nep-ent New Economics Papers
on Entrepreneurship
Issue of 2017‒07‒30
five papers chosen by
Marcus Dejardin
Université de Namur

  1. To Grow or Not to Grow? That is the Question: Lessons for Social Ecological Transformation from Small-Medium Enterprises By Heidi Leonhardt; Maria Jutschen; Clive L. Spash
  2. Employment growth following takeovers By Geurts, Karen; Van Biesebroeck, Johannes
  3. Under the AEGIS∗ of knowledge intensive entrepreneurship: Employment growth and gender of founders among European Firms By Sara, Amoroso; Albert, Link
  4. SMEs access to formal finance in post-communist economies: Do institutional structure and political connectedness matter? By Kobil Ruziev; Don Webber
  5. Demand and innovation: theory and evidence By Dawid, Herbert; Pellegrino, Gabriele; Vivarelli, Marco

  1. By: Heidi Leonhardt; Maria Jutschen; Clive L. Spash
    Abstract: While research on alternatives to growth at the level of the economy as a whole is accumulating, few studies have related the criticism of growth to the business level. This paper starts to address this gap by investigating mechanisms of growth for small and medium sized enterprises (SMEs), presenting a case study that applies Q methodology and interviews with owner-managers of both growing and non-growing SMEs in Austria. Some mechanisms stimulating growth are identified across SMEs including contributing to innovativeness and motivation of employees. Others are only of relevance for some SMEs: competition, financial stability and a desire for market power. The owner-managers of non-growing SMEs hold values and pursue goals that free them from mechanisms of growth or prevent them from being triggered. Moreover, they exhibit a strong identification with their SME, operate in niche markets and strive for financial independence. This illustrates that a growth imperative is neither inevitable nor are growth mechanisms always operative, but depend upon structures and institutions.
    Keywords: SME growth, growth mechanisms, post-growth society, social ecological transformation
    Date: 2017
  2. By: Geurts, Karen; Van Biesebroeck, Johannes
    Abstract: We use a comprehensive sample of takeovers in Belgium to show that they are remarkably common and an important part of many firms' growth process. They affect both small and large firms and, over a five-year period, 17 percent of private employment. We estimate the impact of takeovers on employment growth of the merged entity using an empirical framework that explicitly takes into account that mergers are formed by pairs of firms. It allows for post-merger employment outcomes that are heterogeneous and determined jointly by the characteristics of both partners. The average merger is estimated to reduce employment by 8% over a four-year period, but the contraction can be three times as large for some types of mergers, while employment expands for other types.
    Keywords: efficiency defense; Firm Dynamics; M&A; Matching; merger
    JEL: J23 L23
    Date: 2017–07
  3. By: Sara, Amoroso (Joint Research Centre, European Commission); Albert, Link (University of North Carolina at Greensboro, Department of Economics)
    Abstract: An increasing number of theoretical and empirical analyses address the role of innovation as one of the main sources of firm growth. More recently, studies have looked at the role of gen-der diversity as a possible determinant of innovation and entrepreneurial performance. How-ever, the relationship between gender and employment growth —a dimension of entrepreneurial performance— still remains unexplored to a large degree. This paper contributes to the empiri-cal literature on gender and entrepreneurial performance in several ways. First, it examines the role played by both innovation and gender ownership as determinants of employment growth rates of young, knowledge intensive entrepreneurial (KIE) firms. Second, it investigates the indirect impact of contributing factors —such as the characteristics of the market, knowledge-based capital, and human capital— on employment growth. And third, it relies on a rich new cross-sectional data set on young, KIE firms across European Union (EU) countries. The data set contains information not only on the gender of the firm’s founders, but also on the market environment, business strategy, and innovative and economic performance of firms.
    Keywords: innovation; entrepreneurship; employment growth; gender
    JEL: J16 L26 O31
    Date: 2017–07–24
  4. By: Kobil Ruziev (University of the West of England, Bristol); Don Webber (University of the West of England, Bristol)
    Abstract: In post-communist economies, a disproportionately greater share of formal finance is channelled to larger enterprises and SMEs lack appropriately-priced formal finance. This article examines whether institutional structure and interpersonal connectedness with bureaucrats exacerbate this formal finance misallocation. We show that access to and use of interpersonal bureaucratic networks improve chances of receiving formal bank credit by between 4–10%. The benefits of interpersonal links are stronger for larger SMEs, and being connected to bureaucratic networks is not associated with enterprise growth. These findings imply that traditional policies that increase bank finance to SMEs should also aim to improve impartiality of bureaucratic institutions and enforceability of private contracts.
    Keywords: Financial development; Formal finance; Firm-level analysis; Transition economies
    JEL: G00 G38 B52 P3 M2
    Date: 2017–01–01
  5. By: Dawid, Herbert; Pellegrino, Gabriele; Vivarelli, Marco
    Abstract: While the extant innovation literature has provided extensive evidence of the so-called "demand-pull" effect, the possible diverse impact of demand evolution on product vs process innovation activities has not been yet investigated. This paper develops a formal model predicting a larger inducing impact of past sales in fostering product rather than process innovation. This prediction is then tested through a dynamic microeconometric model, controlling for R&D persistence, sample selection, observed and unobservable individual firm effects and time and sectoral peculiarities. Results are consistent with the model and suggest that an expansionary economic policy may benefit the diffusion of new products or even the emergence of entire new sectors.
    Keywords: technological change,R&D,demand-pull innovation,dynamic two tobit
    JEL: O31
    Date: 2017

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.