nep-ent New Economics Papers
on Entrepreneurship
Issue of 2016‒12‒11
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Access to informal venture capital and ambitious entrepreneurship – cross country evidence By Avdeitchikova, Sofia; Nyström, Kristina
  2. The contribution of different public innovation funding programs to SMEs' export performance By Liu, Rebecca; Rammer, Christian
  3. The Rise of the Working Rich, Market Imperfections, and Income Inequality By Chhy, Niroth
  4. Venture Capital and Underpricing: Capacity Constraints and Early Sales By Pinheiro, Roberto
  5. Success factors of innovation networks: Lessons from agriculture in Flanders By Lambrecht, Evelien; Kühne, Bianka; Gellynck, Xavier
  6. Innovation and Access to Finance By Michele Cincera; Anabela Santos
  7. The impact of LEADER Programme on entrepreneurship and employment in the context of multifunctionality of rural areas. A case study of UE peripheral region (Lublin voivodeship, Poland) By Guzal-Dec, Danuta; Zwolińska-Ligaj, Magdalena
  8. Joseph A. Schumpeter: Ein Pionier der Makrofinanz By Gerald Braunberger
  9. Fostering entrepreneurial education in Agribusiness through experiential learning By Cavicchi, Alessio; Rinaldi, Chiara; Santini, Cristina
  10. Innovación y emprendedurismo: Ordenando el rompecabezas de la Nueva Gestión Empresarial de la Innovación By Faiña Medín, J. Andres; Losada-Lopez, Chema; Montes-Solla, Paulino
  11. A Dinâmica Inovativa das Empresas de Pequeno Porte no Brasil By Graziela Ferrero Zucoloto; Mauro Oddo Nogueira
  12. Strumenti per il sostegno finanziario di famiglie e microimprese: il caso italiano (Policies to help financially vulnerable Italian households and micro-businesses) By Simonetta Cotterli

  1. By: Avdeitchikova, Sofia (Oxford Research); Nyström, Kristina (The Ratio Institute)
    Abstract: Many empirical studies have emphasized the importance of institutional venture capital for enabling high growth entrepreneurship and innovation. Yet, there are reasons to believe that provision of informal venture capital will have as significant, if not more significant effect on entrepreneurship. Based on Global Entrepreneurship Monitor data for 33 countries for the years 2001-2010, we study the relationship between the presence of informal investors in a country and the levels of general and ambitious entrepreneurship, defined as entrepreneurs that have intentions to grow their business, internationalize and/or innovate. Some of the main findings are that the overall level of access to informal venture capital is positively related to general entrepreneurship and ambitious entrepreneurship in terms of innovativeness, while access to arms-length money (i.e. informal investments made by work colleagues or strangers) appears to be positively related to ambitious entrepreneurship in terms of job growth expectations. The relationship between availability of arms-length money and the innovativeness of the entrepreneurial activities appears however to be negative.
    Keywords: Venturecapital
    JEL: G24
    Date: 2016–11–21
  2. By: Liu, Rebecca; Rammer, Christian
    Abstract: This paper studies the effects of different public innovation funding programs on the innovation output and export performance of small and medium-sized enterprises (SMEs). We evaluate the effectiveness of regional, national and European funding programs implemented in Germany for both product and process innovations. Our panel study shows that public financial support contributes to higher innovation outputs, which in turn translates into higher export success in later years. This relation however only holds for certain sources of public funding and certain types of innovation output. Innovation support from the European Union and national programs for cutting-edge technology that results in higher sales with new-to-market products shows a significant positive effect on SMEs' export performance. For funding programs run by regional authorities, we find similar though relatively smaller impacts on both innovation output and exporting. Bottom-up funding at the national level-which allows firms to freely define the design of the funded innovation projects in terms of content and cooperation-increases sales with innovations that are only new to the firm, but these innovations have limited impacts on export success. Our results suggest that public innovation programs should challenge SMEs to go for more ambitious innovations in order to strengthen their competitiveness.
    Keywords: Public Funding,SMEs,Innovation Outputs,Exporting,Panel Study,Matching
    JEL: O32 O38 F14
    Date: 2016
  3. By: Chhy, Niroth
    Abstract: This paper attempts to explain the recent substantial increase in income inequality, which is largely due to the explosion of the very top labor incomes (i.e., the rise of the working rich), in the rich countries especially the United States. This paper points to technological progress and (less importantly to) capital accumulation as the main cause of the (universal) increase in income inequality starting from the late 1970s; also, this paper points to the differences in the nature of demand as the main cause of the large cross-country differences. This paper will build a simple general equilibrium model to formalize this idea and to provide some new insights into the analysis of income inequality.
