nep-ent New Economics Papers
on Entrepreneurship
Issue of 2017‒03‒05
fifteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Homeownership and entrepreneurship By Gaetano Lisi
  2. Entrepreneurial Experimentation: A Key Function in Entrepreneurial Systems of Innovation By Lindholm-Dahlstrand, Åsa; Andersson, Martin; Carlsson, Bo
  3. Innovation and Firm Growth over the Business Cycle By Andrin Spescha; Martin Wörter
  4. Entrepreneurship and Institutions: A Bidirectional Relationship By Elert, Niklas; Henrekson, Magnus
  5. The Allocation of Talent to Financial Trading versus Production: Welfare and Employment Effects of Trading in General Equilibrium By Arnold, Lutz Georg; Arnold, Lutz; Zelzner, Sebastian
  6. The shale revolution and entrepreneurship: an assessment of the relationship between energy sector expansion and small business entrepreneurship in US counties By Tsvetkova, Alexandra; Partridge, Mark
  7. Advance-purchase financing of projects with few buyers By Sahm, Marco
  8. A critical review of entrepreneurial ecosystems research: towards a future research agenda By Borissenko, Janna; Boschma, Ron
  9. The impact of open innovation on employee mobility and entrepreneurship By Simeth, Markus; Mohammadi, Ali
  10. Firm Entry and Exit and Aggregate Growth By Jose Asturias; Sewon Hur; Timothy J. Kehoe; Kim J. Ruhl
  11. Tax policy and entrepreneurial entry with information asymmetry and learning By Diego d'Andria
  12. Organizations, Occupations and Decentral Work: On Hybridity and Ambiguity of Own-Account Workers By Bögenhold, Dieter; Klinglmair, Andrea
  13. Global productions sharing and local entrepreneurship in developing countries: Evidence from Penang export hub, Malaysia By Prema-chandra Athukorala
  14. The Characteristics and Performance of Family Firms: Exploiting information on ownership, governance and kinship using total population data By Andersson, Fredrik; Johansson, Dan; Karlsson, Johan; Lodefalk, Magnus; Poldahl, Andreas
  15. Government and Governance of Regional Triple Helix Interactions By Danson, Michael; Todeva, Emanuela

  1. By: Gaetano Lisi (Centro di Analisi Economica CREAtività e Motivazioni)
    Abstract: Housing costs can damage labour market outcomes and increase unemployment. Also, an important and related research stream claims that higher homeownership rates are associated with fewer new businesses. Using a search-matching model, this paper investigates the relation between homeownership and entrepreneurship by distinguishing two channels through which homeownership affects the creation of enterprises and jobs. The first channel looks at the job search intensity of homeowners, while the second considers the link between the benefit of being a homeowner and the productivity of a new enterprise. The key result of this paper is that the intrinsic preference for homeownership plays a key role in the establishment of new small businesses, while in general homeownership does not encourage the development of existing enterprises.
    Keywords: entrepreneurship; homeownership; job creation; new firms; small businesses.
    JEL: J63 J64 R21 M13 L26
    Date: 2017–02
  2. By: Lindholm-Dahlstrand, Åsa (CIRCLE); Andersson, Martin (Department of Industrial Economics); Carlsson, Bo (Department of Economics)
    Abstract: There is a need for a conceptual approach that, with reference to explicit micro-level mechanisms and processes of industrial dynamics, articulates the role and function of entrepreneurial experimentation in innovation systems. This paper develops the concept of ‘entrepreneurial systems of innovation’ to address this gap in the literature. We argue that entrepreneurial experimentation comprises both ‘technical’ and ‘market’ experimentation, and that entrepreneurship must be conceptualized in terms of its function in innovation systems rather than as an outcome. At the systems level, the central function of entrepreneurial experimentation is to foster creation, selection and scaling-up of innovations. Spinoffs and acquisitions are proposed as examples of micro-mechanisms that give rise to system-wide entrepreneurial experimentation. Interaction between established organizations and new innovative entrants, through spinoffs and acquisitions, is an important characteristic of vibrant entrepreneurial systems of innovation.
