nep-ent New Economics Papers
on Entrepreneurship
Issue of 2016‒11‒27
five papers chosen by
Marcus Dejardin
Université de Namur

  1. A little bit of knowledge is a dangerous thing: Entrepreneurial experience and new venture disengagement By Vendler Toft-Kehler, Rasmus; Wennberg, Karl; Kim, Philip
  2. The workforce composition of young firms and product innovation: Complementarities in the skills of founders and their early employees By Müller, Bettina; Murmann, Martin
  3. Employment effects of innovations over the business cycle: Firm-level evidence from European countries By Dachs, Bernhard; Hud, Martin; Koehler, Christian; Peters, Bettina
  4. Does Managerial Capital also Matter Among Micro and Small Firms in Developing Countries? By Axel Demenet
  5. The Impact of Consumer Credit Access on Employment, Earnings and Entrepreneurship By Kyle Herkenhoff; Gordon Phillips; Ethan Cohen-Cole

  1. By: Vendler Toft-Kehler, Rasmus (Copenhagen Business School); Wennberg, Karl (The Ratio Institute and Linköping University); Kim, Philip (Babson College)
    Abstract: Existing research has offered conflicting narratives of how entrepreneurial experience influences whether founders will continue working on or disengage from their ventures. We theorize and test how entrepreneurs with varying levels of experience disengage from early-stage companies. Findings reveal a U-shaped relationship, such that novices and highly experienced entrepreneurs are more likely to quit their ventures, while moderately experienced entrepreneurs are more likely to persist in their pursuits. We offer both theoretical and empirical explanations for how the propensity to disengage from new ventures evolves with entrepreneurial experience.
    Keywords: Serial entrepreneurship; Disengagement; Experience curves; Entrepreneurial behavior
    JEL: L26 M13
    Date: 2016–11–21
  2. By: Müller, Bettina; Murmann, Martin
    Abstract: We investigate the extent to which complementarities between technical and business skills of founders and employees matter for the generation of market novelties by new ventures. Using data about German start-ups, we find that there are no complementarities between technical and business skills within the group of founders, but that there are significant complementarities between technically trained founders and employees who have business skills. This suggests that the innovation potential of start-ups by technically trained founders is best explored by hiring employees who are trained in business. However, a reverse relationship does not exist: There are no complementarities between founders with business skills and employees with technical skills.
    Keywords: Entrepreneurship,Innovation,Human Capital,Skills,Complementarity
    JEL: J24 L23 L26 M13 M51 Q31
    Date: 2016
  3. By: Dachs, Bernhard; Hud, Martin; Koehler, Christian; Peters, Bettina
    Abstract: A growing literature investigates how firms' innovation input reacts to changes in the business cycle. However, so far there is no evidence whether there is cyclicality in the effects of innovation on firm performance as well. In this paper, we investigate the employment effects of innovations over the business cycle. Our analysis employs a large data set of manufacturing firms from 26 European countries over the period from 1998 to 2010. Using the structural model of Harrison et al. (2014), our empirical analysis reveals four important findings: First, the net effect of product innovation on employment growth is pro-cyclical. It turns out to be positive in all business cycle phases except for the recession. Second, product innovators are more resilient to recessions than non-product innovators. Even during recessions they are able to substitute demand losses from old products by demand gains of new products to a substantial degree. As a result their net employment losses are significantly lower in recessions than those of non-product innovators. Third, we only find resilience for SMEs but not for large firms. Fourth, process and organizational innovations displace labor primarily during upturn and downturn periods.
    Keywords: innovation,employment,business cycle,resilience,Europe
    JEL: O33 J23 C26 D2
    Date: 2016
  4. By: Axel Demenet (DIAL, UMR 225, IRD, Paris, France, PSL Research University, Université Paris-Dauphine, LEDa, Paris, France)
    Abstract: The lack of managerial capital was recently put forward as a constraint for developing countries firms (Bruhn et al., 2010). While established for large and medium firms, its importance for micro enterprises has yet to be proven: evidence found in Development Economics and Entrepreneurial Studies is, at best, mixed. This paper uses a panel of Vietnamese micro, small and medium enterprises to investigate this question in a comparative manner. The data let building a multidimensional measure of Managerial Capital, and allows consistent estimates of firm-level productivity. Even though bias might still affect the estimation of the average influence of managerial capital on productivity, I am able to show that this influence is as important for micro firms as it is for medium ones.
    Keywords: informal sector, microenterprises, household business, managerial capital, entrepreneurship
    JEL: O17 M1
    Date: 2016–10
  5. By: Kyle Herkenhoff; Gordon Phillips; Ethan Cohen-Cole
    Abstract: How does consumer credit access impact job flows, earnings, and entrepreneurship? To answer this question, we build a new administrative dataset which links individual employment and entrepreneur tax records to TransUnion credit reports, and we exploit the discrete increase in consumer credit access following bankruptcy flag removal. After flag removal, individuals flow into self-employment. New entrants earn more, borrow significantly using unsecured and secured consumer credit, and are more likely to become an employer business. In addition, after flag removal, non-employed and self-employed individuals are more likely to find unemployment-insured "formal" jobs at larger firms that pay greater wages. These estimates imply that firms believe previously bankrupt workers are 3.8% less productive than non-bankrupt workers, on average. These results suggest that consumer credit access matters for each stage of entrepreneurship and that credit-checks may be limiting formal sector employment opportunities.
    JEL: D04 D1 D12 D14 D22 D31 D83 E2 E21 G23 G3 G33 K35 K36 L22 M5 M52 O16
    Date: 2016–11

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