nep-ent New Economics Papers
on Entrepreneurship
Issue of 2015‒10‒25
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Industry structure, entrepreneurship, and culture: An empirical analysis using historical coalfields By Stuetzer, Michael; Obschonka, Martin; Audretsch, David B.; Wyrwich, Michael; Rentfrow, Peter J.; Coombes, Mike; Shaw-Taylor, Leigh; Satchell, Max
  2. Firm Growth and Selection in a Finite Economy By Staley, Mark
  3. Firm entry and exit, investment irreversibility, and business cycle dynamics By Pavol Majher
  4. Trends in Firm Entry and New Entrepreneurship in Canada By Shutao Cao; Mohanad Salameh; Mai Seki; Pierre St-Amant
  5. Initial Public Offering and Financing of Biotechnology Start-ups: Evidence from Japan By HONJO, Yuji; NAGAOKA, Sadao
  6. Challenging Competition at Public Procurement Markets: Are SMEs Too Big to Fail? The Case of BiH and Croatia By Suncana Slijepcevic; Jelena Budak; Edo Rajh
  7. Excess Commuting in the US: Differences between the Self-Employed and Employees By Gimenez-Nadal, J. Ignacio; Molina, José Alberto; Velilla, Jorge
  8. Private Returns to Education for Wage-employees and the Self-employed in Uganda By Morrissey Oliver; Kavuma Susan Namirembe; Upward Richard
  9. Oligopolistic Equilibrium and Financial Constraints By Beviá, Carmen; Corchón, Luis C.; Yasuda, Yosuke
  10. An Empirical Analysis of a Crowdfunding Platform By Jin-Hyuk Kim; Peter Newberry; Calvin Qiu
  11. Disadvantage and discrimination in self-employment : Caste gaps in earnings in Indian small businesses By Sharma Smriti; Deshpande Ashwini
  12. Creation of Enterprises & Knowledge Economy in the Arab Countries By Driouchi, Ahmed
  13. La performance des lieux de co-création de connaissances : le cas des FabLab By Rapahël Suire

  1. By: Stuetzer, Michael; Obschonka, Martin; Audretsch, David B.; Wyrwich, Michael; Rentfrow, Peter J.; Coombes, Mike; Shaw-Taylor, Leigh; Satchell, Max
    Abstract: There is mounting evidence demonstrating that entrepreneurship is spatially clustered and that these spatial differences are quite persistent over long periods of time. However, especially the sources of that persistence are not yet well-understood, and it is largely unclear whether persistent differences in entrepreneurship are reflected in differences in entrepreneurship culture across space as it is often argued in the literature. We approach the cluster phenomenon by theorizing that a historically high regional presence of large-scale firms negatively affects entrepreneurship, due to low levels of human capital and entrepreneurial skills, fewer opportunities for entry and entrepreneurship inhibiting formal and informal institutions. These effects can become self-perpetuating over time, ultimately resulting in persistent low levels of entrepreneurship activity and entrepreneurship culture. Using data from Great Britain, we analyze this long-term imprinting effect by using the distance to coalfields as an exogenous instrument for the regional presence of large-scale industries. IV regressions show that British regions with high employment shares of large-scale industries in the 19th century, due to spatial proximity to coalfields, have lower entrepreneurship rates and weaker entrepreneurship culture today. We control for an array of competing hypotheses like agglomeration forces, the regional knowledge stock, climate, and soil quality. Our main results are robust with respect to inclusion of these control variables and various other modifications which demonstrates the credibility of our empirical identification strategy. A mediation analysis reveals that a substantial part of the impact of large-scale industries on entrepreneurship is through human capital.
    Keywords: Entrepreneurship; entrepreneurship culture; Industrial Revolution; industry structure; personality
    JEL: L26 L64 N13 N53 N94
    Date: 2015
  2. By: Staley, Mark
    Abstract: A model of firm dynamics is presented in which the growth rate of knowledge capital is linked to productivity, and productivity fluctuates randomly. The distribution of productivity forms a stable traveling wave, representing a growing economy. Granularity is maintained by way of spinoffs, resulting in a firm size distribution that rapidly approaches the Zipf distribution. An unexpected consequence of the model is that the growth rate is proportional to the log of the number of firms. The model also implies that specialization is positive for growth.
