|
on Entrepreneurship |
| By: | Frank Fossen; Ray Rees; Davud Rostam-Afschar; Viktor Steiner |
| Abstract: | We investigate how personal income taxes affect the portfolio share of personal wealth that entrepreneurs invest in their own business. In a reformulation of the standard portfolio choice model that allows for underreporting of private business income to tax authorities, we show that a fall in the tax rate may increase investment in risky entrepreneurial business equity at the intensive margin, but decrease entrepreneurial investment at the extensive margin. To test these hypotheses, we use household survey panel data for Germany eliciting the personal wealth composition in detail in 2002, 2007, and 2012. We analyze the effects of personal income taxes on the portfolio shares of six asset classes of private households, including private business equity. In a system of simultaneous demand equations in first differences, we identify the tax effects by an instrumental variables approach exploiting tax reforms during our observation period. To account for selection into entrepreneurship, we use changes in entry regulation into skilled trades. Estimation results are consistent with the predictions of our theoretical model. An important policy insight is that lower taxes drive out businesses that are viable only due to tax avoidance or evasion, but increase investment in private businesses that are also worthwhile in the absence of taxes. |
| Keywords: | taxation, entrepreneurship, portfolio choice, investment |
| JEL: | H24 H25 H26 L26 G11 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6558&r=ent |
| By: | Ehrlich, Isaac (University at Buffalo, SUNY); Li, Dunli (University College London); Liu, Zhiqiang (University at Buffalo, SUNY) |
| Abstract: | We model investment in entrepreneurial human capital (EHC) – the representative enterprise's share of production capacity allocated to investment in innovative industrial and commercial knowledge – as a distinct channel through which firm-specific human capital drives endogenous growth. Our model suggests that institutional factors supporting free markets for goods and ideas, and higher educational attainments of entrepreneurs and workers, enhance endogenous economic growth by augmenting the efficiency of investment in EHC rather than exclusively by themselves. We test these implications using data from Global Entrepreneurship Monitor's Adult Population Survey of 63 countries over 2002–2010 and find robust support for these hypotheses. |
| Keywords: | innovation, entrepreneurship, the market for ideas, human capital, endogenous growth |
| JEL: | L26 O31 O43 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11048&r=ent |
| By: | Tavassoli, Sam (RMIT University); Trippl, Michaela (University of Vienna) |
| Abstract: | This paper seeks to provide novel insights into the effects of ethnic communities on immigrants’ entrepreneurial activities. We investigate to what extent the decision of an employed immigrant to become an entrepreneur is associated with his or her embeddedness in ethnic networks in the host region. We capture such embeddedness through various mechanisms. Using longitudinal registered-data from Sweden and employing a Logit model, we find that merely being located in an ethnic community does not have an influence on immigrant entrepreneurship; rather what matters is being located in ethnic communities that have a high share of entrepreneurs themselves. |
| Keywords: | Immigrants; entrepreneurship; ethnic communities; embeddedness; social capital |
| JEL: | D83 J61 M13 |
| Date: | 2017–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2017_017&r=ent |
| By: | Sara Amoroso (European Commission - JRC); David B. Audretsch (Indiana University); Albert N. Link (Bryan School of Business and Economics University of North Carolina-Greensboro) |
| Abstract: | The purpose of this paper is to explore the relationship between an entrepreneur’s experience and education and his/her reliance on alternative sources of knowledge for exploring new business opportunities. The extant literature that is at the crossroads between sources of knowledge and the experiential and intellectual base of an entrepreneur (i.e., dimensions of his/her human capital) suggests that it is through experience and through education that an entrepreneur obtains knowledge. Using information on a sample of high-tech manufacturing firms across 10 European countries, we explore heterogeneities in the influence of experience, age, and education of the firm’s primary founder on the perceived importance of (i.e., use of) alternative sources of knowledge. We find that the association of these characteristics differs significantly across sources of knowledge, and across European regions. Education is positively related to the importance of knowledge from research institutes and internal know-how, while age is negatively related to the importance of research institutes and positively related to publications and conferences. On the one hand, in South/East European countries, the importance of internal know-how is positively associated with age and education, but negatively associated with experience. On the other hand, the characteristics of primary founders of North/West European firms are more linked to the importance of the participation to funded research programmes. This source of knowledge is related positively with age and education and negatively with experience. |
| Keywords: | Entrepreneurship; Knowledge; Experience; Education; Human Capital |
| JEL: | L26 J24 D83 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:wpaper:201703&r=ent |
| By: | Neira, Julian; Singhania, Rish |
