nep-ent New Economics Papers
on Entrepreneurship
Issue of 2017‒05‒28
three papers chosen by
Marcus Dejardin
Université de Namur

  1. Who persistently creates jobs? Absolute versus relative high-growth firms By Erhardt, Eva
  2. Does patenting always help new-firm survival? By Masatoshi Kato; Koichiro Onishi; Yuji Honjo
  3. Microfinance beyond self-employment: Evidence for firms in Bulgaria By Erhardt, Eva

  1. By: Erhardt, Eva
    Abstract: This paper examines the economic contribution of high-growth firms after their high-growth event. While the central role of high-growth firms for job creation is well-established, little is known about their dynamic development in coming periods. We address this question for the first time by comparing absolute with relative growth measures and use data on private firms in Bulgaria for three consecutive 3-year periods (2001-2004, 2004-2007, and 2007-2010). Next to calculating transition probability matrices to investigate growth in employees in coming periods, we model future employment growth by means of a two-part model with separate equations for the probability of survival and exit as well as for growth of survivors and growth of exits. The decomposition of aggregate growth effects shows that it is central for outcomes whether growth is measured in absolute or relative terms. High-growth firms defined according to an absolute measure show the biggest potential for job creation in coming periods while those measured in relative terms without size threshold tend to be outperformed by other firms. In that regard, both public support programs for high-growth firms as well as researchers should refrain more from exclusively applying relative growth measures.
    Keywords: high-growth firms, growth measures, job creation, persistence, Bulgaria
    JEL: C18 D22 J23 L26 P23
    Date: 2017–01
  2. By: Masatoshi Kato (School of Economics, Kwansei Gakuin University); Koichiro Onishi (Faculty of Intellectual Property, Osaka Institute of Technology); Yuji Honjo (Faculty of Commerce, Chuo University)
    Abstract: This study examines the role of patenting activities in new-firm survival, using a data set of firms founded from 2003 to 2010 in the Japanese manufacturing and software sectors. In particular, we distinguish the effects of patenting activities of chief executive officers (CEOs) from those of patenting activities of firms, taking into account exit routes: bankruptcy, voluntary liquidation, and merger. It is found that firms that engaged in patenting activities after start-up are less likely to go bankrupt. It is also found that firms whose CEOs have experience in patenting activities before start-up are less likely to go bankrupt. In contrast, we provide evidence that CEOs' involvement in patenting activities after start-up are not helpful for survival. Furthermore, the results based on subsamples according to firm age show that while firms' patenting activities do not increase the probability of survival in the early years since start-up, they help new firms surviving after a certain period of time since start-up. While CEOs' pre-entry patenting activities have a significant explanatory power in reducing the probability of bankruptcy within a certain period of time since start-up, they have no longer significant effect afterwards. Further, CEOs' patenting activities after start-up increase the probability of exit through bankruptcy and voluntary liquidation especially after a certain period of time since start-up.
    Keywords: New firm, patenting, chief executive officer, survival, firm age
    Date: 2017–05
  3. By: Erhardt, Eva
    Abstract: This paper provides new evidence on the impact of microfinance on job creation beyond self-employment. We examine wage-employment effects for a typical program in Eastern Europe with average loan sizes that are considerably above what has been studied so far. We apply propensity score matching extended by a difference-in-differences estimator to panel data from an individual-lending program to firms in Bulgaria. Our results indicate that microcredit has very positive effects on job creation. Participating firms have on average 2.5 (or 33 percent) more employees two years after receiving a microcredit than matched non-participants. This strong effect seems to be related to a certain loan size threshold necessary for positive impacts to unfold. Effects are largest for the smallest firms, supporting findings from other studies that small firms are more constrained by credit than large firms. Investigating dynamic effects for up to six years after treatment, we furthermore show that effects are long lasting.
    Keywords: microfinance, wage employment, small firms, impact evaluation, Bulgaria
    JEL: C21 D22 G21 J23 P34
    Date: 2017–03

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