nep-ent New Economics Papers
on Entrepreneurship
Issue of 2017‒01‒15
twelve papers chosen by
Marcus Dejardin
Université de Namur

  1. Saving and Wealth Inequality By De Nardi, Mariacristina; Fella, Giulio
  2. How do entrepreneurial bosses influence their employees' future entrepreneurship choices? By Rocha, Vera; van Praag, Mirjam
  3. The role of firms? location on persistency of various types of innovation By Charlie Karlsson; Sam Tavassoli
  4. Persistent high-growth firms in China's manufacturing By Daniele Moschella; Federico Tamagni; Xiaodan Yu
  5. Entrepreneurial Activities and Institutional Environment in China By Luo, Bei; Chong, Terence Tai Leung
  6. How Destructive is Innovation? By Daniel Garcia-Macia; Chang-Tai Hsieh; Peter J. Klenow
  7. Small and Medium Firms, Aggregate Productivity and the Role of Dependencies By Fornaro, Paolo; Luomaranta, Henri
  8. Australian SME Micro-Offshoring Opportunities in the Philippines: An Expanding Niche Market? By Ross, Peter K.
  9. Spanish Public Policies towards the Promotion of Cloud Computing and Digital Services for SMEs By Serrano Calle, Silvia; Pérez Martínez, Jorge; Frías Barroso, Zoraida
  10. Who Creates Jobs? Econometric Modeling and Evidence for Austrian Firm Level Data By Huber, Peter; Oberhofer, Harald; Pfaffermayr, Michael
  11. The impact of broadband and other infrastructure on the location of new business establishments By McCoy, Daire; Lyons, Sean; Morgenroth, Edgar; Palcic, Donal; Allen, Leonie
  12. Distinguishing Constraints on Financial Inclusion and Their Impact on GDP and Inequality By Dabla-Norris, Era; Ji, Yan; Townsend, Robert M; Unsal, Derya Filiz

  1. By: De Nardi, Mariacristina; Fella, Giulio
    Abstract: Why are some people rich while others are poor? To what extent can governments affect inequality? Which instruments should they use? Answering these questions requires understanding why people save. Dynamic quantitative models of wealth inequality can help us understand and quantify the determinants of the outcomes that we observe in the data and to evaluate the consequences of policy reform. This paper surveys the savings mechanisms generated by the transmission of bequests and human capital, by preference heterogeneity, by rates of returns heterogeneity, by entrepreneurship, by richer earnings processes, and by medical expenses. It concludes that the transmission of bequests and human capital, entrepreneurship, and medical expense risk are crucial determinants of savings and wealth inequality.
    Keywords: Wealth; Wealth Inequality
    Date: 2017–01
  2. By: Rocha, Vera; van Praag, Mirjam
    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; female leadership; gender gaps; role models
    JEL: J16 J24 L26 M12 M13
    Date: 2016–12
  3. By: Charlie Karlsson; Sam Tavassoli
    Abstract: This paper analyzes the role of regional characteristics on innovation persistency among firms. Using five waves of the Community Innovation Survey in Sweden, we have traced the innovative behavior of firms over a ten-year period, i.e. between 2002 and 2012. On the one hand, we distinguish between four types of innovations: process, product, marketing, and organizational innovations. On the other hand, we considered various regional characteristics including knowledge stock, market thickness, and extent of knowledge spillovers. Using a dynamic Probit model, we found that, in general, those firms located in the regions with higher stock of knowledge, thicker market, and higher extent of knowledge spillovers exhibit higher probability of being a persistent innovators. Such higher persistency is mostly pronounced for product innovators.
    Keywords: location; persistence; innovation; product innovations; process innovations; market innovations; organizational innovations; firms; Community Inno¬vation Survey
    JEL: D22 L20 O31 O32
    Date: 2016–12
  4. By: Daniele Moschella; Federico Tamagni; Xiaodan Yu
    Abstract: This article investigates the characteristics of high-growth (HG) firms in Chinese manufacturing, and further explores the effects of firm characteristics on persistence of high-growth. We employ a multidimensional definition of HG firms that simultaneously accounts for growth of sales and employment. Exploiting a representative panel covering the period of the Chinaùs miracle, we find that HG firms outperform other firms, showing higher productivity, higher profitability, larger investment intensity, higher sales from product innovation, lower interest expenses and lower leverage. HG firms are also relatively young, larger in size, more often exporters and more concentrated in non-State-controlled companies. However, regression analysis suggests that none of the indicators of structural characteristics and performance considered above displays any statistical association with the ability to persistently replicate high-growth over time. The results speak against the long-run effectiveness of policies supporting the creation and backing of high-growth firms.