    Keywords: Entrepreneurship; Experimentation; Innovation systems; New technology-based firms; Entrepreneurial systems of innovation; Scaling up; Growth
    JEL: L22 L26 O31 O33
    Date: 2017–02–23
  3. By: Andrin Spescha (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Wörter (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: This paper investigates how the macroeconomic business cycle impacts the empirical relation between firms’ innovations and their sales growth rates. Based on firm-level panel data over the time period 1995-2014, the paper finds no visible sales growth differentials between firms in booming economic environments. In the economically difficult times of recessions, by contrast, innovative firms show significantly higher sales growth rates than non-innovative firms. This finding is in line with Schumpeter’s (1939) business cycle theory, where recessions play an important role in the adaptation of the economy towards innovative products and processes. Moreover, the paper shows that small innovative firms, profiting from their higher organizational flexibility and stronger entrepreneurial commitment, are the main beneficiaries in this adaption process.
    Keywords: Innovation, Firm growth, Business cycle, Firm size
    Date: 2016–10
  4. By: Elert, Niklas (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: The interplay between entrepreneurship and institutions is crucial for economic development; however, the view that institutions determine the extent to which entrepreneurial activity is productive is only part of the story. We argue that causality is bidirectional, in that entrepreneurship is also, for better or for worse, one of the main drivers of institutional change. Through their actions, entrepreneurs have a fundamental influence on institutions, whether they abide by them, actively try to alter them, or evade them. Particular attention is given to evasive entrepreneurship, an entrepreneurial function which, until recently, has been an underappreciated and poorly understood source of innovation and institutional change. We argue that the influence of evasive entrepreneurship on the economic trajectories of societies is likely to only grow in the future.
    Keywords: Economic development; Entrepreneurship; Evasive entrepreneurship; Innovation; Institutional change; Regulation
    JEL: L50 M13 O31 P14
    Date: 2017–02–16
  5. By: Arnold, Lutz Georg; Arnold, Lutz; Zelzner, Sebastian
    Abstract: We incorporate occupational choice between finance and entrepreneurship into the Grossman-Stiglitz (1980) noisy rational expectations equilibrium model. Sophisticated agents produce output and create jobs as entrepreneurs or contribute to informational efficiency in financial markets as informed traders. Finance possibly attracts too much talent, for instance if the amount of noise in the economy is small, so that the asset price at a rational expectations equilibrium is highly informative anyway. The main beneficiaries of the allocation of talent to entrepreneurial activity are workers, whose wage and employment prospects improve when more sophisticated agents choose to become entrepreneurs.
    JEL: G14 J24 D61
    Date: 2016
  6. By: Tsvetkova, Alexandra; Partridge, Mark
    Abstract: economic growth and overall regional socioeconomic wellbeing. Entrepreneurship is particularly important for economic health of rural and remote areas. The recent shale boom brought growth to many communities creating new jobs; however, it is unclear how these effects are distributed across self-employed and wage and salary segments of local economies. The resource curse literature suggests that a booming energy sector may crowd out entrepreneurship. Given the self-reinforcing nature of local self-employment and entrepreneurship in general, such a negative impact of expanding energy sector, if present, is likely to suppress future growth prospects in regions that experience the shale revolution. Using SUR and IV approaches and a differencing strategy, this paper estimates the effects of the growth in oil and gas extraction industry on self-employment growth in metropolitan and rural US counties during the 2001-2013 period. The results suggest that after three years, oil and gas sector expansion tends to crowd out self-employment. In contrast, energy sector expansion promotes wage and salary employment growth in nonmetro counties but has crowding out effects in metro counties. Overall, we find that the expanding energy sector suppresses self-employment, especially in rural communities, in line with one mechanism of the resource curse.
    Keywords: Entrepreneurship; Oil and Gas Extraction; economic development; regional economics
    JEL: L26 O1 O13 P25
    Date: 2017–02–23
  7. By: Sahm, Marco
    Abstract: I investigate a simple model of advance-purchase contracts as a mode of financing costly projects. An entrepreneur has to meet some capital requirement in order to start production and sell the related good to a limited number of potential buyers who are privately informed about their willingness to pay. I find that advance-purchase arrangements enable more costly projects to be financed than traditional funding sources. The entrepreneur uses advance-purchase surcharges as a price discrimination device. However, the discriminatory power is limited by the problem of free-riding, which is exacerbated as the number of potential buyers increases.
