nep-ent New Economics Papers
on Entrepreneurship
Issue of 2017‒03‒19
twelve papers chosen by
Marcus Dejardin
Université de Namur

  1. Becoming an Entrepreneur - The Role of Profit Taxes By Berger, Melissa; Misch, Florian; Voget, Johannes
  2. Self-employment and educational childcare time: Evidence from Latin America By Juan Carlos, Campaña; J. Ignacio, Giménez-Nadal; Jose Alberto, Molina
  3. Which Firms Create the Most Jobs in Developing Countries? Evidence from Tunisia By Bob Rijkers; Hassen Arouri; Caroline Freund; Antonio Nucifora
  4. Intelligence and the Ease of Doing Business: Does Intellectual Class Facilitate Leadership and Entrepreneurship? By Burhan, Nik Ahmad Sufian; Che Razak, Razli; Salleh, Fauzilah; Labastida Tovar, María Elena
  5. Observables and residuals: exploring cross-border differences in Small and Medium Enterprise borrowing costs By Carroll, James; McCann, Fergal
  6. Is Corruption "Greasing" or "Sanding" the Wheels of Innovation of Firms in MENA? By Tamer Taha
  8. Don't Stop Me Now: The Impact of Credit Market Fragmentation on Firms' Financing Constraints By Franziska Bremus; Katja Neugebauer
  9. Understanding the Dynamics of Household Enterprises in Egypt: Birth, Death, Growth and Transformation By Caroline Krafft
  10. Gender, Enterprise Ownership, and Labor Allocation in MENA: the Roles of Islam, Oil, and Government Policies By Hadi Salehi Esfahani; Roksana Bahramitash
  11. Firm and Regional Factors of Productivity: A Multilevel Analysis of Tunisian Manufacturing By Mohamed Amara; Khaled Thabet
  12. Finansowanie innowacyjnych przedsięwzięć przez fundusze podwyższonego ryzyka - determinanty procesu decyzyjnego. By Gawlik, Remigiusz

  1. By: Berger, Melissa; Misch, Florian; Voget, Johannes
    Abstract: In this paper we study the effects of profit taxation on the creation of new firms using a unique data set covering all firms created in Germany since 2000 irrespective of whether they are German or foreign owned. We exploit the fact that each municipality in Germany is able to independently set the rate of local profit taxation, whereas all tax-base related regulation is identical across municipalities. Our analyzes show that firms react to some incentives induced by profit taxes, but to a small extent and depending on the legal status of the firm.
    JEL: H25 H71 D22
    Date: 2016
  2. By: Juan Carlos, Campaña; J. Ignacio, Giménez-Nadal; Jose Alberto, Molina
    Abstract: In this paper, we analyze the time employed and self-employed mothers devote to paid work and childcare activities, focusing on the activities aimed at increasing the human capital of children. To that end, we use time-use survey data for Mexico (2009), Peru (2010), Panama (2011), Ecuador (2012) and Colombia (2012). In our econometric results, we find that self-employed mothers in Mexico, Panama, Ecuador, and Colombia devote more time to educational child care, compared to employed mothers. Furthermore, the level of education of the mother also influences behavioral patterns between self-employed and employed mothers in childcare. To the extent that differences in the time mothers spend with their children influence the present and future outcomes of those children, our results are important for policy reasons.
    Keywords: self-employment; educational child care, Latin America
    JEL: D13 J13 J22
    Date: 2017–03–08
  3. By: Bob Rijkers (The World Bank); Hassen Arouri; Caroline Freund (World Bank); Antonio Nucifora
    Abstract: This paper examines private sector job creation in Tunisia over the period 1996-2010 using a unique database containing information on all registered private enterprises, including self-employment. In spite of stable GDP growth, overall net job creation was disappointing and firm dynamics were sluggish. The firm size distribution has remained skewed towards small firms, because of stagnation of incumbents and entrants starting small, typically as one-person firms (i.e., self-employment). Churning is limited, especially amongst large firms, and very few firms manage to grow. Post-entry, small firms are the worst performers in terms of job creation, even if they survive. Moreover, the association between productivity, profitability and job creation is feeble, pointing towards weaknesses in the re-allocative process. Weak net job creation thus appears to be due to insufficient firm dynamism rather than excessive job destruction.
