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on Entrepreneurship |
| By: | Brixiova, Zuzana (University of Cape Town); Kangoye, Thierry (African Development Bank) |
| Abstract: | This paper examines gender differences in entrepreneurial performance and their links with start-up capital utilizing a search model and empirical analysis of survey of entrepreneurs from Swaziland. The results show that entrepreneurs of both genders with higher start-up capital record better sales performance than those with smaller amounts of capital. For women entrepreneurs, formal finance sources of start-up capital are also associated with higher sales. However, as in other developing countries, women entrepreneurs in Swaziland have smaller start-up capital and are less likely to fund it from formal sources than men. Among women entrepreneurs, those with college education and confident in their skills tend to start their firms with higher amounts of capital. Professional support also matters, as women with such support are more likely to fund their start-up capital from the formal financial sector. |
| Keywords: | women's entrepreneurship, start-up capital, search model, multivariate analysis |
| JEL: | L53 O12 C61 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10279&r=ent |
| By: | Florence Honoré; Martin Ganco |
| Abstract: | While it is crucial for startups to hire high human capital employees, little is known about what drives the hiring decisions. Considering the stakes for both startups and their hires (i.e., joiners), we examine the phenomenon using a two-sided matching model that explicitly reveals the preferences of each side. We apply the model to a sample of startups from five technological manufacturing industries while examining a range of variables grounded in prior work on startup human capital. The analysis is based on the Longitudinal Employer Household dynamics from the U.S. Census Bureau. Our findings indicate that, in the context of entrepreneurship, both startups and joiners rely heavily on signals of quality. Further, quality considerations that are important for the match play a minimal role in determining earnings. Our approach refines our understanding of how entrepreneurial human capital evolves. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:16-45&r=ent |
| By: | Angela Cipollone (LUISS "Guido Carli" University); Paolo E. Giordani (LUISS "Guido Carli" University) |
| Abstract: | This paper estimates the process of search and matching between entrepreneurs and financiers in the business angel (BA) market. We hand-collect a new dataset from the BA markets of 17 developed countries for the period 1996-2014, and we estimate the aggregate matching function expressing the number of successful deals as a function of the number of potential entrepreneurs and of business angels. Empirical findings confirm the technological features assumed in the theoretical literature: positive and decreasing marginal returns to both inputs (stepping on toes effect), technological complementarity across the two inputs (thick market effect) and constant returns to scale. We discuss the theoretical and policy implications of these findings. |
| Keywords: | Entrepreneurial finance, innovation, matching function, business angels. |
| JEL: | C78 L26 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:lui:celegw:1601&r=ent |
| By: | Grabrucker, Katharina (University of Passau); Grimm, Michael (University of Passau) |
| Abstract: | An often-heard argument is that South Africa's very high crime rate is the main reason for the country's small share of business ownership. Combining a fixed-effects model with an instrumental variable approach, we estimate the effect of crime on self-employment and business performance using a matched data set of census, survey and police data. In contrast to previous studies, which focus on perceived rather than actual crime and often deal with geographically limited areas, we do not find robust evidence that high crime rates have a negative impact on self-employment. Although the impact of crime is statistically significant and negative, it is economically small. Moreover, our results suggest a positive rather than a negative relationship between robbery and burglary and sales and average business profits. These results suggest that crime may not be in general a serious threat for small businesses in low and middle-income countries. |
| Keywords: | crime, self-employment, microenterprises, South Africa, informal sector |
| JEL: | D22 J24 J46 K40 L26 O12 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10280&r=ent |
| By: | Lindquist, Matthew J. (SOFI, Stockholm University); Sol, Joeri (University of Amsterdam); van Praag, Mirjam C. (Copenhagen Business School); Vladasel, Theodor (Copenhagen Business School) |
| 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: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10278&r=ent |
| By: | Daniel Sanches (Federal Reserve Bank of Philadelphia); Todd Keister (Rutgers University) |
