nep-ent New Economics Papers
on Entrepreneurship
Issue of 2015‒01‒09
nine papers chosen by
Marcus Dejardin
Université de Namur

  1. Who turns to entrepreneurship later in life? - Push and pull in Finnish rural and urban areas By Hannu Tervo
  2. Innovation and entrepreneurship in the global economy By Karlsson, Charlie; Gråsjö, Urban; Wixe, Sofia
  3. Examining Entrepreneurial Potential By Bonev, Pavlin; Egbert, Henrik; Neumann, Thomas
  4. Do Market-Based Tax Incentives Attract New Businesses? Evidence from the New Markets Tax Credit By Amanda Ross; Kaitlyn Wolf
  5. R&D partnerships and innovation performance: Can there be too much of a good thing? By Hottenrott, Hanna; Lopes-Bento, Cindy
  6. Determinants of technological innovation in SMEs. Firm-level factors, agglomeration economies and the role of KIBS providers By Roberto Ganau; Eleonora Di Maria
  7. The Key Areas Turkey Needs to Work on Due to Improve Entrepreneurship By Senay Oguztimur
  8. The Mannheim Enterprise Panel (MUP) and firm statistics for Germany By Bersch, Johannes; Gottschalk, Sandra; Müller, Bettina; Niefert, Michaela
  9. Schumpeter and the meanings of rationality By Mário Graça Moura

  1. By: Hannu Tervo
    Abstract: Age is an important factor in entrepreneurship. The paths into entrepreneurship at a later age may be varied. Self-employment in later life may be either a form of partial retirement or a career option. Older individuals may also be pushed into self-employment. The focus of this paper is on the career choices of older individuals and their background motivations in Finland. The purpose is to analyse the factors and motives in terms of the push and pull dichotomy that lead individuals to enter self-employment at older ages in different types of labour markets in Finland, viz., rural and urban areas. Although some studies have focused on transitions to self-employment among older workers, questions about the motives and particularly about the background and circumstances of these people, including the regional environment, still need clarification. A large longitudinal data set is utilised to examine the transitions of individuals aged 55-74 to self-employment. The results suggest that due to a lower level of demand and lower educational capital, self-employment is less tempting in rural than in urban areas. As a result, transitions to self-employment at older ages are less frequent in rural areas than in urban areas, although rural areas have strong traditions of entrepreneurship. Seniors with prior experience are more likely to start a business in urban areas: habitual entrepreneurship is more frequent in urban areas, at least in later life. Older workers without prior experience in self-employment, however, start businesses in rural areas as likely as in urban areas. The results also show that most enter self-employment from paid employment, though a small number do enter from non-employment. The results suggest that a career option is often linked with transitions from wage work, whereas those transitioning from non-employment seek a bridge to full retirement. No sharp division between these two options can be made, however. The results suggest that those who are recognised to possess pull motives are characterised to be more likely male and/or highly educated, whereas those who are recognised to possess push motives are more likely female, unmarried and/or less educated with an orientation of business education. An interesting finding is that both necessity- and opportunity-driven self-employed have prior self-employment experience. Independent of whether entrepreneurship is necessity- or opportunity-driven, it is most likely habitual.
    Keywords: self-employment; third age; rural and urban regions; habitual and novice entrepreneurship; necessity vs. opportunity JEL-codes:
    JEL: J14 J24 J26 M13 R23
    Date: 2014–11
  2. By: Karlsson, Charlie (Jönköping International Business School & Centre of Excellence for Science and Innovation Studies); Gråsjö, Urban (University West); Wixe, Sofia (¨Jönköping International Business School & Centre of Excellence for Science and Innovation Studies)
    Abstract: Much of the discussion about globalization has been held at a rather superficial macro-economic level. Discussions about globalization dealing with the meso- and micro-economic level, i.e. the level of regions and companies, have been much less common. Many of the discussions of globalization at the meso- and micro-economic level have also been biased in the sense that they have only given a partial picture. One obvious example is that discus¬sions of the role of innovation and entrepreneur¬ship have tended to use a narrow definition of entrepreneurship equal to the start-up of new companies and as a result ignored the high degree of innovation and entrepreneurship within many incumbent companies. The purpose of this paper is to contribute to the meso- and micro-economic literature on innovation and entrepreneurship in the global economy.
    Keywords: Globalization; innovation; entrepreneurship; urban regions
    JEL: L26 O30 R10
    Date: 2014–11–26
  3. By: Bonev, Pavlin; Egbert, Henrik; Neumann, Thomas
    Abstract: Employing public resources for promoting entrepreneurships demands careful selection of candidates who are most promising to set up a successful entrepreneurial career. This study addresses the relation between an individuals’ entrepreneurial potential, identified through personality traits, and aspects of human and social capital, based on prior individual experiences in the domain of self-employment. A psychometric test, called F-DUPN, measures the strengths of personality traits considered relevant for successful entrepreneurial activity. To test our hypotheses we collected data of 166 individuals. All of them are university students or graduates and have indicated a specific interest in entrepreneurial activity. A major result is that participants experienced in self-employment, with self employed parents and with self employed friends show a higher entrepreneurial potential than participants who do not have these experiences or relations. Furthermore, we find in line with other studies that differences in entrepreneurial potential become less pronounced with increasing age. An interpretation is that personality traits significant for entrepreneurial activity are not stable over time and can also be acquired at a later stage in life.