    Date: 2015–10
  4. By: Burhan, Nik Ahmad Sufian; Che Razak, Razli; Salleh, Fauzilah; Labastida Tovar, María Elena
    Abstract: Does the intelligence quotient (IQ) in a nation regulate the ease of doing business in the society? Based on the normal distribution of IQ scores within a nation, the population was classified into three groups, specifically intellectual class, average ability, and non-intellectual class, which were represented by the 95th, 50th, and the 5th percentiles of IQ level respectively. Using a robust regression method with Huber’s weight function, the impact of each IQ class on the ease of doing business (EDB) index was examined. The sub-indicators of the ten business regulatory environment across 71 countries were studied. In this study, the effect of IQ was controlled for the levels of economic freedom, GDP per capita, freedom of corruption, and tertiary education. Results revealed strong evidence that the IQ of the intellectual class had contributed most to the enhancement of the regulatory environment, which is supportive for entrepreneurship. This result was consistent with the term ‘creative minority’ coined by the prominent historian Arnold Toynbee. It was concluded that the IQ of the people from the intellectual class is the most significant factor for creating a business regulatory environment that favours and eases the new and experienced entrepreneurs. This occurs through their competent and virtuous leadership that enhances the quality and efficiency of institutions across countries.
    Keywords: doing business; entrepreneurship; intelligence; intellectual class; leadership; non-intellectual class; robust regression
    JEL: J24 L26 O11 Z13
    Date: 2017–02
  5. By: Carroll, James (Trinity College Dublin); McCann, Fergal (Central Bank of Ireland)
    Abstract: Cross-country comparisons of average loan interest rates, often carried out using statistics provided by national and international authorities, should be accompanied by strong caveats. If underlying compositional differences in loans, borrowers or lenders are unaccounted for, claims of over/under-pricing may be unfounded. In this paper, we propose a simple methodology that compares interest rates between countries after controlling for such differences. We apply our method to loan-level data from three Irish banks operating in both Ireland and the UK. We find that controlling for such factors reduces the the cross-country interest rate premium significantly. We attribute any remaining interest rate “gap” to overall lending market conditions – for example, to differences in the recoverability of collateral, the level of competition among banks, the aggregate perception of risk, or banks’ expectations on the relative movements in policy rates and exchange rates between the UK and the euro area.
    Keywords: SME, loan-level data, interest rate differentials
    Date: 2017–01
  6. By: Tamer Taha (United Nations University)
    Abstract: In a region with a tradition and abundance of rent-seeking behavior, innovation in MENA countries is key for growth and development. However many inherited institutional barriers are still locking the potentials for a transition towards a knowledge and innovation-based economy. Using recently collected firm-level data from MENA countries, this article explores the effect of institutional obstacles in Egypt and Tunisia on the innovative behavior of firms. Recognizing the potential risk of endogeneity and simultaneity, the paper uses a conditional recursive mixed-process model (CMP) to estimate the micro level interactions that occur between corruption and business permits. The results show a positive effect of corruption on innovation only as a “greasing” mechanism to bypass the bureaucratic obstacles of business permits. Such an effect is even more pronounced if the firm is surrounded by other firms with corrupt practices.
    Date: 2016–03
  7. By: Julita E. Wasilczuk (Gdansk University of Technology, Gdansk, Poland); Katarzyna Stankiewicz (Gdansk University of Technology, Gdansk, Poland)
    Abstract: Unproductive entrepreneurship is not a common theme undertaken by researchers. The author defines the basic concepts of unproductive entrepreneurship and explains the role of cultural and economic differences in transition countries, in terms of institutional environment. However the main aim is to identify the nature of unproductive entrepreneurship in Poland. The theory for the research was based on the Baumol work. The research model on the Ajzen TPB. 270 Polish entrepreneurs were surveyed in order to define and describe unproductive entrepreneurship in Poland. The surveyed entrepreneurs present a permissive subjective standard regarding tax evasion when the existence of their enterprise is endangered, however they are also quite indulgent in the case of desire to maximize profits. The entrepreneurs represent more negative behavioural beliefs regarding the effectiveness of tax avoidance than regarding the effectiveness of making arrangements with tender participants or paying bribes.
    Keywords: unproductive entrepreneurship, types of unproductivity
    JEL: D22 D23 O43
    Date: 2017–03
  8. By: Franziska Bremus; Katja Neugebauer
    Abstract: This paper investigates how the withdrawal of banks from their cross-border business impacted the borrowing costs of European firms since the crisis. We combine aggregate information on total and cross-border credit with firm-level survey data for the period 2010 - 2014. We find that the decline in cross-border lending led to a deterioration in the borrowing conditions of small firms. In countries with more pronounced reductions in cross-border credit inflows, the likelihood of a rise in firms’ external financing costs has increased. This result is mainly driven by the interbank channel, which plays a crucial role in transmitting shocks to the real sector across borders.
