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on Entrepreneurship |
| By: | Frank M. Fossen; Johannes König |
| Abstract: | We estimate the impact of a differential treatment of paid employees versus self-employed workers in a public health insurance system on the entry rate into entrepreneurship. In Germany, the public health insurance system is mandatory for most paid employees, but not for the self-employed, who usually buy private health insurance. Private health insurance contributions are relatively low for the young and healthy, and until 2013 also for males, but less attractive at the other ends of these dimensions and if membership in the public health insurance system allows other family members to be covered by contribution-free family insurance. Therefore, the health insurance system can create incentives or disincentives to starting up a business depending on the family’s situation and health. We estimate a discrete time hazard rate model of entrepreneurial entry based on representative household panel data for Germany, which include personal health information, and we account for nonrandom sample selection. We estimate that an increase in the health insurance cost differential between self-employed workers and paid employees by 100 euro per month decreases the annual probability of entry into self-employment by 0.38 percentage points, i.e. about a third of the average annual entry rate. The results show that the phenomenon of entrepreneurship lock, which an emerging literature describes for the system of employer provided health insurance in the USA, can also occur in a public health insurance system. Therefore, entrepreneurial activity should be taken into account when discussing potential health care reforms, not only in the USA and in Germany. |
| Keywords: | Health insurance, entrepreneurship lock, self-employment |
| JEL: | L26 I13 J2 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1446&r=ent |
| By: | Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Sandra Kublina (School of Economics and Business Administration, Friedrich-Schiller-University Jena) |
| Abstract: | We distinguish four types of regional growth regimes based on the type of relationship between new business formation and economic development. The distinguishing characteristics of these regime types are analyzed in order to identify the reasons for different growth performance. Although growth regimes are highly persistent over time, typical transition patterns between regime types can be identified. We explain these patterns and draw conclusions for policy. The evidence clearly suggests that entrepreneurship is a key driver of economic development, and one that has long-run effects. |
| Keywords: | Entrepreneurship, new business formation, economic development, regional growth regimes |
| JEL: | L26 R11 O11 |
| Date: | 2015–01–26 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2015-002&r=ent |
| By: | Saul Estrin; Seçil Hülya Danakol; Paul Reynolds; Utz Weitzel |
| Abstract: | This paper explores the effects of foreign direct investment, measured by mergers and acquisitions, on domestic entrepreneurial entry. We use a micro‐panel of more than two thousand individuals disaggregated by industry in seventy countries including both developed and developing economies, 2000-2009. The theory yields ambiguous predictions about the relationship between FDI and entrepreneurship; positive spillovers via dissemination of technology or negative because of crowding out. Our empirical analysis is conducted at three levels of aggregation. We find the relationship between FDI and domestic entrepreneurship in aggregate and intra-industry to be negative. Policies need to consider how to counteract this effect. |
| Keywords: | Foreign direct investment; entrepreneurship; new firm entry; spillovers |
| JEL: | F23 L29 M13 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:60281&r=ent |
| By: | Saul Estrin; Ute Stephan; Sunčica Vujić |
| Abstract: | Based upon unique survey data collected using respondent driven sampling methods, we investigate whether there is a gender pay gap among social entrepreneurs in the UK. We find that women as social entrepreneurs earn 29% less than their male colleagues, above the average UK gender pay gap of 19%. We estimate the adjusted pay gap to be about 23% after controlling for a range of demographic, human capital and job characteristics, as well as personal preferences and values. These differences are hard to explain by discrimination since these CEOs set their own pay. Income may not be the only aim in an entrepreneurial career, so we also look at job satisfaction to proxy for nonmonetary returns. We find female social entrepreneurs to be more satisfied with their job as a CEO of a social enterprise than their male counterparts. This result holds even when we control for the salary generated through the social enterprise. Our results extend research in labour economics on the gender pay gap as well as entrepreneurship research on women’s entrepreneurship to the novel context of social enterprise. It provides the first evidence for a “contented female social entrepreneur” paradox. |
