nep-ent New Economics Papers
on Entrepreneurship
Issue of 2017‒10‒15
twelve papers chosen by
Marcus Dejardin
Université de Namur

  1. Older and Slower: The Startup Deficit’s Lasting Effects on Aggregate Productivity Growth By Titan Alon; David Berger; Robert Dent; Benjamin Pugsley
  2. Learning from Feedback: Evidence from New Ventures By Sabrina T. Howell
  3. Business Cycles and Start-ups across Industries: an Empirical Analysis for Germany By Alexander Konon; Michael Fritsch; Alexander Kritikos
  4. The Role of Startups for Local Labor Markets By Carlino, Gerald A.; Drautzburg, Thorsten
  5. Occupational choice of return migrants: Is there a 'Jack-of-all-trades' effect? By Mahe, Clotilde
  6. Location Choices of Graduate Entrepreneurs By Larsson, Johan P; Wennberg, Karl; Wiklund, Johan; Wright, Mike
  7. Mobile Phone Innovation and Entrepreneurship in Sub-Saharan Africa By Asongu, Simplice; Biekpe, Nicholas
  8. Credit Rationing and Firm Exports: Micro Evidence from SMEs in China By Cheng, Dong; Tan, Yong; Yu, Jian
  9. Regional Effects of Publicly Sponsored R&D Grants on SME Performance By Gustavsson Tingvall, Patrik; Videnord, Josefin
  10. The role of Innovation Hubs taking start-ups from idea to business. The case of Nairobi, Kenya By Natalie Chirchietti
  11. Reservation Employer Establishments: Data from the U.S. Census Longitudinal Business Data Set By Randall Akee; Elton Mykerezi; Richard M. Todd
  12. Familienunternehmen von Migranten By Bijedić, Teita; Kay, Rosemarie; Schlepphorst, Susanne; Suprinovič, Olga; Ettl, Kerstin

  1. By: Titan Alon; David Berger; Robert Dent; Benjamin Pugsley
    Abstract: We investigate the link between declining firm entry, aging incumbent firms and sluggish U.S. productivity growth. We provide a dynamic decomposition framework to characterize the contributions to industry productivity growth across the firm age distribution and apply this framework to the newly developed Revenue-enhanced Longitudinal Business Database (ReLBD). Overall, several key findings emerge: (i) the relationship between firm age and productivity growth is downward sloping and convex; (ii) the magnitudes are substantial and significant but fade quickly, with nearly 2/3 of the effect disappearing after five years and nearly the entire effect disappearing after ten; (iii) the higher productivity growth of young firms is driven nearly exclusively by the forces of selection and reallocation. Our results suggest a cumulative drag on aggregate productivity of 3.1% since 1980. Using an instrumental variables strategy we find a consistent pattern across states/MSAs in the U.S. The patterns are broadly consistent with a standard model of firm dynamics with monopolistic competition.
    JEL: E01 E24
    Date: 2017–09
  2. By: Sabrina T. Howell
    Abstract: This paper studies how early stage entrepreneurs learn about the quality of their ventures. I assess the effect of negative feedback on venture abandonment using application and judging data from 87 new venture competitions, some of which privately informed ventures of their relative rank. I use a difference-in-differences design and two matching estimators to compare lower and higher ranked losers, across competitions in which they did and did not observe their standing. Receiving negative feedback increased venture abandonment by about 13 percent. The effect occurs quickly, doubles among women founders, and increases with signal precision. It decreases with venture maturity and riskiness.
    JEL: G24 L1 L2 L26 O3
    Date: 2017–09
  3. By: Alexander Konon (German Institute for Economic Research (DIW Berlin)); Michael Fritsch (FSU Jena); Alexander Kritikos (German Institute for Economic Research (DIW Berlin), University of Potsdam, IZA, and IAB)
    Abstract: We analyze whether start-up rates in different industries systematically change with business cycle variables. We mostly find correlations that are consistent with counter-cyclical influences of the business cycle on entries in both innovative and non-innovative industries. Entries into the large-scale industries, including the innovative part of the manufacturing sector, are more strongly influenced by changes in the cyclical component of unemployment, while entries into small-scale industries, like the knowledge intensive services, are merely influenced by changes in the cyclical component of GDP. Business formation may therefore have a stabilizing effect on the economy.
    Keywords: New business formation, Entrepreneurship, business cycle, manu- facturing, services, innovative industries
    JEL: L26 E32 L16 R11
    Date: 2017–10–04
  4. By: Carlino, Gerald A. (Federal Reserve Bank of Philadelphia); Drautzburg, Thorsten (Federal Reserve Bank of Philadelphia)
    Abstract: We investigate the dynamic response of local U.S. labor markets to increased job creation by new firms and compare the effects to overall labor demand shocks. To account for both dynamic and spatial dependence we develop a spatial panel VAR that builds on recent advances in the VAR literature to identify structural shocks using external instruments. We find that startup shocks have a small but persistent effect on local employment through population growth. Population growth, in turn, is largely driven by immigration. We also investigate how the responses differ by local characteristics such as population density. Finally, we show that startups are not closely linked to innovation.