    Keywords: Growth, Ideas, Selection, Scale effect
    JEL: O40 O41
    Date: 2015–10–12
  3. By: Pavol Majher
    Abstract: This paper studies the role of rms' entry and exit for business cycle dynamics in an environment, where physical capital is partially sunk. Extending a heterogeneous-rm model a la Hopenhayn (1992) by aggregate productivity shocks and partially irreversible investment yields substantial endogenous amplication and propagation. A positive aggregate productivity shock increases the number of entrants and their initial investment levels, because the expected entry value outweighs the implicit sunk cost associated with investment irreversibility. The endogenous propagation of an exogenous stimulus arises via a built-in selection device, as the production growth of new businesses over their lifecycle exceeds the decay due to exits of the least productive rms.
    JEL: D92 E22 E37 L11
    Date: 2015–10
  4. By: Shutao Cao; Mohanad Salameh; Mai Seki; Pierre St-Amant
    Abstract: Recently released data show downward trends for both the firm entry rate and the rate of new entrepreneurship since the early 1980s in Canada. This paper documents these trends and discusses potential explanations. A shift-share analysis suggests that changes to Canada’s industrial and demographic structures cannot explain the long-term downward trends, although population aging accounts for part of the decline in new entrepreneurship since around 2000. The paper also discusses other factors potentially contributing to the downward trends: increased industrial concentration, changing labour market conditions, an increased college wage premium and higher student debt. In-depth analysis of these factors is left for future research.
    Keywords: Firm dynamics; Market structure and pricing; Productivity
    JEL: L11 M13
    Date: 2015
  5. By: HONJO, Yuji; NAGAOKA, Sadao
    Abstract: This paper explores the initial public offering (IPO) and financing of biotechnology start-ups in Japan. Using a unique data set, we find that biotechnology start-ups initially backed by venture capital (VC) firms and those originating from universities are more likely to go public within a shorter period. Moreover, we examine whether two investment methods used by VC firms?staged financing and syndication?affect the market value of equity at the IPO. The results reveal that these methods do not create a higher value of biotechnology start-ups at the IPO. Furthermore, we provide evidence that the timing of IPOs does not depend on market conditions in the biotechnology industry, whereas the market value of equity tends to depend on market conditions.
    Keywords: Biotechnology, Initial public offering, Market value, Staged financing, Start-up, Syndication
    JEL: G32 M13 L65
    Date: 2015–09
  6. By: Suncana Slijepcevic (The Institute of Economics, Zagreb); Jelena Budak (The Institute of Economics, Zagreb); Edo Rajh (The Institute of Economics, Zagreb)
    Abstract: This study empirically evaluates the role and perspectives for SMEs to successfully compete at public procurement markets. The government procurement markets in post-transition countries make a significant share of national economy and seemingly their importance rises in the times of economic crisis. The literature on public procurement and involvement of SMEs noted severe obstacles for companies to access public procurement markets, and the set of policies were established in the EU to promote SMEs’ involvement in public procurement. This case study encompasses business sector in two post-transition countries, Croatia and Bosnia and Herzegovina (BiH) in order to explore competitiveness and entry barriers specifically for SMEs to participate at the public procurement market. We compare the views of managers and business people representing companies of the small and medium size on the level of competition and on the range and intensity of obstacles to participate at public procurement tenders, in terms of availability of resources, corruption risks, transparency and fairness of procedure, clarity of documentation, principles and standards achieved, price, deadlines and other dimensions of public procurement. If there are differences between the two countries, do they stem from the different EU membership status? Are there differences between subgroups of micro, small, and medium companies? In order to provide plausible answers to these questions, we use the empirical evidence collected through the survey of companies in BiH in 2014, and comparable data on Croatian companies surveyed in 2013. The findings are put in the context of public procurement as an opportunity to enhance growth and economic development in post-transition era.
    Keywords: public procurement, small and medium enterprises, post-transition countries, competition
    JEL: D73 H57 L25
    Date: 2015–10
  7. By: Gimenez-Nadal, J. Ignacio (University of Zaragoza); Molina, José Alberto (University of Zaragoza); Velilla, Jorge (University of Zaragoza)
    Abstract: In this paper, we propose a new spatial framework to model excess commuting of workers and we show empirical differences between the self-employed and employees in the US. In a theoretical framework where self-employed workers minimize their commuting time, employees do not minimize their commuting time because they lack full information, and thus the difference between the time devoted to commuting by self-employed workers and employees is modeled as wasteful commuting (i.e., excess commuting). We first formulate a microeconomic framework for commuting by modeling the location of individuals in urban cores surrounded by rings. Using the American Time Use Survey for the years 2003-2013, our empirical results show that employees spend twelve more minutes per day, or forty percent of the average commuting time, compared to their self-employed counterparts. This is consistent with our "diana" model, in that location is an important factor.