    Keywords: International banking, firm finance, credit constraints
    JEL: F34 F36 G15 G21
    Date: 2017
  9. By: Caroline Krafft (Department of Economics, St. Catherine University)
    Abstract: Micro and small household enterprises play an enormous role in growth and employment in developing economies such as Egypt. Despite the importance of household enterprises, little is known about the creation, survival, and growth of such enterprises. This paper examines the dynamics of household enterprises, using household panel data from 1998, 2006, and 2012 in Egypt. As well as identifying the patterns of enterprise creation, dissolution, and growth, the paper identifies the individual, household, and enterprise characteristics that contribute to these dynamics. The findings demonstrate that the recent economic downturn in Egypt had a strong negative effect on household enterprise survival as well as employment growth within surviving enterprises.
    Date: 2016–03
  10. By: Hadi Salehi Esfahani (University of Illinois at Urbana-Champaign); Roksana Bahramitash
    Abstract: We document a relatively low share of women among small and medium enterprise (SME) owners in the Middle East and North Africa (MENA). This phenomenon appears to be related to the low female labor force participation (LFP) rates commonly observed in the region. However, the connection is not straightforward because the rates of large firm ownership by women in MENA are comparable and sometimes higher than some other world regions. To take a step toward understanding this puzzling pattern, we start with a framework that takes account of economy-wide interactions between firm ownership, employment, and outside options. We then use a unique cross-country micro dataset and a two-level model to separate out the role of individual characteristics from the influence of country conditions. Our first-level micro analysis suggests that the young age structure of MENA population helps explain part of MENA women’s low participation and low SME formation. At the second level, we find that the prevalence of conservative religious culture, particularly the cultural and legal rule that husbands are financially responsible for their families’ expenses, rather than sharing responsibility jointly with their wives, may be a key factor that helps explain the pattern of labor allocation. In addition, lack of government effectiveness, the relative closed-ness of MENA economies, and the gap between educational attainments of women and men in the past have also contributed to women’s low LFP and SME ownership. These are all policy areas in which governments can make a difference. We also explore the role of a number of other factors and show their roles in labor allocation, though they do not help explain the current weaknesses in patterns of participation and employment in the region. One very notable finding among these is that, in contrast to the results of many other studies, resource rents don’t seem to be responsible for low LFP and small firm formation by MENA women. Quite to the contrary, they seem to have helped raise both of these outcomes in the oil-rich countries of the region. We attribute this sharp difference in findings to the closer cross-country comparability of our data and our micro-based approach.
    Date: 2015–09
  11. By: Mohamed Amara (University of Tunis); Khaled Thabet
    Abstract: In this paper, we use multilevel models to simultaneously analyze individual, sectoral and regional characteristics that might affect the total factor productivity of Tunisian manufacturing firms for the period 1998-2004. Our results show that the individual characteristics of the firm have an important effect on both total factor productivity and labor productivity. We find that the oldest small firms are more productive than larger firms. Regional context has a significant direct impact on firms’ performance. More specifically, industrial density has a positive influence on total factor productivity. Our results show also that interaction effects or indirect effects are mostly driven by sectoral context. The intra-industrial wage disparities are beneficial only for firms with higher human capital and R&D. The interaction effects also show that larger and older firms will benefit more from industrial agglomeration. We conclude that multilevel models better fit our research questions that combine firm and contextual characteristics simultaneously, because they allow firm-specific characteristics to be differently associated to their regional and sectoral contexts.
    Date: 2016–01–09
  12. By: Gawlik, Remigiusz
    Abstract: The paper discusses the determinants of decision-making when financing innovative entrepreneurship through Venture Capital. Its aim is to structure key determinants of such decision-making process in order to aid the assessment of projects for financing. Literature analysis, deductive method and qualitative-quantitative multicriteria analysis have been employed. The author described the sense, financing phases, forms and limitations of VC investments. A set of decision-making determinants relevant for particular financing phases has been proposed.
    Keywords: Venture Capital, decision-making, innovative entrepreneurship
    JEL: D81 G24 O31
    Date: 2016

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