nep-ent New Economics Papers
on Entrepreneurship
Issue of 2014‒12‒08
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. On the Misery of Losing Self-employment By Clemens Hetschko
  2. Employment Transitions among the self-employed during the Great Recession By Beckhusen, Julia
  3. Skills Training for Entrepreneurs in Developing Countries By Nathan Fiala
  4. Conflict in the wage-led growth model By Correa, Romar
  5. Innovation in creative cities: Evidence from British small firms By Neil Lee; Andrés Rodríguez-Pose
  6. The Role of Self-Employment in Mitigating Trade Shocks of Chinese Imports on U.S. County Labor Markets By Liang, Jiaochen; Goetz, Stephan
  7. Where Do They Come From, Where Do They Go? Endogenous Insurance and Informal Relationships By Xiao Yu Wang
  8. Innovation and export in SMEs: the role of relationship banking By Serena Frazzoni; Maria Luisa Mancusi; Zeno Rotondi; Maurizio Sobrero; Andrea Vezzulli
  9. Framing the scope of value in exploratory projects: An expansive value management model By Thomas Gillier; Sophie Hooge; Gérald Piat
  10. Starving (or Fattening) the Golden Goose?: Generic Entry and the Incentives for Early-Stage Pharmaceutical Innovation By Lee Branstetter; Chirantan Chatterjee; Matthew J. Higgins
  11. Young Firms and R&D subsidies in Catalonia By Segarra Blasco, Agustí, 1958-; Teruel, Mercedes
  12. Does team competition increase pro-social lending? Evidence from online microfinance By Chen, Roy; Chen, Yan; Liu, Yang; Mei, Qiaozhu
  13. Déficit de Financement des PME au Cameroun: A qui la faute? By Christian Lambert Nguena

  1. By: Clemens Hetschko
    Abstract: German Socio-Economic Panel data is used to show that the decrease in life satisfaction caused by an increase in the probability of losing work is higher when self-employed than when paid employed. Further estimations reveal that becoming unemployed reduces self-employed workers' satisfaction considerably more than salaried workers' satisfaction. These results indicate that losing self-employment is an even more harmful life event than losing dependent employment. Monetary and non-monetary reasons seem to account for the difference between the two types of work. Moreover, it originates from the process of losing self-employment and the consequences of unemployment rather than from advantages of self-employment.
    Keywords: life satisfaction; self-employment; probability of losing work; Unemployment; SOEP
    JEL: I31 J24 J65 L26
    Date: 2014
  2. By: Beckhusen, Julia
    Abstract: Entrepreneurs base their decision to start a business on a range of factors, from age, education and assets to macroeconomic conditions. While the majority of these factors have a well-understood impact on entering and exiting self-employment, the effect of macroeconomic conditions is less clear. During periods of recession, self-employment may increase due to its attractiveness as an alternative to unemployment. However, the difficulty of maintaining a business through the downturn can lead to a decrease in the self-employed. Understanding the transitions in and out of self-employment would help us better appreciate how entrepreneurs experience recessions. We use a robust set of longitudinal data from the Survey of Income and Program Participation (SIPP) to analyze the movements between self-employment, unemployment and wage-work during the Great Recession. The results suggest that the probability of entering self-employment depends on characteristics of the individual while movements out of self-employment are contingent on characteristics of the business. Furthermore, transitions from unemployment to self-employment increased during the recession months and transitions from self-employment to wage-work increased in the post recession months.
    Keywords: Self-employment, unemployment, longitudinal data, Labor and Human Capital, Public Economics, L26, J01, J60, C23,
    Date: 2014–05
  3. By: Nathan Fiala
    Abstract: For most of the developing world, microenterprises are a key source of income and employment creation. For many countries the informal sector, where most of the small enterprises exist, represents over 80% of employment (ILO 2012). These businesses often have a difficult time growing. There are a number of reasons that have been put forward by policy makers and researchers for this lack of growth, including missing the necessary skills to manage a growing business.International NGOs and governments are interested in training programs. The ILO and World Bank have invested heavily in trainings, calling greater access to skills training a game changer. However, the results of recent impact evaluations suggest there is reason to be skeptical of training programs. There is a growing evidence that these programs do not contribute to enterprise growth. Researchers now argue that such trainings, when delivered alone, are not effective. The debate over the right way to approach unemployment and business creation is just starting.
    Date: 2014
  4. By: Correa, Romar
    Abstract: We model the interaction between capitalists and entrepreneurs as a dynamic game. The open-loop Nash equilibrium and the closed-loop Nash equilibrium are distinguished. The elasticity of intertemporal substitution as well as the level and responsiveness of the wage rate to the accumulation of capital are shown to be important for wage-led growth.