    Keywords: Entrepreneurship, Firm growth, High-growth firms, Persistent high-growth firms
    Date: 2017–09–01
  5. By: Luo, Bei; Chong, Terence Tai Leung
    Abstract: This paper aims to examine the relationship between the quality of an institutional environment and the characteristics of entrepreneurial activities within the context of China. An event study was conducted to investigate the impacts of the announcement of the Forbes China Rich List on prices of the shares associated with entrepreneurs on the list. This paper concludes that the quality of an institutional environment is greatly negatively related to unproductive entrepreneurial activities.
    Keywords: Forbes; Entrepreneurial activities; Institutional environment.
    JEL: G3 L26
    Date: 2016–10–05
  6. By: Daniel Garcia-Macia; Chang-Tai Hsieh; Peter J. Klenow
    Abstract: Entrants and incumbents can create new products and displace the products of competitors. Incumbents can also improve their existing products. How much of aggregate productivity growth occurs through each of these channels? Using data from the U.S. Longitudinal Business Database on all non-farm private businesses from 1976–1986 and 2003–2013, we arrive at three main conclusions: First, most growth appears to come from incumbents. We infer this from the modest employment share of entering firms (defined as those less than 5 years old). Second, most growth seems to occur through improvements of existing varieties rather than creation of brand new varieties. Third, own-product improvements by incumbents appear to be more important than creative destruction. We infer this because the distribution of job creation and destruction has thinner tails than implied by a model with a dominant role for creative destruction.
    Date: 2017–01
  7. By: Fornaro, Paolo; Luomaranta, Henri
    Abstract: We analyze the productivity contribution of firms in the Finnish business sector, using data from 2002 until 2014, and assess the role of the dependency status (i.e. whether they are owned, at least partially, by a mother company) of small and medium enterprises in the manufacturing and services industries, together with the whole private business sector. We find that dependent firms have provided a larger contribution to aggregate productivity growth, compared to the independent ones, regardless of the industry, size class and age groups considered. This result is mainly driven by the better reallocation of labour among dependent companies and by the positive productivity contribution of dependent entrants. Inside the dependent category, the foreign controlled firms contribute more to the aggregate productivity than the other dependent companies due to even more efficient reallocation of labour inputs. Moreover, we find that dependent firms tend to reach their peak productivity earlier than their independent counterparts. Finally, we examine the subgroup of high growing enterprises and find that the positive effect of dependencies on the productivity contribution holds also for this class of firms.
    Keywords: Productivity, decomposition, dependencies, small and medium firms
    JEL: O12 O14 O47
    Date: 2017–01–10
  8. By: Ross, Peter K.
    Abstract: This paper examines how Filipino-based business process outsourcing centers have been developing services, including offshore "staff leasing" and "co-managed services" arrangements, that are helping to overcome traditional small and medium enterprise (SME) resource constraints. These "micro-offshoring" models greatly reduce transaction costs for Australian SMEs seeking to outsource/offshore former in-house work and appear to be supporting a rapid increase in the number of Australian-based SMEs offshoring professional services to the Philippines. Micro-offshoring further provides job opportunities for Filipino tertiary graduates and entrepreneurial opportunities for local Filipino SMEs looking to enter and tap this market. This research also suggests that it may encourage Australian SMEs to shift to more long-term offshoring models over time, such as local incorporation, and therefore foster foreign direct investment.
