nep-ent New Economics Papers
on Entrepreneurship
Issue of 2017‒10‒01
fifteen papers chosen by
Marcus Dejardin
Université de Namur

  1. The Returns to Entrepreneurship: Evidence from Matched Person-Firm Data By van Praag, Mirjam C.; Raknerud, Arvid
  2. Fitting entrepreneurial, firm-level and environmental contingencies for better performance By Arjen Van Witteloostuijn; Marcus Dejardin; Julie Hermans; Dendi Ramdani,; Johanna Vanderstraeten; Jacqueline Brassey; Hendrik Slabbinck
  3. Do Non-Compete Covenants Influence State Startup Activity? Evidence from the Michigan Experiment By Carlino, Gerald A.
  4. Badge of Honor or Scarlet Letter? Unpacking Investors' Judgment of Entrepreneurs' Past Failure By Zunino, Diego; van Praag, Mirjam C.; Dushnitsky, Gary
  5. Financial Inclusion and Women Entrepreneurship: Evidence from Mexico By Fozan Fareed; Mabel Gabriel; Patrick Lenain; Julien Reynaud
  6. Equity Crowdfunding and Early Stage Entrepreneurial Finance: Damaging or Disruptive? By Saul Estrin; Daniel Gozman; Susanna Khavul
  7. Are They All Like Bill, Mark, and Steve? The Education Premium for Entrepreneurs By Michelacci, Claudio; Schivardi, Fabiano
  8. The Number of Bank Relationships and Bank Lending to New Firms: Evidence from firm-level data in Japan By OGANE Yuta
  9. Corruption and Firm Financial Performance: New Evidence from Vietnam By Huong Vu Van; Tuyen Quang Tran; Tuan Van Nguyen; Lim Steven
  10. Did the establishment of specialised courts affect the frequency of business bankruptcy petitions in Spain? By Claudio Detotto; Laura Serra; Marco Vannini
  11. Leadership style and Performance of Small and medium size enterprises in Cameroon By Jeff Astein, FOKAM
  12. Sorting into and out of Rural and Urban Retail Markets By Artz, Georgeanne M.; Eathington, Liesl; Francois, Jasmine; Masinde, Melvin; Orazem, Peter F.
  13. The dynamic of SMEs collective strategy: the case of Pic Saint-Loup winemakers* By Julien Granata; Marie-Clémence Da Fonseca; Pierre Marques; Mickaël Géraudel
  14. IL EST TOUJOURS TEMPS D'ENTREPRENDRE By Fabienne Bornard; Emmanuel Abord de Chatillon
  15. Les auto-entrepreneurs et les stagiaires : des emplois atypiques générateurs de « flexicarité » ? By Christophe Everaere

  1. By: van Praag, Mirjam C. (Copenhagen Business School); Raknerud, Arvid (Statistics Norway)
    Abstract: Empirical studies show low pecuniary returns of switching from wage employment to entrepreneurship. We reconsider the pecuniary gains of this switching by employing a two-stage procedure, where the randomness in the timing of inheritance transfers is used as an exclusion restriction to identify causal effects. The model is estimated on data covering the whole Norwegian population of individuals matched to the entire population of firms established in the period 2002-2011. The results indicate that the average returns to entrepreneurship are significantly negative for individuals entering entrepreneurship through self-employment and modest, but significantly positive, for incorporated startups.
    Keywords: returns to entrepreneurship, earnings distribution, matched person-firm data, self-employment, random effects probit model
    JEL: L26 C23 J31 G32
    Date: 2017–09
  2. By: Arjen Van Witteloostuijn (Tilburg University [Netherlands]); Marcus Dejardin (CIRTES - Centre interdisciplinaire de recherche Travail Etat et Société - UCL - Université Catholique de Louvain, CERPE - Centre de Recherches en Economie Régionale et Politique Economique - Facultés Universitaires Notre Dame de la Paix (FUNDP) - Namur); Julie Hermans (CERPE - Centre de Recherches en Economie Régionale et Politique Economique - Facultés Universitaires Notre Dame de la Paix (FUNDP) - Namur); Dendi Ramdani, (Universiteit Antwerpen [Antwerpen]); Johanna Vanderstraeten (Universiteit Antwerpen [Antwerpen]); Jacqueline Brassey (Tilburg University [Netherlands]); Hendrik Slabbinck (Universiteit Gent [Ghent])
    Abstract: This book reports the outcomes of a BELSPO (the Belgian Federal Science Policy Office) research project. The authors develop and estimate (parts of) a comprehensive model in which the micro-performance of SMEs is determined by a complex web of factors. These are situated at the level of the entrepreneur, organization and environment. In this modeling, a fit between individual, strategy, structure and environment is key to attain better performance in terms of, for example, efficiency or profitability. Strategy is assumed to be the linking pin between the entrepreneur’s (or his or her venture’s) strengths and weaknesses, and the opportunities and threats in the environment. In line with this contingency approach, the authors utilize a multi-disciplinary theoretical lens in combination with analysis techniques that allow for the identification of fits (and misfits), such as the analysis of conditional processes or dynamic multi-level QCA fit analysis.
