nep-ent New Economics Papers
on Entrepreneurship
Issue of 2015‒12‒01
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Entrepreneurship and the Reallocation of African Farmers By Naudé, Wim
  2. Do better entrepreneurs avoid more taxes? By Laurent Bach
  3. The decision to become an entrepreneur in Spain: The role of the household financial situation By Molina, Jose Alberto; Velilla, Jorge; Ortega, Raquel
  4. Barriers to Innovation: Can Firm Age Help Lower Them? By Gabriele Pellegrino
  5. Tax incentives and R&D: an evaluation of the 2002 UK reform using micro data By Irem Guceri
  6. Inverted-U relationship between innovation and survival: Evidence from firm-level UK data By Ugur, Mehmet; Trushin, Eshref; Solomon, Edna
  7. Problems of financing SMEs in Ghana: a case study of the Sunyani Municipality By Prempeh, kwadwo Boateng
  8. State-inducement Versus Self-initiation By Girum Abebe
  9. Too much or not enough heterogeneity in Innovation Policies among EU Member States? By Reinhilde Veugelers
  10. The EU framework for social innovation - Between entrepreneurship and policy experimentation By Sebastiano Sabato; Bart Vanhercke; Gert Verschraegen
  11. The case study of "Krushevo women"as a model of social entrepreneurship By Petreski, Blagica; Petreska, Despina
  12. High-growth firms: the role of management and capabilities By Simone Bertini; Tommaso FerraresiAuthor-X-Name-First: Tommaso; Marco Mariani; Edoardo Loris Rossi
  13. Les déterminants du travail autonome au Québec et au Canada (1993-2010) By Raquel Fonseca Benito; Simon Lord

  1. By: Naudé, Wim (Maastricht University)
    Abstract: African agriculture's importance for sustainable development is well appreciated. Indeed, recent years have seen a thorough reappraisal of the sector. What are less well understood, however, are the drivers that reallocate scarce human and physical resources across occupations and space, and without which agriculture and industrial development, and hence structural transformation, will stagnate. One such endogenous driver is entrepreneurship. In this paper I start with the reappraisal of African agriculture and focus on the literature on entrepreneurship in Africa's structural transformation. I present a conceptual model to describe how entrepreneurship reallocates farmers out of agriculture into non-agricultural activities and locations. Recent empirical evidence that is broadly consistent with this model is discussed. Implications and challenges for entrepreneurship development policies and further research are outlined.
    Keywords: agriculture, entrepreneurship, Africa, development, industrialization, structural change, urbanisation
    JEL: Q12 J43 L26 M13 O13
    Date: 2015–11
  2. By: Laurent Bach (Stockholm School of Economics and Swedish House of Finance)
    Abstract: In this paper, we estimate why some firms strongly react to avoidance incentives given by nonlinear taxes and regulations while others don¡¯t. We measure avoidance using a kinkpoint in the French corporate income tax schedule and a notch in exposure to French labor regulation. We find that firm profitability is a strong predictor of avoidance: income tax elasticities are 30% bigger among firms in the top quintile of ROA than among firms in the bottom quintile; employment declines induced by the regulation notch are more than twice as big among the former group of firms as among the latter. Going further, we find that tax elasticities reflect in great part the speed of tax code learning by firms and that more profitable firms learn faster. We also find that firms¡¯ avoidance strategies are much more developed when management is more sophisticated and ownership structures are more concentrated. Overall, we conclude that a large part of firm heterogeneity in the strength of reaction to taxes and regulations reflects differences in the quality of governance rather than differences in firm technologies.
    Date: 2015
  3. By: Molina, Jose Alberto; Velilla, Jorge; Ortega, Raquel
    Abstract: This paper analyses how self-employed (entrepreneurs) and employed workers earnings differ in Spain. We develop an empirical analysis on the factors that determine income and the factors that determine the effects on the financial situation of the families of entrepreneurs versus salaried families. We use the “Encuesta Financiera de las Familias” database corresponding to 2011. Our results show that salaried workers earn more than the self-employed workers. Furthermore, pessimism and familiar patrimony play a key role in the entrepreneur decision.