| Abstract: | The business startup rate in the United States has exhibited a large secular decline in recent decades. The reasons behind the decline are not well understood. This paper hypothesizes that the startup rate declined in large part because corporate taxes raised the opportunity cost of entrepreneurship. We formalize this thesis using a model of occupational choice that features firm entry and exit. Quantitatively, the model accounts for much of the decline in the startup rate. Taxes alone account for one-fifth of the decline. Cross-sectoral patterns in US data support our results. |
| Keywords: | Firm Entry, Startups, Corporate Taxes, Declining Business Dynamism, Occupational Choice |
| JEL: | D2 E2 E6 H2 |
| Date: | 2017–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:81662&r=ent |
| By: | Mustafa Caglayan (Heriot-Watt University); Alessandro Flamini (Department of Economics and Management, University of Pavia); Babak Jahanshahi (Department of Economics and Management, University of Pavia) |
| Abstract: | Since 1980s, organized crime rooted in northern Italy with a new modality in its relation with the society: less violence and more illegal business. We study to what extent, if any, this social adaptation, dubbed silent mafia, to the highest productive area of the country, is interfering with human capital accumulation. We provide empirical evidence that in northern Italy provinces, the larger the presence of organized crime, the less human capital accumulation. This is due on the one hand to the relation between organized crime and entrepreneurs that reduces entrepreneurs' incentives to innovate, and thus leads to a fall in their demand for high-skilled labor. On the other hand to mafia's control of the territory that provides young people with examples of social elevator which reduce their incentives to acquire human capital. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:pav:demwpp:demwp0143&r=ent |
| By: | Zheng, Liang; Zhao, Zhong |
| Abstract: | Since Chinese government initiated economic reform in the late 1970s, entrepreneurship and private sectors have emerged gradually and played an increasingly important role in promoting economic growth. However, entrepreneurship is distributed unevenly in China. Using micro data from 2008 economic census and 2005 population census, this paper explains spatial clusters of entrepreneurship for both manufacturing and services. For both sectors, entrepreneurship (measured by new private firms) tends to emerge in places with more relevant upstream and downstream firms. Moreover, Chinitz's (1961) theories are also supported for manufacturing: small upstream and downstream firms seem to be more important for manufacturing entrepreneurship. For both sectors, entrepreneurship is positively related to city size, the share of young adults and the elderly population, and foreign direct investment. More migrants are also found to promote service entrepreneurship. Our paper is the first to consider both manufacturing and service entrepreneurship in China and should be of interest to both local and national policymakers who plan to encourage entrepreneurship. |
| Keywords: | New Firm Formation,Entrepreneurship,Marshallian Effect,Chinitz Effect,China |
| JEL: | L26 L60 L80 R10 R12 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:127&r=ent |
| By: | Čuveljak, Jelena; Rašić, Mario |
| Abstract: | Since difficulties during business are an integral part of entrepreneurship, the Croatian legislative offers several restructuring models for companies who have business issues. The pre-bankruptcy agreement is available in cases when the debtor is threatened by insolvency and during this procedure, the business of the company is still managed by the existing management board. However, it is necessary that the pre-bankruptcy procedure is finished within a short deadline. The bankruptcy procedure is commenced on grounds of over-indebtedness and when in a state of incapacity to make payments, Future business is managed by the insolvency practitioner. The extraordinary administration procedure in companies of systemic importance for the Republic of Croatia is initiated in cases where large enterprises are faced with bankruptcy or pre-bankruptcy reasons. During this procedure, the business of the parent-company is conducted by the extraordinary trustee. Each of the aforementioned procedures (models) has its specifications and legal consequences for all stakeholders involved (debtor, management board and creditors). This paper will use the comparative legal research methodology to analyze the differences between them: the grounds for commencing the procedures, continuing company’s business operations, deadlines and the aftermaths for the creditors and shareholders of the company. The focus of the paper will be to demonstrate that each procedure can preserve financially positive business of the companies in problems. Several legal models should enable timely restructuring of companies, which can secure the safety of sustainable businesses and help create and maintain employment, while also can reduce the risk in the finance sector connected with converting loans to poor credits. However, the success of the negotiations with relevant stakeholders, namely creditors, and the percentage of creditor’s payment returns largely depend on early detection of business problems and prompt opening of appropriate proceedings. |
| Keywords: | insolvency,bankruptcy,pre-insolvency,restructuring in bankruptcy,extraordinary administration |
| JEL: | K22 K20 L53 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:129&r=ent |
| By: | Helke Seitz |
