|
on Entrepreneurship |
| By: | Jolanda Hessels (Erasmus University Rotterdam, and Panteia/EIM, the Netherlands); Udo Brixy (Institute for Employment Research (IAB), Nuremburg, and Ludwig-Maximilians University, Munich, Germany); Wim Naudé (Maastricht School of Management, Maastricht University, the Netherlands , and IZA, Germany); Thomas Gries (University of Paderborn, Germany) |
| Abstract: | We extend Lazear’s theory of skills variety and entrepreneurship in three directions. First, we provide a theoretical framework linking new business creation with an entrepreneur’s skill variety. Second, in this model we allow for both generalists and specialists to possess skill variety. Third, we test our model empirically using data from Germany and the Netherlands. Individuals with more varied work experience seems indeed more likely to successfully start up a new business and being a generalist does not seem to be important in this regard. Finally, we find that innovation positively moderates the relationship between having varied experiences, and being successful in starting up a new business. Our conclusion is that entrepreneurs with more varied work experience are more likely to introduce innovations that have not only technical, but also commercial value. Our findings support the notion that entrepreneurship can be learned. |
| Keywords: | entrepreneurship, start-ups, human capital, innovation, skills |
| JEL: | L26 M13 J24 O31 |
| Date: | 2014–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140011&r=ent |
| By: | Pourya Darnihamedani (Erasmus University Rotterdam, the Netherlands); Joern Hendrich Block (University of Trier, Trier, Germany); Jolanda Hessels (Erasmus University Rotterdam, the Netherlands); Aram Simonyan (National Academy of Science of the Republic of Armenia, Yerevan, Republic of Armenia) |
| Abstract: | Prior research suggests that start-up costs and taxes negatively influence entry into entrepreneurship. Yet, no distinction is made regarding the type of entrepreneurship, particularly innovative versus non-innovative entrepreneurship. Start-up costs, being one-off costs, may reduce the entry of entrepreneurs whose ideas are not very promising, thus increasing the proportion of innovative entrepreneurs. Taxes, being recurring costs, may reduce the “prize” of innovation and the profit from entrepreneurship, discouraging individuals with innovative business ideas from becoming entrepreneurs. Analyzing a dataset of 632,116 individuals, including 43,223 entrepreneurs from 53 countries, we can confirm our main predictions. Our paper contributes to the discussion on how governmental regulation costs and taxes influence innovative entrepreneurship and technological deve lopment. |
| Keywords: | Innovative entrepreneurship, corporate taxes, personal income taxes, start-up costs, entrepreneurial profit |
| JEL: | H24 H25 L26 L51 O31 |
| Date: | 2015–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150013&r=ent |
| By: | Marco Vivarelli |
| Abstract: | This paper is intended to provide an updated discussion on a series of issues that the relevant literature suggests to be crucial in dealing with the challenges a middle income country may encounter in its attempts to further catch-up a higher income status. In particular, the conventional economic wisdom - ranging from the Lewis-Kuznets model to the endogenous growth approach - will be contrasted with the Schumpeterian and evolutionary views pointing to the role of capabilities and knowledge, considered as key inputs to foster economic growth. Then, attention will be turned to structural change and innovation, trying to map - using the taxonomies put forward by the innovation literature - the concrete ways through which a middle income country can engage a technological catching-up, having in mind that developing countries are deeply involved into globalized markets where domestic innovation has to be complemented by the role played by international technological transfer. Among the ways how a middle income country can foster domestic innovation and structural change in terms of sectoral diversification and product differentiation, a recent stream of literature underscores the potentials of local innovative entrepreneurship, that will also be discussed bridging entrepreneurial studies with the development literature. Finally, the possible consequences of catching-up in terms of jobs and skills will be discussed. |
| Keywords: | catching-up, structural change, globalization, capabilities, innovation, entrepreneurship |
| Date: | 2015–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2015/09&r=ent |
| By: | Jolanda Hessels (Erasmus School of Economics, Erasmus Happiness Economics Research Organization (EHERO), Erasmus University Rotterdam, The Netherlands); José María Millán (University of Huelva, Spain); Concepción Román (University of Huelva, Spain) |
