nep-ent New Economics Papers
on Entrepreneurship
Issue of 2015‒01‒19
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Aspire By Marcel Fafchamps; Simon Quinn
  2. How do new entrepreneurs innovate? By Gabriele Pellegrino; Mariacristina Piva; Marco Vivarelli
  3. Spin-offs: Why geography matters By Baltzopoulos, Apostolos; Braunerhjelm, Pontus; Tikoudis, Ioannis
  4. The Direct and Indirect Effects of Small Business Administration Lending on Growth: Evidence from U.S. County-Level Data By Andrew T. Young; Matthew J. Higgins; Donald J. Lacombe; Briana Sell
  5. Schumpeter and Venture Finance. Radical Theorist, Broke Investor and Enigmatic Teacher By Michael Peneder; Andreas Resch
  6. Entrepreneurial Activities in Europe - Evaluation of Inclusive Entrepreneurship Programmes By Stuart Thompson
  7. Entrepreneurial Activities in Europe - Social Entrepreneurship By Antonella Noya; Emma Clarence
  8. Household Entrepreneurship and Social Networks: Panel Data Evidence from Vietnam By Nguyen, Huu Chi; Nordman, Christophe Jalil
  9. Analysis of SMES Evolution in France By Scarlat, Cezar; Bourbonnais, Régis; Ceausu, Ioana
  10. Do firm-bank relationships affect firms' internationalization? By Riccardo De Bonis; Giovanni Ferri; Zeno Rotondi
  11. DOES R&D PROTECT SMES FROM THE HARDNESS OF THE CYCLE? EVIDENCE FROM SPANISH SMES (1990-2009) By Dolores Añón Higón; Miguel Manjón; Juan A. Máñez; Juan A. Sanchis-Llopis
  12. Credit Constrained R&D Spending and Technological Change By Pascal Aßmuth
  13. By Shapiro, Alan Finkelstein; Mandelman, Federico S.

  1. By: Marcel Fafchamps; Simon Quinn
    Abstract: We gave US$1,000 cash prizes to winners of a business ideas competition in Africa. The competition, entitled ‘Aspire’, is intended to attract young individuals aspiring to become entrepreneurs. Participants were ranked by panels of judges composed of established entrepreneurs. Each panel selected one winner among twelve candidates; that winner was awarded a prize of US$1,000 to spend at his or her discretion. Six months after the competition, we compare winners with the two runners-up in each panel: winners are 30 percentage points more likely to be self-employed. Our findings imply that access to start-up capital constitutes a sizeable barrier to entry into entrepreneurship for the kind of young motivated individual most likely to succeed in business.
    Date: 2014
  2. By: Gabriele Pellegrino (SPRU, University of Sussex); Mariacristina Piva (DISCE, Università Cattolica); Marco Vivarelli (DISCE, Università Cattolica - SPRU, University of Sussex - IZA, Bonn)
    Abstract: This paper analyses the determinants of product innovation in Italian young innovative companies (YICs) by looking at in-house and external R&D and at the acquisition of external technology in its embodied and disembodied components. A Tobit approach is applied to study jointly the occurrence of product innovation and the intensity of such innovation. Results provide evidence that in-house R&D is linked to product innovation both in mature firms and YICs; however, YICs turn out to be less in-house R&D-based and more dependent on external sources of knowledge. Moreover, other entrepreneurial attitudes such as the ability to cooperate with other firms in producing innovation or the capacity to develop significant organizational changes appear to be less important or even absent in Italian YICs. These results are somehow worrying, since they show that Italian innovative entrepreneurs are mostly driven by routinized rather than creative strategies.
    Keywords: YICs; entrepreneurship, R&D, product innovation
    JEL: L26 O31
    Date: 2014–11
  3. By: Baltzopoulos, Apostolos (Department of Industrial Economics and Management, KTH Royal Institute of Technology and The Swedish Competition Authority, Stockholm, Sweden.); Braunerhjelm, Pontus (Department of Industrial Economics and Management, KTH Royal Institute of Technology, Centre of Excellence for Science and Innovation Studies (CESIS), 100 44 Stockholm, Sweden.); Tikoudis, Ioannis (Department of Spatial Economics, VU University Amsterdam, De Boelelaan 1105, 1081HV, and Tinbergen Institute, Gustav Mahlerplein 117, 1082MS Amsterdam.)