    Keywords: Income inequality, trickle-down, entrepreneurs, supermanagers
    JEL: D31 D63
    Date: 2016–12–02
  4. By: Pinheiro, Roberto (Federal Reserve Bank of Cleveland)
    Abstract: I present a model of the venture capital (VC) and public markets in which VCs suffer from capacity constraints, due to the shortage of skilled VC managers. Consequently, VC firms can only handle a limited number of new projects at once, having to take ongoing projects public in order to take advantage of new opportunities. This framework is able to match key features presented by the VC and initial public offer (IPO) empirical literatures: (1) VC-backed firms are younger, smaller, and less profitable at the IPO than their non-VC backed counterparts; (2) VC-backed IPOs are more underpriced than non-VC backed ones; (3) There is a positive relationship between underpricing and VC fundraising; (4) Small and young VC firms usually take portfolio firms public earlier than their large and mature counterparts; and (5) In hot IPO markets, VCs are more likely to take public both very young and small firms as well as mature and large firms, compared to cold markets. Differently, non-VC backed firms are usually smaller and younger in hot markets than in cold ones.
    Keywords: IP; Venture Capital; Underpricing; Capacity Constraints;
    JEL: G11 G24
    Date: 2016–11–14
  5. By: Lambrecht, Evelien; Kühne, Bianka; Gellynck, Xavier
    Abstract: Innovation has been identified as a critical asset for SMEs to survive (Hitt et al., 2001; Lee et al., 2001). However, SMEs that need to improve their innovation process often lack the essential resources to innovate when relying solely on their in-house activities (Batterink et al., 2010). A large body of literature therefore highlights the role of external partnerships, or networks (Lazzarini et al., 2001; Pittaway et al., 2004; Sawhney et al., 2006). Despite the increasing number of studies focusing on the relationship between networking and innovation, there is still considerable ambiguity and debate within literature regarding appropriate network characteristics for successful innovations (Nieto and Santamaria, 2007; Pittaway et al., 2004). Furthermore, the existing studies focus mostly on high tech companies (Edquist 2006, van Galen 2008). The objective of our study is to gain insight into the network characteristics critical for successful innovations within the agricultural sector in Flanders. The study is based on interviews and focus group discussions with farmers and network coordinators active in Flanders. In total, 109 respondents were consulted. This research is based on four innovation characteristics which seem crucial for each innovation (Kanter, 1988). For each of these innovation characteristics, we investigated how networks could contribute, via their network characteristics. The results showed that networks serves as a net for knowledge about e.g. new technologies, or changing legislation in order that farmers are faster aware of developments. When farmers have multiple contacts, they have a higher chance to discover new things. Thereby, it is important that knowledge providers are part of the network and connected with the different actors, and not only provide their information to the farmers as an external actor. Also the face-to-face communication within a network is an essential issue. Furthermore, coalition can play a crucial role for some innovations, as a lot of farmers are not able to implement their idea because for example the retailer or research institute is not supportive or interested. If the farmers set up a self-initiated coalition, it can be easier to initiate the innovative idea. Fourth, it is important that individual actors from the agricultural system revisit their actual role. Successful innovation processes often originate in situations where creativity is not limited within one unit. Based on the findings, recommendations for farmers as well as network coordinators are formulated to increase the innovation capacity.
    Keywords: Innovation, Networks, Success factors, Agriculture, Flanders, Agribusiness,
    Date: 2015–05
  6. By: Michele Cincera (The International Centre for Innovation, Technology and Education Studies (iCite), Solvay Brussels School of Economics and Management, University of Brussels, Belgium); Anabela Santos (The International Centre for Innovation, Technology and Education Studies (iCite), Solvay Brussels School of Economics and Management, University of Brussels, Belgium)
    Abstract: Promoting Research and Development (R&D) activities is the main goal of the EU 2020 Strategy in order to achieve an R&D spending at least 3% of GDP. The Innovation Union is one of the seven flagship initiatives of the EU 2020 Strategy, which has the aims: to improve access to finance for R&D; to get innovative ideas to market; to ensure growth and jobs (European Commission, 2014b). The aim of the present paper is to identify and explain the main mechanisms related to four commitments of Innovation Union: i) Commitment 10 (Put in place EU level financial instruments to attract private finance); ii) Commitment 11 (Ensure cross-border operation of venture capital funds); iii) Commitment 12 (Strengthen cross-border matching of innovative firms with Investors); iv) Commitment 13 (Review State Aid Framework for Research, Development and Innovation). To this purpose, a review of both theoretical and empirical literatures about ’Innovation, Access to Finance and SMEs’ based on more than 80 scientific and other articles and analyses is presented. The paper provides an analysis of the main alternative financial instruments to bank loans, namely Risk-Sharing Facility Financing, Venture Capital, Business Angels and public subsidies. We found some evidence in the literature that Venture Capital could have a limited impact in enhancing innovation in the long-term and that some public support schemes could be more effective than other, depending on the firm’s maturity state.