    Keywords: pre-ordering,price discrimination,excludable public goods,monopolistic provision,crowdfunding,innovation and R&D
    JEL: D42 G32 H41 L12 L26 O31
    Date: 2016
  8. By: Borissenko, Janna (CIRCLE, Lund University); Boschma, Ron (CIRCLE, Lund University)
    Abstract: The Entrepreneurial Ecosystem (EE) literature has attracted much attention, especially in policy circles. However, the concept suffers from a number of shortcomings: (1) it lacks a clear analytical framework that makes explicit what is cause and what is effect in an entrepreneurial ecosystem; (2) while being a systemic concept, the EE has not yet fully exploited insights from network theory, and it is not always clear in what way the proposed elements are connected in an entrepreneurial ecosystem; (3) it remains a challenge what institutions (and at what spatial scale) impact on the structure and performance of EE; (4) studies have often focused on the EE in single regions or clusters, but lack a comparative and multi-scalar perspective; (5) the EE literature tends to provide a static framework taking a snapshot of EE without considering systematically their evolution over time. For each of these shortcomings, we make a number of suggestions to take up in future research on EE.
    Keywords: Entrepreneurial ecosystem; Entrepreneurial system; Networks; Entrepreneurship; Clusters
    JEL: L26 M21 O33
    Date: 2017–02–23
  9. By: Simeth, Markus (Universidad Carlos III de Madrid (UC3M)); Mohammadi, Ali (Royal Institute of Technology (KTH), Centre of Excellence for Science and Innovation Studies (CESIS) & Swedish House of finance)
    Abstract: Prior research shows that firms can increase their innovation performance by leveraging external sources of knowledge. However, insights related to potential drawbacks of open collaborative approaches for innovation remain scarce. In this paper, we investigate the relationship between R&D collaboration and the departure of skilled employees. Highly qualified scientists and engineers who interact with external partners in the context of R&D collaborations may increase their outside options, resulting in higher rates of employee mobility to other firms and employee entrepreneurship. We analyze our research question using data from the Swedish edition of the Community Innovation (CIS) survey combined with employer-employee register data. Our econometric analysis suggests that a stronger use of research collaborations by firms leads to an increasing number of employee departures. Moreover, we detect heterogeneity for this relationship with respect to the types of employee exits and different collaboration partners.
    Keywords: R&D employees; Open Innovation; R&D Collaboration; Employee mobility; Employee Entrepreneurship
    JEL: J62 O32
    Date: 2017–03–01
  10. By: Jose Asturias; Sewon Hur; Timothy J. Kehoe; Kim J. Ruhl
    Abstract: Using data from Chile and Korea, we find that a larger fraction of aggregate productivity growth is due to firm entry and exit during fast-growth episodes compared to slow-growth episodes. Studies of other countries confirm this empirical relationship. We develop a model of endogenous firm entry and exit based on Hopenhayn (1992). Firms enter with efficiencies drawn from a distribution whose mean grows over time. After entering, a firm’s efficiency grows with age. In the calibrated model, reducing entry costs or barriers to technology adoption generates the pattern we document in the data. Firm turnover is crucial for rapid productivity growth.
    JEL: E22 O10 O38 O47
    Date: 2017–02
  11. By: Diego d'Andria (European Commission - JRC)
    Abstract: We study a market with entrepreneurial and workers entry where both entrepreneurs' abilities and workers' qualities are private information. We develop an Agent-Based Computable model to mimic the mechanisms described in a previous analytical model (Boadway and Sato 2011). Then, we introduce the possibility that agents may learn over time about abilities and qualities of other agents, by means of Bayesian inference over informative signals. We show how such different set of assumptions affects the optimality of second-best tax and subsidy policies. While with no information it is optimal to have a subsidy to labour and a simultaneous tax on entrepreneurs to curb excessive entry, with learning a subsidy-only policy can be optimal as the detrimental effects of excessive entrepreneurial entry are (partly or totally) compensated by surplus-increasing faster learning.
