nep-ent New Economics Papers
on Entrepreneurship
Issue of 2017‒01‒01
sixteen papers chosen by
Marcus Dejardin
Université de Namur

  1. How do Entrepreneurial Bosses influence their Employees' Future Entrepreneurship Choices? By Vera Rocha; Mirjam van Praag
  2. Entrepreneurship and Income Inequality By Halvarsson, Daniel; Korpi, Martin; Wennberg, Karl
  3. Recruiting for Small Business Growth: Micro-level Evidence By Gidehag, Anton; Lodefalk, Magnus
  4. An Evaluation of German Active Labor Market Policies and its Entrepreneurship Promotion By Moritz Zöllner; Michael Fritsch; Michael Wyrwich
  5. The effect of personal financing disruptions on entrepreneurship By Hanspal, Tobin
  6. The growth and human capital structure of new firms over the business cycle By Brixy, Udo; Murmann, Martin
  7. Digitalization and Collective Value Creation By Isaksson, Darja; Wennberg, Karl
  8. Individual and structural influences on the entrepreneurial activities of academics By Bijedić, Teita; Maaß, Frank; Schröder, Christian; Werner, Arndt
  9. Knowledge Creates Markets: The Influence of Entrepreneurial Support and Patent Rights on Academic Entrepreneurship By Dirk Czarnitzk; Thorsten Doherr; Paula Schliessler; Katrin Hussinger; Andrew Toole
  10. Do You Dare? The Effect of Economic Conditions on Entrepreneurship among College Graduates By Hendrik Beiler
  11. Public subsidies for SME research and development: Empirical evaluation of collaborative versus individual place-based programs By Andrea Bellucci; Luca Pennacchio; Alberto Zazzaro
  12. Macroeconomic costs of gender gaps in a model with household production and entrepreneurship By David Cuberes; Marc Teignier
  13. MODELLING THE CREDIT RISK OF THE HUNGARIAN SME SECTOR By Ádám Banai; Gyöngyi Körmendi; Péter Lang; Nikolett Vágó
  14. The Venture Capital Divide: Germany and the United States in the Post-War Era By Caroline Fohlin
  15. Poverty graduation with cash transfers: a randomized evaluation By Vilas J. Gobin; Paulo Santos; Russell Toth
  16. Developments in new entrepreneurial activity in Finland By Kotiranta, Annu; Pajarinen, Mika; Rouvinen, Petri

  1. By: Vera Rocha (Copenhagen Business School, Denmark); Mirjam van Praag (Copenhagen Business School, Faculty of Economics and Business, University of Amsterdam and Tinbergen Institute, The Netherlands)
    Abstract: We adopt a process-based approach to investigate the influence of entrepreneurial bosses on the two main decisions of employees towards becoming entrepreneurs: exit from the current firm and entry into entrepreneurship. In other words, we study the push and pull mechanisms possibly underlying the influence of entrepreneurial bosses. We do so by employing an identification strategy based on comparisons of same-gender matches of bosses and employees, using rich register data for Denmark. We show that same-gender entrepreneurial bosses have a great impact on employees’ future entrepreneurship choices, especially among women. We do not find any evidence that female bosses push female employees out of the workplace, by creating a discriminatory environment that forces them to search for alternative career paths. Instead, our analysis finds consistent support for pull mechanisms, with role modeling being the main explanation for the positive influence of female entrepreneurial bosses on female employees’ transition into entrepreneurship. We show that the female boss effect is greater than other social interactions identified in prior research. We conclude that entrepreneurial bosses can be role models and female entrepreneurial bosses may thus act as a lever to reducing gender gaps in entrepreneurship rates.