    Keywords: EU 2020 strategy, innovation, finance, Innovation Union
  7. By: Guzal-Dec, Danuta; Zwolińska-Ligaj, Magdalena
    Abstract: The aim of the study is to describe the role of the LEADER program in creating entrepreneurship and employment in the Lublin voivodship. In order to achieve this, the following hypothesis was used: local action groups (LAG) operating in rural areas of the Lublin Region contribute to the creation of social activity, but create insufficient jobs and entrepreneurial incentives. The study used document analysis and diagnostic surveys with an interview questionnaire addressed to representatives of the offices of all 22 LAGs from the studied region. The results revealed the small scale of projects aimed at the development of non-agricultural functions in rural areas, and an insufficient involvement in the implementation of projects in the bio-economy sector, which is the key smart specialization of the region. We conclude that the examined LAGs’ overall role in creating jobs should be assessed as average, but that they create an important local platform focused on stimulating social activity.
    Keywords: LAGs, LDSs, social activity, multifunctional development, Community/Rural/Urban Development, Political Economy, Public Economics,
    Date: 2016
  8. By: Gerald Braunberger (Frankfurter Allgemeine Zeitung)
    Abstract: Since the outbreak of the Great Financial Crisis in 2007, „Macrofinance“ has evolved as an exciting field for economists. The idea of marrying macroeconomics and financial economics has a long tradition, however, which should not remain buried in almost forgotten books. A couple of seemingly new ideas can be traced back to the work of the eminent economist Joseph A. Schumpeter. His dynamic model of the business cycle is built upon a close interaction between entrepreneurs and banks. Fire-sales of assets, liquidity spirals and feedback loops can turn a mild recession into a devastating depression. Schumpeter’s analysis of the role of monetary policy bears a striking resemblance to contemporary discussions.
    JEL: B10 B13 B20 B22 E30 E44
    Date: 2016–12
  9. By: Cavicchi, Alessio; Rinaldi, Chiara; Santini, Cristina
    Abstract: This work examines the relationship between experiential learning and entrepreneurial education in the Agribusiness field. After having outlined the challenges that higher education has to meet business and students’ needs, the work outlines emerging insights from research that contributse to underline how effective could be an academic approach focused on experience. An overview of the latest development in the methodological field is presented; the paper, finally introduces the measures and initiative undertaken at the European level for promoting entrepreneurial education and initiatives by implementing experiential learning methods.
    Keywords: Agribusiness,
    Date: 2015–05
  10. By: Faiña Medín, J. Andres; Losada-Lopez, Chema; Montes-Solla, Paulino
    Abstract: This essay aims to clarify the puzzle of new principles and techniques in the field of business management of innovation. These new principles and techniques were born in a widely-connected world with an increasing presence of startups and innovative companies in order to meet pervasive market uncertainty and facilitate implementation of “new-to-market” innovations. The focus is placed on the implications for competitive strategy and business management of innovation. Instead of drawing on Schumpeterian concepts, we use the modern notion of “disruptive” innovations (those upsetting the rules of the game and old structures in a business or industry), as well as the principles and techniques recently developed to approach the uncertainties and costs of innovations: customer development and lean startup. We compare two paradigmatic styles of innovation: the startups’ stereotype (the American style) and that of “innovation transfer” (German-European style). Then, we discuss the main orientations of innovation policy with regard to the new industrial initiatives (Industry 4.0 in Germany and Europe and advanced manufacturing in USA) and their counterpoint of startups' innovating creativity across a connected world at the edge of an information revolution.
