and document that their employment levels are very persistent and largely driven by the intensive margin (average firm size) rather than the extensive margin (number of firms). To differentiate changes in the composition of startup cohorts from post-entry choices and to evaluate aggregate effects, we estimate a general equilibrium firm dynamics model using BDS data. We find that even for older firms, the aggregate state at birth drives the vast majority of variations in employment across cohorts of the same age. The key force behind this result is fluctuation in choices made by startups that determine their potential to grow large. At the aggregate level, startup decisions account for the large low-frequency fluctuations observed in the employment rate. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed014:84&r=ent |
| By: | Siemer, Michael (Board of Governors of the Federal Reserve System (U.S.)) |
| Abstract: | The 2007-2009 recession is characterized by: a large drop in employment, an unprecedented decline in firm entry, and a slow recovery. Using confidential firm-level data, I show that financial constraints reduced employment growth in small relative to large firms by 4.8 to 10.5 percentage points. The effect of financial constraints is robust to controlling for aggregate demand and is particularly strong in small young firms. I show in a heterogeneous firms model with endogenous firm entry and financial constraints that a large financial shock results in a long-lasting recession caused by a "missing generation" of entrants. |
| Keywords: | Employment; firm entry; financial crisis; small business; financial friction; slow recovery; start-ups |
| JEL: | E24 E32 E44 G01 J20 L25 |
| Date: | 2014–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2014-56&r=ent |
| By: | Bjuggren, Per-Olof (The Ratio institute and Jönköping School of Economics.); Elmoznino Laufer, Michel (The Ratio institute) |
| Abstract: | In the paper we look at the bank lending routines of Swedish banks and their consequences for external financing of start-ups. Results from a questionnaire sent out to start-ups listed in the files of the Swedish interest organization “NyföretagarCentrum” were used. We looked at firms founded during the period 2010-2011, which can be considered family firms in terms of the ownership structure. The survey indicated that bank loans had to be backed up with personal assets used as collaterals and personal guarantees of repayment. Essentially, the entrepreneur personally takes all risk. The corporate form does not work. Risk-adverse persons with innovative business ideas will hesitate to realize their ideas. The consequences for economic growth and employment will be negative. Research questions posed in this study are: • How do start-up firms finance their business? • How much personal financial risk must an entrepreneur with a start-up business shoulder? • How do they try to mitigate the financial risk through financial bootstrapping? • What are the alternatives to bank loans? Law and economics theories about how collaterals and safeguards can overcome the double trust problem between entrepreneurs and financiers will be used. Bank regulations play a decisive role in these cases. The contribution of the paper is that it gives both a theoretical and empirical explanation to why start- ups have to be financed by the entrepreneur. There is a shortage of empirical studies that show this. |
| Keywords: | Start-ups; Bank loans; Asymmetric information; External financing |
| JEL: | G21 G32 L26 M13 |
| Date: | 2014–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0232&r=ent |
| By: | Javier Ramos (Instituto Complutense de Estudios Internacionales (ICEI)) |
| Abstract: | Crowdfunding is an alternative way of finance and exchange where those seeking funding and those looking to invest or donate can be matched. Creators and entrepreneurs can make use of online crowdfunding platforms to expand the pool of potential investors and donors, who contribute via the Internet to the financing their online project. Yet, crowdfunding is not just about raising money, but also about market testing, engaging potential customers and target groups and exploiting the advantages of community and proximity. Using short cases studies, interviews with platform managers and a review of the literature this report explores the current state of crowdfunding, and makes recommendations for policy and research. |
| Keywords: | Crowdfunding, Employability, Work, Employment, Entrepreneurship, Finance, Fund raising, investment, Skills, Internet, Equity, Lending, Reward, Donation, community |
| JEL: | G21 G24 L26 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc85752&r=ent |
| By: | Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Waldenström, Daniel (Uppsala University) |