    Keywords: Entrepreneurship, Taxation, Asymmetric Information, Learning, Adverse Selection, Agent-Based Computational Model
    Date: 2017–02
  12. By: Bögenhold, Dieter; Klinglmair, Andrea
    Abstract: Conventional perceptions of the labor force say that occupational dichotomy includes just the majority of wage or salary dependent and the minority of entrepreneurs. This notion is over-simplified and not adequate to grasp the dynamic and multidimensional system of social and economic stratification and mobility. Our study dealt with one-person-enterprises, which are the vast majority of all business owners in Europe (Burke 2015). Nearly 30 percent of our sample in Austria proved to have either more than one source of income from self-employment or they were hybrids combining income from self-employment and dependent work. It shows that these circumstances disturb the clear perception of society as based upon two major categories, it multiplies theoretical challenges.
    Keywords: Own-Account Work, Hybridity, Ambiguity
    JEL: A14 M13 M29
    Date: 2016
  13. By: Prema-chandra Athukorala
    Abstract: This papers examines opportunities and policy options for developing countries to promote engagement of local firms in global production networks. The paper begins with a stage-setting overview of the ongoing process of global production sharing and the emerging opportunities local firm’s engagement. It then undertakes an illustrative case study of the export hub in the state of Penang in Malaysia. Forging operational links between multinational enterprises (MNEs), which set up assembly plants in Penang, and local firms was an integral part of the export-led development strategy of the state. This policy emphasis was instrumental in fostering a domestic supplier network around the operations of the MNE subsidiaries. A number of local firms, which emerged de novo through production sharing have become global players in their own right, with production bases in a number of other countries.
    Keywords: globalisation, trade policy, multinational enterprises, global production networks
    JEL: F21 F23 O24 O53
    Date: 2017
  14. By: Andersson, Fredrik (Statistics Sweden); Johansson, Dan (Örebro University School of Business); Karlsson, Johan (Örebro University School of Business); Lodefalk, Magnus (Örebro University School of Business); Poldahl, Andreas (Statistics Sweden)
    Abstract: Family firms are often considered characteristically different from non-family firms, and the economic implications of these differences have generated significant academic debate. However, our understanding of family firms suffers from an inability to identify them in total population data, as this requires information on owners, their kinship and involvement in firm governance, which is rarely available. We present a method for identifying domiciled family firms using register data that offers greater accuracy than previous methods. We then apply it to data from Statistics Sweden concerning firm ownership, governance and kinship over the years 2004-2010. Next, we use Swedish data to estimate these firms’ economic contribution to total employment and gross domestic product (GDP) and compare them to private domiciled non-family firms in terms of their characteristics and economic performance. We find that the family firm is the prevalent organizational form, contributing to over one-third of all employment and GDP. Family firms are common across industries and sizes, ranging from the smallest producers to the largest multinational firms. However, their characteristics differ across sizes and legal forms, thereby indicating that the seemingly contradictory findings among previous studies on family firms may be due to unobserved heterogeneity. We furthermore find that they are smaller than private non-family firms in employment and sales and carry higher solidity, although they are more profitable. These differences diminish with firm size, however. We conclude that the term ‘family firm’ contains great diversity and call for increased attention to their heterogeneity.
    Keywords: entrepreneur; family firms; employment; GDP; register data
    JEL: D22 G32 J21
    Date: 2017–02–21
  15. By: Danson, Michael; Todeva, Emanuela
    Abstract: This conceptual paper contributes to the discussion on the role of regional government and regional triple helix constellations driving economic development and growth within regional boundaries. We investigate the impact of regionalism and subsidiarity on regional triple helix constellations and the questions of governmentality, governance and institutional development at regional level. We put emphasis on the fact that the position of regional authorities in the structure of government and policy boundaries are best implemented at a regional level (the principles of regionalism and subsidiarity), and that localised policy practices represent a more precise view on the government-industry-university interactions (the principle of governmentality). We look at the regional triple helix context as a prerequisite for stakeholder engagement, enhancing innovation capabilities and entrepreneurial behaviour. The paper identifies the drivers behind regional competitiveness and economic development, and investigates the positive externalities from strong triple helix constellations, as well as the impact of government support and institutionalised cooperation on value creation and value capture at the level of the locale. The paper offers a stylized model (Fig. 1) of the conditions for value creation and value capture and offers a critical overview of the debates around the rationale for regional governments. Examples are drawn from Scotland, England and some comparable parts of Europe.
    Keywords: regional development agencies; triple helix; regional governance; public policy; regional economic development
    JEL: H7 L0
    Date: 2016

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