nep-ent New Economics Papers
on Entrepreneurship
Issue of 2015‒02‒16
twelve papers chosen by
Marcus Dejardin
Université de Namur

  1. The Great Recession, entrepreneurship, and productivity performance By Diez, Federico J.
  2. Why Did Self-Employment Increase so Strongly in Germany? By Fritsch, Michael; Kritikos, Alexander S.; Sorgner, Alina
  3. Do Entrepreneurs Really Earn Less? By Sorgner, Alina; Fritsch, Michael; Kritikos, Alexander
  4. De Jure Determinants of New Firm Formation: How the Pillars of Constitutions Influence Entrepreneurship By E. Carbonara; E. Santarelli
  5. Can capital grants help microenterprises reach the productivity level of SMEs? Evidence from an experiment in Sri Lanka By Laurin Janes
  6. Public Health Insurance and Entry into Self-Employment By Fossen, Frank M.; König, Johannes
  7. Venture Capital Financing of Innovation Races By Kovac, Eugen
  8. Firms’ Innovation Strategies Analyzed and Explained By Tavassoli, Sam; Karlsson, Charlie
  9. Measuring Spillovers of Venture Capital By Watzinger, Martin; Schnitzer, Monika
  10. Empirical Games of Market Entry and Spatial Competition in Retail Industries By Victor Aguirregabiria; Junichi Suzuki
  11. Das gewerbliche Gründungsgeschehen im Dienstleistungssektor By Günterberg, Brigitte; Kay, Rosemarie; Levering, Britta
  12. Der Einfluss institutioneller Rahmenbedingungen auf die Gründungsneigung von Wissenschaftlern an deutschen Hochschulen By Bijedic, Teita; Maass, Frank; Schröder, Christian; Werner, Arndt

  1. By: Diez, Federico J. (Federal Reserve Bank of Boston)
    Abstract: In recent years, it is argued, the level of entrepreneurial activity in the United States has declined, causing concern because of its potential macroeconomic implications. In particular, it is feared that a lower rate of firm creation may be associated with lower productivity growth and, hence, lower economic growth in the coming years. This paper studies the issue, focusing on the dynamics of entrepreneurship and productivity around the time of the Great Recession. The author looks first at the recent evolution of alternative measures of entrepreneurship and of productivity, and then analyzes the relationship between the two concepts.
    Keywords: entrepreneurship; firm creation; productivity; TFP
    JEL: D24 L26 O47
    Date: 2014–11–01
  2. By: Fritsch, Michael (University of Jena); Kritikos, Alexander S. (University of Potsdam, DIW Berlin); Sorgner, Alina (University of Jena)
    Abstract: Germany experienced a unique rise in the level of self-employment in the first two decades following unification. Applying the non-linear Blinder-Oaxaca decomposition technique, we find that the main factors driving these changes in the overall level of self-employment are demographic developments, the shift towards service sector employment, and a larger share of population holding a tertiary degree. While these factors explain most of the development in self-employment with employees and the overall level of self-employment in West Germany, their explanatory power is much lower for the stronger increase of solo self-employment and of self-employment in former socialist East Germany.
    Keywords: self-employment, non-linear Blinder-Oaxaca decomposition technique, entrepreneurship, Germany
    JEL: L26 D22
    Date: 2015–01
  3. By: Sorgner, Alina; Fritsch, Michael; Kritikos, Alexander
    Abstract: We compare, based on German data, the income of self-employed individuals with and without employees with the income of dependently employed individuals. Our results show that self-employed with employees tend to earn significantly higher incomes than their salaried counterparts, while with the exception of solo-entrepreneurs without vocational degree - the income of solo self-employed tends to be significantly lower than that of comparable employees. We also observe that self-employed people are able to improve their earnings within the first three years after start-up, when we compare their actual earnings to their income before the start-up.
    JEL: L26 D22 D31
    Date: 2014
  4. By: E. Carbonara; E. Santarelli
    Abstract: This paper provides empirical evidence supporting the view that constitutions may influence the organization of economic activities. Dealing with the issue of the institutional determinants of entrepreneurship, it shows that some of the provisions contained in national constitutions are positively and significantly associated to a standard measure of entrepreneurial dynamics, namely the rate of new business density. Using a novel dataset containing the characteristics of the constitutions enacted in the world and a sample of 115 countries, the paper finds that provisions about the right to conduct/establish a business, the right to strike, consumer protection, protection of trademarks, and education promote higher rates of new firm formation.
