nep-ent New Economics Papers
on Entrepreneurship
Issue of 2016‒10‒09
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. On the Origins of Entrepreneurship: Evidence from Sibling Correlations By Matthew J. Lindquist; Joeri Sol; C. Mirjam van Praag
  2. "Financial Constraint, Entrepreneurship and Sectoral Migrations " By Pierrick Baraton; Florian Léon
  3. Entrepreneurship after displacement: The transition and performance of entrepreneurial ventures created after displacement By Nyström, Kristina
  4. Entrepreneurial role models, fear of failure, and institutional approval of entrepreneurship: A tale of two regions By Wyrwich, Michael; Stuetzer, Michael; Sternberg, Rolf
  5. Business Owners, Employees and Firm Performance By Maliranta, Mika; Nurmi, Satu
  6. Gazelles and muppets in the City: Stock market listing, risk sharing, and firm growth quantiles By Cosimo Abbate; Alessandro Sapio
  7. Entrepreneurial Human and Social Capital in Small Businesses in Vietnam - An Extended Analysis - By Souksavanh VIXATHEP; Nobuaki MATSUNAGA
  8. Financial constraints and the failure of innovation projects By José García-Quevedo; Agustí Segarra-Blasco; Mercedes Teruel
  9. Female Entrepreneurship, Access to Credit, and Firms' Performance in Senegal By Abdoulaye Seck; Fatoumata Lamarana Diallo; Founty Alassane Fall; KARAMOKO CAMARA; Ndeye Khadidiatou Mouhamed DIOP; Abdelkrim Araar
  10. Access to microcredit and women’s entrepreneurship: evidence from Bangladesh By M. Jahangir Alam Chowdhury; Shabnaz Amin; Tazrina Farah
  11. Empowering the vulnerable to be entrepreneurs: An empirical test on the efectiveness of the Ghana microfinance policy 2006 By Díaz Serrano, Lluís; Sackey, Frank G.
  12. The Role of Rating and Loan Characteristics in Online Microfunding Behaviors By Gaurav Paruthi; Enrique Frias-Martinez; Vanessa Frias-Martinez
  13. The impact of resource efficiency measures on performance in small and medium-sized enterprises By Horbach, Jens

  1. By: Matthew J. Lindquist (Stockholm University, Sweden); Joeri Sol (University of Amsterdam, the Netherlands); C. Mirjam van Praag (Copenhagen Business School, Denmark, and University of Amsterdam, the Netherlands)
    Abstract: Promoting entrepreneurship has become an increasingly important part of the policy agenda in many countries. The success of such policies, however, rests in part on the assumption that entrepreneurship outcomes are not fully determined at a young age by factors that are unrelated to current policy. We test this assumption and assess the importance of family background and neighborhood effects as determinants of entrepreneurship, by estimating sibling correlations in entrepreneurship. We find that between 20 and 50 percent of the variance in different entrepreneurial outcomes is explained by factors that siblings share (i.e., family background and neighborhood effects). The average is 28 percent. Hence, entrepreneurship is far less than fully determined at a young age. Our estimates increase only a little when allowing for differential treatment within families by gender and birth order. We then investigate a comprehensive set of mechanisms that explain sibling similarities. Parental entrepreneurship plays a large role in explaining sibling similarities, as do shared genes. We show that neighborhood effects matter, but are rather small, particularly when compared with the overall importance of family factors. Sibling peer effects, and parental income and education matter even less.
    Keywords: Entrepreneurship; Family Background; Intergenerational Persistence; Neighborhood Effects; Occupational Choice; Sibling Correlations
    JEL: D13 J62 L26
    Date: 2016–09–30
  2. By: Pierrick Baraton (CERDI - University of Auvergne); Florian Léon (CREA, Université du Luxembourg)
    Abstract: Using an original database of over 3,000 micro and small enterprises (MSEs) that were micro finance institution (MFI) clients in Madagascar over the period of 2008-2014, we observe that around one third of these entrepreneurs switched business sectors in the first five years after starting their business. We find that the probability of an entrepreneur's changing sectors is highly correlated with the size of the first loan obtained from the MFI. This result survives multiple robustness checks, including treatment for endogeneity and attrition. We interpret this finding in terms of financial constraint: a lack of financing prevents an entrepreneur from initially investing in his first choice sector, causing him to change sectors only when he has become financially able to do so. This result challenges the classic distinction made between necessity entrepreneurs" and "opportunity entrepreneurs" and raises important questions concerning entrepreneurial talent allocation.