    Keywords: Entrepreneurship; role models; gender gaps; female leadership
    JEL: J19 J24 L26 M12 M13
    Date: 2016–12–16
  2. By: Halvarsson, Daniel (The Ratio Institute); Korpi, Martin (The Ratio Institute); Wennberg, Karl (The Ratio Institute and the Department of Management and Engineering (IEI) and Institute of Analytical Sociology (IAS) Norrköping)
    Abstract: Entrepreneurship research highlights individual entrepreneurship as a simultaneous source of enhanced income mobility for some but a potential source of poverty for others. Research on inequality has furthered new types of models to decompose and problematize various sources of income inequality in modern economies, but attention to entrepreneurship as an increasingly prevalent occupational choice in these models remains scant. This paper seeks to bridge these two literatures by applying regression-based income decomposition among entrepreneurs and paid workers, distinguishing between self-employed (SE) and incorporated self-employed (ISE) individuals in Sweden. We find that the proportion of self-employed in the workforce significantly increases income dispersion by way of widening the bottom end of the distribution, whereas the proportion of incorporated self-employed contributes only marginally to income dispersion at the top end of the distribution.
    Keywords: entrepreneurship; income decomposition
    JEL: J24 J31 L26 O15
    Date: 2016–12–15
  3. By: Gidehag, Anton (Örebro University and HUI Research); Lodefalk, Magnus (The Ratio Institute)
    Abstract: We examine the link between new employees in leading positions and subsequent productivity in small- and medium-sized (SME) enterprises. Managers and professionals are likely to possess important tacit knowledge. They are also in a position to influence the employing firm. Exploiting rich and comprehensive panel data for Sweden in the 2001-2010 period and employing semi-parametric and quasi-experimental estimation techniques, we find that newly recruited leading personnel have a positive and statistically significant impact on the productivity of the hiring SME. Interestingly, our results suggest that professionals with experience from international firms and enterprise groups contribute the most to total factor productivity. Overall, the findings suggest the importance of mobility of leading personnel for productivity-enhancing knowledge spillovers to SMEs.
    Keywords: recruitment; knowledge spillovers; firm growth; productivity; SME
    JEL: D22 D24 D83 J24 J62
    Date: 2016–12–15
  4. By: Moritz Zöllner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Michael Wyrwich (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: This paper reviews the results of studies that investigate the most important active labour market policy (ALMP) measures in Germany. A particular focus is on programs devoted to foster entrepreneurship which can make important contributions to a country's growth and social welfare. The available evidence suggests that most ALMP measures increase labour market prospects of the participants. Evaluations of the entrepreneurship promotion activities show high success rates as well as high cost efficiency. The bulk share of participants of entrepreneurship measures is still self-employed after several years and nearly one third of these businesses had at least one employee. We mention problems regarding the evaluation of previous programs and highlight future challenges of German ALMP.
    Keywords: Active labour market policy, evaluations, effectiveness, entrepreneurship
    JEL: J08 J64 J68 L26
    Date: 2016–12–14
  5. By: Hanspal, Tobin
    Abstract: I show that disruptions to personal sources of financing, aside from commercial lending supply shocks, impair the survival and growth of small businesses. Entrepreneurs holding deposit accounts at retail banking institutions that defaulted following the financial crisis reduce personal borrowing and are consequently more likely to exit their firm. Exposure to the corresponding investment losses from delisted publicly traded bank stocks strongly reduces the rate of firm survival, particularly for early-stage ventures. At the intensive margin, owners who remain in business reduce employees after personal wealth losses. My results suggest that personal finance is an important component of firm financing.