| Abstract: | We study a model in which both money and private credit instruments can potentially be used as media of exchange to overcome trading frictions in decentralized markets. Entrepreneurs in our model have access to productive projects, but face credit constraints due to limited pledgeability of their returns. If credit claims cannot circulate, the optimal monetary policy is the Friedman rule, which leads to efficient patterns of exchange, but the equilibrium level of investment is inefficiently low. When credit claims do circulate, monetary policy affects the liquidity premium on private credit and thereby influences the cost of borrowing and the level of investment. The Friedman rule is no longer optimal; we show that the optimal policy instead strikes a balance between easing borrowing constraints for entrepreneurs and promoting efficient exchange. We relate our result to the traditional bank lending channel of monetary policy and derive implications for optimal banking regulation. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:1267&r=ent |
| By: | Mircea Epure; Martí Guasch |
| Abstract: | This study analyzes the relationship between debt and outside equity investments in early stage firms. The existing evidence on this relationship is scarce and inconclusive, mostly due to the pervasive opaqueness of early stage firms. We argue that outside investors who face the severe information asymmetries that exist in entrepreneurial firms may use the level of debt as a signal. In addition, personal and business debt could signal different information to outside investors. We use the Kauffman Firm Survey and develop an empirical strategy based on a Heckman selection model and a propensity score matching analysis. Our results consistently show that debt, and particularly business debt, is positively related to outside equity investments, especially in times of economic distress. We posit that start-ups with higher levels of business debt can send more credible signals to capital markets, and identify cash holdings and the firm-bank relationship as possible information channels for outside investors. |
| Keywords: | financing; debt; equity; entrepreneurship; information asymmetry; capital structure. |
| JEL: | G32 M13 M40 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1546&r=ent |
| By: | Flavio Calvino |
| Abstract: | This work studies the firm-level relationship between different types of innovative activities and employment growth rates. Improving on previous investigations on the topic, it combines a dynamic panel analysis of the effects of different types of product and process innovation on employment growth with an outlook on the whole conditional employment growth distribution. Results show that product innovation -- especially in terms of good new to the entire market -- has a positive effect on employment growth. This role is likely to be particularly relevant for both fast-growing and shrinking firms. Process innovation appears instead to have less clear-cut dynamics, consistently with existing evidence. Among different types of process innovation, the introduction of novel auxiliary processes appears to be more positively linked with employment growth. |
| Keywords: | Innovation, Employment growth, Dynamic panel methods, Quantile regression |
| Date: | 2016–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2016/37&r=ent |
| By: | Dorothea Schäfer (German Institute for Economic Research DIW Berlin); Andreas Stephan (Jönköping International Business School) |
| Abstract: | Using the Mannheim innovation panel, we investigate whether family firms have higher financial need and how this affects both innovation input and innovation outcomes such as firm or market novelties, or process innovation. Applying the CDM framework, we find that family firms are more likely to have a latent financial need for innovation, which means that they have innovation ideas which they have not implemented yet. We find that family firms have a significantly lower marginal innovation productivity in particular for innovations with radical character, i.e., market novelties. We conclude from this evidence that family firms have a comparative disadvantage in innovation projects that imply high risk and require high innovation capability. |
| Keywords: | Innovation, Capability, Funding gaps, Financing Restrictions, Family Firms, CDM |
| JEL: | D21 D22 G31 O30 O31 O32 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:lsa:wpaper:wpc14&r=ent |
| By: | Diego Comin (Dartmouth College); Daniel Lashkari (Harvard U.); Marti Mestieri (Northwestern University) |
| Abstract: | We develop a multi-sectoral endogenous growth model in which the direction of innovation across sectors is endogenous. Thus, our model provides a theoretical framework to think about the classical demand-pull versus technology-push drivers of innovation in a general equilibrium framework. A robust prediction that emerges from our analysis is that innovation growth should be higher in more income-elastic sectors. We test this prediction using the universe of U.S. patents for the period 1976-2007. We find empirical support for this prediction. Preliminary analysis of firm R&D expenditures from the U.S. census also confirm this prediction. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:1287&r=ent |