| Abstract: | This paper studies the evolution of the modern Swedish inheritance taxation from its introduction in 1885 to its abolishment in 2004. Our contribution is twofold. First, we compute annual effective inheritance tax rates for differently sized bequests and different types of inherited assets (non-firm wealth and family firm equity), accounting for all relevant exemptions, deductions and valuation discounts. Second, we try to account for the changes in inheritance taxation. Ideology rather than mass mobilization or revenue maximization appears to drive the sharp tax increases of the 1930s through the 1960s. We document increased opportunities for tax planning for the wealthy, in particular a series of drastic tax cuts on inherited family firms from the 1970s onwards. This rise of avoidance opportunities for the rich while more and more middle-class heirs paid notable inheritance taxes contributed to a loss of legitimacy for the tax and its ultimate repeal in 2004. |
| Keywords: | Gift tax; Inheritance tax; Estate tax; Tax avoidance; Excess burden; Entrepreneurship; Ownership transfers of family firms |
| JEL: | D31 H20 K34 |
| Date: | 2014–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1032&r=ent |
| By: | Daria Ciriaci (JRC-IPTS); Pietro Moncada-Paternò-Castello (JRC-IPTS); Peter Voigt (University of Barcelona, IEB) |
| Abstract: | This study examines growth patterns of innovative and non innovative firms and, in this regard, whether being an innovator determines company trajectories; i.e. whether there are systematic differences in the persistence of the jobs created by innovating vs. non-innovating firms. For this purpose, a semi-parametric quantile regression approach has been adopted examining serial correlation in employment by drawing on a unique longitudinal dataset of 3,300 Spanish firms over the years 2002-2009, obtained by matching different waves of the Spanish Encuesta sobre Innovacion en las Empresas, the Spanish innovation survey, which is administered every year by the Spanish National Statistics Institute (INE). The empirical results of the study indicate that among those firms experiencing high organic employment growth, smaller and younger innovative firms grow more, at average, than larger innovative firms. Moreover, the jobs created by innovative firms, in general, appear to be rather persistent over time whereas those created by non innovative firms do not. Among declining firms, non-innovators tend to deteriorate faster in terms of economic performance. Overall, evidence suggests that being innovative supports and stabilizes a firm's organic employment growth pattern and being smaller and younger seems to be a sufficient condition to experience high employment growth, i.e. – with regard to the latter – it is not necessary to have a comparably high R&D spending / being an R&D intensive company. |
| Keywords: | Serial correlation; quantile regression; Spanish firms; firm size, firms age; job creation; YICs |
| JEL: | L11 L25 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:wpaper:201301&r=ent |
| By: | Zhou, Yexin (Stockholm China Economic Research Institute); Chen, Mo; Ye, Jingyi |
| Abstract: | In Chinese cities, rural migrants on average are less educated and poorer than the urban locals. Migration is costly, especially for those who choose to move to provinces faraway from their hometowns. A larger fraction of the rural migrants are self-employed than that of the urban locals. The social contacts of migrants in the host cities often help them to find jobs or to start businesses. We studied the choice of self-employment of rural migrants in Beijing, using a migrant dataset collected from 2007 to 2012. The result shows that the self-employed rural migrants in Beijing tend to be females, migrating from faraway provinces, with more social contacts, and either having the highest education or the lowest. Education and social capital are positively correlated with earning for both wage-earners and self-employed, with different magnitudes. We use a search model to explain this. |
| Keywords: | Self-employmen; Rural Migrants; Social Network |
| JEL: | J61 R23 Z13 |
| Date: | 2014–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hascer:2014-031&r=ent |
| By: | Hottenrott, Hanna; Lopes-Bento, Cindy |
| Abstract: | R&D collaboration facilitates pooling of complementary skills, learning from the partner as well as sharing risks and costs. Research therefore repeatedly stressed the positive relationship between collaborative R&D and innovation performance. Collaboration, however, involves transaction costs in form of coordination and monitoring efforts and requires knowledge disclosure. This study explicitly considers a firm's collaboration intensity, that is, the share of collaborative R&D projects in a firms' total R&D projects in a sample of mostly small and medium-sized firms (SMEs). We can confirm previous findings in terms of gains for innovation performance, but also show that collaboration has decreasing and even negative returns on product innovation if its intensity increases above a certain threshold. In particular, costs start outweighing benefits if a firm pursues more than about two thirds of its R&D projects in collaboration. -- |