    Keywords: Entrepreneurship; Household financial situation, Wages; Self-employment;
    JEL: D10 M00
    Date: 2015–11–27
  4. By: Gabriele Pellegrino (World Intellectual Property Organization, Economics and Statistics Division, 34, chemin des Colombettes CH-1211 Geneva 20, Switzerland; EPFL, College of Management of Technology, Lausanne; Barcelona Institute of Economics, University of Barcelona, Barcelona)
    Abstract: This paper examines how firm age can affect a firm’s perception of the obstacles (deterring vs. revealed) that hamper and delay innovation. Using a comprehensive panel of Spanish firms for the period 2004-2011, the empirical analysis conducted shows that distinct types of obstacle are perceived differently by firms of different ages. First, a clear-cut negative relationship is identified between firm age and a firm’s assessment of both the internal and external shortages of financial resources. Second, young firms seem to be less sensitive to the lack of qualified personnel when initiating an innovative project than when they are already engaged in such activities. By contrast, the attempts of mature firms to engage in innovation activity are significantly affected by the lack of qualified personnel. Finally, mature incumbents appear to attach greater importance to obstacles related to market structure and demand than is the case of firms with less experience.
    Keywords: Barriers to innovation, firm age, probit panel data model
    JEL: C23 O31 O32 O33
    Date: 2015–11
  5. By: Irem Guceri (Oxford University Centre for Business Taxation)
    Abstract: The United Kingdom introduced an R&D tax incentive scheme rst for SMEs in 2000 and then for large rms in 2002, gradually increasing the generosity of both schemes after 2008. This study exploits the differences between companies with similar characteristics that were just above the size threshold for eligibility to the SME scheme and those that were just below, before and after the 2002 reform. This allows for a difference-in-differences approach to measure the (additional) impact of the tax incentives on firms around this size threshold. Treatment group firms are found to have increased their R&D spending by around 18 percent on average in response to the large company tax incentive, implying a user cost elasticity of -1.35. We do not find significant differences in this effect between sectors.
    Keywords: R&D, tax credits, difference-in-differences
    JEL: H25 O31
    Date: 2015
  6. By: Ugur, Mehmet; Trushin, Eshref; Solomon, Edna
    Abstract: Theoretical and empirical work on innovation and firm survival has produced varied and often conflicting findings. In this paper, we draw on Schumpeterian models of competition and innovation and stochastic models of firm dynamics to demonstrate that the conflicting findings may be due to linear specifications of the innovation-survival relationship. We demonstrate that a quadratic specification is appropriate theoretically and fits the data well. Our findings from an unbalanced panel of 39,705 UK firms from 1997-2012 indicate that an inverted-U relationship holds for different types of R&D expenditures and sources of funding. We also report that R&D intensity is more likely to increase survival when firms are in more concentrated industries and in Pavitt technology classes consisting of specialized suppliers of technology and scale-intensive industries. Finally, we report that the effects of firm and industry characteristics as well as macroeconomic environment indicators are all consistent with prior findings. The results are robust to step-wise modeling, controlling for left truncation and use of lagged values to address potential simultaneity bias.