    Keywords: excess commuting, urban cores, American Time Use Survey, self-employed workers, employees
    JEL: R20 R41 J64
    Date: 2015–10
  8. By: Morrissey Oliver; Kavuma Susan Namirembe; Upward Richard
    Abstract: The paper investigates the differences in private marginal returns to education between wage-employees and the self-employed in Uganda, using the Mincerian framework with pooled regression models. We use a two-wave household panel to estimate homogenous a
    Keywords: Education, Entrepreneurship, Panel analysis, Wage differentials, Wages
    Date: 2015
  9. By: Beviá, Carmen (Universidad de Alicante, Universitat Autònoma de Barcelona and Barcelona GSE); Corchón, Luis C. (Universidad Carlos III de Madrid); Yasuda, Yosuke (Osaka University)
    Abstract: We provide a model of dynamic duopoly in which firms face financial constraints and disappear when they are unable to fulfill them. We show that, in some cases, Cournot outputs are no longer supported in equilibrium, because if these outputs were set, a firm may have incentives to ruin the other. In these cases, standard grim-trigger strategies in which collusion is sustained by infinite reversion to Cournot outputs cannot be used. We show that there is a stationary Markov equilibrium in mixed strategies where predation occurs with a positive probability. We also obtain a modified "folk theorem". We show that any bankruptcy-free outputs (outputs in which no firm can drive another firm to bankruptcy without becoming bankrupt itself) that attain individually rational profits (reflecting bankruptcy consideration) can be supported by a subgame perfect Nash equilibrium when firms are sufficiently long-sighted.
    Keywords: Financial Constraints, Bankruptcy, Firm Behavior, Dynamic Games
    JEL: D2 D4 L1 L2
    Date: 2015–10
  10. By: Jin-Hyuk Kim (University of Colorado at Boulder, Department of Economics, 256 UCB, Boulder, CO 80309, USA); Peter Newberry (Pennsylvania State University, Department of Economics, 510 Kern Building, University Park, PA 16802); Calvin Qiu (ICF International, 19/F Heng Shan Centre, 145 Queen's Road East, Wan Chai, Hong Kong)
    Abstract: Crowdfunding, a fundraising mechanism in which monetary contributions are raised from a large number of people, is booming and impacting government policy. We study two features of a well-known crowdfunding platform, First, we study the role of observable information in determining whether or not a donor contributes to the project. Second, we study the effect of the all-or-nothing nature of donations. Our counterfactual analyses indicate that the observability of donor information increases the expected quality of funded projects while the conditionality of pledges decreases it.
    Keywords: Crowdfunding; Social learning; Value of information; Free-riding; Voluntary contribution
    JEL: D82 D83 G11 G14 L26 L81
    Date: 2015–09
  11. By: Sharma Smriti; Deshpande Ashwini
    Abstract: Using the 2004-05 India Human Development Survey data, we estimate and decompose the earnings of household businesses owned by historically marginalized social groups known as Scheduled Castes and Tribes (SCSTs), and non-SCSTs across the earnings distribu
    Keywords: Caste, Equality and inequality, Households, Income distribution, Microeconomics
    Date: 2015
  12. By: Driouchi, Ahmed
    Abstract: Abstract The limited business and enterprise creation in relation to the high unemployment of skilled labor are among the issues analyzed and discussed in this paper. The present paper shows clearly that shifts to the creation of more enterprises are the most important ways to enhance economic performance and market development through further access to the knowledge economy.
    Keywords: Keywords: Enterprise creation, doing business
    JEL: M2 O1
    Date: 2015–10–20
  13. By: Rapahël Suire (CREM, UMR CNRS 6211, University of Rennes 1, France)
    Abstract: If FabLab (Fabrication Laboratory) is nowadays a huge phenomenon their performance based on their socio-economic embeddedness is still an open research question. From an original world database (N=48), we show that production of documented projects and transformation of those projects into new company is a function of interactions between FabLab and its innovative eco-system. In particular, everything remains equal, interactions with peripheral and explorative actors lead to higher level of creativity and documented projects. New company creation appears to be significantly higher when FabLab is an intermediary platform or a middleground between these peripheral actors and a core of bigger companies more oriented in exploitation and seeming harvesting FabLab’s creativity.
    Keywords: FabLab, platform, middleground, networks, knowledge
    JEL: D20 L10 O32 R11
    Date: 2015–10

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