nep-ent New Economics Papers
on Entrepreneurship
Issue of 2016‒08‒07
six papers chosen by
Marcus Dejardin
Université de Namur

  1. The "Entrepreneurial Boss" Effect on Employees' Future Entrepreneurship Choices: A Role Model Story? By Rocha, Vera; van Praag, Mirjam C.
  2. Risk Diversification and International Trade By Federico Esposito
  3. Higher Taxes at the Top: The Role of Entrepreneurs By Bettina Brueggemann
  4. Deconstructing Informality: A Response to Vulnerability or an Optimal Choice? By Song, Lina; Appleton, Simon; Liang, Zhe
  5. Entrepreneurial University Culture: The Clash of Values And Resistance to Change By Gerasim A. Mkrtychyan
  6. Self-employed Person, Family Enterprise, Individual Enterprise: A Legal, Fiscal and Accounting Perspective By Carmen UNGUREANU

  1. By: Rocha, Vera (Copenhagen Business School); van Praag, Mirjam C. (Copenhagen Business School)
    Abstract: Both organizational and sociological approaches in entrepreneurship research highlight the importance of social context in shaping individual preferences for entrepreneurship. An influential contextual factor that has not been studied in entrepreneurship research is one's boss at work. Do entrepreneurial bosses contribute to their employees' decisions to become entrepreneurs themselves? Using Danish register data of newly founded firms and their entrepreneurs and employees between 2003 and 2012, and employing methods that allow causal inferences, we show that entrepreneurial bosses indeed affect their employees' future entrepreneurship choices, especially if both boss and employee are female. We investigate two alternative underlying mechanisms that may shape the (female) boss' influence on (female) workers' entrepreneurship decisions. Our results consistently suggest that entrepreneurial bosses may act as role models for the entrepreneurship activities of their employees, especially between pairs of female bosses and female employees. We do not find any evidence on female bosses acting as "queen bees" at the workplace. Female entrepreneurial bosses may, thus, act as a lever to reducing the gender gaps in entrepreneurship rates.
    Keywords: entrepreneurship, role models, gender gaps, female leadership
    JEL: L26 J24 J16
    Date: 2016–07
  2. By: Federico Esposito (Yale University)
    Abstract: Firms face considerable uncertainty about consumers' demand. In presence of incomplete financial markets, entrepreneurs may not be able to insure against unexpected demand fluctuations. The key insight of my paper is that firms can hedge demand risk through geographical diversification. I first develop a general equilibrium trade model characterized by stochastic demand and risk-averse entrepreneurs, who exploit the imperfect correlation of demand across countries to lower the variance of their total sales. I show that: i) a firm's exporting decision does not obey a hierarchical structure as in standard models with fixed costs, because it depends on the global diversification strategy of the firm, and ii) the intensity of trade flows to a market are affected by its risk-return profile. To quantify the risk diversification benefits of international trade I calibrate the model with the Method of Moments, using Portuguese firm-level data. One of the counterfactual exercises reveals that the welfare gains from trade can be significantly higher than the gains predicted by models neglecting firm level risk. After a trade liberalization, risk-averse firms boost exports to countries offering better diversification benefits. Hence, in these markets competition among firms is stronger, lowering the price level more and raising welfare gains.
    Date: 2016
  3. By: Bettina Brueggemann (Goethe University Frankfurt)
    Abstract: This paper contributes to the recent and growing literature on optimal top marginal income tax rates. It computes optimal marginal tax rates for top earners in a Bewley-Aiyagari type economy explicitly accounting for entrepreneurs. Entrepreneurs make up more than one third of the highest-earning one percent in the income distribution despite representing less than ten percent of the population. They are thus disproportionately affected by an increase in the top marginal income tax rate. Since entrepreneurs overall also employ half of the private-sector workforce, such policy changes can have important repercussions for aggregate labor demand and productivity. Nonetheless, the welfare maximizing top marginal tax rate amounts to 82.5 percent, and the revenue maximizing one to 90 percent. A steady state comparison between the benchmark economy featuring the current US tax system and the economy with the welfare maximizing top marginal tax rate illustrates the underlying mechanisms. The substantial increase in taxes leads to a large degree of redistribution, yielding sizable welfare gains for low-income households. Lower equilibrium wages benefit medium-sized entrepreneurs and enable them to grow, such that all entrepreneurs except those directly affected by the higher tax experience considerable welfare gains.
    Date: 2016
  4. By: Song, Lina (University of Nottingham); Appleton, Simon (University of Nottingham); Liang, Zhe (University of Nottingham)
    Abstract: The rapid growth of informal employment in China in recent decades has attracted attention, but to understand its implications, the concept of informality must be deconstructed. We reclassify employment status into three categories: salaried workers who have long-term contracts; the self-employed; and causal workers without long term contracts (working in either the formal or the informal sector). The monthly earnings of the self-employed are much (47%) higher than those casual employees. Self-employment is not necessarily a misfortune and the flexibility it provides may be optimal for some kinds of workers. For example, the self-employed are more likely to be disabled and to have young families. Institutionally, it is still difficult for casual workers and most rural-urban migrant workers to embark on business ownership. Although a large group of rural-urban migrants are employees with longer term contracts, their rural registration (hukou) means they lack the social protection of urban residents. The labour force with rural hukou is more likely to fall into the informal sector and, within that sector, is most likely to be engaged in casual labouring jobs. Policies to support small businesses may be warranted given the detrimental impacts of informality on casual workers. Experimental interventions could be tried along the lines of those used in Peru to provide funds to support entrepreneurial activities by this group to lift themselves out of a poverty trap into more sustainable employment. Skill training, encouragement for innovation, tax credits and reducing institutional constraints on starting up small business should be all considered.
    Keywords: informality, vulnerability, self-employment, casual labour, China
    JEL: J24 J46 J48
    Date: 2016–07
  5. By: Gerasim A. Mkrtychyan (National Research University Higher School of Economics)
    Abstract: This paper introduces an original methodology for assessing the organizational culture of an entrepreneurial university. Methods for the assessment of values in research activity and of resistance to organizational change have been developed. The study of values and characteristics of resistance to change was conducted on the academic staff of the faculties of Economics and Management at the Nizhny Novgorod campus of the Higher School of Economics. It was found that the campus professors' academic orientation in research activity dominates their entrepreneurial orientation and that the strength of this influence differs amongst them, depending on their values. Additionally, greatest resistance in professors is caused by changes in human resources policy and management; this resistance is of moderate intensity and passive. The study confirms a positive relationship between the academic orientation of the "motivation" and "reward" values and the intensity of resistance to change in personnel policy and management.
    Keywords: entrepreneurial university, organizational culture, academic values, entrepreneurial values, resistance to change.
    JEL: M14
    Date: 2016
  6. By: Carmen UNGUREANU (Faculty of Economics, Ecological University of Bucharest)
    Abstract: An ambitious initiative of the European Commission, also presented the Europe 2020 Strategy, is that, by 2020, 75% of the population aged between 20 and 64 be employed. The responsibility for action in this regard must not belong to governments only, but also to companies, trade unions, NGOs, local authorities and to each person individually. An important role in creating jobs in Romania is played by the self-employed persons, individual enterprises and family enterprises. They offer unemployed people the opportunity to bring their contribution to the economy and society. In this paper, we have proposed an analysis of the self-employed persons, individual enterprises and family enterprises as ways to exercise the free enterprise and a person’s free access to an economic activity, in three areas: legal, taxation and accounting.
    Keywords: family business, accounting
    JEL: L20 M40
    Date: 2016–04

This nep-ent issue is ©2016 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.