    Keywords: Entrepreneurship, Financial constraint, firm dynamics, Madagascar
    JEL: L26 M13 O16 O55
    Date: 2016
  3. By: Nyström, Kristina (Center of Excellence for Science and Innovation Studies (CESIS), Division of Entrepreneurship and Innovation, Department of Industrial Economics and Management, The Royal Institute of Technology, & The Ratio Institute, Stockholm Sweden.)
    Abstract: According to Hoetker and Agarwal (2007), research on knowledge transfers related to business closures is scarce. This paper intends to fill the knowledge gap on the transition to entrepreneurship after a business closure. This paper studies which employees are most likely to start an entrepreneurial venture after being affected by a displacement. Furthermore, following e.g., Hyttinen and Maliranta (2008) and Sørensen (2007), this study investigates the link between former workplace characteristics, such as the size and age of the former workplace, and the transition into entrepreneurship. In the second part of the analysis, the performance of the entrepreneurial ventures started by employees after displacement are explored as it relates to survival, employment and profitability. The empirical setting employs an employer–employee matched dataset coving all displaced employees in Sweden during 2001-2010. The empirical findings suggest that employees displaced from smaller firms are more likely to transition to entrepreneurship, Employing a Cox proportional hazard model to study the survival of these companies shows that new firms generated by displaced employees from small establishments are more viable. Furthermore, individuals who took part in labor market polices have a higher probability of becoming entrepreneurs, although these firms tend to show lower survival rates, which indicates that these transitions are necessity based. As for the performance of the business, the empirical findings suggest modest growth in terms of employment, turnover and operating profit for the vast majority of entrepreneurial ventures started after displacement.
    Keywords: Displacements; exit. Entrepreneurship; Labor mobility
    JEL: J63 L26
    Date: 2016–09–30
  4. By: Wyrwich, Michael; Stuetzer, Michael; Sternberg, Rolf
    Abstract: Studies on the influence of entrepreneurial role models (peers) on the decision to start a firm ar-gue that entrepreneurial role models in the local environment (1) provide opportunities to learn about entrepreneurial tasks and capabilities, and (2) signal that entrepreneurship is a favorable career option thereby reducing uncertainty that potential entrepreneurs face. However, these studies remain silent about the role of institutional context for these mechanisms. Applying an ex-tended sender-receiver model, we hypothesize that observing entrepreneurs reduces fear of fail-ure in others in environments where approval of entrepreneurship is high while this effect is signif-icantly weaker in low approval environments. Taking advantage of the natural experiment from recent German history and using data from the Global Entrepreneurship Monitor Project (GEM), we find considerable support for our hypotheses.
    Keywords: Fear of failure, role models, peer effect, entrepreneurial intentions, Global Entrepreneurship Mon-itor, East Germany
    JEL: D1 L26 M13 P20 R23 Z13
    Date: 2016
  5. By: Maliranta, Mika; Nurmi, Satu
    Abstract: Abstract The novel Finnish Longitudinal OWNer-Employer-Employee (FLOWN) database was used to analyze how the characteristics of owners and employees relate to firm performance as determined by labor productivity, survival and employment growth. Focusing on the role of the owner’s formal education and previous experience as an employee, the results show that previous experience in a high-productivity firm strongly predicts high productivity and probability of survival for the entrepreneur’s new firm. This can be interpreted as evidence of knowledge spillover through labor mobility. Strikingly, firms established in times of intensive excess job reallocation were found to exhibit superior productivity performance in the later phases of their life cycles.