| Abstract: | Self-employed workers can be own-account workers who control their own work or employers who not only are their own boss but also direct others (their employees). We expect both types of self-employed, i.e., own-account workers and employers, to enjoy more independence in determining their work content (type of work) and more flexibility in shaping their work context (e.g., working conditions) compared to paid employees and hence to be more satisfied with their work. Furthermore, we suspect that employers (who can delegate work to their employees and can help them to develop and grow) enjoy even higher levels of work satisfaction compared to both own-account workers (who are their own boss but do not give direction to others) and (non-supervisory) paid employees (who have to obey orders from others within organizational hierarchies). While prior studies typically broadly compare the work satisfaction of self-employed and paid employees, we distinguish employers from own-account workers within the group of self-employed using data from the ECHP for 14 European countries. Our findings indeed show that employers are significantly more satisfied with their work than both own-account workers and paid employees. Additionally, while employers as well as own-account workers enjoy greater procedural utility than (non-supervisory) paid employees stemming from the content and the context of their work, there also seems to be an additional work satisfaction premium for employers. |
| Keywords: | entrepreneurship; self-employment; employers; own-account workers; work satisfaction |
| JEL: | J24 J28 L26 O52 |
| Date: | 2015–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150047&r=ent |
| By: | Michael S. Dahl (Aalborg University, Denmark); Mirjam van Praag (Copenhagen Business School, Denmark); Peter Thompson (Emory University, United States) |
| Abstract: | We study possible motivations for co-entrepenurial couples to start up a joint firm, using a sample of 1,069 Danish couples that established a joint enterprise between 2001 and 2010. We compare their pre-entry characteristics, firm performance and postdissolution private and financial outcomes with a selected set of comparable firms and couples. We find evidence that couples often establish a business together because one spouse – most commonly the female – has limited outside opportunities in the labor market. However, the financial benefits for each of the spouses, and especially the female, are larger in co-entrepreneurial firms, both during the life of the business and post-dissolution. The start-up of co-entrepreneurial firms seems therefore a sound investment in the human capital of both spouses as well as in the reduction of income inequality in the household. We find no evidence of non-pecuniary benefits or costs of coentrepreneurship |
| Keywords: | Entrepreneurship, motives, performance, couples, co-entrepreneurship. |
| JEL: | J12 L26 |
| Date: | 2014–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140055&r=ent |
| By: | Mette Ejrnæs (University of Copenhagen, Denmark); Stefan Hochguertel (VU University Amsterdam) |
| Abstract: | Availability of (partial) insurance mechanisms is arguably important for the decision of (riskaverse) workers to start up a risky entrepreneurial venture. Using administrative data from Denmark, where unemployment insurance (UI) is available to both wage earners and self-employed on a voluntary basis, we estimate the causal effect of UI cover on the self-employment choice of wage earners after instrumenting for the UI choice. The instruments we use are based on a series of policy variations that took place at three points in time during an observation period spanning three decades: only UI covered individuals could under certain conditions qualify for an early retirement (ER) program. Changes (reforms) in the eligibility conditions of the program that affected different age groups differentially at these three different points in time identify the UI choice process. Results show that the causal effect of insurance on the probability of starting up a venture is positive for would-be entrepreneurs, in contrast to correlations in the data or uninstrumented estimates. Using firm data, we also investigate how the newly insurance-induced entrepreneurs fare relative to their uninsured peers. Results suggest that they survive longer, but are not more likely to employ any workers or to make higher or lower profits. |
| Keywords: | self-employment, insurance, entrepreneurs, unemployment, panel data, early retirement |
| JEL: | C35 J26 J62 J65 L26 |
| Date: | 2014–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140040&r=ent |
| By: | Martin Koudstaal (University of Amsterdam); Randolph Sloof (University of Amsterdam, the Netherlands); Mirjam van Praag (Copenhagen Business School, Denmark) |