    Keywords: Strategy, Business Strategy, Competitive Strategy, Performance, Growth,Entrepreneurship, Small Business, SMEs
    Date: 2015–10
  3. By: Carlino, Gerald A. (Federal Reserve Bank of Philadelphia)
    Abstract: This paper examines how the enforceability of employee non-compete agreements affects the entry of new establishments and jobs created by these new firms. We use a panel of startup activity for the U.S. states for the period 1977 to 2013. We exploit Michigan’s inadvertent policy reversal in 1985 that transformed the state from a non-enforcing to an enforcing state as a quasi-natural experiment to estimate the causal effect of enforcement on startup activity. Our findings offer little support for the widely held view that enforcement of non-compete agreements negatively affects the entry rate of new firms or the rate of jobs created by new firms. In a difference-in-difference analysis, we find that a 10 percent increase in enforcement led to an increase of about 1 percent to about 3 percent in the startup job creation rate in Michigan and, in general, to essentially no change in the startup entry rate. Extending our analysis to consider the effect of increased enforcement on patent activity, we find that enforcement had differential effects across technological classifications. Importantly, increased enforcement had a positive and significant effect on the number of quality-adjusted mechanical patents in Michigan, the most important patenting classification in that state.
    Keywords: Startup activity; non-compete agreements; regional economic growth
    JEL: O30 O38 R11
    Date: 2017–09–21
  4. By: Zunino, Diego (Copenhagen Business School); van Praag, Mirjam C. (Copenhagen Business School); Dushnitsky, Gary (London Business School)
    Abstract: Research shows that most ventures fail, yet it has devoted limited attention to the consequences of entrepreneurs' past failure for investors' decisions. Our motivating insight is that failure can be due to bad luck, lack of skill or both. Therefore, failure conveys ambiguous information about skill. We predict that investors will discount entrepreneurs that experienced past failure. However, in the presence of a signal of skill, the magnitude of the failure discount is reduced. We test our predictions using an online experiment where respondents are potential investors in seed stage ventures via equity crowdfunding. Respondents evaluate a realistic investment opportunity in a between-subjects design, where we decompose the effect of failure into luck and skill. Our results indicate that investors discount entrepreneurs who have experienced failure. Past failure in the presence of a signal of skill, however, is not discounted. The findings indicate no discount of failure based on the "failed" label only. Overall, our analysis sheds light on the rationality of investors. In a world where entrepreneurial failure is prevalent, we find that investors are sensitive to its core drivers: luck and skill.
    Keywords: entrepreneur, venture, failure, luck, skill, investors, crowdfunding, experiment
    JEL: G32 G24 L26
    Date: 2017–09
  5. By: Fozan Fareed (OECD); Mabel Gabriel (OECD); Patrick Lenain (OECD); Julien Reynaud (OECD)
    Abstract: Financial inclusion and women entrepreneurship concern policymakers because of their impact on job creation, economic growth and women empowerment. Women in Mexico do engage in paid work but many of them work in the informal sector because they lack opportunities to work in the formal sector. Moreover, financial exclusion rate in Mexico remains the highest amongst OECD countries, affecting women in particular. This paper uses an individual-based panel dataset over the period 2009-2015 to examine the determinants of women entrepreneurship in Mexico and to determine the relationship between women entrepreneurship and financial inclusion across informal and formal work and across economic sectors. The results suggest that financial inclusion is positively linked with entrepreneurship and it can open up economic opportunities for women entrepreneurs. Various financial access points like banking branches, POS terminals, banking agents, ATMs and microfinance banks can be a gateway to the use of additional financial services which can allow businesses development through access to credit facilities. However, the positive relationship between women entrepreneurship and financial inclusion does not hold for women entrepreneurs working in the informal sector or women working in the commerce sector, highlighting lower entry barriers, including financial, in the informal sector and problems pertaining to financial illiteracy. Results also highlight that the probability of a women being an entrepreneur in the informal sector is higher than in the formal sector. Education, age, income, marital status (married or divorced), and income level at the municipality level are amongst other significant determinants which are positively linked with women entrepreneurship. The results also highlight the existence of gender disparity in the status of entrepreneurship across formal and informal work in Mexico. On average, women are about 56% less likely to be entrepreneurs in the formal sector and 63% more likely to be entrepreneurs in the informal sector, as compared to men, after taking into account other relevant individual and municipality level characteristics that are important in explaining entrepreneurship.