    Keywords: Entrepreneurship,Small business,Personal finance,Financial crisis,Bank defaults
    JEL: L26 D14 G01 G11 G21 G33
    Date: 2016
  6. By: Brixy, Udo (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Murmann, Martin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Recent research suggests that employment in young firms is more negatively impacted during economic downturns than employment in incumbent firms. This questions the effectiveness of policies that promote entrepreneurship to fight crises. We complement prior research that is mostly based on aggregate data by analyzing cyclical effects at the firm level. Using new linked employer-employee data on German start-ups we show that under constant human capital of the firms' founders, employment growth in less than 11/2-yearold start-ups reacts countercyclically and employment growth in older start-ups reacts procyclically. The young start-ups realize their countercyclical growth by hiring qualified labor market entrants who might be unable to find employment in incumbent firms during crises. This mechanism is highly important in economic and management terms and has not been revealed by prior research." (Author's abstract, IAB-Doku) ((en))
    JEL: E32 J23 L26 M13 L25 L11 D22
    Date: 2016–12–19
  7. By: Isaksson, Darja (Future transparent); Wennberg, Karl (The Ratio Institute and Linköping University)
    Abstract: We discuss the spread and impact of digitalization as a disruptive technological change. We show how digitalization is intimately connected to globalization by first, being dependent on globalization for its impact, and second, enhancing the speed of globalization. Digitalization lowers barriers to funding, marketing, sales and distribution, and enables an increasing global flow of goods, services, and financial transactions. We discuss how digitalization also contributes to changing consumer habits and a blurring line between producers and consumers where the latter now have capabilities to build collective knowledge by they themselves becoming producers. Digital platforms are emerging, aggregating data and providing new business models where contact costs are approaching zero. These platforms wield strong economic power and the algorithms by which they operate also change incentives and transaction costs for producers and consumers. We sketch the patterns by which industries digitialize as being characterized by one or a few ‘platforms’ dominating a global market, but where such platforms also facilitate the emergence of more narrow niche businesses and products and allow new types of micro-multinationals to reach out to a larger global crowd and satisfy latent demand. These changes have already happened in media and music, and the principles seen in these industries can be seen as emerging in other sectors. We conclude by highlighting the potential of digitalization to enhance the value of collective goods. We particularly highlight the cases of health care and the energy, and discuss how digital technologies can contribute to collective value creation in these areas.
    Keywords: Entrepreneurship
    JEL: L26
    Date: 2016–12–22
  8. By: Bijedić, Teita; Maaß, Frank; Schröder, Christian; Werner, Arndt
    Abstract: In this paper we study how and to what extend (i) individual working conditions (e.g. peers, working atmosphere, work contract incentives, wage satisfaction), (ii) institutions (e.g. technology transfer offices, patent exploitation agencies, chair in entrepreneurship or awards for academic entrepreneurship) and (iii) network relationships simultaneously affect the likelihood of engaging in entrepreneurial activities (nascent entrepreneurship) in academia. Using unique data collected from 5.992 academic scientists in 73 German Universities Germany, we find that entrepreneurial peers and performance based monetary incentives have a strong positive effect on the entrepreneurial intentions. We show that, although there is a comprehensive support infrastructure for start-ups in German academic institutions, these services are little known amongst their staff. Finally we find that market related networks show a high correspondence with high entrepreneurial intentions, whereas networks within the own university do not have any impact. Several mentioned aspects were analyzed before, but mostly on a limited sample (e.g. only stem field), isolated personal variables (e.g. gender) or isolated environmental aspects (e.g. peer groups). Our study provides a holistic view on the impact of several university-specific structural factors on entrepreneurial intentions among academic scientists in Germany by simultaneously focusing on personal and occupational characteristics for different faculties. @Wissenschaftliches Hochschulpersonal generiert im Rahmen seiner Forschungstätigkeit Innovationen und verfügt über aktuelles Wissen, das als Basis für eine innovative Unternehmensgründung betrachtet werden kann. Bisher fehlte jedoch eine umfassende empirische Analyse, inwieweit die bestehenden institutionellen Rahmenbedingungen die Gründungsneigung von Wissenschaftlern beeinflussen. Hier setzt die vorliegende Studie an, indem sie die Wirkung personenbezogener und institutioneller Einflussfaktoren (wie Arbeitsbedingungen, Netzwerkbeziehungen und gründungsfördernde Hochschulangebote) untersucht und potenzielle institutionelle Handlungsfelder identifiziert. Die Befragung von 5.992 Wissenschaftlern an 73 deutschen Hochschulen hat gezeigt, dass insbesondere monetäre Anreize im Forschungskontext aber auch Rollenvorbilder im kollegialen Umfeld, Netzwerke - hier insbesondere außerhalb der eigenen Institution - und spezifische Infrastrukturangebote gründungsfördernd wirken.