    Abstract: Based on unique data covering individuals, firms, industries, and regions for the 1999-2005 period, we contribute with new knowledge concerning the impact of regional variables on spin-offs. Implementing a large number of controls, as well as different estimation techniques and robustness tests, we show that Jacobian externalities have a positive effect on spin-offs. Moreover, using an entropy measure to disentangle unrelated and related variety, we conclude that the effect is confined to related variety. These findings are likely to be associated with strong welfare effects: a standard-deviation increase (decrease) in related (unrelated) variety increases spin-off propensity by approximately 25%. Other variables are shown to have economic effects of a similar magnitude but may have a different effect across sectors. Sensitivity analyses indicate that the impact of other determinants proposed in the literature (e.g., Marshallian externalities and scale effects) is too small to be detected.
    Keywords: Regions; spin-offs; industries
    JEL: D01 L26 R10
    Date: 2014–12–22
  4. By: Andrew T. Young (West Virginia University, College of Business and Economics); Matthew J. Higgins (Georgia Institute of Technology & NBER); Donald J. Lacombe (West Virginia University, College of Business and Economics); Briana Sell (Georgia Institute of Technology)
    Abstract: Conventional wisdom suggests that small businesses are innovative engines of Schumpetarian growth. However, as small businesses, they are likely to face credit rationing in financial markets. If true then policies that promote lending to small businesses may yield substantial economy-wide returns. We examine the relationship between Small Business Administration (SBA) lending and local economic growth using a spatial econometric framework and a sample of 3,035 U.S. counties for the years 1980 to 2009. We find evidence that a county’s SBA lending per capita is associated with direct negative effects on its income growth. We also find evidence of indirect negative effects on the growth rates of neighboring counties. Overall, a 10% increase in SBA loans per capita is associated with a cumulative decrease in income growth rates of about 2%.
    Keywords: Small Business Administration, guaranteed loans, economic growth, income growth, entrepreneurship, US counties, spatial econometrics, spillovers
    JEL: O47 E65 R11 H25 C23
    Date: 2014–12
  5. By: Michael Peneder (WIFO); Andreas Resch
    Abstract: Schumpeter's relation to venture finance constitutes a fascinating yet so far unacknowledged chapter of his biography and financial history. Presenting new historical evidence and pointing out connections that have so far escaped attention, we first discuss Schumpeter's venture theory of money and banking, then his personal history as a broke investor in Vienna, and finally his influence on the emerging venture industry during his later years at Harvard. We show how the theoretical vision inspired his failed effort as a venture investor in the 1920s, and provided a powerful intellectual frame for the later development of venture finance in the 1940s.
    Date: 2014–12–16
  6. By: Stuart Thompson
    Abstract: Inclusive entrepreneurship policies are intended to give everybody the opportunity to start up in business or self-employment regardless of their social background and to improve labour market outcomes for people who are under-represented or disadvantaged in entrepreneurship and self-employment. This may occur directly, through increasing the number and quality of businesses and self-employment start-up activities, or indirectly, by providing an improved pathway to employment for people who do not eventually start-up or remain in business or self-employment. They work by targeting specific populations such as youth, seniors, women, the disabled, ex-offenders, ethnic minorities, and the unemployed with tailored interventions or improved accessibility to mainstream actions in areas such as access to start-up financing; training, mentoring and consultancy; entrepreneurship education and awareness raising; network building; or improvements to social security and business regulation systems.
    Date: 2013–12
  7. By: Antonella Noya; Emma Clarence
    Abstract: Social enterprises have gained importance in the policy debate in many European and non-European countries, as also demonstrated by the European Commission’s recent “Social Business Initiative”. This marks an important milestone for European policy makers and other stakeholders involved in promoting national and sub-national eco-systems for socially oriented business. Putting in place an enabling environment for social enterprises is critical if they are to fulfil their potential in contributing not only to the creation of jobs, but also to addressing wider social and economic needs, and to promoting more cohesive and inclusive societies.
    Date: 2013–05
  8. By: Nguyen, Huu Chi; Nordman, Christophe Jalil
    Abstract: Using a unique panel of household businesses for Vietnam, this paper sheds light on the links between households’ and entrepreneurs’ social networks and business performance. We address two related questions. One first question asks if we can find evidence of a differentiated effect of employment of members of the family versus hired workers on the business performance. A second question tackles the respective effects of various dimensions of social networks on the business technical efficiency. The assumption is that, beyond the channel of labour productivity, entrepreneurs that are confronted with an unfavourable social environment may produce less efficiently and realize a lower output than what could be possible with the same amount of resources. We find evidence of a productivity differential between family and hired labour and highlight results consistent with the presence of adverse social network effects faced by households running a business, in particular ethnic minorities. We stress the importance of professional networks for successful entrepreneurship.
