nep-ent New Economics Papers
on Entrepreneurship
Issue of 2016‒09‒11
ten papers chosen by
Marcus Dejardin
Université de Namur

  1. Persistence of innovation and patterns of firm growth By Dario Guarascio; Federico Tamagni
  2. Are They All Like Bill, Mark, and Steve? The Education Premium for Entrepreneurs By Claudio Michelacci; Fabiano Schivardi
  3. The Strategic Management of High-Growth Firms: A Review and Theoretical Conceptualization By Demir, Robert; Wennberg, Karl; McKelvie, Alexander
  4. The Schumpeterian Entrepreneur: A Review of the Empirical Evidence on the Antecedents, Behavior, and Consequences of Innovative Entrepreneurship By Joern H. Block; Christian O. Fisch; Mirjam van Praag
  5. Cognitive Biases and Entrepreneurial Under-Diversification By Enrico Maria Cervellati; Pierpaolo Pattitoni; Marco Savioli
  6. The Emergence of the Global Fintech Market: Economic and Technological Determinants By Christian Haddad; Lars Hornuf
  7. Steve Jobs or No Jobs? Entrepreneurial activity and performance among Danish college dropouts and graduates By Guido Buenstorf; Kristian Nielsen; Bram Timmermans
  8. Place, platform, and knowledge co-production dynamics: Evidence from makers and FabLab By Raphaël Suire
  9. Finance for Micro, Small, and Medium-Sized Enterprises in India: Sources and Challenges By Singh, Charan; Wasdani, Kishinchand Poornima
  10. Related variety and economic development:a literature review By Jeroen Content; Koen Frenken