    Keywords: Entrepreneurship, ownership, firm performance, human capital, diffusion of knowledge
    JEL: L25 L26 J24 J62 O33
    Date: 2016–10–06
  6. By: Cosimo Abbate; Alessandro Sapio
    Abstract: Financialization is persuading academics and policy-makers that the growth of SMEs can be unleashed by promoting their quotation on stock markets. Is that true? Answering this can give clues on the functions that stock markets actually perform in the financialized world. The market may allow collecting finance for productive investments, or mainly provide firms with opportunities for value extraction. It may work as a selection device or as a risk-sharing mechanism. In this paper, we test hypotheses linking the shape of the firm growth rates distribution to stock market functions, through quantile regressions. We use a sample of UK manufacturing companies listed on AIM, a junior segment of the London Stock Exchange, and comparably small and young unlisted companies. We find that the operating revenues and total assets of AIM-listed gazelles grow faster than for their unlisted peers, after controlling for lagged values of size, age, and growth. Yet, there is a loss reinforcing effect for companies listed on the AIM. After controlling for endogeneity by estimating instrumental variable quantile treatment effect (IVQTE), our findings dismiss the existence of a treatment effect of public quotation and are consistent with the stock market attracting relatively risky companies.
    Keywords: Firm growth; Quantile regression; Stock market; Financialization
    Date: 2016–04–10
  7. By: Souksavanh VIXATHEP (Graduate School of Economics, Kyoto University); Nobuaki MATSUNAGA (Graduate School of International Cooperation Studies, Kobe University)
    Abstract: Entrepreneurship is viewed as an important mechanism for economic development. It helps entrepreneurs overcome most of the constraints in businesses, encourages innovation, and contributes to employment generation and welfare improvement. The paper addresses the issue of entrepreneurial contribution to economic development at the micro level in Vietnam. The study examines the impact of entrepreneurial human capital on firm's performance (value added, total factor productivity (TFP)) in micro and small enterprises (MSEs). The analysis reveals that owner's formal education (up to upper secondary education) contributes to enhancement of firm value added and TFP in micro businesses. Entrepreneur's technical specialization, including advanced vocational training, university and post-graduate education, enhances performance of small enterprises, but shows some sign of over-education for micro businesses. Accumulated entrepreneurial experience, in form of occupation and self-employment experience, proves crucial for firm performance. Geographical advantages favoring MSEs located in the major metropolitan areas and sectoral advantages favoring 'trade and services' prove to be significant. The findings highlight the importance of human capital in nurturing entrepreneurship and fostering economic development at the micro-level.
    Keywords: entrepreneurship; human capital; social capital; small business; Vietnam
    JEL: C01 D22 L26
    Date: 2015–04
  8. By: José García-Quevedo (IEB, Universitat de Barcelona); Agustí Segarra-Blasco (GRIT, Universitat Rovira i Virgili); Mercedes Teruel
    Abstract: Theoretical and empirical approaches have stressed the existence of financial constraints in firms’ innovative activities. Although a large number of innovation projects are abandoned before their completion, the empirical evidence has focused on the determinants of innovation while failed projects have received little attention. This paper analyses the role of financial obstacles on the likelihood of abandoning an innovation project by using panel data of potential innovative Spanish firms for the period 2005–2013. Our analysis differentiates between internal and external barriers on the probability of abandoning a project and we examine whether the effects are different depending on the stage of the innovation process. Controlling for potential endogeneity, we use a bivariate probit model to take into account the simultaneity of financial constraints and the decision to abandon an innovation project. Our results show that financial constraints most affect the probability of abandoning an innovation project during the concept stage.
    Keywords: barriers to innovation, failure of innovation projects, financial constraints
    JEL: O31 D21
    Date: 2016–09
  9. By: Abdoulaye Seck; Fatoumata Lamarana Diallo; Founty Alassane Fall; KARAMOKO CAMARA; Ndeye Khadidiatou Mouhamed DIOP; Abdelkrim Araar
    Abstract: Despite an increase in the share of female-owned existing and new start-up firms in Senegal, there is still a wide belief that female entrepreneurs are discriminated against in the credit market. This paper empirically investigates such gender-based discrimination, and the extent to which it might be translated into lower efficiency. Using firm-level data and a methodological approach that consists of the data envelopment analysis, an endogenous switching regression and a propensity score matching, the paper finds no evidence to support the common wisdom that women are discriminated in the credit market. In addition, to the extent that they benefit from credit, female reap equal returns from the funds, efficiency-wise. These results do not however call for the abandonment of gender-biased public policies aiming at promoting access to credit and entrepreneurship, but suggest they be grounded on more robust footings such as managers’ education, firms’ ownership, sectorial activities with respect to capital intensity, and geographical locations.
    Keywords: Gender, access to credit, firms’ efficiency, Senegal.