    Keywords: Innovation, post-entry performance, R&D, survival analysis
    JEL: C41 D22 L1 O21 O3
    Date: 2015–10–19
  7. By: Prempeh, kwadwo Boateng
    Abstract: Small and medium enterprises play an important role in the development of a country. The growth of SMEs is also important for the world economy which has been widely discussed in recent years. Although the problems SMEs face in accessing finance are well known, still there are some research gaps that need to be filled. The main focus of this research is to explore the nature and the characteristics of SMEs together with the financial constraints facing the SMEs. Basically the research focuses on Sunyani Municipality as the main area of study, but it will also cover the problems of SMEs for the other parts of the world under the same main purpose of this research. The research is a case study. Moreover, the nature of data collected for this project is both quantitative and qualitative. Questionnaires and interviews are the main tools for collecting data. Relevant literature is also reviewed. The Researcher has concluded that many studies have shown most of the SMEs lack access to finance for starting, operating and expanding their businesses, therefore access to finance is always quoted as a major constraint for all SMEs and can seriously affect their ability to survive, upgrade the technology in their business, increase their capacity and even in many cases, expand their market, improve management system or increase productivity as well as profitability. The findings will assist policy makers, development agencies, SME owners and financial institutions to ascertain the appropriate strategy to improve the SME financing.
    Keywords: SMEs, Sunyani Municipality, Venture Capital fund, SME financing
    JEL: M00 M1 M10 M13
    Date: 2015–01–04
  8. By: Girum Abebe (Ethiopian Development Research Institute)
    Abstract: The promotion of micro and small enterprises has been a centerpiece of the Ethiopian government’s strategy to alleviate urban unemployment among the youth since 2004. Since this time, the government has adopted twin strategies of creating a business environment conducive to start and operate MSEs while at the same time actively triggering the establishment of new MSEs. In this research, using a large dataset collected from 13 major cities in Ethiopia, we explore whether government-induced enterprises (cooperatives) differ from self-initiated enterprises (non-cooperatives) in various aspects of business productivity, business practices and performance,. We employ Control Function and two-stage Least Square methods to overcome selection problems. We also perform Propensity Score Matching as a check for robustness. We identify that cooperatives have greater access to a wide-array of support schemes. Consistent with the government strategy, cooperatives also employ more labor intensive technologies. Using three distinct measures of enterprise productivity, we find that productivity levels are largely comparable by enterprise type but differ widely by gender and levels of education of the entrepreneur. Similarly, after controlling for initial size, value added and gross profits are not statistically different between the two groups of enterprises. Our growth calculation also indicates that while growth rates of self-initiated enterprises are higher, conditional on positive rates of growth, the likelihood of transition into larger size category appears to be larger among cooperatives. We suggest for a more customized government support system that responds to the unique sets of binding constraints faced by such types of dynamic and growth-oriented enterprises that would complement the current all-embracing promotion program of the MSEs.
    Keywords: cooperatives, government support, selection, technology, productivity, transition
    JEL: L26 D24
    Date: 2015–10
  9. By: Reinhilde Veugelers
    Abstract: This contribution focuses on the heterogeneity in innovation capacity within Europe across its different Member States. Who are the leading and who are the lagging EU countries? Is there a trend towards convergence over time? And how has the crisis affected this trend of convergence? We then take a look at the research and innovation policies which the EU countries have in place and try to assess whether these policies match with the heterogeneous EU countries’ innovation capacity positions. We examine both the budgets allocated by EU Member States to R&I as well as the various kinds of R&I policy programmes being deployed. More particularly, we examine how heterogeneous the deployment of policy instruments is across EU member states and whether this matches with the heterogeneity in innovation capacity development among EU countries. Notwithstanding the large and increasing heterogeneity among EU countries in innovation capacity development, the evidence on innovation policies in EU countries shows a relative homogeneity of policy mixes in different countries. Current innovation policy mixes of instruments do not well reflect the countries’ levels of innovation capacity development.