    Keywords: Startups; entrepreneurship; local labor markets; proxy VAR; spatial panel VAR
    Date: 2017–09–27
  5. By: Mahe, Clotilde (UNU-MERIT, Maastricht University)
    Abstract: Although it has been found that return migrants are more likely to be self-employed than non-migrants, the role of migration episodes per se remains unclear. With reference to Lazear's Jack-of-all-trades hypothesis, this paper examines whether migrants are more likely to choose self-employment upon return because of the diverse work experience they gained abroad. Using the 2012 Egypt Labour Market Panel Survey, seemingly unrelated regression model estimates show that return migrants' greater propensity to be self-employed, to survive or to generate jobs as self-employed might proceed from participating in significantly more occupations, sectors and jobs over their work history than non-migrants. Results hold for non-agricultural activities, rural areas, and controlling for financial resources. In line with Lazear's framework, they confirm that entrepreneurship can be learnt, and that exposure to multiple occupations and industries matters for entering into and persisting in self-employment.
    Keywords: International migration, Return migration, Entrepreneurship, Human capital, North Africa, Egypt
    JEL: F22 J24 L26 O12 O15
    Date: 2017–09–18
  6. By: Larsson, Johan P (Jönköping International Business School); Wennberg, Karl (The Ratio Institute); Wiklund, Johan (Whitman School of Management); Wright, Mike (Imperial College London South Kensington Campus)
    Abstract: We review complementary theoretical perspectives on location choices of university graduate entrepreneurs derived from the individual-opportunity nexus and local embeddedness perspectives on entrepreneurship. Analysis of the full population of 215,388 graduates from Swedish institutions of higher education between 2002 and 2006 provides support for both location choice perspectives. Overall, 63 % of graduate entrepreneurs start businesses locally in their region of graduation while 37 % start businesses elsewhere. The likelihood of starting locally is substantially higher in metropolitan regions, if the graduate was born locally or has university peer entrepreneurs and entrepreneurial family members in the region of graduation. Implications for theory and public policy are discussed.
    Keywords: Entrepreneurship; Location choice; Universities
    JEL: J61 M13 O18
    Date: 2017–08–07
  7. By: Asongu, Simplice; Biekpe, Nicholas
    Abstract: This study assesses how knowledge diffusion modulates the effect of the mobile phone on entrepreneurship in Sub-Saharan Africa with data for the period 2000-2012.The empirical evidence is based on interactive Generalised Method of Moments in which mobile phones are interacted with three knowledge diffusion variables, namely: education, internet penetration and scientific output. Ten variables of entrepreneurship are used. The following three main findings are established. First, the net effects from interacting mobile phones with the internet and scientific publications are negative whereas the corresponding net impact from the interaction between mobile phones and education is positive on the cost of doing business. Second, the mobile phone interacts with education (the internet) to have a positive (negative) net effect on the time needed to construct a warehouse whereas, the corresponding interaction with the internet yields a net negative effect on the time to enforce a contract. Third, there is a positive net effect from the interaction of mobile phones with education on the time to start a business. Given the construction of the education variable, the positive net effects from education are consistent with corresponding negative net effects from the other knowledge diffusion variables. The main policy implication is that mobile phone innovation (by means of internet penetration, scientific output and quality education) decreases constraints of entrepreneurship. Suggestions on how to boost these knowledge diffusion channels are discussed. Other practical and theoretical implications are also covered. To the best our knowledge, this is the first inquiry to assess the relevance of mobile phone innovation in entrepreneurship in Sub-Saharan Africa.
    Keywords: Entrepreneurship; the Mobile Phone; Knowledge Diffusion; Sub-Saharan Africa
    JEL: L59 L98 O10 O30 O55
    Date: 2017–05
  8. By: Cheng, Dong; Tan, Yong; Yu, Jian
    Abstract: In this study we examine the effect of credit rationing on export performance for small and medium sized firms in China. We use a detailed firm-level data provided by the Small and Medium-sized Enterprises Dynamic Survey (SMEDS) to conduct this analysis. SMEDS provides firm-specific measures of credit rationing based directly on firm-level responses to the survey rather than indirectly from firm-level financial statements. We find that, at the extensive margin, weak and strong credit rationing reduce SMEs' export probability by 22% and 36%, respectively. At the intensive margin, they decrease SMEs' export values by more than 32% and over 66%, respectively. Different from existing literature, we construct valid firm-level instruments, firm-level housing investments and receivables, for credit rationing rather than using province-level instruments. In addition, credit rationing exhibits heterogeneous impacts on firms with different liquidity ratios, product portfolios, external collateral and capital utilization rates.
