nep-ent New Economics Papers
on Entrepreneurship
Issue of 2016‒03‒23
nine papers chosen by
Marcus Dejardin
Université de Namur

  1. Going into Business and Out of Business: The Role of Human Capital By Arnab Bhattacharjee; Jean Bonnet; Nicolas Le Pape; Régis Renault
  2. Self-Employment Amongst Migrant Groups in England and Wales: New Evidence from Census Microdata By Ken Clark; Stephen Drinkwater; Catherine Robinson
  3. Traces of entrepreneurship in the artistic context By Lisa Balzarin; Chiara Monica Calcagno
  4. Time allocation and performance: the case of Chinese entrepreneurs By Talavera, Oleksandr; Xiong, Lin; Weir, Charlie
  5. Does Trust Matter for Entrepreneurship: Evidence from A Cross-Section of Countries By Oasis Kodila-Tedika; Julius A. Agbor
  6. Finance and creative destruction: evidence for Italy By Francesca Lotti; Francesco Manaresi
  7. Does Geographical Proximity Matter in Small Business Lending? Evidence from Changes in Main Bank Relationships By Ono, Arito; Saito, Yukiko; Sakai, Koji; Uesugi, Iichiro
  8. The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI By Elias Einiö; Overman; Henry
  9. Investment, Adverse Selection and Optimal Redistributive Taxation By Anastasios Dosis