    Keywords: Innovation, innovation policy, institutional reforms, multi-level governance
    JEL: O31 O38
    Date: 2015–08
  10. By: Sebastiano Sabato; Bart Vanhercke; Gert Verschraegen
    Abstract: The aim of this paper is to identify and provide a preliminary assessment of the resources that the EU has made available to promote social innovation over the period 2006-2014, with special focus on poverty and social exclusion policies. Such a focus is relevant insofar as the establishment of a quantitative target concerning poverty and social exclusion has been one of the major novelties introduced by the Europe 2020 Strategy: social innovation has been presented as a key area for facilitating its achievement. In order to identify European Union (EU) resources relevant for social innovation, we have adopted a diachronic approach taking into account two sub-periods: 2006-2010 (the period of the revised Lisbon Strategy) and 2010-2014 (the first stage of the new Europe 2020 Strategy). This has allowed us to shed light on both the varying importance of the issue over time and the evolution of the relevant instruments and processes implemented by the EU. Our analysis also provides insights into the complex and multi-layered European policy architecture for underpinning social innovation.(for more see paper)
    Keywords: Social innovation, Europe 2020, poverty and social exclusion, social experimentation, European structural Funds
    JEL: I3
    Date: 2015–11
  11. By: Petreski, Blagica; Petreska, Despina
    Abstract: Many families in Krushevo (small city in Macedonia) are struggling with unemployment and poverty, seeking a way to address these bitter social problems. The main objective of the intervention is economic empowerment of women. The social entrepreneurship model has been applied among 25 unemployed women from Krushevo who produce traditional, homemade products divided in several categories: homemade pasta, berries products and natural teas. The model involves horizontal clustering through interconnections among individual producers and the community, as well vertical clustering through networking with the local caterers. Hence, applied approach composes of: capacity building, mentoring, piloting and promotion. The income of the women increased on average more than six times, the number of new buyers increased by 80%. At the same time, skills for packaging and sale significantly improved. Vertical clustering diversifies existing and enable new channels on sale, and horizontal clustering improved their products with joint brand, slogan and logo.
    Keywords: social entrepreneurship, economic empowerment, women, mini-clustering, traditional products
    JEL: E2 J16 J24 P36
    Date: 2015–11–26
  12. By: Simone Bertini (IRPET); Tommaso FerraresiAuthor-X-Name-First: Tommaso (IRPET); Marco Mariani (IRPET); Edoardo Loris Rossi (IRPET)
    Abstract: The present study analyzes the managerial practices of high-growth firms, an issue which is still unexplored in the relevant literature. Its aim is to verify whether the excellent performances of these firms are matched by significant differences in management skills. The main results suggest that, although they are not radically different from the others, fast-growing firms are somehow characterized by more advanced managerial practices and pay greater attention to learning-related aspects. Some of these aspects differentiate constant-growth firms from the non-constant growth ones.
    Keywords: High-growth firms, management
    Date: 2014
  13. By: Raquel Fonseca Benito; Simon Lord
    Abstract: This paper studies the determinants of self-employment in Québec and in the rest of Canada by focusing on liquidity constraints, age and aggregate unemployment. We use a random effects probit model to analyse panel data from the Survey of Labour and Income Dynamics (SLID) for the period 1993-2010. The main results are as follows. The positive effect of investment income on the probability of being self employed confirms the existence of liquidity constraints. Being older increases the probability of choosing self-employment, rather than salaried work. This suggests that working for oneself may be a stepping stone towards retirement. High unemployment decreases the probability of being self-employed, suggesting that pull factors dominate push factors. Cet article analyse les déterminants du travail autonome au Québec et dans le reste du Canada en se concentrant sur les contraintes de liquidité, l’âge et le chômage agrégé. Nous utilisons les données en panel de l’Enquête sur la dynamique du travail et du revenu (EDTR) couvrant la période 1993-2010. Les résultats principaux tirés du modèle avec effets aléatoires sont les suivants : l’effet positif des revenus de placement sur la probabilité d’être travailleur autonome confirme la présence de contraintes financières; être plus âgé accroît la probabilité de choisir le travail autonome, suggérant que ce type d’emploi peut être un tremplin vers la retraite; un chômage élevé diminue la probabilité d’être à son compte ce qui suggère que les facteurs de pull dominent sur les facteurs de push.
    Keywords: , Travail autonome, contraintes financières, facteurs pull et push
    JEL: J21 J24
    Date: 2015–11–16

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