    JEL: D72 K10 H10 L26 M13 O50 P48
    Date: 2015–02
  5. By: Laurin Janes
    Abstract: Using data from a randomized control trail in Sri Lanka, this paper explores whether cash and in-kind grants helped microenterprises approach the productivity level of SMEs.  The paper first estimates production functions and subsequently treatment effects on TFP levels.  Most significantly, more able and more risk-averse owners benefit from the larger in-kind grant.  Also, the larger in-kind grants allowed for increases in productivity to the least productive firms.  The paper then uses data from a representative sample of formal firms to put the TFP levels and treatment effects in the microenterprises into perspective.  The results suggest that the least productive firms were able to catch up with the average microenterprise and formal SMEs, while a gap remains with large firms.  This finding encourages a positive view of the potential for productivity growth in microenterprises.
    Keywords: Economic development, microenterprises, formal informal, total factor productivity, embodied technology
    JEL: L25 O12 O14 O17 O33
    Date: 2013–11–20
  6. By: Fossen, Frank M. (Free University of Berlin); König, Johannes (Freie Universität Berlin)
    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 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 non-random 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: 2015–01
  7. By: Kovac, Eugen
    Abstract: This paper analyzes innovation races in a moral hazard setting. I develop a model where two competing entrepreneurs, financed by a single venture capitalist, work independently on the same project. The venture capitalist cannot observe the allocation of funds she provides, which creates a moral hazard problem. I identify properties of the optimal financing contract and compare them to two benchmarks: single entrepreneur and first best. In particular, if the entrepreneurs differ in their skills, the relevant question is whether it is profitable to employ the less skilled entrepreneur in addition to the more skilled one. I show that if the entrepreneurs do not differ in their skills too much, financing both of them indeed helps to alleviate the moral hazard problem. Moreover, it might be profitable to finance the less skilled entrepreneur, in addition more skilled one, even in cases where the former would not be employed in the first best.
    JEL: D92 G24 O31
    Date: 2014
  8. By: Tavassoli, Sam (Centre for Innovation, Research and Competence in the Learning Economy (CIRCLE), Blekinge Institute of Technology.); Karlsson, Charlie (Blekinge Institute of Technology, Jönköping International Business School & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: This paper analyzes various innovation strategies of firms. Using five waves of the Community Innovation Survey in Sweden, we have traced the innovative behaviour of firms over a ten-year period, i.e. between 2002 and 2012. We distinguish between sixteen innovation strategies, which compose of Schumpeterian 4 types of innovations (process, product, marketing, and organizational) plus various combinations of these four types. First, we find that firms are not homogenous in choosing innovation strategies; instead, they have a wide range of preferences when it comes to innovation strategy. Second, using Transition Probability Matrix, we found that firms also persist to have such a diverse innovation strategy preferences. Finally, using Multinomial Logit model, we explained the determinant of each innovation strategies, while we gave special attention to the commonly used innovation strategies among firms.
    Keywords: innovation strategy; product innovations; process innovations; market innovations; organizational innovations; innovation strategies; heterogeneity; firms; persistence; Community Innovation Survey; Sweden
    JEL: D22 L20 O31 O32
    Date: 2015–02–02
  9. By: Watzinger, Martin; Schnitzer, Monika
    Abstract: In this paper we measure knowledge spillovers arising from venture-capital nanced companies on the patenting activities of other companies and com- pare them to spillovers from established rms. We develop a novel measure to to identify the appropriate spillover pool based on backward citations which re ect channels for learning between rms. Using panel data of U.S. rms we show that venture capital investment in start-ups generates signi cant spillovers on the patent quantity and quality of other rms. Counterfactual estimates suggest that these spillovers are larger than those generated by corporate R&D. We address potential concerns about causality with an in- strumental variable strategy using changes in federal and state tax incentives as instrument for R&D and past fund raising as instrument for venture capital investment.
    JEL: O31 O32 G24
    Date: 2014
  10. By: Victor Aguirregabiria; Junichi Suzuki
    Abstract: We survey the recent empirical literature on structural models of market entry and spatial competition in oligopoly retail industries. We start with the description of a framework that encompasses various models that have been estimated in empirical applications. We use this framework to discuss important specification assumptions in this literature: firm heterogeneity; specification of price competition; structure of spatial competition; firms' information; dynamics; multi-store firms; and structure of unobservables. We next describe different types of datasets that have been used in empirical applications. Finally, we discuss econometric issues that researchers should deal with in the estimation of these models, including multiple equilibria and unobserved market heterogeneity. We comment on the advantages and limitations of alternative estimation methods, and how these methods relate to identification restrictions. We conclude with some issues and topics for future research.