| Abstract: | Theory predicts that entrepreneurs have distinct attitudes towards risk and uncertainty, but empirical evidence is mixed. To better understand the unique behavioral characteristics of entrepreneurs and the causes of these mixed results, we perform a large ‘lab-in-the-field’ experiment comparing entrepreneurs to managers – a suitable comparison group – and employees (n = 2288). The results indicate that entrepreneurs perceive themselves as less risk averse than managers and employees, in line with common wisdom. However, when using experimental incentivized measures, the differences are subtler. Entrepreneurs are only found to be unique in their lower degree of loss aversion, and not in their risk or ambiguity aversion. This combination of results might be explained by our finding that perceived risk attitude is not only correlated to risk aversion but also to loss aversion. Overall, we therefore suggest using a broader definition of risk that captures this unique feature of entrepreneurs; their willingness to risk losses. |
| Keywords: | Entrepreneurs, managers, risk aversion, loss aversion, ambiguity aversion, lab-in- the field experiment |
| JEL: | L26 C93 D03 |
| Date: | 2014–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140136&r=ent |
| By: | Cornelius A. Rietveld (Erasmus University Rotterdam); Jolanda Hessels (Erasmus University Rotterdam); Peter van der Zwan (Erasmus University Rotterdam) |
| Abstract: | This discussion paper resulted in a publication in 'Economics and Human Biology' (forthcoming).<P> Taller individuals typically have occupations with higher social status and higher earnings than shorter individuals. Further, entrepreneurship is associated with high social status in numerous countries; hence, entrepreneurs might be taller than wage workers. Using data from the German Socio-Economic Panel (2002-2010), we find that a 1 cm increase in an individual’s height raises the probability of being self-employed (the most common proxy for entrepreneurship) versus paid employed by 0.16 percentage-points. Within self-employment the probability of being an employer is increased by 0.11 percentage-points as a result of a 1 cm increase in height whereas this increase is 0.05 percentage-points for an own-account worker. Furthermore, we confirm that a height premium in earnings exists for not only paid employees, as indicated by prior studies, but also for self-employed individuals. An additional 1 cm in height is associated with a 0.44% increase in hourly earnings for paid employees, and a 0.87% increase for self-employed individuals. The predicted earnings differences between short and tall individuals are substantial. Short paid employees—first quartile of height—earn 15.5 Euros per hour whereas tall paid employees—third quartile of height—earn 16.5 Euros per hour; in self-employment the earnings are 12.8 and 14.4 Euros per hour, respectively. Another novel finding is that we establish the existence of a height premium for work and life satisfaction, but only for paid employees. Finally, our analysis reveals that 44% of the height premium in earnings is explained by differences in educational attainment whereas the height premium in work and life satisfaction is only marginally explained by education. |
| Keywords: | Self-employment, Stature, Height premium, Education, Life satisfaction |
| JEL: | J24 J31 |
| Date: | 2014–08–19 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140109&r=ent |
| By: | Francisco J. Buera; Joseph P. Kaboski; Yongseok Shin |
| Abstract: | We review both the theoretical and empirical literature on entrepreneurship and financial frictions, with an emphasis on the heterogeneous and dynamic micro-level implications of financial frictions for macro development. |
| JEL: | L26 O1 O11 O15 O16 O4 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21107&r=ent |
| By: | Sander Hoogendoorn (CPB Netherlands Bureau for Economic Policy Analysis, the Netherlands); Simon C. Parker (Ivey Business School, Western University, London, Canada); Mirjam van Praag (Copenhagen Business School, Denmark) |
| Abstract: | What is the effect of dispersed levels of cognitive ability of members of a (business) team on their team’s performance? This paper reports the results of a field experiment in which 573 students in 49 teams start up and manage real companies under identical circumstances. We ensured exogenous variation in — otherwise random — team composition by assigning students to teams based on their measured cognitive abilities (Raven test). Each team performs a variety of tasks, often involving complex decision making. The key result of the experiment is that the performance of business teams first increases and then decreases with ability dispersion. We seek to understand this finding by developing a model in which team members of different ability levels form sub-teams with other team members with similar ability levels to specialize in different productive tasks. Diversity spreads production over different tasks in order to escape diminishing marginal returns under specialization. The model comes with a boundary condition: our experimental finding is most likely to emerge in settings where different tasks exhibit moderate differences in their productive contributions to total output. |