    Keywords: financial access, financial exclusion, Financial inclusion, informality, SMEs, women entrepreneurship
    JEL: F14 F23 L16 O24
    Date: 2017–09–27
  6. By: Saul Estrin; Daniel Gozman; Susanna Khavul
    Abstract: Equity crowdfunding (ECF) offers founders of new ventures an online social media marketplace where they can access a large number of investors who, in exchange for an ownership stake, provide finance for business opportunities that they find attractive. In this paper, we first quantify the evolution of the ECF market in the UK, the world leader, as well as the benign regulatory environment. ECF already represents more than 15% of British early stage entrepreneurial finance. We then use qualitative methods to explore three research questions. First, do these large financial flows via ECF platforms supplement or merely divert more traditional forms of funding for entrepreneurs? Second, do investors understand and appropriately evaluate the risks that they are bearing by investing in this new asset class? Finally, does ECF finance bring with it the spillovers, e.g. advice and guidance critical to entrepreneurial success, associated with other sources of funding such as Venture Capital? Our study is based on extensive interviews with investors, entrepreneurs (including some who chose not to use ECF in favour of traditional funding sources) and regulators. We conclude that ECF provides real additionality to the sources of entrepreneurial finance while not bringing major new risks for investors. This suggests other jurisdictions might consider implementing the British "principles based" regulatory framework.
    Keywords: equity crowdfunding, early stage entrepreneurial finance, financial regulation, investor choices
    JEL: G3 G21 L26 M21
    Date: 2017–09
  7. By: Michelacci, Claudio; Schivardi, Fabiano
    Abstract: We rely on the Survey of Consumer Finances to study the return to education of US entrepreneurs since the late 1980s. We calculate the average yearly income that an entrepreneur expects to obtain during his venture, combining labor income, dividend payments, and capital gains upon selling the business. We find that the premium for postgraduate education has increased substantially more for entrepreneurs than for employees. Today an entrepreneur with a postgraduate degree earns on average \$100,000 a year more than one with a college degree. And the difference is substantially greater at the higher quantiles of the income distribution. In the late 1980s, the differences had been close to zero. The rise in the postgraduate premium is mainly due to increased complementarity between the advanced formal skills provided by higher education and the applied practical expertise acquired through past labor market experience. In combination, these two factors have become increasingly valuable to running successful businesses.
    Keywords: entrepreneurship; skill premium
    JEL: J24 J31 M13
    Date: 2017–09
  8. By: OGANE Yuta
    Abstract: This paper examines how the number of bank relationships affects bank lending to new firms using a unique firm-level data set of more than 1,000 small and medium-sized enterprises (SMEs) incorporated in Japan between April 2003 and June 2008. We employ a two-stage least squares (2SLS) estimator—one of the instrumental variables estimators—to address the possible bias caused by omitted variables and/or reverse causality. We find that an increase in the number of bank relationships increases long-term lending to new firms. We also find that this rise may boost total lending to such firms. Furthermore, the findings in this paper suggest that the most significant difference in the effects of the number of bank relationships on bank lending is the difference between a single bank relationship and multiple bank relationships. We show that these results are unlikely to be driven by omitted variables and/or reverse causality.
    Date: 2017–09
  9. By: Huong Vu Van (Academy of Finance, Hanoi); Tuyen Quang Tran (University of Economics and Business, Vietnam National University, Hanoi); Tuan Van Nguyen (University of Dalat, Vietnam); Lim Steven (University of Waikato, New Zealand)
    Abstract: Using a nationwide survey of provincial institutional quality and a sample of private manufacturing small and medium scale enterprises (the SMEs), this paper is the first to examine the effects of corruption on financial performance of the Vietnamese private SMEs. Interestingly, contrary to previous findings, the study finds that corruption as measured by a dummy variable does not affect firms’ financial performance after controlling for heterogeneity, simultaneity and dynamic endogeneity. However, we find that the intensity of bribe and many types of corruption have negative impacts on firms’ financial performance. Thus, a typical approach using only a dummy variable of bribe might not adequately evaluate the impact of bribe intensity or even ignored negative impacts of some types of bribe on firms’ financial performance. Our findings imply that anti-corruption measures are necessary to the development of the Vietnamese private SMEs.