  1. By: Dario Guarascio; Federico Tamagni
    Abstract: In this work we test if persistent innovators, defined according to different innovation activities (R&D, product and process innovation, patenting) grow more than other firms, and if innovation persistence can contribute to explain the so far little evidence in favor of persistence in growth itself. We exploit a somewhat uniquely long-in-time dataset tracing a representative sample of Spanish manufacturing firms over the period 1990-2012. This allows to overcome the difficulties in the definition of persistent innovators traditionally based on innovation surveys. Our findings, against the expectations, support that persistent innovators do not generally outperform the other firms. First, they do not grow more, and actually we find that, despite some variation across innovation persistence indicators, they even grow less than other firms in the top-quantiles of the growth rates distribution, that is among high-growth firms. Further, persistent innovators do not show higher growth persistence than other firms, in none of the quantiles of the growth rates distribution, independently from the innovation persistence indicator considered.
    Keywords: firm growth, innovation persistence, product and process innovation, R\&D, patents, quantile regressions
    Date: 2016–02–09
  2. By: Claudio Michelacci (EIEF); Fabiano Schivardi (Università Bocconi and EIEF)
    Abstract: We rely on the Survey of Consumer Finances to study how the return to education of US entrepreneurs has evolved since the late 80's. We calculate the yearly income that an entrepreneur expects to obtain during his entrepreneurial venture, as resulting from labor income, dividend payments, and realized capital gains upon selling the business. We find that the premium of having a college degree relative to a high school degree has increased, but roughly as much as the analogous premium for workers. Instead, the premium for postgraduate education relative to college education has increased substantially more for entrepreneurs than for workers. Today an entrepreneur with a postgraduate degree earns on average 100,000 dollars per year more than an entrepreneur with a college degree. The difference is larger at higher quantiles of the entrepreneurs' income distribution. In the late 80's, it was close to zero. The increase in the premium to postgraduate education is unlikely to be explained by selection or valuation issues related to business failure; by a pattern of sectoral specialization more favourable to postgraduate entrepreneurs; by their easier access to internal or external finance; by their newly created businesses embodying better technologies; or by compensating differentials - due to greater business risk or lower possibilities of recycling entrepreneurial skills into new ventures. All this suggests that the more advanced skills associated with higher education have become increasingly important for running successful businesses.
    Date: 2016
  3. By: Demir, Robert (The Ratio Institute and Lancaster University Management School); Wennberg, Karl (The Ratio Institute and Linköping University); McKelvie, Alexander (Syracuse university)
    Abstract: Scholars’ knowledge of the factors behind high-growth firms remains fragmented. This paper provides a systematic review of the empirical literature concerning high-growth firms with a focus on the strategic aspects contributing to growth. Based on our review of 39 articles, we identify five drivers of high growth: human capital, strategy, human resource management, innovation, and capabilities. These drivers are combined to develop a conceptual model of high-growth firms that includes potential contingency factors among the five drivers. We also propose a research agenda to deepen the study of high-growth firms in strategic management.
    Keywords: High-Growth Firms; Strategy; Innovation; Human Capital; HRM; Capabilities; Literature Review
    JEL: L25 L26 M13
    Date: 2016–09–05
  4. By: Joern H. Block (Erasmus University Rotterdam, the Netherlands); Christian O. Fisch (Erasmus University Rotterdam, the Netherlands); Mirjam van Praag (Copenhagen Business School, Denmark)
    Abstract: Innovative entrepreneurship is considered an important pillar for economic development and has sparked a lively discussion in academia and practice alike. Oftentimes, however, the debate is not sufficiently grounded on solid empirical evidence. The academic literature is growing but very scattered and is separated into several disciplines. We provide a summary that takes stock of the academic knowledge about innovative entrepreneurship and summarizes the evidence from 102 empirical studies published in the primary economics and management journals on the antecedents, behavior, and consequences of innovative entrepreneurship. Based on this state-of-the-art literature review, directions for future research are discussed.
    Keywords: innovative entrepreneurship; Schumpeter; literature review; economic development
    JEL: L26 L53 M13 O31 O33
    Date: 2016–09–05
  5. By: Enrico Maria Cervellati (Department of Management, University of Bologna, Italy); Pierpaolo Pattitoni (Department of Management, University of Bologna, Italy; The Rimini Centre for Economic Analysis, Italy); Marco Savioli (Department of Economics, University of Bologna, Italy; The Rimini Centre for Economic Analysis, Italy)
    Abstract: Cognitive biases lead entrepreneurs to overinvest in their own companies, over exposing themselves to idiosyncratic risk. Our novel theoretical model explains entrepreneurial under-diversification by measuring the amount of potential bias in entrepreneurs' portfolio allocations brought about by overconfidence and over optimism. Simulation analyses based on our model allow us calculating the implicit levels of overconfidence and over optimism from observable portfolio choices. Finally, using a unique dataset including cross-regional data on Italian entrepreneurs and a structural equation modeling approach, we test the effect of overconfidence and over optimism on entrepreneurs' portfolio allocations. Consistent with our theoretical predictions, we find a positive relationship between overconfidence and entrepreneur investments in their own companies. On the other hand, the role of over optimism seems to be negligible.
    Keywords: Cognitive Biases, Entrepreneurship, Portfolio Optimization, Simulation Analysis, Under-diversification, Structural Equation Models
    JEL: G02 G11 L26
    Date: 2016–09
  6. By: Christian Haddad; Lars Hornuf
    Abstract: We investigate the economic and technological determinants inducing entrepreneurs to establish ventures with the purpose of reinventing financial technology (fintech). We find that countries witness more fintech startup formations when the latest technology is readily available, capital markets are well-developed, and people have more mobile telephone subscriptions. Furthermore, the available labor force has a positive impact on the development of this new market segment. Finally, the more sound the financial system, the lower the number of fintech startups in a country. Overall, the evidence suggests that fintech startup formation need not be left to chance, but active policies can influence the emergence of this new sector.
    Keywords: Fintech, Entrepreneurship, Startups, Financial institutions
    JEL: L26 K2 O3
    Date: 2016
  7. By: Guido Buenstorf (University of Kassel); Kristian Nielsen (Aalborg University); Bram Timmermans (Norwegian School of Economics)
    Abstract: Are college dropouts successful entrepreneurs? Other than anecdotal evidence on illustrious college dropouts who managed to become self-made billionaires, there is only limited empirical evidence to answer this question. This paper addresses this issue by investigating the relationship between college dropout or graduation and entrepreneurship activity as well as performance. Using information from the Danish labor market register, we identify college students, whether these students graduate, and if they registered a new venture. We find that a larger share of dropouts starts a business, but this reflects the endogeneity of the decision to exit from college. On average, becoming an entrepreneur does not allow dropouts to escape from their punishment in the labor market.
    Keywords: entrepreneurship, higher education, college dropouts, returns to entrepreneurship
    JEL: L26 I29
    Date: 2016
  8. By: Raphaël Suire
    Abstract: FabLabs (fabrication laboratories) have become popular but the academic literature on this entrepreneurial phenomenon is scant. This paper provides some insight into the sources of Fablab performance based on original data on the characteristics and interactions between (n = 48) FabLabs and their ecosystem. A FabLab is a geographically located, intermediary platform which reduces the matching and searching costs to stakeholders involved in an entrepreneurial endeavor. We find that a FabLab is less productive if disconnected from its ecosystem. Innovation production is highest when the FabLab acts as a platform allowing interactions between small explorative firms, and large exploitative firms. Its innovation remains explorative if the interaction involves only small explorative firms. Our study has some implications for the management of FabLabs and their ambiguous impact on the overall innovation ecosystem in relation to resilience, smart specialization and diversification.
    Date: 2016–08
  9. By: Singh, Charan (Asian Development Bank Institute); Wasdani, Kishinchand Poornima (Asian Development Bank Institute)
    Abstract: Finance for micro, small, and medium-sized enterprises (MSMEs) has been a concern for all stakeholders including entrepreneurs, financial institutions, and government organizations. The key objective of the study was to identify various challenges faced by MSMEs in sourcing of finance during different stages of their life cycle. This study is a first-of-its-kind attempt to focus on these aspects. The study further explores whether the financial awareness of MSME entrepreneurs is a major limitation in the identification and utilization of sources of finance. Data was collected through personal interviews using a structured questionnaire from a sample of 85 MSMEs. The survey was conducted mainly in the city of Bangalore covering a wide spectrum of sectors like precision tools, weavers, jewelers, food retailers, metal works, textiles, and book shops. The results reinforce the findings of other studies that utilization of formal sources like banks is significantly small compared with informal sources like personal and family wealth. The study found that the main challenges faced in underutilization of formal sources were inadequacy of collateral assets and lack of financial awareness of entrepreneurs. Based on the conclusion that requirement of finance differs with the life-cycle stage of the MSME, recommendations have been proposed for entrepreneurs, financial institutions, and policy makers.
    Keywords: India; SME; small and medium-sized enterprises; microenterprises; finance; loans; capital; start-up; economic growth; firms; banks; financial institutions; financial awareness; sources of finance
    JEL: G20 L26 O23
    Date: 2016–09–08
  10. By: Jeroen Content; Koen Frenken
    Abstract: Since the introduction of the related variety in 2007, a number of studies have been undertaken to analyze the effect of related variety on economic development. Our review of 21 studies makes clear that most studies find support for the initial hypothesis that related variety supports employment growth, though some studies suggest that the growth effects of related variety may be specific to knowledge-intensive sectors only. From the review, we list a number of further research questions regarding: methodology, the role of unrelated variety, different forms of relatedness, and the effect of related variety on knowledge production and entrepreneurship.
    Date: 2016–08

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