| Keywords: | Ability dispersion, team performance, field experiment, entrepreneurship |
| JEL: | C93 D83 J24 L25 L26 M13 M54 |
| Date: | 2014–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140053&r=ent |
| By: | Hasan, Iftekhar (BOFIT); Kobeissi , Nada (BOFIT); Wang, Haizhi (BOFIT); Zhou , Mingming (BOFIT) |
| Abstract: | This paper provides an empirical examination of the regional banking structures in China and their effects on entrepreneurial activity. Using a panel of 27 provinces and four directly controlled municipalities from 1997 through 2008, we find that the presence of large banking institutions negatively correlates with small business development in local markets and that this negative relation is driven mainly by participation of large banks in the short-term loan market. Rural banking institutions, in contrast, are found to promote regional entrepreneurial activity. Moreover, large state banks facilitate small business development in concentrated markets. When we interact measures of banking financing by state banks and rural banking institutions with a set of provincial level marketization indexes, we find that extensive marketization, factor market development, and sophistication of legal frameworks mitigate the negative effect of large state banks on small business development. In provinces with advanced market development, efficient factor markets, and favorable institutional settings, the positive effect of rural banking institutions on small business growth is even stronger. Finally, we present evidence that banks do a better job of promoting regional entrepreneurship when it occurs in conjunction with policies to foster innovation activity and assure protection of intellectual property rights. |
| Keywords: | banking structure; marketization; small business development; China |
| JEL: | G21 O16 P23 P25 |
| Date: | 2015–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2015_011&r=ent |
| By: | Shrabani Mukherjee (Madras School of Economics) |
| Abstract: | The lack of access to formal credit at affordable cost (effective interest) is the most critical constraint faced by the rural entrepreneurs to get involved in productive profitable business activities. This study explores the causes behind the widespread existence of informal credits as investment capital for small house-based business. Based on a primary survey on house based industrial owners in back ward areas of West Bengal it tries to capture the binding constraints in decision process for entrepreneurs to obtain their investment capital from subsidized formal credit market. A binary probit confirms imperfect substitutability between formal and informal credit in investment decision and an ordered probit analysis claims that huge complexity in lending process of formal sector becomes major restraint to access the institutional credit and thus makes the formal credit costlier than alternative sources to use it for industrious purposes. |
| Keywords: | Formal Credit, Informal Credit, Entrepreneurial Decision, Ordered Probit Analysis |
| JEL: | C13 D22 D23 R30 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:mad:wpaper:2015-097&r=ent |
| By: | Bjorvatn, Kjetil (Dept. of Economics, Norwegian School of Economics and Business Administration); Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Sekei, Linda Helgesson (Development Pioneer Consultants); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | Can television be used to teach and foster entrepreneurship among youth in developing countries? We report from a randomized control field experiment of an edutainment show on entrepreneurship broadcasted over almost three months on national television in Tanzania. The field experiment involved more than two thousand secondary school students, where the treatment group was incentivized to watch the edutainment show. We find short-term evidence of the edutainment show inspiring the viewers to become more interested in entrepreneurship and business and shaping non-cognitive traits such as risk- and time preferences, and long-term evidence of more business startups; in general, the treatment effects are more pronounced for the female viewers. However, we also find evidence that the encouragement of entrepreneurship discouraged investment in schooling;administrative data show a negative treatment effect on school performance and long-term survey data show that fewer treated students continue schooling. |