| Keywords: | Social entrepreneur; gender pay gap; social enterprise; earnings; job satisfaction |
| JEL: | J28 J31 J71 L32 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:60606&r=ent |
| By: | Varady, David P. (University of Cincinnati); Kleinhans, Reinout (Delft University of Technology); van Ham, Maarten (Delft University of Technology) |
| Abstract: | Through a review of the recent American community development literature, this paper tests the assertion that British community enterprises (CEs) are fundamentally similar to American community development corporations (CDCs), and therefore, that CEs can learn from CDCs. In the context of the current austerity regimes, CEs and community entrepreneurship are increasingly considered as a means to continue small-scale urban regeneration, not only in the UK but also in several other European countries. While the CDC sector has achieved a relatively successful record in affordable housing production in distressed areas, CDCs are fundamentally limited in terms of reversing the processes of community decline. Our comparison of CDCs and CEs reveals similarities, but also differences with regard to organizational characteristics, co-operation on multiple scales, comprehensiveness, targeting and community participation. Apart from outlining lessons that CEs can learn from CDS, we provide recommendations for further research that should cover the lack of empirical evidence in this field. |
| Keywords: | community development corporations, community enterprises, neighborhood revitalization, entrepreneurship, regeneration, United States, United Kingdom |
| JEL: | L26 L31 R23 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8777&r=ent |
| By: | Behncke, Nadine |
| Abstract: | This paper analyzes the effect of different cooperation forms on innovation in small and medium enterprises in Belgium, Germany, Portugal and Spain using Community Innovation Survey data from 2008. We find that vertical cooperation and knowledge cooperation increases the probability to introduce product innovations in all countries. The positive effect is driven by cooperation in the home country in Germany and Spain while it comes from cooperations with foreign countries in Belgium and Portugal. However, our results suggest that SME are not able to capitalize from these cooperations. We find a significant and positive effect of horizontal cooperation on sales due to product innovation only in Germany. |
| Keywords: | networks,SMEs,innovation |
| JEL: | L14 L25 L2 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:229&r=ent |
| By: | Max Nathan; Emma Vandore |
| Abstract: | The digital industries cluster known as 'Silicon Roundabout' has been quietly growing in East London since the 1990s. Now rebranded 'Tech City', it is now the focus of huge public and government attention. National and local policymakers wish to accelerate the local area's development: such cluster policies are back in vogue as part of a re-awakened interest in industrial policy in many developed countries. Surprisingly little is known about Tech City's firms or the wider ecosystem, however, and existing cluster policies have a high failure rate. This paper performs a detailed mixed-methods analysis, combining rich enterprise-level data with semi-structured interviews. We track firm and employment growth from 1997-2010 and identify a number of distinctive features: branching from creative to digital content industries, street-level sorting of firms, the importance of local amenities and a lack of conventional cluster actors such as universities or anchor businesses. We also argue that the existing policy mix embodies a number of tensions, and suggest areas for improvement. |
| Keywords: | digital economy; cities; clusters; innovation; London; silicon roundabout; tech city |
| JEL: | L2 L52 M13 O18 O31 R11 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:58424&r=ent |
| By: | Emmanuel O. Nwosu; Anthony Orji; Vivian Nwangwu; Chioma Nwangwu |
| Abstract: | This research investigates whether women entrepreneurs in small and medium-sized enterprise (SMEs) in Nigeria are marginalised in formal credit markets compared to their male counterparts. The study also investigates the impact of credit access on the performance of enterprises. The study uses Nigerian Enterprise Surveys data from 2010 to construct a direct measure of credit constraints in order to address the objectives. A probit credit constraint model was estimated, and nonlinear decomposition methods as well as propensity score matching methods were employed in the analyses. Our results did not show significant discrimination against women in formal credit markets in Nigeria. The results reveal that firms that are not credit constrained in the formal credit market perform measurably better in terms of output, output per worker and the decision to invest/expand, compared to firms that are constrained. Our results also show that access to formal credit by small and medium enterprises in Nigeria is still very low. The policy implications, among others, are that government and monetary authorities should support credit expansion policies for medium and small enterprises by creating an enabling environment for financial intermediation in Nigeria. Also, intervention funds targeted specifically at medium and micro enterprises would help to ease credit constraints. |