    Keywords: capital accumulation,conflict: cooperation
    JEL: B51 C73
    Date: 2014
  5. By: Neil Lee; Andrés Rodríguez-Pose
    Abstract: Creative cities are seen as important sites for the generation of new ideas, products and processes. Yet, beyond case studies of a few high-profile cities, there is little empirical evidence on the link between local creative industries concentration and innovation. This paper addresses this gap with an analysis of around 1,300 UK SMEs. The results suggest that firms in local economies with high shares of creative industries employment are significantly more likely to introduce entirely new products and processes than firms elsewhere, but not innovations which are simply new to the firm. This effect is not exclusive to creative industries firms and seems to be largely due to firms in medium sized, rather than large, cities. The results imply that creative cities may have functional specialisations in new content creation and so firms are more innovative in them.
    Keywords: Creativity, Creative Cities, Creative Industries, Cities, Innovation
    JEL: O31 O38 R1 R11 R58
    Date: 2014–11
  6. By: Liang, Jiaochen; Goetz, Stephan
    Abstract: This paper embeds an analysis of self-employment into the framework of international trade and local economies, seeking to explain how entrepreneurship can shape local labor market response to trade shocks. We investigate the cross-effect of self-employment and change in Chinese imports on US county labor markets during 2000-2007. Our empirical results suggest that counties with higher self-employment experience smaller job losses and wage cuts in response to Chinese imports. That suggests self-employment or entrepreneurship activities in local economies mitigate adverse impacts of trade penetration.
    Keywords: self employment, trade shocks, labor market, Chinese import, Community/Rural/Urban Development, International Relations/Trade,
    Date: 2014
  7. By: Xiao Yu Wang
    Abstract: Heterogeneously risk-averse individuals who lack access to formal insurance build and use relationships with each other to manage risk. I show that equilibrium relationships under pairwise matching and endogenous group size are determined by the mean-variance trade-off across differentially risky productive opportunities, though output distributions have infinitely-many nonzero moments. I show that the need to manage risk informally influences firm structure and entrepreneurship, and policymakers must account for this. A risk-reduction policy which ignores the equilibrium response of informal institutions may cause the least risk-averse to abandon their roles as informal insurers, exacerbating inequality and hurting the most risk-averse.
    JEL: C78 O1 O17
    Date: 2014–08
  8. By: Serena Frazzoni; Maria Luisa Mancusi (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Zeno Rotondi; Maurizio Sobrero; Andrea Vezzulli
    Abstract: This paper assesses the role of relationship lending in explaining simultaneously the innovation activity of Small and Medium Enterprises (SME), their probability to export (i.e. the extensive margin) and their share of exports on total sales conditional on exporting (i.e. the intensive margin). We adopt a measure of informational tightness based on the ratio of firm’s debt with its main bank to firm’s total assets. Our results show that the strength of the bank-firm relation has a positive impact on both SME’s probability to export and their export margins. This positive effect is only marginally mediated by the SME’s increased propensity to introduce product innovation. We further discuss the financial and non-financial channels through which the intensity of bank-firm relationship supports SMEs’ international activities.
    Keywords: margins of export, bank-firm relationships, innovation, localized knowledge spillovers
    JEL: F10 G20 G21 O30
    Date: 2014–11
  9. By: Thomas Gillier (MTS - Management Technologique et Strategique - Grenoble École de Management (GEM)); Sophie Hooge (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Gérald Piat (EDF R&D - EDF)
    Abstract: Organizations often launch exploration projects (EP) aiming at developing innovative products (or services) by the exploration of new technologies, users, ecosystems or business models. Because a fundamental purpose of any project is to create value, the approach of value management (or value engineering) has been largely adopted in the organizations to manage the projects. However, the fact to move beyond the existing markets and the established technologies imply great difficulties and uncertainties for managing creative projects. Indeed, because exploration projects precisely aim to invent products (or services) that do not exist before, the value to create is unknown at the start of such project. So, what does value management precisely mean in situation of exploration project? This research aims to clarify the nature, the beneficiaries, and the ways to manage the value in such situations. After reviewing the historical development of the two traditional approaches of value management in project management literature, we then show we show their inadequacies for managing exploratory situations. This article is based on a longitudinal of two case-studies into a collaborative management research conducted with a major French car manufacturer. The two case-studies are an inter-firm EP corresponding to the joint exploration of an innovative multimodal urban platform by the automotive firm and two other industrial partners and an intra-firm EP aiming at generating innovative projects for the development of the electric vehicles. We propose an expansive value management model (EVM) towards three main propositions: 1) evaluating and stimulating the creation of value with a constant comparison with the dominant designs - (2) sustaining the exploration by tuning the degree of undecidability - (3) stimulating the emergence of new ecosystems by the creation of new platforms projects. Finally, this research proposes key managerial principles for EP management and a set of indicators to monitor the exploration process (i.e. identifying design rules to break, managing two kind of design paths...) and the collective dimension (i.e. the beneficiaries...) of EP.
