nep-ent New Economics Papers
on Entrepreneurship
Issue of 2016‒04‒16
eight papers chosen by
Marcus Dejardin
Université de Namur

  1. What Makes a Successful Entrepreneur? Historical Evidence from Italy (XIX-XX Centuries) By Alessandro Nuvolari; Pier Angelo Toninelli; MIchelangelo Vasta
  2. Taking the Leap: The Determinants of Entrepreneurs Hiring their First Employee By Fairlie, Robert W.; Miranda, Javier
  3. Social capital, entrepreneurship and living standards: differences between immigrants and the native born By Matthew Roskruge; Jacques Poot; Laura King
  4. Velocity shifts in the creative economy: incumbent-entrant dynamics in the emergence of Japanese social games By Ernkvist, Mirko
  5. SME Financing in the EU: Moving beyond one-size-fits-all By Markus Demary; Joanna Hornik; Gibran Watfe
  6. Innovation and Performance of Enterprises: The Case of SMEs in Vietnam By Vu, Hoang Nam; Doan, Quang Hung
  7. Contingent Payment Mechanisms and Entrepreneurial Financing Decisions By Miguel de Oliveira Tavares Gärtner; Paulo Jorge Pereira; Elísio Brandão
  8. SMALL BUSINESS MANAGEMENT IN RELATIONSHIPS OF MICRO AND MACRO ENVIRONMENT By Anna Wiśniewska-Sałek; Joanna Nowakowska-Grunt; Anna Brzozowska; Robert Sałek