| Keywords: | gender, discrimination, credit, constraint, performance, access |
| JEL: | O16 O17 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:pmmacr:2015-01&r=ent |
| By: | Martin Lábaj (University of Economics in Bratislava, Faculty of National Economy, Department of Economic Policy); Karol Morvay; Peter Silaniè; Christoph Weiss |
| Abstract: | The present paper provides first empirical evidence on the relationship between market size and the number of firms for a transition economy. We estimate size thresholds required to support different numbers of firms for seven retail and professional service industries in a large number of distinct geographic markets in Slovakia. The empirical analysis is carried out for three time periods (1995, 2001 and 2010) characterizing different stages of the transition process. Our results suggest that the relationship between market size and the number of firm has changed substantially over time. While entry threshold ratios tend to be larger than one and decline with the number of firms in most professions in 1995, the estimation results obtained for 2010 suggest entry threshold ratios much closer to one. This finding is consistent with observations suggesting a significant decline in entry barriers as well as an intensification of competition over time. |
| Keywords: | entry thresholds, competition, Slovakia, transition, geographic markets |
| JEL: | L22 D22 M13 R11 |
| Date: | 2014–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:brt:depwps:005&r=ent |
| By: | Neil Lee |
| Abstract: | Growing cultural diversity is seen as important for innovation. Research has focused on two potential mechanisms: a firm effect, with diversity at the firm level improving knowledge sourcing or ideas generation, and a city effect, where diverse cities helping firms innovate. This paper uses a dataset of over 2,000 UK SMEs to test between these two. Controlling for firm characteristics, city characteristics and firm and city diversity, there is strong evidence for the firm effect. Firms with a greater share of migrant owners or partners are more likely to introduce new products and processes. This effect has diminishing returns, suggesting that it is a ‘diversity’ effect rather than simply the benefits of migrant run firms. However, there is no relationship between the share of foreign workers in a local labour market and firm level innovation, nor do migrant-run firms in diverse cities appear particularly innovative. But urban context does matter and firms in London with more migrant owners and partners are more innovative than others. |
| Keywords: | cultural diversity; innovation; cities; SMEs; migration |
| JEL: | J61 L21 M13 O11 O31 R23 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:57874&r=ent |
| By: | Max Nathan |
| Abstract: | High levels of net migration to the UK have contributed to growing cultural diversity, and researchers are turning their attention to the long-term effects of diversity on productivity. Yet little is known about these issues. This paper asks: what are the links between the composition of firms' top teams and business performance? What role do ethnic diversity and co-ethnic networks play? And do cities amplify or dampen these channels? I explore using a rich dataset of over 6,000 English firms. Owners, partners and directors set firms' strategic direction. Top team demography might generate production externalities through diversity (a wider range of ideas/ experiences, helping problem solving) and/or 'sameness' (via specialist knowledge or better access to international markets). These channels may be balanced by internal downsides (lower trust) and external barriers (discrimination), so that overall effects on business performance are unclear. In addition, urban locations (particularly big cities) may amplify any demographics-performance effects. I create a repeat cross-section of firms from the RDA National Business Survey. I construct measures of diversity and sameness across ethnicity and gender 'bases', alongside information on revenues, product and process innovation. I then regress these measures of business performance on top team demographics, plus firm level controls, area, year and detailed industry fixed effects. My results suggest a non-linear link between diversity and business performance, which is net positive for process innovation and net negative for turnover. Further tests on diverse and minority/female-headed firms find positive links for diverse top teams, negative for minority and female-only top teams. This implies that while diversity has internal and external benefits, penalties from being 'too diverse' probably result from external constraints. Further tests for intervening effects of capital cities, metropolitan hierarchies and urban form find some evidence of amplifying and dampening effects – which are generally stronger in London and larger cities. |