| Keywords: | innovation performance,product innovation,R&D partnerships,collaboration intensity,SMEs,transaction costs,selection model,endogenous switching |
| JEL: | O31 O32 O33 O34 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:154&r=ent |
| By: | Egger, Peter; Erhardt, Katharina; Keuschnigg, Christian |
| Abstract: | Firms are heterogeneous in size, productivity, ownership concentration, governance, financial structure and other dimensions. This paper introduces a stylized theoretical framework to account for such differences and to explain the heterogeneous tax sensitivity of firm-level investments across firm types. We econometrically test the theoretical predictions, taking account of selection of firms into different regimes. We find important differences in the tax sensitivity of investment of small entrepreneurial and larger managerial firms in different financial regimes that are largely in line with theoretical results. |
| Keywords: | Corporate tax; Personal taxes; Firm heterogeneity; Access to capital; Manager-shareholder conflicts |
| JEL: | D22 G32 H25 L21 |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2014:26&r=ent |
| By: | Iootty, Mariana; Correa, Paulo; Radas, Sonja; Skrinjaric, Bruno |
| Abstract: | Drawing on a representative sample of firms, this paper presents some microeconomic evidence on the productivity growth process in Croatia since the onset of recession (2008-12). Four types of results are highlighted. First, there is a persistent (and increasing) heterogeneity in the performance of Croatian firms along outcome measures. Second, Croatia lags behind regional peers in entrepreneurship measures, which suggests a comparatively lower economic dynamism. Third, the lack of dynamism displayed by the Croatian economy is confirmed when looking at the firm entry and exit process: the analytical results point to reduced firm dynamism compared with Croatia's peers in Europe and Central Asia. Fourth, the contribution of net entry to overall productivity growth in Croatia is surprisingly negative. This is contrary to what would be expected based on the literature and suggests that the process of"destructive creation"in Croatia has not been efficient, as the market might be eliminating firms that are potentially productive. Policies that foster market contestability should be pursued, especially policies aiming at better product market regulation (such as liberalization of entry into the service sector, particularly retail and infrastructure). Measures to help finance entrepreneurship (in promising sectors) should be used to support enhancements in firm productivity. In addition, appropriate bankruptcy rules play a key role by easing the exit process and allowing low-productive units to leave the market and free resources that can be better used by other, more efficient, firms. |
| Keywords: | E-Business,Economic Theory&Research,Microfinance,Labor Markets,Markets and Market Access |
| Date: | 2014–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6990&r=ent |
| By: | World Bank |
| Keywords: | Access and Equity in Basic Education Teaching and Learning Education - Educational Sciences Education - Primary Education Tertiary Education |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:16704&r=ent |
| By: | World Bank |
| Keywords: | Finance and Financial Sector Development - Access to Finance Banks and Banking Reform Private Sector Development - Emerging Markets Finance and Financial Sector Development - Debt Markets Private Sector Development - E-Business |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:16736&r=ent |
| By: | Bozeman, Barry (Arizona State University); Link, Albert N. (University of North Carolina at Greensboro, Department of Economics) |
| Abstract: | Five important policy initiatives were promulgated in response to the slowdown in U.S. productivity in the early-1970s, and then again in the late-1970s and early-1980s. These initiatives included the Bayh-Dole Act of 1980, the Stevenson-Wydler Act of 1980, the R&E Tax Credit of 1981, the Small Business Innovation and Development Act of 1982, and the National Cooperative Research Act of 1984. Scholars and policy-makers have long debated the direction and magnitude of impacts from these policies but empirical evidence remains modest, especially evidence of their aggregate effects. Our assessment of these policies is based on quantifying their collective impact on industrial investments in R&D in the post-productivity slowdown period. Our findings support the conclusion that the relative levels of industrial investments in R&D from 1980 forward were significantly higher than before, ceteris paribus. |
| Keywords: | technology; innovation; R&D; policy assessment |
| JEL: | H50 O31 O33 O47 |
| Date: | 2014–08–14 |
| URL: | http://d.repec.org/n?u=RePEc:ris:uncgec:2014_005&r=ent |