    Keywords: SMEs, Strong Credit Rationing, Weak Credit Rationing, Export Performance
    JEL: F10 G20
    Date: 2017–10–12
  9. By: Gustavsson Tingvall, Patrik (The Ratio Institute); Videnord, Josefin (The Ratio Institite)
    Abstract: This paper explores regional variation in the effects of publicly sponsored R&D grants on SME performance. The results suggest that there is no guarantee that the grants will impact firm growth, either positive or negative. Studying the heterogeneity of the results, positive growth effects are most likely to be found for publicly sponsored R&D grants targeting SMEs located in regions abundant with skilled labor, whereas the opposite is found for SMEs located in regions with a limited supply of skilled workers.
    Keywords: R&D grants; SME; Economic growth; Regional growth; Selective policies
    JEL: H81 O18 O38 O40 R11 R58
    Date: 2017–04–18
  10. By: Natalie Chirchietti
    Abstract: In recent years, there has been a growing interest in the start-up scene in sub-Saharan Africa. "Silicon Savannah" is today widely used to describe the thriving IT industry in and around Nairobi. Kenya's geographical advantage, its favorable economic reforms, and mature start-up ecosystem makes it stands out positively. Since a lot of hype exists around the start-up scene many investors are drawn to it, but in reality very few start-ups are investment-ready. The increasing start-up requirements and needs force incubators to diversify their offer. In contrast, to traditional incubators, an Innovation Hub (Hub) is characterized based on the concept of open innovation and collaboration. A Hub nurtures an enabling environment where a community of entrepreneurs can grow. At the same time, it serves as a nexus point for the local start-up community, investors, academia, technology companies and the wider private sector. It aims to create a structure where people serendipitously interact with others that they would not typically meet. Considering the great interest for and the large amounts of money invested in Hubs by governments, universities, private companies and other interested parties, not only researchers have been raising the question of the actual benefit of Hubs. This research study aims to investigate to what extent the support offered by the Hubs is tackling the challenges faced by start-ups in Nairobi, Kenya. The analysis can serve as a basis for identifying strength and weaknesses in the Hub models.
    Keywords: Entrepreneurship; Innovation Hubs; Start-ups; Kenya
    JEL: M13
    Date: 2017–09
  11. By: Randall Akee; Elton Mykerezi; Richard M. Todd
    Abstract: The presence of employers and jobs on American Indian reservations has been difficult to analyze due to limited data. We are the first to geocode confidential data on employer establishments from the U.S. Census Longitudinal Business Database to identify location on or off American Indian reservations. We identify the per capita establishment count and jobs in reservation-based employer establishments for most federally recognized reservations. Comparisons to nearby non-reservation areas in the lower 48 states across 18 industries reveal that reservations have a similar sectoral distribution of employer establishments but have significantly fewer of them in nearly all sectors, especially when the area population is below 15,000 (as it is on the vast majority of reservations and for the majority of the reservation population). By contrast, the total number of jobs provided by reservation establishments is, on average, at par with or somewhat higher than in nearby county areas but is concentrated among casino-related and government employers. An implication is that average job numbers per establishment are higher in these sectors on reservations, including those with populations below 15,000, while the remaining industries are typically sparser within reservations (in firm count and jobs per capita). Geographic and demographic factors, such as population density and per capita income, statistically account for some but not all of these differences.
    Keywords: Entrepreneurship, American Indians, Rural Communities, Economic Development
    Date: 2017–01
  12. By: Bijedić, Teita; Kay, Rosemarie; Schlepphorst, Susanne; Suprinovič, Olga; Ettl, Kerstin
    Abstract: In der vorliegenden Studie untersuchen wir die Besonderheiten migrantengeführter Familienunternehmen, zu denen jedes zehnte Familienunternehmen in Deutschland gehört. Obwohl sie im Durchschnitt kleiner und jünger sind als nicht-migrantengeführte Familienunternehmen, leisten migrantengeführte Familienunternehmen einen wertvollen volkswirtschaftlichen Beitrag. So beschäftigen sie überdurchschnittlich häufig Personen mit Migrationshintergrund und haben damit eine bedeutende Integrationsfunktion am Arbeitsmarkt. Entgegen landläufiger Wahrnehmung sind sie überdurchschnittlich häufig in wissensintensiven Bereichen sowie in Freien Berufen tätig, innovationsstark und in ihrer Geschäftstätigkeit international ausgerichtet. Dabei spielt die Herkunftsregion der Unternehmerfamilie(n) eine nachrangige Rolle. Zwar bilden niedrige Preise nicht den Kern der Wettbewerbsstrategie von Familienunterneh-men, doch spielen sie bei migrantengeführten eine bedeutendere Rolle als bei nicht-migrantengeführten Familienunternehmen und führen dann häufiger zu Rentabilitätsproblemen. Aufgrund ihrer geringeren Größe und des geringeren Alters verfügen migrantengeführte Familienunternehmen über kleinere Netzwerke und haben insbesondere weniger Kontakte zu Institutionen, wie Kammern und Verbände. Ein Wandel des Bildes von migrantischem Unternehmertum könnte helfen, Unternehmer mit Migrationshintergrund besser zu erreichen.
    Keywords: Familienunternehmen,migrantengeführte Familienunternehmen,Family Firms,Migrant Entrepreneurship
    JEL: J15 L26
    Date: 2017

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