    Keywords: psychometric test, human capital, social capital, observational learning, F DUP, self employment experience, personality traits
    JEL: D8 M13
    Date: 2014–12–10
  4. By: Amanda Ross; Kaitlyn Wolf
    Abstract: Policy makers at all levels of government believe that one of the key drivers of local economic growth is new businesses. Therefore, governments design policy with the intention of attracting businesses with the hopes that this will create future growth in struggling areas. Over the past few decades, the federal government has adjusted its approach to aid low-income communities to be based on market-based policies that encourage private investment in low-income communities. The underlying logic of these programs is that the best way to help local areas develop is to set up incentives for businesses at a local level to attract these drivers of growth to disadvantaged communities. By bringing new businesses and employment opportunities to a struggling area, there will be increased employment opportunities and the market will operate to reach an efficient outcome. In this paper, we use the New Market Tax Credit (NMTC) adopted in 2000 by the U.S. government to determine the effect of market-based, government-sponsored tax credits on the location decisions of new businesses. One issue when looking at the impact of business location decisions on growth is there is an inherent endogeneity issue, as entrepreneurs are likely to open their new establishment in growing areas. To address this endogeneity concern, we draw upon an eligibility cutoff in the NMTC to determine the impact of the tax credit on where businesses locate. By comparing census tracts with income levels that make the tract just eligible for the tax credit versus those that are just not eligible for the credit, we are able to obtain causal estimates. Using business location data from the Dun and Bradstreet MarketPlace Files, we find that in Metropolitan Statistical Areas in particular, the tax credit successfully incentivized businesses to locate in lower income census tracts. In particular, we found that these tax credits, aimed at increasing investment, had particularly strong effects on manufacturing. Our results suggest that these market-based tax incentives are having the intended effect of attracting new businesses to struggling areas. Our research fits into a growing literature on the impact of place-based tax programs on the development of local areas
    Keywords: Place-based programs; tax credits; regression discontinuity; entrepreneurship; agglomeration;
    JEL: H25 J60 R23 R41
    Date: 2014–11
  5. 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. Fewer studies addressed potential drawbacks of collaborative R&D. Collaborative R&D comes at the costs of coordination and monitoring, requires knowledge disclosure and involves the risk of opportunistic behaviour by the partners. Thus, while the net gains from collaboration can be high initially, cost may start to outweigh those benefits if firms engage in multiple collaborative projects simultaneously. This study explicitly considers a firm's collaboration intensity, that is, the share of collaborative R&D projects in the firms' total R&D project portfolio. For a sample of 2,891 firms located in Germany, active in abroad range of manufacturing and service sectors and of which 86% are SMEs, we indeed find that increasing the share of collaborative R&D projects in total R&D projects is associated with a higher probability of product innovation and with a higher market success of new products. While we can confirm previous findings in terms of gains for innovation performance, we also find that collaboration has decreasing and even negative returns on product innovation if its intensity increases above a certain threshold. Consequently, the relationship between collaboration intensity and innovation has an inverted-U shape. In particular, costs start outweighing benefits if a firm pursues more than about two thirds of its R&D projects in collaboration. This result is robust to conditioning market success to the introduction of new products and to accounting for the selection into collaborating.
    Keywords: innovation performance,product innovation,R&D partnerships,collaboration intensity,SMEs,transaction costs,selection model,endogenous switching
    JEL: O31 O32 O33 O34
    Date: 2014
  6. By: Roberto Ganau; Eleonora Di Maria
    Abstract: The study of the determinants of innovation processes has received great attention in both the economics and the business literature. However, only few contributions have proposed a comprehensive framework able to bring together different but not mutually exclusive research approaches. This paper contributes to the analysis of the determinants of technological innovation - namely, product and process innovations - focusing on Italian manufacturing small and medium sized firms (SMEs) by accounting, simultaneously, for firm-specific characteristics, agglomeration economies and the role of KIBS providers. Specifically, the paper provides an empirical investigation which is built on a multi-dimensional theoretical basis which gathers the resource-based view of the firm and the new economic geography framework together. The empirical exercise employs data of about 4,000 Italian SMEs observed over the period 2004-2006 and drawn from the Unicredit-Capitalia database. Parametric probabilistic models are estimated in order to identify the joint effects of several potential determinants of successful technological innovation. Overall, results suggest that technological innovation in manufacturing SMEs is mainly driven by firm-specific characteristics. It emerges that experience and knowledge accumulated over time (i.e. age) as well as availability of human and capital resources (i.e. size) matter for being innovative firms. Moreover, innovative firms show both higher labour productivity levels and higher investments in R&D activities than non-innovative firms. Results partially support previous findings on the agglomeration-innovation relationship: overall, diversification (specialisation) externalities seem to positively (negatively) affect (high-tech) firms' probability of introducing technological innovations. Finally, results suggest that the spatial agglomeration of KIBS providers - i.e. being located in an area characterised by a high concentration of KIBS firms - does not matter per se: in fact, a positive effect emerges only when firms' heterogeneity in absorptive capacity is explicitly considered. Results show that only (low-tech) SMEs which invest in R&D activities benefit from a high geographic concentration of (professional and technological) KIBS firms.