  1. By: Arnab Bhattacharjee (Heriot-Watt University, Edinburgh,UK); Jean Bonnet (Normandie Université, UNICAEN, CREM, France); Nicolas Le Pape (Normandie Université, UNICAEN, CREM, France); Régis Renault (Université de Cergy-Pontoise, THEMA)
    Abstract: An evaluation of the impact of an entrepreneur's human capital on her/his entrepre-neurial ability is likely to suffer from a sample selection bias if performed on a sample of new entrepreneurs alone. Our theoretical model of entrepreneurial choice allows us to characterize this bias. It is shown to be positive (respectively negative) for individuals who were in a favorable (respectively adverse) situation in the labor market at the time at which they decided to become self-employed. Our empirical application measures the impact of the entrepreneur's education on the newly created firm's survival. It is found to be strong and significant for individuals who were previously employed in the new firm's branch of activity, whereas it is at best weakly significant for individuals who were previously unemployed or employed in a branch di¤erent from that of the new firm, so that they are more likely to have been poorly matched. These results suggest a very substantial sample selection bias in our sample.
    Keywords: entrepreneurial ability, labor market, human capital, rm survival
    JEL: L26 C41 J24
    Date: 2016–03
  2. By: Ken Clark (University of Manchester); Stephen Drinkwater (University of Roehampton); Catherine Robinson (University of Kent)
    Abstract: Self-employment constitutes a vital part of the economy since entrepreneurs can provide not only employment for themselves but also for others. The link between self-employment and immigration is, however, complex since self-employment can be viewed as both a haven from the paid labour market or as a source of economic growth. Moreover, the nature of self-employment has changed considerably in recent decades, especially with regards to providing a flexible form of employment for many demographic groups. We investigate the evolving relationship between self-employment and immigration in the UK using recently released microdata from the 2011 Census for England and Wales. Our findings indicate large variations, with high self-employment rates observed for some groups with a long established history of migration to the UK (especially men born in Pakistan) and also for some groups who have arrived more recently (such as from the EU’s new member states). We further explore the differences, analyse variations by gender and identify key determining factors. In addition to certain socio-economic characteristics, it is found that migration-related influences, such as English language proficiency and period of arrival in the UK, play an important role for some groups.
    Keywords: Self-Employment; Immigrants; United Kingdom
    JEL: J61 F22 J21
    Date: 2016–03
  3. By: Lisa Balzarin (Dept. of Management, Università Ca' Foscari Venice); Chiara Monica Calcagno (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The interplay between the world of arts and that of business is at the centre of the present paper, where the processes of artistic entrepreneurship are investigated through the observation of a group of artists living the experience of founding their own cultural enterprises in the specific context of performing arts. The result is a picture of what the contemporary artists-entrepreneurs are: they act entrepreneurially guided by the respect of the integrity of the Art and assume the role of gatekeepers of the quality of their product, playing in the business world and challenging its logics and structures.
    Keywords: cultural entrepreneurship, artistic entrepreneurship, creativity, innovation, paradox, compromise, performing arts
    JEL: L26
    Date: 2016–03
  4. By: Talavera, Oleksandr; Xiong, Lin; Weir, Charlie
    Abstract: This paper analyses the effect of time allocation on the financial performance of entrepreneurial firms. We apply the Lewbel (2012) estimator to a pooled dataset of Chinese private manufacturing firms that are managed by their owners. Time is allocated between management, networking and study activities. After accounting for endogeneity, we find an inverted U-shaped relationship between management hours and firm performance and between networking and firm performance. However, no relationship between time spent studying and firm performance is observed. We also find that the managing hours-performance relationship is particularly strong for companies managed by entrepreneurs who own more than 75% of share, for companies that are managed by owners with previous experience, for male entrepreneurs and for smaller sized firms.
    Keywords: Time allocation, owner manager businesses, China
    JEL: L26 M21 O53
    Date: 2016–02–29
  5. By: Oasis Kodila-Tedika (Université de Kinshasa Département d’Eco); Julius A. Agbor (Stellenbosch University)
    Abstract: Differences in trust levels between countries explain the observed discrepancies in entrepreneurial spirit amongst them. We test this hypothesis with a cross-section of 60 countries in 2010. Our findings suggest that about half of the variation in entrepreneurial spirit across countries in the world is driven by trust considerations. This result is robust to regional clustering, to outliers and to alternative conditioning variables. The findings of the study suggest that while formal incentives to nurture entrepreneurship must be maintained, policy-makers should also seek to pay attention to the role of trust cultivated through informal networks.
    Keywords: trust, institution, entrepreneurship
    Date: 2015–12
  6. By: Francesca Lotti (Banca d'Italia); Francesco Manaresi (Banca d'Italia)
    Abstract: In this paper we provide new evidence on the relationship between market concentration in the banking industry and firm dynamics. In Italy, in the case of a banking merger or acquisition, the antitrust authorities can require the sale of bank branches if the joint market share of the banks involved in the merger exceeds a specific threshold. We exploit this feature to carry out RDD estimates of (i) the effect of intervention by antitrust authorities on banking market concentration, and (ii) the effect of the level of bank concentration on various measures of firm dynamics. The results show that, in those areas where the authorities forced branch sales, firm's entry rates increase, reallocation of employees from incumbent to entrant firms is higher, and the survival rate of newly formed businesses increases. The overall allocative efficiency, as measured by an Olley-Pakes decomposition of labor productivity, is found to improve.
    Keywords: bank competition, firm dynamics, entry, exit, firm size, regression discontinuity
    JEL: G21 L11 M13
    Date: 2015–12
  7. By: Ono, Arito; Saito, Yukiko; Sakai, Koji; Uesugi, Iichiro
    Abstract: Using a unique and massive firm-bank matched panel dataset, this paper examines the causal link between the geographical distance between a firm and its main bank and the probably that a firm will switch its main bank. Utilizing the exogenous change in firm-main bank distances brought about by bank mergers and bank branch consolidations in Japan during 2000–2010, the analysis – the first of its kind – finds the following. First, an increase in lending distance positively affected switching of firm-main bank relationships. Second, the average lending distance for firms that switched to new main banks significantly decreased afterwards. Third, the lending distance of new firm-main bank relationships after the switch did not have a significant impact on firms' probability of ex-post default, suggesting that larger lending distance does not necessarily result in a deterioration in the quality of soft information.
    Keywords: lending distance, firm-bank relationships, bank mergers, main bank
    JEL: G21 R12
    Date: 2016–02
  8. By: Elias Einiö; Overman; Henry
    Abstract: We investigate the impacts of a significant area-based intervention (LEGI) that aimed to increase employment and entrepreneurial activity in 30 disadvantaged areas across England. We examine the spatial pattern of effects at a fine spatial scale using panel data for small geographic units and a regression discontinuity design that exploits the programme eligibility rule. The results indicate considerable local displacement effects. Employment increases in treated areas close to the treatment area boundary at the cost of significant employment losses in untreated localities just across the boundary. These differences vanish quickly when moving away from the boundary and do not persist after the programme is abolished. These findings support the view that area-based interventions may have considerable negative displacement effects on untreated parts of the economy. This displacement can substantially reduce (or in this case eliminate) any net benefits.
    Keywords: Place-based policy, Programme evaluation, Displacement, Employment
    JEL: J20 O40 R11 H25
    Date: 2016–03–07
  9. By: Anastasios Dosis (ESSEC - ESSEC Business School - Essec Business School - Economics Department - Essec Business School, THEMA - Théorie économique, modélisation et applications - Université de Cergy Pontoise - CNRS - Centre National de la Recherche Scientifique)
    Abstract: I study a credit market with adverse selection as a signalling game. I show that in the least-costly separating equilibrium, entrepreneurs of high-quality projects may over-or under-invest compared to the social optimum to signal their type. I then examine a simple budget-balanced tax-subsidy scheme applied by the government. At a first sight, the tax-subsidy scheme seems to benefit entrepreneurs of low-quality projects and harm entrepreneurs of high-quality projects because the former are cross-subsidised by the latter. Nonetheless, this result does not necessarily hold if entrepreneurs can pledge the subsidy as collateral. In that case, taxes can improve social welfare by either decreasing or increasing aggregate investment depending on whether entrepreneurs of high-quality projects over-or under-invest in equilibrium.
    Keywords: Adverse selection,investment,taxes,welfare
    Date: 2016–02–17

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