    Keywords: Innovación, Emprendedurismo, Nueva Gestión Empresarial
    JEL: M13 M15 O31 O32 O38 O39
    Date: 2016–10–27
  11. By: Graziela Ferrero Zucoloto; Mauro Oddo Nogueira
    Abstract: Este trabalho analisa o perfil inovativo das empresas industriais brasileiras segundo seu porte. Os dados utilizados foram obtidos a partir da Pesquisa de Inovação Tecnológica (Pintec) de 2011, publicada pelo Instituto Brasileiro de Geografia e Estatística (IBGE). As empresas foram agregadas, de acordo com seu porte, em três grupos: micro e pequenas (entre 10 e 99 funcionários), médias (de 100 a 499 empregados) e grandes (500 ou mais empregados). Foram analisadas não somente as taxas de inovação desses grupos mas também o grau de inovatividade, as diferenças nas atividades inovativas empregadas, o grau de cooperação e o uso de incentivos públicos, entre outros. Adicionalmente, o trabalho realiza uma análise setorial das empresas, segundo os portes estabelecidos. Entre os principais resultados, concluiu-se que, apesar de apresentarem taxas de inovação superiores às das pequenas, os esforços inovativos das grandes firmas são, proporcionalmente, mais elevados, com ênfase na aquisição de máquinas e equipamentos (M&E), atividade associada à modernização do processo produtivo. Ainda, as empresas de pequeno porte são as principais responsáveis pela introdução de novos produtos no mercado nacional e mundial, representando cerca de três quartos do total. Em relação ao esforço em pesquisa e desenvolvimento (P&D), nos setores de baixa tecnologia, a distância das micro e pequenas empresas (MPEs) para as grandes é expressiva, enquanto nas indústrias de maior intensidade tecnológica, como a de farmoquímica e farmacêutica e a de informática e eletrônicos, as empresas de menor porte apresentam esforço tecnológico superior ao das grandes empresas. This paper analyzes the innovative performance of Brazilian industrial companies according to their size. We obtained the data from the Innovation Survey 2011, published by the Brazilian Institute of Geography and Statistics (IBGE). We grouped the companies according to their size: micro and small (between 10 and 99 employees), medium (100-499 employees) and large (500 or more employees). The paper not only analyzed the innovation rates of such groups, but the degree of innovativeness, differences in innovative activities, the degree of cooperation, use of public incentives, among others. In addition, the work carries out a sectoral analysis of the companies, according to the established sizes. Among the main results, it concluded that despite the large firms present innovative rates higher than small ones, innovative efforts of these are proportionally higher, with emphasis on the acquisition of machine, which is associated with the modernization of the production process. Still, small businesses are the main responsible for the introduction of new products in the domestic and world market, accounting for about ¾ full. Regarding the R&D efforts in low-tech sectors, the distance of SMEs to large firms is significant, while in the more technology-intensive industries, such as pharmaceutical, information technology and electronics, the smaller companies have technological effort higher than that of large companies.
    Date: 2016–11
  12. By: Simonetta Cotterli
    Abstract: This study aims to review and evaluate several policies enacted in the financial field to alleviate the negative consequences of the economic crisis on families and micro-businesses. Two different, yet complementary aspects of the effects of the crisis have been examined: the increased difficulty in gaining access to credit and the increased problems in meeting debt repayment obligations. Firstly the recent regulations governing micro-credit - enacted to facilitate access to credit for families and micro-businesses (the latter in light of the increasing need for self-sufficient entrepreneurial projects, as a response to increased unemployment in the job market) - are evaluated. This is followed by an examination of the efficacy of the law relating to over-indebtedness of families and micro-businesses, with particular focus on the concept of creditor-blame. This study ends with a question: could an interpretation of the new rules governing responsible credit to consumers constitute a legal right to such credit?
    Keywords: microcredit, overindebtness, creditor blame, responsible credit
    JEL: G21 G28 I38 K35 K36
    Date: 2016–12
  13. By: Cécile Fonrouge (Université du Québec à Trois-Rivières (UQTR))
    Abstract: Crowdfunding is an emerging form of entrepreneurial finance. Financial flows from migrants and their descendants to their homeland are important. Do crowdfunding platforms disrupt this Diaspora financial flow? Our aim is to contrast and compare the sociology of immigration, Diaspora literature and entrepreneurial finance. We have interviewed all the French Diaspora Crowdfunding startups. We highlighted Diaspora motivation typologies and the evolution of these motivations since the beginning of Crowdfunding. By studying this new literature and interviewing key “Fintechs” entrepreneurs of French platforms, we propose a unique description: Diasporas motivations that are applied to Diaspora and trends on Diaspora investment evolution for this new digital industry. The main results are about the equilibrium between emotional and rational motivations for the new generation of migration, the competencies that Diaspora gives back to the country of their origin and the modification of the hierarchy of financing sources due to the possibility to raise money online.
    Keywords: crowdfunding, diaspora
    Date: 2016–11–01

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