nep-ent New Economics Papers
on Entrepreneurship
Issue of 2014‒11‒07
six papers chosen by
Marcus Dejardin
Université de Namur

  1. Housing Collateral, Credit Constraints and Entrepreneurship - Evidence from a Mortgage Reform By Thais Laerkholm Jensen; Søren Leth-Petersen; Ramana Nanda
  2. Principal investigators as scientific entrepreneurs By Anne Casati; Corine Genet
  3. Optimal Crowdfunding Design By Matthew Ellman; Sjaak Hurkens
  4. Do distributors really know the product? Approaching emerging markets through exports By Francesca Checchinato; Lala Hu; Tiziano Vescovi
  5. A Panel Study of Zombie SMEs in Japan: Identification, Borrowing and Investment Behavior By Kentaro Imai
  6. Informal Employment in Russia: Definitions, Incidence, Determinants and Labor Market Segmentation By Hartmut Lehmann; Anzelika Zaiceva

  1. By: Thais Laerkholm Jensen (University of Copenhagen); Søren Leth-Petersen (University of Copenhagen); Ramana Nanda (Harvard Business School, Entrepreneurial Management Unit)
    Abstract: We study how a mortgage reform that exogenously increased access to credit had an impact on entrepreneurship, using individual-level micro data from Denmark. The reform allows us to disentangle the role of credit access from wealth effects that typically confound analyses of the collateral channel. We find that a $30,000 increase in credit availability led to a 12 basis point increase in entrepreneurship, equivalent to a 4% increase in the number of entrepreneurs. New entrants were more likely to start businesses in sectors where they had no prior experience, and were more likely to fail than those who did not benefit from the reform. Our results provide evidence that credit constraints do affect entrepreneurship, but that the overall magnitudes are small. Moreover, the marginal individuals selecting into entrepreneurship when constraints are relaxed may well be starting businesses that are of lower quality than the average existing businesses, leading to an increase in churning entry that does not translate into a sustained increase in the overall level of entrepreneurship.
    Date: 2014–10
  2. By: Anne Casati (Ressource-Conseil - Ressource-Conseil); Corine Genet (MTS - Management Technologique et Strategique - Grenoble École de Management (GEM))
    Abstract: Although Principal Investigators are key actors in scientific fields, there is little focus on what they actually do in shaping new scientific directions. This paper studies PIs practices to better understand their roles. Our central contribution is to identify the different ways in which PIs engage themselves in science, in implementing four main practices: 'focusing in scientific discipline', 'innovating and problem solving', 'shaping new paradigms and models' and 'brokering science'. While 'focusing' and 'innovating' remain close to project management, 'shaping' and 'brokering' look more like entrepreneurial activities, shaping new horizons, reshaping boundaries between subfields and among organizations. External orientations to how they engage in different practices shapes PIs roles to articulate different worlds and to reshape the boundaries of organizations, knowledge and markets. Studying PIs' practices and their combinations advances our knowledge about their roles in managing the interplay between science policies and scientific agendas more effectively highlighting their role as scientific entrepreneurs.
    Keywords: Principal investigator; scientific entrepreneur; practices; engagement. boundary, career path, role; position.
    Date: 2013
  3. By: Matthew Ellman (Institute for Economic Analysis (CSIC) and BGSE, Campus UAB, 08193 Bellaterra, Spain); Sjaak Hurkens (Institute for Economic Analysis (CSIC) and BGSE, Campus UAB, 08193 Bellaterra, Spain)
    Abstract: This paper investigates the optimal design of crowdfunding where crowdfunders are potential consumers with standard motivations and entrepreneurs are profit-maximizing agents. We characterize the typical crowdfunding mechanism where the entrepreneur commits to produce only if aggregate funding exceeds a defined threshold. We study how the entrepreneur uses this threshold, in conjunction with a minimal price, for rent extraction. Compared to a standard posted-price mechanism, total welfare may rise because the entrepreneur can adapt the production decision to demand conditions, but may fall because rent-seeking can worsen. Crowdfunding platforms can raise threshold credibility. So we also compare outcomes when the entrepreneur commits to a threshold against those where the entrepreneur simply decides on production after observing crowdfunder bids. Finally, we contrast crowdfunding with the optimal mechanism where production is contingent on a general function of all bids, rather than the simple sum of bids obliged by the aggregate threshold rule. Crowdfunding is very different, for instance, never committing to produce the good when aggregate bids fall short of the fixed cost (even absent credit constraints).
    Keywords: Crowdfunding; mechanism design
    JEL: C72 D42 L12
    Date: 2014–10
  4. By: Francesca Checchinato; Lala Hu; Tiziano Vescovi
    Abstract: Exports represent an entry mode into international markets that is less risky than more direct strategies, therefore it particularly fits SMEs (small-medium enterprises) that generally have a few resources to invest. In the case of emerging markets because of the high psychic distance, SMEs tend to rely on their distributors for the business operations in the new market. However, although this type of intermediary allows the access to the foreign distribution channel that is particularly complex in countries such as China, it can limit the market control and in some cases, the product expansion. Based on a qualitative research consisting of interviews and secondary data, we present two original case studies of Italian firms operating in the Chinese market. It is shown that in emerging markets, since distributors do not really analyze and know consumer expectations and behaviors, they may represent a barrier in the knowledge accumulation of foreign products in the new market. Managerial implications are discussed on the extent to which SMEs are not able to replicate marketing strategies used in other countries, but they should define a clear strategy that involves their distributors in the process of knowledge accumulation and brand value creation in the foreign market.
    Keywords: internationalization, export, SME, distributor, emerging markets.
    JEL: F23 M16 M31 D22
    Date: 2014–10
  5. By: Kentaro Imai (Graduate School of Economics, Osaka University)
    Abstract: Using a panel dataset of firms for the period 1999-2008, we estimated the prevalence of zombies among Japanese Small- and Medium-sized enterprises (SMEs) and their borrowing and investment behaviors. We observe that 4-14% of SMEs were zombie firms during the period 1999-2008. Analysis of borrowing behavior indicates that zombie firms could not reduce their loans. Reductions in the land values of SMEs did not lead to a decrease in the borrowing of zombie firms due to ever-greening. We also observe that the profitability of investment, measured by marginal q, did not increase investment among zombie firms because evergreen loans increased investment in less productive and profitable projects.
    Keywords: zombie firms, ever-greening, SMEs, borrowing, investment
    JEL: G21 E22 E44
    Date: 2013–07
  6. By: Hartmut Lehmann; Anzelika Zaiceva
    Abstract: This paper takes stock of informal employment in Russia analyzing its incidence and determinants, developing several measures of informal employment and demonstrating that the incidence varies widely across the different definitions. We, however, show that the determinants of informal employment are roughly stable across the different measures. We also estimate an informal-formal wage gap at the means and across the entire wage distributions. We find only weak evidence for labor market segmentation in Russia for salaried workers but establish a segmented informal sector with a lower free entry tier and an upper rationed tier when including the self-employed and entrepreneurs
    Keywords: Informal employment, transition economies, labor market segmentation, Russia
    JEL: J31 J40 P23
    Date: 2014–03

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