    JEL: G21 J16 L25
    Date: 2015
  10. By: M. Jahangir Alam Chowdhury; Shabnaz Amin; Tazrina Farah
    Abstract: This paper intends to assess the impact of access to microcredit on women’s entrepreneurship in Bangladesh. The descriptive statistics and multivariate techniques have been used to achieve the objective of the paper. The study uses Household Income and Expenditure survey (HIES) 2010 dataset. The HIES 2010 survey covers 12,240 households from all districts in the country. Considering the endogeneity in the microcredit program participation of women, the study uses an instrumental variables technique (IV method) to assess the impact of access to microcredit on the entrepreneurial status of women. After adjustment for the endogeneity, the results from the multivariate analysis indicate that access to microcredit has a significant and positive impact on women’s entrepreneurship. It also has a significant and positive impact on men’s entrepreneurship and the marginal effects of access to microcredit are stronger on men’s entrepreneurship than on women’s entrepreneurship.
    Keywords: : Access to Credit, Women’s Entrepreneurship, Bangladesh
    JEL: L26 J16
    Date: 2016
  11. By: Díaz Serrano, Lluís; Sackey, Frank G.
    Abstract: The study aims at testing the Ghana Microfinance Policy set up to support the vulnerable through access to credit. We resort to the Blinder-Oaxaca decomposition to determine if there is positive discrimination in favor of women and young entrepreneurs in the rationing behavior of the microfinance companies. This is what we should expect if the policy is effective. Our results show that even after controlling for a large number of borrower characteristics, microfinance type and credit worthiness variables, there is positive discrimination that favors female and young entrepreneurs as this discrimination is largely determined by the differential treatment these groups receive in respect of men and older borrowers from microfinance institutions. Our results show that the Government microfinance is the most severe in the rationing behavior towards the discriminating groups.
    Keywords: Microfinances -- Ghana, Crèdit -- Ghana, Programes d'acció positiva -- Ghana, 334 - Formes d'organització i cooperació en l'economia,
    Date: 2016
  12. By: Gaurav Paruthi (University of Michigan); Enrique Frias-Martinez (Telefonica Research); Vanessa Frias-Martinez (University of Maryland)
    Abstract: We propose an in-depth study of lending behaviors in Kiva using a mix of quantitative and large-scale data mining techniques. Kiva is a non-profit organization that offers an online platform to connect lenders with borrowers. Their site,, allows citizens to microlend small amounts of money to entrepreneurs (borrowers) from different countries. The borrowers are always affiliated with a Field Partner (FP) which can be a microfinance institution (MFI) or other type of local organization that has partnered with Kiva. Field partners give loans to selected businesses based on their local knowledge regarding the country, the business sector including agriculture, health or manufacture among others, and the borrower.Our objective is to understand the relationship between lending activity and various features offered by the online platform. Specifically, we focus on two research questions: (i) the role that MFI ratings play in driving lending activity and (ii) the role that various loan features have in the lending behavior. The first question analyzes whether there exists a relationship between the MFI ratings - that lenders can explore online - and their lending volumes. The second research question attempts to understand if certain loan features - available online at Kiva - such as the type of small business, the gender of the borrower, or the loan's country information might affect the way lenders lend.
    Date: 2016–09
  13. By: Horbach, Jens
    Abstract: The profitability of green investment is crucial for the diffusion of the resulting technologies but the knowledge about these effects is still limited. Positive performance effects may be based on cost savings stemming from the introduction of cleaner production processes connected with lower material and/or energy use. The present paper empirically analyzes the effects of environmentally active behavior on the performance of a firm. The analysis is based on the 2013 wave of the Eurobarometer data for small and medium-sized firms (SME's). The analysis for SME's seems to be interesting because small firms might be especially affected by the costs of environmental measures as the introduction of resource efficiency measures are costly in the short run. The results of a bivariate probit model show that a high amount in investment in resource efficiency measures triggers the overall performance of the firm. A high selfperceived greenness of the firm and a high share of green employment are positively correlated to performance. In fact, not all measures in improving resource efficiency are connected with positive performance effects: An increased use of renewables leads to a higher performance whereas measures to reduce water consumption are negatively correlated to turnover development.
    Keywords: eco-innovation,bivariate probit model,SME
    JEL: C35 O33 Q55
    Date: 2016

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