    Keywords: Technological innovation; Manufacturing SMEs; Resource-Based Theory; Agglomeration Economies; KIBS providers; Italy;
    JEL: D22 O31 R12
    Date: 2014–11
  7. By: Senay Oguztimur
    Abstract: Even though Turkey is frequently regarded as an emerging market and actually has many advantages to be considered as an attractive place to invest and do business, it is not that much attractive for international economy world. Despite Turkey's capacity, such as being 16th largest market with its young population as well as approximately 8% gross domestic product increase, varied industry base with a wide talent pool, according to various international independent research institutes, the global market does not view Turkey as a beneficial place for entrepreneurship. Moreover there are quite a large number of barriers to attract investment and to make successful investment and entrepreneurship opportunities in Turkey. Besides the entrepreneurship indicators in Turkey demonstrate similar point. One of the most conspicuous is that just about six tenth of Turkish people regard their local environment to be a good one for fostering entrepreneurs and entrepreneurship. The very little number of female entrepreneurs (while compared with the man-dominant market) is also a barrier to Turkey becoming a positive and inclusive environment for continued entrepreneurial growth. With consideration paid to given statistics in recent years, Turkey generally remains in the last quarter while compared with the overall countries having possibility to attract entrepreneurs. After analyzing the present circumstances, this paper focuses on the national and local level of obstacles of entrepreneurship in Turkey. Within the light of the researches of statistics and secondary documents; it is obvious that Turkey should take into account such the following issues: chaos in Turkish bureaucracy, counterworks in protecting intellectual property and drawbacks to break monopolies in the marketplace are the first significant points to worth stressing. To support entrepreneurship, reforms and regulations need to be done in order to create an inviting and successful atmosphere for potential entrepreneurs even from local level and from international market. In order to deal with the problems of enlargement the capacity of Turkish entrepreneurship, commitment to fostering a positive environment for entrepreneurship should have done over and above launching a series of programs designed to foster growth and support entrepreneurship. The main purpose of this paper is to evaluate the key points that Turkey needs to work on due to improve entrepreneurship.
    JEL: L26
    Date: 2014–11
  8. By: Bersch, Johannes; Gottschalk, Sandra; Müller, Bettina; Niefert, Michaela
    Abstract: The Mannheim Enterprise Panel (Mannheimer Unternehmenspanel - MUP) of the Centre for European Economic Research (ZEW) is the most comprehensive micro database of companies in Germany outside the official business register (which is not accessible to the public). The MUP is based on the firm data pool of Creditreform e.V., which is the largest credit rating agency in Germany. At the end of 2013, the MUP contained information on 7.7 Mio firms, of which about 3.2 Mio were still active. Comparisons of the active stock of firms in the MUP with the Business Register of the Federal Statistical Office indicate that the MUP gives by and large a representative picture of the corporate landscape in Germany. The MUP is a valuable database for analyzing the number of start-ups and firm closures on a yearly basis for Germany. Further, the MUP is the sampling frame for the ZEW firm surveys and it is used for analyzing the development of firms over time.
    Keywords: firm data,start-ups,firm closures,stock of firms in Germany
    JEL: C8 L26
    Date: 2014
  9. By: Mário Graça Moura (Universidade do Porto, Faculdade de Economia)
    Abstract: This paper discusses various meanings of rationality distinguished by Schumpeter – as well as related concepts like rationalisation – and connects them with widely remarked tensions or dilemmas in his substantive works. The well-known contrast between Schumpeter’s commitment to equilibrium economics and his heterodox, evolutionary vision is analysed on the basis of the notions of ‘rationality of the observer’ and ‘rationality in the observed’, developed in his article on 'The Meaning of Rationality in the Social Sciences'. Schumpeter’s thesis of the obsolescence of the entrepreneurial function is also scrutinised, by investigating the coherence between his conceptions of rationality and of rationalisation. This topic is in turn connected with Schumpeter’s assessment of the socialist calculation debate.
    Keywords: Schumpeter, methodology, ontology, rationality
    JEL: B3 B4
    Date: 2014–11

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