    Keywords: Academic Entrepreneurship,Nascent Entrepreneurship,German Universities,Institutions,Working Conditions,Knowledge Transfer
    JEL: O32 M13 J24
    Date: 2016
  9. By: Dirk Czarnitzk (KU Leuven, Belgium); Thorsten Doherr (Centre for European Economic Research (ZEW), Mannheim); Paula Schliessler (Centre for European Economic Research (ZEW), Mannheim); Katrin Hussinger (CREA, Université du Luxembourg); Andrew Toole (US Patent and Trademark Office, Alexandria, USA)
    Abstract: We use an exogenous change in German Federal law to examine how entrepreneurial support and the ownership of patent rights influence academic entrepreneurship. In 2002, the German Federal Government enacted a major reform called Knowledge Creates Markets that set up new infrastructure to facilitate university-industry technology transfer and shifted the ownership of patent rights from university researchers to their universities. Based on a novel researcher-level panel database that includes a control group not affected by the policy change, we find no evidence that the new infrastructure resulted in an increase in start-up companies by university researchers. The shift in patent rights may have strengthened the relationship between patents on university-discovered inventions and university start-ups; however, it substantially decreased the volume of patents with the largest decrease taking place in faculty-firm patenting relationships.
    Keywords: Intellectual property, patents, technology transfer, policy evaluation
    JEL: O34 O38
    Date: 2016
  10. By: Hendrik Beiler
    Abstract: I estimate the effect of business cycle conditions on the decision to enter entrepreneurship after college graduation. I proxy for economic conditions at the field of study level, constructed from industry growth rates which I weight to fields of study using employees' industry - college major distribution. This enables to control for unobserved differences between graduation cohorts such as technological change or shifts in cohort composition. Using administrative survey data for Germany, I find that a one percentage point increase in employment growth in the year of graduation raises entry into entrepreneurship by about 30% in the first year after graduation. The effect halves in the second year and is close to zero in the third and fourth year after graduation. Interestingly, exit from entrepreneurship decreases slightly, which suggests that the additional entrepreneurs are fairly stable in the first years after entry. Taken together, my results imply that "lucky" graduation cohorts are persistently more likely to enter and persist in entrepreneurship than "recessionary" cohorts, at least during the first four years after graduation that I examine. My results have relevant implications for policy measures such as startup subsidies, since entrepreneurship is commonly acknowledged as a central source of job creation and economic dynamism.
    Keywords: Entrepreneurship, Business Cycles, Higher Education, Occupational Choice, Firm Entry
    JEL: L26 E32 I23 J23 J24 M13
    Date: 2016–11–01
  11. By: Andrea Bellucci (Institute for Applied Economic Research (IAW), Germany, MoFiR, Italy); Luca Pennacchio (Dipartimento di Scienze Economiche e Statistiche - Universita' degli Studi di Napoli - "Federico II"); Alberto Zazzaro (Universita' Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali, MoFiR - Ancona, Italy, CSEF, Naples, Italy)
    Abstract: This paper provides novel empirical evidence on the effectiveness of regional research and innovation policies for small and medium-sized firms (SMEs). Two subsidy programs implemented at the regional level in central Italy are investigated. One program targeted firms' individual research, while the other addressed collaborative research between firms and universities. Using a matched difference-in-differences approach our empirical analysis shows a differentiated impact of the two programs. The first was successful in stimulating additional private R&D investment and, at least partially, in improving firms. performance. The second program had weaker effects, mostly restricted to R&D expenditure and employment. Otherwise, subsidized firms show a reduction in their tangible and intangible investments, thus casting doubts on the benefits of subsidies forcing R&D collaborations.
    Keywords: Research and innovation; place-based regional subsidies; impact evaluation, small- and mediumsized firms, collaborative research programs.
    JEL: G32 H81 L52 O38 R58
    Date: 2016–12
  12. By: David Cuberes (Clark University); Marc Teignier (Universitat de Barcelona)
    Abstract: This paper examines the quantitative effects of gender gaps in entrepreneurship and workforce participation in an occupational choice model with a household sector. Gender gaps in entrepreneurship affect negatively both income and aggregate productivity, since they reduce the entrepreneurs’ average talent and female labor force participation. We estimate the gender gaps for 37 European countries and we find that gender gaps cause an average market output loss of 11.5% when they are considered constant across talent levels. The loss in total output, which also includes household production, varies between 6.4% and 8.7%, depending on the household productivity parameter.
    Keywords: Gender-specific occupational choice frictions, Entrepreneurhsip talent misallocation, Total output.