| Abstract: | Microenterprises account for a large fraction of employment in developing countries and they are likely to increase in importance in the future. In Sub-Saharan Africa, for example, around 8 million additional jobs need to be created annually in order to cope with the increasing number of new entrants into the labour market (The World Bank, 2013). As microenterprises typically only provide subsistence income to few individuals the question remains whether they have the potential to grow and to contribute to the creation of jobs. Studies suggest that many businesses do indeed have the potential to grow. However, they often lack the necessary funds due to imperfect credit markets, insufficient household savings or behavioral reasons and missing information to exploit their potential. Policy interventions to overcome these issues show some promising results. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwrup:114en&r=ent |
| By: | Grüning, Patrick |
| Abstract: | Empirical evidence suggests that investments in research and development (R&D) by older and larger firms are more spread out internationally than R&D investments by younger and smaller firms. In this paper, I explore the quantitative implications of this type of heterogeneity by assuming that incumbents, i.e. current monopolists engaging in incremental innovation, have a higher degree of internationalization in their R&D technologies than entrants, i.e. new firms engaging in radical innovation, in a two-country endogenous growth general equilibrium model. In particular, this assumption allows the model to break the perfect correlation between incumbents' and entrants' innovation probabilities and to match the empirical counterpart exactly. |
| Keywords: | Heterogeneous innovation,Technology spillover,Endogenous growth,Creative destruction,International finance |
| JEL: | E22 F31 G12 O30 O41 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:185&r=ent |
| By: | Roud Vitaliy (National Research University Higher School of Economics); Valeriya Vlasova (National Research University Higher School of Economics) |
| Abstract: | This paper develops an integrated framework to examine the determinants of industry-science cooperation in the general process of developing innovation. Based on the literature review and using firm-level data on innovation strategies of 805 manufacturing enterprises in Russia we investigate what are the incentives to firms (1) to cooperate with universities and R&D organizations and (2) to choose a particular mode of interaction that ranges from purchasing S&T services to a full scale original R&D aimed at creating new-to-market innovation. We suggest that a broad range of intramural and external determinants, including competition regime, absorptive capacity, technological opportunities, appropriability conditions, public support, as well as barriers to the practical application of R&D results influence the firm’s decision on cooperation with knowledge producers. The findings indicate that the scale of industry-science linkages in Russian manufacturing is limited and generally hampered by low propensity of business to the R&D-based innovation strategies |
| Keywords: | Science-industry cooperation; Innovation strategy; Firm-level; Manufacturing; Russia |
| JEL: | D22 D83 L2 O31 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:75sti2017&r=ent |
| By: | Tiago Fonseca (World Maritime University; CEG-IST, Instituto Superior Técnico, Universidade de Lisboa); Francisco Lima (CEG-IST, Instituto Superior Técnico, Universidade de Lisboa); Sonia C. Pereira (Barnard College, Columbia University and Columbia School of Social Work) |
| Abstract: | As job markets have been polarizing, firms have been changing their labor inputs.By using matched employer-employee data for Portugal, we examine whether labor market polarization has occurred within or across firms and how labor input upgrades have contributed to overall productivity growth. We develop a firm taxonomy based on worker’s occupational data. Firms can be focused on one task – Abstract, Manual or Routine – on a combination of tasks, or none. Results show that Abstract firms are the most productive and their share has increased over time. Manual firms, the least productive, have had a stable share throughout the period. Routine firms have seen their share decline over time. The dynamic decomposition of the estimated productivity reveal that productivity growth is propelled by increased market shares of the most productive incumbents and exiting of the least productive, especially for Abstract firms. Notwithstanding these productivity growth drivers, they fail to avert the productivity stagnation observed in Portugal between 2004 and 2009 due to the overall decline in productivity of incumbent firms, especially Routine. We discuss the policy implications of our results which are relevant to other European economies also lagging behind in terms of knowledge and innovation capabilities. |
| Keywords: | Taxonomy, productivity, routinization, technological change, polarization |
| JEL: | D24 L23 O33 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0080&r=ent |
| By: | Geovanny Castro Aristizabal; Luis Eduardo Giron Cruz; Daniel Soto Cuadros (Faculty of Economics and Management, Pontificia Universidad Javeriana Cali) |
| Abstract: | The present study finds the main factors that influence entrepreneurship in Colombia, Chile and Ecuador, based on data from the Global Entrepreneurship Monitor -GEM, 2014- and the Entrepreneurship Activity Rate -TEA-. For this, initially, the multivariate method of Multiple Correspondence Analysis was used. Subsequently, a binomial logit model was estimated for each of the countries. It was found that both formal and informal human capital are determinant to generate entrepreneurship by opportunity. Likewise, experience, empirical knowledge, gender and age. Finally, by including in the model the technological level of the sector (medium-high), it was estimated that Chile has a greater impact on entrepreneurship. given the current situation of diminishing tensions with the US government. |
| Keywords: | Cuba, Entrepreneurship opportunity, Logit models, Multiple Correspondence Analysis, Human Capital, Colombia, Ecuador, Chile. |
| JEL: | J24 L26 Y40 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ddt:wpaper:29&r=ent |