    Keywords: Retail industries; Market entry and exit; Spatial competition; Econometrics of discrete choice games
    JEL: L11 L13 L81 R30
    Date: 2015–02–02
  11. By: Günterberg, Brigitte; Kay, Rosemarie; Levering, Britta
    Abstract: Auf der Basis der Existenzgründungsstatistik des IfM Bonn wurde das gewerbliche Gründungsgeschehen im Dienstleistungssektor untersucht. Im Dienstleistungssektor fanden 2013 knapp drei Viertel aller Gründungen statt und damit weniger als 1998. Ursächlich dafür ist vor allem ein Anstieg der Anzahl der Gründungen im Baugewerbe. Insgesamt war das Gründungsgeschehen im Dienstleistungssektor rückläufig, allerdings mit teils erheblichen Unterschieden in den einzelnen Dienstleistungsbranchen. An der Dominanz der Bereiche Handel, Reparatur und Instandhaltung von Kraftfahrzeugen, Gastgewerbe und Erbringung von sonstigen wirtschaftlichen Dienstleistungen hat dies jedoch nichts geändert. Frauen sind vergleichsweise häufig und Ausländer vergleichsweise selten im Gründungsgeschehen im Dienstleistungssektor vertreten.
    Abstract: Using IfM Bonn's business start-up statistics (person related data) this paper analyzes the commercial start-up activities (excluding liberal professions) in the service sector. In 2013 almost three quarters of all business start-ups took place in the service sector, which was therefore fewer than in 1998. The main reason is an increase in the number of start-ups in the construction sector. Altogether the start-up actvities in the service sector were declining, but with partly great differences betwen the particular service branches. Still most start-ups were in the fields of wholesale and retail trade, repair of motor vehicles and motorcycles, commodation and food service activities and administrative and support service activities. Women are relatively often and foreigners rarely represented in the start-up actvities of the service sector.
    Keywords: Dienstleistungssektor,Existenzgründungen,Deutschland,Frauen,Ausländer,service sector,business start-ups,Germany,women,foreigners
    JEL: J15 J16 L8 M13
    Date: 2014
  12. By: Bijedic, Teita; Maass, Frank; Schröder, Christian; Werner, Arndt
    Abstract: Wissenschaftlerinnen und Wissenschaftler an Hochschulen verfügen über ein hohes Maß an innovativem Wissen, das die ideale Ausgangsbasis für eine Unternehmensgründung darstellen kann. Bisher fehlte jedoch eine umfassende empirische Analyse, inwieweit die bestehenden Rahmenbedingungen tatsächlich die Gründungsneigung von Hochschulmitarbeitern beeinflussen. Hier setzt die vorliegende Studie an, indem sie die Wirkung der verschiedenen Einflussfaktoren (die Arbeitsbedingungen, Netzwerkbeziehungen und gründungsfördernde Hochschulangebote) untersucht und potenzielle institutionelle Handlungsfelder identifiziert. Die Befragung von 5.992 Wissenschaftlern an 73 deutschen Hochschulen hat dabei gezeigt, dass insbesondere Forschungsanreize und die erfolgreiche Vermarktung eigener Forschungsergebnisse, aber auch Rollenvorbilder im kollegialen Umfeld, Netzwerke - hier insbesondere zu externen Partnern - und spezifische Infrastrukturangebote gründungsfördernd wirken.
    Abstract: Knowledge of great commercial value is unexploited in universities. Thus, policy makers have started to foster knowledge transfer activities by incentivizing academic entrepreneurship. To date, however, little is known whether the incentives provided so far by the universities have raised the start-up inclination of their scientific staff. Using data of 5,992 academic scientists in 73 German universities, we analyze how working conditions, network structures, and institutions affect the likelihood of the scientific staff to get engaged in entrepreneurial activity. We find that for example role models ("peers") as well as the infrastructure - namely consulting offers, start-up camps, awards and patent exploitation agencies - have a strong positive impact on the entrepreneurial propensity of scientists.
    Keywords: Hochschulgründungen,Technologietransfer,Gründungsförderung,Academic Entrepreneurship,Knowledge Transfer,Start-Up Promotion
    JEL: D02 H52 I23 I28 L26 M13 O31 O38
    Date: 2015

This nep-ent issue is ©2015 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.