    Keywords: Corruption; financial performance; SMEs; institutional quality; Vietnam
    Date: 2017
  10. By: Claudio Detotto (Laboratoire Lieux, Identités, eSpaces et Activités (LISA)); Laura Serra (IMIM (Hospital del Mar Medical Research Institute)); Marco Vannini (University of Sassari (Italy) & CRENoS (Italy))
    Abstract: Spanish small businesses rarely file for bankruptcy, and Spanish bankruptcy rates are among the smallest in the world. The historical inadequacy of the Spanish insolvency system has led most enterprises to rely on the de facto alternative mortgage system, which implies, among other things, overinvestment by debtors in fixed tangible assets. This latter effect can be particularly detrimental to the enabling environment of novel entrepreneurship. It is therefore of interest to examine whether the change in the bankruptcy regime that took place in Spain some ten years ago, with the establishment of specialised commercial courts (Juzgados de lo Mercantil), had any positive effect on bankruptcy rates. In this paper, the staggered timing of the new courts establishment is exploited in order to estimate an endogenous treatment model with a binary policy variable. The results support the direction of the reform, but the size of the estimated parameter suggests further efforts in that direction.
    Keywords: bankruptcy, commercial courts, endogenous treatment effects, Spain
    JEL: C31 C33 G33 K2
    Date: 2017–09
  11. By: Jeff Astein, FOKAM
    Abstract: In Cameroon, SMEs contribute about 50% of the GDP and accounts for about 92% of businesses (INS, 2009) but about 80% of this SME’s created in Cameroon die before their 5th anniversary with one of the principal causes being the lack of corporate leadership. The main objectives of this research it to show the effects of leadership style on the performance of Cameroonian SMEs. The research follows a Hypothetico- deductive methodology through which primary data was collected through the Multi Factor Leadership Questionnaire which was administered on 114 workers form 38 SMEs in 05 major towns in the southwest region of Cameroon between the period of November 2015 to January 2016, the data was analysed using the Principal Component Analysis (PCA), the Pearson correlation coefficient and the Ordinary Least Square Multiple Regression(OLS), the SPSS version 20 was used for regression. The Principal results showed that the Transformational Leadership style exerted a positive and significant effect on the performance of SMEs in Cameroon, while the Transactional leadership style exerted a positive and significant impact on performance, this results are in coherence with the results obtained by Bass and Avolio, 2004 in their work entitled “Leadership and Performance beyond Expectations”. This research will therefore propose that in order to achieve organizational performance, managers should use the Transformational alongside with the Transactional leadership style since a combination of the two leadership style will permit the enterprise to attain performance beyond expectations.
    Keywords: Leadership style, Performance, Small and Medium enterprises
    JEL: M50 M51 M54
    Date: 2016–04–16
  12. By: Artz, Georgeanne M.; Eathington, Liesl; Francois, Jasmine; Masinde, Melvin; Orazem, Peter F.
    Abstract: We compare the entry decisions and relative success of rural and urban retail start-ups in Iowa from 1992 through 2011. We use an expanded variant of the pull factor idea to predict the level of local retail sales. We then examine how the factors that increase sales affect the incentive to enter or exit an urban or rural market. We show that the same factors that affect retail sales also affect new retail firm entry and retail firm exit. Our findings are consistent with a model where the very best generally skilled entrepreneurs sort into thicker, urban locations where they are subjected to frequent arrival of other potential entrepreneurs who have some probability of having an even higher valued use for the site. Urban entrepreneurs may decide to sell their site to another entrepreneur, even if the first entrepreneur has a successful venture. On the other hand, the scarcity of potential successors in thinner rural markets means that a large share of the skill set for rural entrepreneurs is specific to the match between the entrepreneur and the location. Because the value of the rural firms are tied to the first entrepreneur, much of the venture’s value cannot be priced were the venture to be sold, and so rural markets have little turnover in retail sites.
    Date: 2017–09–14
  13. By: Julien Granata (Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School); Marie-Clémence Da Fonseca (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Pierre Marques (UAG - Université des Antilles et de la Guyane); Mickaël Géraudel (Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School)
    Abstract: The environmental uncertainty leads SMEs to adopt collective strategies in order to supplement their inadequate resources. The longitudinal study of the Pic Saint-Loup union of wine producers provides an understanding of how SMEs can develop collective strategies. The case study is based on several time of data collection from mainly forty five semi-structured interviews. Our findings are twofold. We identify the stages of SMEs collective strategies development and the role of stakeholders. Then, we highlight the tertius strategies of SMEs owner-managers and the positive influence of their combination.