    Keywords: value management; exploration; radical innovation; exploratory projects; creativity; dominant design
    Date: 2013–04–19
  10. By: Lee Branstetter; Chirantan Chatterjee; Matthew J. Higgins
    Abstract: Over the last decade, generic penetration in the U.S. pharmaceutical market has increased substantially, providing significant gains in consumer surplus. What impact has this rise in generic penetration had on the rate and direction of early stage pharmaceutical innovation? We explore this question using novel data sources and an empirical framework that models the flow of early-stage pharmaceutical innovations as a function of generic penetration, scientific opportunity, firm innovative capability, and additional controls. While the aggregate level of early-stage drug development activity has increased, our estimates suggest a sizable, robust, negative relationship between generic penetration and early-stage pharmaceutical research activity within therapeutic markets. A 10% increase in generic penetration is associated with a 7.9% decline in all early-stage innovations in the same therapeutic market. When we restrict our sample to first-in-class pharmaceutical innovations, we find that a 10% increase in generic penetration is associated with a 4.6% decline in early-stage innovations in the same market. Our estimated effects appear to vary across therapeutic classes in sensible ways, reflecting the differing degrees of substitution between generics and branded drugs in treating different diseases. Finally, we are able to document that with increasing generic penetration, firms in our sample are shifting their R&D activity to more biologic-based (large-molecule) products rather than chemical-based (small-molecule) products. We conclude by discussing the potential implications of our results for long-run welfare, policy, and innovation.
    JEL: D2 L5 L51 L65 M2
    Date: 2014–09
  11. By: Segarra Blasco, Agustí, 1958-; Teruel, Mercedes
    Abstract: Based on four different public R&D calls from the Catalan government, this article evaluates the propensity of entrants and young firms to apply for R&D public grants and, as compared to their counterparts, their capacity for obtaining subsides. This analysis is particularly relevant since entrants and young firms encounter greater market difficulties. Our sample contains 22,139 firms and corresponds to a merge of two databases: one from the Catalan agency responsible for promoting private innovation (ACC1Ó) and the other from the Mercantile Register. Merging these databases has two advantages. Firstly, participants and non-participants in the public R&D call (“InnoEmpresaâ€) are included and, secondly, it provides us with information at firm and project level. The period of observation is between 2006 and 2010, since some explanatory variables are lagged by one period. We apply a two-step methodology. Our results show that entrants and young firms show a lower propensity to apply for R&D subsidies and to obtain R&D public grants. Firm size, exports and participation in a previous call show a positive impact on the likelihood of applying, and firms located in the Barcelona metropolitan area have a greater propensity to apply. Additionally, project quality and R&D cooperative reports presented jointly with other partners have a positive impact on the likelihood of obtaining the R&D subsidy. Finally, firms that have previously obtained an R&D subsidy do not exhibit a greater propensity for obtaining subsequent grants. Keywords: R&D subsidies, entrants and young firms Classification JEL: L53, L25, O38
    Keywords: Subvencions, Empreses -- Creació, Política industrial, Empreses -- Dimensió -- Catalunya, Innovacions tecnològiques -- Política governamental, 332 - Economia regional i territorial. Economia del sòl i de la vivenda,
    Date: 2014
  12. By: Chen, Roy; Chen, Yan; Liu, Yang; Mei, Qiaozhu
    Abstract: We investigate the effects of team competition on pro-social lending activity on, the first microlending website to match lenders with entrepreneurs in developing countries. Using naturally occurring field data, we find that lenders who join teams contribute 1.2 more loans ($30-$42) per month than those who do not. To further explore factors that differentiate successful teams from dormant ones, we run a large-scale randomized field experiment (n = 22, 233) by posting forum messages. Compared to the control, we find that lenders make significantly more loans when exposed to a goal-setting and coordination message, whereas goal-setting alone significantly increases lending activities of previously inactive teams. Our findings suggest that goal-setting and coordination are effective mechanisms to increase pro-social behavior in teams.
    Keywords: social identity,pro-social lending,microfinance,field experiment
    JEL: C1 C93 D64 H41
    Date: 2014
  13. By: Christian Lambert Nguena (Association of African Young Economists)
    Abstract: La présente étude a consisté à effectuer une identification et une évaluation descriptive des niveaux de responsabilité des acteurs dans le problème de financement des PME du Cameroun en adoptant une approche hypothético-déductive. Ce d’autant plus qu’au Cameroun en plus d’un paysage d’entrepreneuriat timide, le secteur privé est constitué à plus de 90% de PME peu viable faute de financement; Situation qui tend à s’accentuer avec l’avènement des crises financières. Sur la base des données d’enquête auprès des acteurs du financement à partir d’un échantillon de 413 PME du Cameroun, les résultats de notre analyse montrent que le déficit de financement externe est expliqué à la fois par le comportement des trois acteurs dans le processus que sont : L’état qui devrait prendre des mesures d’assainissement du circuit du financement pour permettre au secteur financier de jouer son rôle et aux promoteurs des PME d’éviter des barrières à l’entrée pour en bénéficier ; Les promoteurs des PME qui devraient maximiser leur chance de bénéficier des offres de financement ; Les institutions financières qui embrayer le pas à l’État en assurant l’objectivité dans mécanisme de financement des PME.
    Keywords: PME, Etablissement financier, Financement externe, Déficit de financement, Asymétrie d’information
    Date: 2013–05

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