    JEL: E2 J21 O40
    Date: 2016
  13. By: Ádám Banai (Magyar Nemzeti Bank (Central Bank of Hungary)); Gyöngyi Körmendi (Magyar Nemzeti Bank (Central Bank of Hungary)); Péter Lang (Magyar Nemzeti Bank (Central Bank of Hungary)); Nikolett Vágó (Magyar Nemzeti Bank (Central Bank of Hungary))
    Abstract: In banking practice, quantifying the probability of default is one of the most important elements of the lending decision, therefore it is also vital from a financial stability perspective. The aim of our research was to model the probability of default as precisely as possible in the case of micro, small and medium-sized enterprises. By linking the data from the Central Credit Information System (KHR) and companies’ financial statements, a database was created that covers all the SMEs with loan contract, thus we were able to examine credit risk based on a uniquely large group of enterprises. In our research, we created models that enabled us to produce estimates based on certain corporate features about the probability of default of micro, small and medium-sized enterprises. Our analysis revealed that modelling these size categories separately and managing non-linear effects in the case of several variables are especially important. In addition, the impact of the macroeconomic environment on credit risk also proved to be important in the fitting of our estimates.
    Keywords: SME, credit risk, credit register, logit model, probability of default
    JEL: C25 G20 G21
    Date: 2016
  14. By: Caroline Fohlin
    Abstract: This paper analyzes and explains the disparate paths of development among venture capital organizations in the United States and Germany over the post-World War II period, contrasting the early emergence and burgeoning of the sector in the U.S. with the lagging development in Germany. The paucity of venture capital in Germany throughout the latter half of the 20th century is often seen as a result of that country's system of large, powerful universal banks and small, inactive capital markets. Lack of acceptance may additionally appear to result from cultural or social differences that make Germans suspicious or skeptical of such risk-taking and disdainful of the capitalistic drive it represents. I argue instead that a complex of political, social, and economic factors - many dating back to institutions put into place in the 19th century - explains the evolution of venture capital over the post-war era. These factors differed radically between the U.S. and Germany and produced divergent outcomes for venture capital institutions a century later. I emphasize the crucial role of the available pool of qualified, potential entrepreneurs and the incentives that either drove or hindered high-technology venturing, particularly during the middle of the twentieth century.
    Date: 2016–11
  15. By: Vilas J. Gobin; Paulo Santos; Russell Toth
    Abstract: We examine the impact of the Rural Entrepreneur Access Program (REAP), a poverty graduation program that combines multiple interventions with the aim of promoting en- trepreneurship among ultra-poor women. The program emphasizes cash transfers (rather than asset transfers) to ultra-poor women, in addition to business skills training, business mentoring and savings. Participation in each of three rounds of the program was randomly determined through a public lottery. In the short-to-medium-run we find that the program has a positive and significant impact on income, savings, asset accumulation, and food security that are similar to more traditional poverty graduation programs that rely on asset transfers.
    Keywords: Poverty graduation, Cash transfers, Entrepreneurship, Ultra-poor, Field ex- periment, Africa
    JEL: C93 D13 J24 O12 O13 Q12
    Date: 2016–11
  16. By: Kotiranta, Annu; Pajarinen, Mika; Rouvinen, Petri
    Abstract: About half of all new business activity in Finland can be categorized as being entrepreneurial. The number of this kind of new businesses has not increased dramatically during the last ten years. However, the characteristics of these businesses have changed. Nowadays, new entrepreneurs have higher education background, they have more likely work experience from a relevant field, they are more innovation-oriented, and they have higher initial growth aspirations. Their businesses are more likely to seek sales growth by utilizing international markets and by focusing more on consumer markets and less on business-to-business markets. On the other hand, maybe due to prolonged recession in the Finnish economy, the higher share of new entrepreneurial businesses is being started because there are no better opportunities to get a job. Heavy regulation and tight legislation are being seen as the most significant disincentives at the start-up phase. Growth-oriented new entrepreneurial firms see financial issues and labor market rigidities as significant restrictions for growth.
    Keywords: Entrepreneurship, growth firm, start-ups, growth-orientation, enterprise policy
    JEL: D92 L26 L53 M13
    Date: 2016–12–22

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