    Abstract: Les PME, plus vulnérables aux forces de l'environnement, cherchent à compléter l'insuffisance de leurs ressources en adoptant des stratégies collectives afin de réduire cette incertitude. L'étude longitudinale du syndicat de producteurs de vin du Pic Saint-Loup, qui s'appuie sur plusieurs temps de collecte et quarante-cinq entretiens semi-directifs, permet de comprendre la façon dont des PME peuvent développer des stratégies collectives. Nous identifions les phases du développement de la stratégie collective ainsi que le rôle joué par les parties prenantes. Puis, nous soulignons les stratégies de tertius des dirigeants de PME et leur combinaison favorisant le développement de ces stratégies collectives. Mots clés : Stratégie collective, PME, étude longitudinale, parties prenantes, tertius. *Remerciements Ce papier bénéficie du soutien de la chaire Entrepreneuriat et Innovation du 'Labex Entreprendre' de Montpellier en France. Ce " laboratoire d'excellence " est reconnu et soutenu par le gouvernement français pour la qualité de ses recherches dans les sciences humaines et sociales.
    Keywords: Collective Strategy,SMEs,longitudinal study,stakeholders,Stratégie collective,PME,étude longitudinale,Parties prenantes / stakeholders,tertius
    Date: 2016
  14. By: Fabienne Bornard (CRE-EM Lyon - CRE EM Lyon); Emmanuel Abord de Chatillon (UGA IAE - Institut d'Administration des Entreprises - Grenoble - UGA - Université Grenoble Alpes)
    Abstract: Le vieillissement de la population française et européenne met en exergue l’enjeu de la fin d’activité professionnelle des personnes âgées. L’une des voies encouragées pour cela est l’entrepreneuriat. Quels sont le profil et les motivations de ces « seniors » ? La littérature en entrepreneuriat pointe un certain nombre d’atouts et de handicaps mais peine à expliquer ce qui conduit les seniors à se lancer dans l’entrepreneuriat. Cette étude présente une analyse de la base de données des chambres de commerce et d’industries en France, soit 7298 porteurs de projets en 2014. Nous explorons le profil des porteurs de projet avec une analyse centrée sur la problématique de l’âge. Les analyses comparatives des plus de 50 ans/moins de 50 ans, complétées par des analyses par tranches d’âge permettent d’éclairer les ressorts et les spécificités supposées de l’entrepreneuriat des seniors. Nos résultats mettent en évidence que l’entrepreneur de plus de 50 ans se distingue peu des moins de 50 ans, y compris dans sa relation au temps évaluée par le sentiment d’urgence ou le temps de maturité du projet. Le clivage aparait au-delà de 60 ans. Nous concluons sur les limites de l’étude et sur ses enseignements pour le management mais aussi pour les politiques publiques. Distribution électronique pour ARIMHE. © ARIMHE. Tous droits réservés pour tous pays. La reproduction ou représentation de cet article, notamment par photocopie, n'est autorisée que dans les limites des conditions générales d'utilisation du site ou, le cas échéant, des conditions générales de la licence souscrite par votre établissement. Toute autre reproduction ou représentation, en tout ou partie, sous quelque forme et de quelque manière que ce soit, est interdite sauf accord préalable et écrit de l'éditeur, en dehors des cas prévus par la législation en vigueur en France. Il est précisé que son stockage dans une base de données est également interdit.
    Keywords: âge,entrepreneuriat, entrepreneuriat des senior
    Date: 2016
  15. By: Christophe Everaere (Centre de Recherche Magellan - Université Jean Moulin - Lyon III - Institut d'Administration des Entreprises (IAE) - Lyon)
    Abstract: L’Accord National Interprofessionnel (ANI) du 11 janvier 2013 a mis en lumière l’importance et l’actualité des enjeux qui entourent la question des emplois atypiques induits par la recherche simultanée de flexibilité pour les entreprises, et de sécurité professionnelle pour les individus ; autrement dit, la « flexicurité », selon le néologisme inventé il y a une quinzaine d’années. L’auto-entrepreneuriat ainsi que le stage constituent deux formes extrêmes d’emplois atypiques exercés en dehors d’une relation salariale. Le succès des inscriptions au régime de l’auto-entrepreneuriat ainsi que le nombre important de stagiaires méritent que l’on s’y intéresse, d’autant plus que ces dispositifs s’apparentent parfois à du salariat déguisé extrêmement flexible pour les entreprises, mais très peu sécurisé pour les personnes. D’où le nouveau néologisme proposé dans le titre de l’article : « flexicarité » qui combine flexibilité et précarité.
    Keywords: dépendance, salariat déguisé,flexibilité, précarité, atypique
    Date: 2016

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