| Keywords: | Field experiment; edutainment; developing countries |
| JEL: | I25 O10 |
| Date: | 2015–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2015_003&r=ent |
| By: | Merike Kukk (Tallinn University of Technology); Karsten Staehr (Tallinn University of Technology Eesti Pank) |
| Abstract: | Pissarides & Weber (1989) proposed the use of data on income and food consumption for estimating the extent of income underreporting and possibly tax evasion by the self-employed. This paper is the first to investigate the importance of the way in which self-employed households are identified. Using household budget data from Estonia, the underreporting by self-employed households is computed with different identification methods. The share of unreported income is estimated to be at least twice as large when self-employed households are identified using the share of business income than is the case when they are identified using their employment status. Further analysis confirms that the share of reported business income is indeed a better indicator of income underreporting than the reported employment status. The results may facilitate better governance by helping data collectors to identify households prone to income underreporting. Keywords: income underreporting, business income, self-employed, tax auditing, Engel curveJEL codes: H26, E21, E26, H24 |
| Keywords: | income underreporting, business income, self-employed, tax auditing, Engel curve |
| JEL: | H26 E21 E26 H24 |
| Date: | 2014–01–17 |
| URL: | http://d.repec.org/n?u=RePEc:ttu:tuteco:8&r=ent |
| By: | Maria Rosaria Carillo (University of Naples Parthenope); Vincenzo Lombardo (University of Naples Parthenope); Alberto Zazzaro (Polytechnic University of Marche, MoFiR and CSEF) |
| Abstract: | In this paper we present a new theory accounting for the heterogeneous impact of family firms on economic growth. We develop an overlapping generations model, where agents are heterogeneous in innate talent, and family firms have access to an additional source of managerial capital, family connections, which affects the incentives of the firms' owners to pass on the company within the family and invest in the entrepreneurial human capital of their heirs. Our theory predicts that family firms cluster into heterogeneous groups with different management practices, inducing, at the aggregate level, a misallocation of talent that affects economic growth and the evolution into either a dynamic or a stagnant society, depending on the productivity of family connections in doing business. This heterogeneity in management practices and entrepreneurial human capital explains the different contribution of family firms during industrialization, highlighting the many possible evolutionary patterns for the economy and long-run growth regimes. Consistent with the theory, we provide empirical evidence in favor of the importance of social connectivity among individuals for explaining the difference in management practices between family and non-family firms, and, in turn, the GDP per-capita across countries. JEL Classification: J24, J62, L26, O11, O40 |
| Keywords: | Family firms, family connections, (mis)allocation of talents, technological change, economic growth |
| Date: | 2015–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:400&r=ent |
| By: | Bögenhold, Dieter; Klinglmair, Andrea |
| Abstract: | The complex interaction of technological development and socio-demographic change accelerated a structural change in the economy resulting in a changing working environment and new forms of employment. In the field of self-employment, an emerging trend towards one-person enterprises can be observed, which represent already more than 50 % of all Austrian companies. The primary aim of this paper is to analyze the rationalities of these microenterprises based on an empirical online survey of one-person enterprises in Carinthia; the focus of the analysis is the motive for being self-employed. We found out that one-person entrepreneurs are mainly driven by motives like self-realization or working without hierarchies. However, there are also one-person entrepreneurs which have been crowded out from the (dependent) labor market and are therefore driven by economic reasons (e.g. self-employment as an alternative to unemployment). This economic-driven group of one-person enterprises is comparatively dissatisfied with their professional situation, is less optimistic regarding their entrepreneurial future and generates lower incomes. |
| Keywords: | Micro-Entrepreneurship, one-person entrepreneurs, self-employment, motives |
| JEL: | A14 M13 M29 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:63771&r=ent |