  1. By: Alessandro Nuvolari; Pier Angelo Toninelli; MIchelangelo Vasta
    Abstract: in this paper we employ a “quantitative” prosopographical approach to study the nature and the determinants of entrepreneurial success. Our main source is the “Biographical Dictionary of Italian Entrepreneurs” which contains very detailed information on 608 major Italian entrepreneurs active over more than two centuries. Our findings indicate the multidimensional nature of entrepreneurial success, comprising both a strictly economic and a “celebrity” dimension. Concerning the determinants of success, our findings point to the “political” nature of Italian capitalism.
    JEL: N73 N74 N83 N84 L26
    Date: 2016–01
  2. By: Fairlie, Robert W. (University of California, Santa Cruz); Miranda, Javier (U.S. Census Bureau)
    Abstract: Job creation is one of the most important aspects of entrepreneurship, but we know relatively little about the hiring patterns and decisions of startups. Longitudinal data from the Integrated Longitudinal Business Database (iLBD), Kauffman Firm Survey (KFS), and the Growing America through Entrepreneurship (GATE) experiment are used to provide some of the first evidence in the literature on the determinants of taking the leap from a non-employer to employer firm among startups. Several interesting patterns emerge regarding the dynamics of non-employer startups hiring their first employee. Hiring rates among the universe of non-employer startups are very low, but increase when the population of non-employers is focused on more growth-oriented businesses such as incorporated and EIN businesses. If non-employer startups hire, the bulk of hiring occurs in the first few years of existence. After this point in time relatively few non-employer startups hire an employee. Focusing on more growth- and employment-oriented startups in the KFS, we find that Asian-owned and Hispanic-owned startups have higher rates of hiring their first employee than white-owned startups. Female-owned startups are roughly 10 percentage points less likely to hire their first employee by the first, second and seventh years after startup. The education level of the owner, however, is not found to be associated with the probability of hiring an employee. Among business characteristics, we find evidence that business assets and intellectual property are associated with hiring the first employee. Using data from the largest random experiment providing entrepreneurship training in the United States ever conducted, we do not find evidence that entrepreneurship training increases the likelihood that non-employers hire their first employee.
    Keywords: entrepreneurship, job creation, Kauffman Firm Survey, iLBD, startups, entrepreneurship training, small business, GATE experiment
    JEL: L26
    Date: 2016–03
  3. By: Matthew Roskruge (University of Waikato); Jacques Poot (University of Waikato); Laura King (University of Waikato)
    Abstract: Both migrant entrepreneurship and social capital are topics which have attracted a great deal of attention. However, relatively little econometric analysis has been done on their interrelationship. In this paper we first consider the relationship between social capital and the prevalence of entrepreneurship. We also investigate the relationship between social capital and the living standards of entrepreneurs. In both cases we ask whether these interrelationships differ between migrants and comparable native-born people. We utilize unit record data from the pooled 2008, 2010 and 2012 New Zealand General Social Surveys (NZGSS). The combined sample consists of 15,541 individuals who are in the labour force. Entrepreneurs are defined as those in the sample who obtained income from self-employment or from owning a business. Social capital is proxied by responses to questions on social networks, volunteering and sense of community. The economic standard of living is measured by either personal income or by an Economic Living Standards Index (ELSI) score developed by the New Zealand Ministry of Social Development. We find significant differences between migrants and the native born in terms of the attributes of social capital that are correlated with entrepreneurship, but volunteering matters equally for both groups. The positive association between social capital attributes and ELSI scores is similar between migrant and natives. Social capital contributes little to explaining incomes of either group.
    Keywords: migration, social capital, entrepreneurship, income, standard of living
    JEL: F22 J15 L26 Z13
    Date: 2016–04
  4. By: Ernkvist, Mirko (The Ratio Institute)
    Abstract: The Japanese innovation system has been characterized as more prone to disruptive innovation by incumbent firms rather than de novo entrepreneurial entrants (H. W. Chesbrough, 1999). We draw upon the notion that creative industry competition in a high velocity environment is fundamentally different from an environment of more moderate velocity, exploring the notion that velocity shifts following disruptive innovation could be a key underlying mechanism for transformation by entrants in institutional settings that favor incumbents. A higher velocity environment provides a cognitive barrier to incumbent firms’ R&D by making established design heuristics obsolete, introducing novel market analytic methods and shifting established industry logics towards speed, constant iteration and services. The velocity shift in the transition from video games to social games required new specialized assets and new ways of accessing customer preferences though real-time data mining techniques that also challenged engrained cognitive frames of how game design should be pursued. Unlike previous disruptive innovation in the game industry, social games enabled new entrants to rapidly become market leaders. The case points towards a more nuanced view of the influence of disruptive innovation during velocity shifts in creative industries. For studies of technological entrepreneurship, this implies that the velocity shifts following disruptive innovation could provide a previously overlooked important mechanism in understanding how entrants have been able to challenge incumbent firms in Japan.
    Keywords: disruptive innovation; social games; velocity shifts; industry emergence
    JEL: L26 L82 M12 N85 O32
    Date: 2015–12–31
  5. By: Markus Demary (Cologne Institute for Economic Research); Joanna Hornik (College of Europe, Department of European Economic Studies); Gibran Watfe (College of Europe, Department of European Economic Studies)
    Abstract: The proposal for a European Capital Markets Union (CMU) carries large potential economic benefits from enhancing the financing possibilities for Small and Medium-Sized Enterprises (SMEs). By deepening the capital markets and strengthening crossborder integration, the European Commission hopes to stimulate economic growth and boost employment. In this paper, we discuss to what extent these goals can be achieved, in light of the complex business environment of European SMEs. We outline the different types of SMEs in terms of their financing structures as well as the pervasive differences across the EU, concluding that any policy approach must take into account the diversity of the companies’ financing needs and the market realities in the Member States. We argue that the CMU is likely to have a heterogeneous impact, with some types of SMEs and certain regions gaining more than others.
    Keywords: Capital Markets Union, SME financing, European integration
    JEL: O16 F21 E61 G32
    Date: 2016–03
  6. By: Vu, Hoang Nam; Doan, Quang Hung
    Abstract: Innovation is widely recognized as a key determinant of enterprise performance. It is, however, not clear how innovation affects performance of small-and-medium enterprises (SMEs) in transition economies. Based on data collected from surveys of SMEs in Vietnam from 2005 to 2011 this study shows that the human capital of owners/managers of SMEs, the quality of workers, and public physical infrastructure positively affect innovation and the performance of SMEs. More importantly, the study finds that innovation in products, production process, and marketing is a decisive factor for higher performance of SMEs in Vietnam.
    Keywords: Innovation, SMEs, Vietnam
    JEL: D22 J54 L11 L25 O3
    Date: 2015–01
  7. By: Miguel de Oliveira Tavares Gärtner (CEF.UP and University of Porto, Portugal); Paulo Jorge Pereira (CEF.UP and University of Porto, Portugal); Elísio Brandão (University of Porto, Portugal)
    Abstract: We discuss how Contingent Payment Mechanisms (also known as Contingent Earn-Outs) enable of Entrepreneurial Financing decisions. First, we introduce a taxonomy of contingent payment mechanisms, by combining features regarding their term and amount. Second, we introduce each of these alternative mechanisms on a previously developed real options framework for analyzing Entrepreneurial Financing decisions, in which one wealth constrained Entrepreneur is looking for an external equity provider – taken as a Venture Capitalist – to support a given growth strategy. We conclude that different contingent payment mechanisms are equivalent in obtaining joint support from Entrepreneurs and Venture Capitalists regarding optimum investment timing and, therefore, that the choice on the optimum mechanism to use depends on variables which are exogenous to the model, such as liquidity preferences or constraints, timing requirements, post-deal integration or overall deal terms.
    Keywords: Venture Capital, Entrepreneurial Finance, Real Options, Growth Options, Entrepreneurship, Earn-Outs, Contingent Payments
    JEL: G24 G31 G34 L26
    Date: 2016–03
  8. By: Anna Wiśniewska-Sałek (Czestochowa University of Technology, Faculty of Management); Joanna Nowakowska-Grunt (Czestochowa University of Technology, Faculty of Management); Anna Brzozowska (Czestochowa University of Technology, Faculty of Management); Robert Sałek (Czestochowa University of Technology, Faculty of Management)
    Abstract: Building the economy of a country and its competitive strength on international markets constitutes the determinant of the economic power of globalization. Countries, wishing to take an active part in creating this power must exert impact on their economy in terms of innovation, entrepreneurship and flexibility of management of their business. However, building the economy of the country begins from the bottom, therefore, from the local – regional industry. In Poland, this industry consists in the enterprises of the SME sector, where there predominate small companies that do not have the financial potential e.g. for the development being the result of using modern technologies. The State (the policy run by the authorities) and aid programs of the European Union have a significant share in the development of such companies. However, the progress in business greatly depends on the enterprise itself and, particularly, the strategy selected as the leading one. The paper is an attempt to select factors both from the micro and macro environment. Degree of dependence and impact of these factors on each other/ the company represents valuable information for those managing small businesses. It may constitute the first step towards the decision in what direction the enterprise will develop or if it will be able to satisfy the requirements set e.g. by the external environment.
    Keywords: small business, business environment, management
    JEL: M21 Q56

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