| Keywords: | cities; innovation; entrepreneurship; cultural diversity; migration; gender |
| JEL: | J1 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:59250&r=ent |
| By: | Han, Junghee (Chonnam National University); Heshmati, Almas (Centre of Excellence for Science and Innovation Studies (CESIS), Jönköping International Business School, & Sogang University) |
| Abstract: | This paper analyzes the patent propensity as an outcome of innovative activities of regional SMEs. To achieve the aims, we apply robust regression analysis to estimate the models to test 5 research hypotheses using 263 firm level data located at Gwangju region in Korea. Our empirical results show that a firm’s industry characteristics, such as machinery and automotive parts industry, is negatively related with propensity to patent innovation. Also, unlike expectations, the InnoBiz firms designated as innovative SMEs by the government are not performing differently than general firms. Only the CEO’s academic credentials are positively related with propensity to patent. From the findings, we can conclude that patenting propensity is not directly related with a firm’s characteristics but mainly to CEO’s managerial strategy. Also, we cannot find evidence for policy effectiveness from public support given to InnoBiz firms as part of the state policy to nurture photonic industry to boost regional economic development. Given the lack of strong policy effects, a new industry policy should be considered to actively promote SMEs innovativeness. |
| Keywords: | Patent propensity; Photonic Industry; SMEs growth; R&D; innovation; InnoBiz; Korea |
| JEL: | C51 D22 O31 O32 |
| Date: | 2015–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0395&r=ent |
| By: | Claudia Ghisetti (Department of Economics and Management, University of Ferrara, Italy.); Massimiliano Mazzanti (Deptartment of Economics and Management. University of Ferrara, Italy.); Susanna Mancinelli (Deptartment of Economics and Management. University of Ferrara, Italy.); Mariangela Zoli (Università di Roma Tor Vergata, Italy.) |
| Abstract: | We analyse the role of financial barriers behind the adoption of environmental innovations with a focus on SMEs by using recent survey data at EU level. Finance is a key lever of innovation, especially relevant in the current phase of the economic cycle, and might play a critical role in defining green economy directions. Empirical analyses confirm financial barriers as a deterrent for the innovative capacity of EU firms. This is true for the economy as a whole, and for manufacturing firms taken alone. Being smaller and having a low amount of human capital in the firm also hampers environmental innovations . On the ‘positive’ side, we note that existing regulations and expected increasing demand for green products both support EI adoption. Financial barriers are perceived by firms and influenced by technological lock-ins, uncertainty in investments, non-competitive markets, and a lack of subsidies. We observe that the ‘deterrent barrier hypothesis’, alternative to the ‘revealed barrier hypothesis’, is not rejected here, as in recent analyses of traditional innovations: perceived financial constraints deter innovative strategies. |
| Keywords: | Environmental innovations, Financial barriers, Firms, Environmental Regulations |
| JEL: | Q55 O31 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:0115&r=ent |
| By: | Costin, Lenuța |
| Abstract: | The study is intended as a brief foray into the issue of economic restructuring effect of the matrix on rural development and failed to show that it is favorable to human primary role in human resource of entrepreneurial role assumed, being the main driver of competitive advantage of Romania. In Romania the labor force employed in agriculture is steadily decreasing, there is a danger of abandonment areas, unless urgent action is taken and powerful multifunctional development of agriculture, creating an integrated economic activity, entrepreneurial culture. But we must look at this in terms of resources focusing on the long-term impact, which will result in small rural training centers including in the context of developing infrastructure links and economic interdependence. |
| Keywords: | the restructuring, rural development, human factor, entrepreneurship |
| JEL: | Q0 Q19 |
| Date: | 2014–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61624&r=ent |