    Keywords: Family labour; Kinship and ethnic ties; Sharing norms; Social network capital; Informality; Household business; Travail familial; Liens ethniques et de parenté; Normes de partage; Capital du réseau social; Informalité; Microentreprises familiales; Panel; Vietnam;
    JEL: D13 D61 O12
    Date: 2013–11
  9. By: Scarlat, Cezar; Bourbonnais, Régis; Ceausu, Ioana
    Abstract: This paper presents the preliminary results of the study of the evolution of the SMEs in the information technology industry in France. This study was started during a research visit at the University Dauphine Paris, France, as a test model for a study involving SMEs from the information technology at national level in Romania. The analysis of the evolution develops around three indicators: size (number of employees), performance (turnover) and the age of each enterprise. Within this article the theoretical context for this research will be presented, as well as the methodology, the preliminary analysis and the conclusions.
    Keywords: SMEs; evolution; information technology industry; growth;
    JEL: L26
    Date: 2014
  10. By: Riccardo De Bonis (Bank of Italy); Giovanni Ferri (LUMSA); Zeno Rotondi (Unicredit Group)
    Abstract: The goal of this paper is to investigate the link between the length of a firm-bank relationship and firm's internationalization. The analysis is carried out on matched firm-bank micro-data from a survey of Italian enterprises from 1998 to 2003. We obtain two main results. First, a longer relationship with the main bank fosters firms' foreign direct investment (FDI) while it does not affect the export status of the enterprises not engaging in FDI. Second, the probability of a firm undertaking FDI further increases if its main bank is itself internationalized by holding foreign subsidiaries.
    Keywords: internationalization, foreign direct investments, export, external finance, firm-bank relationships, bank internationalization mode
    JEL: D21 F10 F21 F23 G21
    Date: 2014–11
  11. By: Dolores Añón Higón (Department of Applied Economics II and ERICES, Universitat de València); Miguel Manjón (QURE-CREIP Department of Economics, Universitat Rovira i Virgili); Juan A. Máñez (Department of Applied Economics II and ERICES, Universitat de València); Juan A. Sanchis-Llopis (Department of Applied Economics II and ERICES, Universitat de València)
    Abstract: This paper analyses whether undertaking R&D activities allows SMEs to attenuate the negative impact of recessions on productivity. In contrast to other studies we use a firm level indicator of the cycle based on firms’ own perceptions, while total factor productivity is obtained using a control function methodology in which we recognise the potential role that R&D experience might have in shaping future firms’ productivity. The analysis is performed using a representative sample of Spanish SMEs for the period 1990-2009. Results show both that R&D activities render positive productivity returns, and that performing R&D helps to alleviate the negative effects of downturns on productivity. Additionally, R&D seems to have a countercyclical effect upon SME’s productivity over the business cycle, as we find that SMEs R&D productivity premium in recessions doubles that of expansions.
    Keywords: TFP, business cycle, R&D
    Date: 2014–12
  12. By: Pascal Aßmuth (Center for Mathematical Economics, Bielefeld University)
    Abstract: Firms often rely on external financing in order to conduct R&D. The question is to what extend discriminatory behaviour of the funds provider affects the industry evolution. The model is based on an evolutionary framework by Nelson and Winter. A firm chooses its R&D spending in an adaptive fashion where technological improvement is essential for survival in the competitive market. Firms can finance their activities by using retained profits or applying for credit. However, they have a clear hierarchy in choosing the source of funds and saved profits are always used up first. There is endogenous discriminatory lending as the banking sector provides credit according the firms' individual features. It compares profitability and market share across firms when assessing creditworthiness. The model is able to capture features of innovation and diffusion of technology. Results show that the availability of credit is crucial for technological change in a non-linear fashion and that the industry evolves faster if the bank values market share more in assessing creditworthiness.
    Keywords: Heterogeneous Agents Models, Innovation, Financial Constraints
    JEL: D92 G32
    Date: 2014–12
  13. By: Shapiro, Alan Finkelstein (Universidad de los Andes); Mandelman, Federico S. (Federal Reserve Bank of Atlanta)
    Abstract: We incorporate remittances and microentrepreneurship (self-employment) into a small open-economy business cycle model with capital and labor market frictions. Countercyclical remittances moderate the decline of households' consumption during recessions. These remittances also are used to finance the start-up costs of microenterprises that bolster households' income during economic downturns. However, the positive income effect from countercyclical remittances also leads to a decrease in salaried labor supply, which generates offsetting upward pressure on wages during recessions and adversely affects the recovery of the salaried sector. Therefore, the behavior of remittances decisively affects labor force participation and the composition of employment between nonsalaried and salaried employment over the business cycle. The model delivers labor market and aggregate cyclical dynamics that are consistent with the Mexican data.
    Keywords: business cycles; search and matching frictions; remittances
    JEL: E24 E32
    Date: 2014–11–01

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