    Keywords: Philippines, micro-offshoring, outsourcing, BPO, Australian SMEs, staff leasing, co-managed services
    Date: 2016
  9. By: Serrano Calle, Silvia; Pérez Martínez, Jorge; Frías Barroso, Zoraida
    Abstract: The paper focuses on the first public programs in Spain to support the introduction of cloud computing services for small and medium-sized enterprises (SMEs) and micro-SMEs, and facilitating the digital transformation of SMEs, stimulating e-commerce and encouraging competitiveness. The paper analyses how the programs that the Spanish Government launched in 2015 transcend technology and impact over the digital ecosystem, with influences over supply and demand. The paper identifies the main drivers of SMEs providing cloud services and ICT solutions and other key elements that help to understand the eligible portfolio of cloud solutions and authorised providers that will contribute to the digital transformation of Spanish SMEs and micro-SMEs.
    Keywords: Digital Economy,Cloud Computing,SME,Public Policy
    JEL: H76 L88 O14
    Date: 2016
  10. By: Huber, Peter; Oberhofer, Harald; Pfaffermayr, Michael
    Abstract: This paper offers an empirical analysis of net job creation patterns at the firm level for the Austrian economy between 1993 and 2013 focusing on the impact of firm size and age. We propose a new estimation strategy based on a two-part model. This allows to identify the structural parameters of interest and to decompose behavioral differences between exiting and surviving firms. Our findings suggest that conditional on survival, young Austrian firms experience the largest net job creation rates. Differences in firm size are not able to explain variation in net job creation rates among the group of continuing enterprises. Job destruction induced by market exit, however, is largest among the young and small firms with this effect being even more pronounced during the times of the Great Recession. In order to formulate sensible policy recommendations, a separate treatment of continuing versus exiting firms as proposed by the new two-part model estimation approach seems crucial.(authors' abstract)
    Keywords: Net job creation; firm size; firm age; one-part versus two-part models; Austrian economy; Great Recession
    Date: 2015–09
  11. By: McCoy, Daire; Lyons, Sean; Morgenroth, Edgar; Palcic, Donal; Allen, Leonie
    Abstract: Can improving local infrastructure in underdeveloped areas encourage entrepreneurial activity? If so, which infrastructures and by how much? This paper analyses the impact on new business establishments of broadband infrastructure, motorways, airports and railways and a range of other local characteristics such as availability of human capital and access to third level educational facilities. The sample period spans the introduction and recent history of broadband in Ireland, and during this period 86% of the current motorway network was constructed. Human capital, measured as the percentage of the population with a third level qualification and proximity to a third level institution prove to be important determinants of new firm establishments. Availability of broadband infrastructure is significant, but its effects may be mediated by the presence of sufficiently high educational attainment in the area. Transport infrastructure access is significant for some sectors. For all sectoral groupings examined, firm establishments seem to favour a more diverse local sectoral mix rather than a concentrated one.
    Keywords: New business establishments,ICT,Infrastructure,Count panel regression model
    JEL: R3 R11 D22
    Date: 2016
  12. By: Dabla-Norris, Era; Ji, Yan; Townsend, Robert M; Unsal, Derya Filiz
    Abstract: We develop a micro-founded general equilibrium model with heterogeneous agents and three dimensions of financial inclusion: access (determined by a participation cost), depth (determined by a borrowing constraint), and intermediation efficiency (determined by a monitoring cost). We find that the economic implications of financial inclusion policies vary with the source of frictions. In partial equilibrium, we show analytically that relaxing each of these constraints separately increases GDP. However, when constraints are relaxed jointly, the impacts on the intensive margin (increasing output per entrepreneur with access to credit) are amplified, while the impacts on the extensive margin (promoting credit access) are dampened. In general equilibrium, we discipline the model with firm-level data from six countries and quantitatively evaluate the policy impacts. Multiple frictions are necessary to match the country-specific variables, e.g., credit access ratio, interest rate spread, and non-performing loans. A TFP decomposition finds that most of the productivity gains are captured by a between-regime shifting effect, whereby talented entrepreneurs obtain credit and expand their businesses. In terms of inequality and welfare, reducing the participation cost benefits talented-but-poor agents the most, while relaxing the borrowing constraint or intermediation cost is more beneficial for talented-and-wealthy agents.
    JEL: C54 E23 E44 E69 O11 O16 O57
    Date: 2017–01

This nep-ent issue is ©2017 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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