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on Entrepreneurship |
| By: | Zuzana Brixiova; Balazs Egert |
| Abstract: | This paper develops a model of costly firm creation in an economy with weak institutions, costly business environment as well as skill gaps where one of the equilibrium outcomes is a low-productivity trap. The paper tests the implications of the model using a cross-sectional dataset including about 100 countries. Both theoretical and empirical results suggest that to move the economy into a productive equilibrium, complementarity matters: reforms to improve the business environment tend to be more effective in creating productive firms when accompanied by narrowing skill gaps. Similarly, more conducive business regulations amplify the positive impact on firm creation of better education and reduced skill mismatches. To escape a low-productivity trap, policymakers should thus create a pro-business framework and a wellfunctioning education system. |
| Keywords: | model of start-ups and strategic complements, institutions, education, low-income countries, threshold regression |
| JEL: | L26 J24 J48 O17 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6451&r=ent |
| By: | Spanjer, Anne (Tilburg University, School of Economics and Management) |
| Abstract: | Entrepreneurs can be studied from many angles. We will study the phenomenon of entrepreneurship from the management discipline. We aimed to gain more insight into the relationship between experience and entrepreneurial performance. Thus far, several scholars have highlighted the importance of learning when studying entrepreneurship (e.g. Harrison & Leitch, 2005). As Minniti and Bygrave (2001:7) put it, “entrepreneurship is a process of learning, and a theory of entrepreneurship requires a theory of learning”. The theory of learning they propose is that entrepreneurs learn from their experiences. In order to gain more insight in the relationship between experience and performance, we have focused on several moderators in the experience-performance relationship. We considered the possible different effects of the type of experience when studying the experience-performance relationship, i.e. industry experience, entrepreneurial experience and experience diversity. Furthermore, we analyzed conditional indirect effects on the experience-financial constraints relationship and experience-performance relationship. For example, we analyze how experience is related to a particular type set of skills important in obtaining funding and how this in turn is associated with experienced financial constraints. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:6684507a-1de9-47b5-9da7-38b665555771&r=ent |
| By: | Martin Koudstaal (Rabobank); Randolph (R.) Sloof (UvA; Tinbergen Institute, The Netherlands); Mirjam (C.M.) van Praag (Copenhagen Business School) |
| Abstract: | We examine in a large survey (n = 1,928) how contemplative entrepreneurs, managers and employees are in their decision making styles. Besides two well-known subjective measures taken from psychology, we also build on Rubinstein (2016) by including two objective measures derived from response times and the nature of the strategic choices made. Supporting conventional wisdom, we find that entrepreneurs have a stronger subjective Faith in Intuition than others. Their actual action choices are partly in line with this: entrepreneurs make indeed more intuitive choices than managers, but are equally intuitive as employees. At the same time entrepreneurs have response times and a subjective Need for Cognition that (on average) equal those of managers. Together these findings tentatively suggest that entrepreneurs start from a stronger prior intuition, making them ceteris paribus more intuitive than others, but at the same time share with managers a higher need for cognition, and thus take more time to think things over. |
| Keywords: | Response times; contemplativeness; faith in intuition; need for cognition; entrepreneurs; managers; lab-in-the-field experiment |
| JEL: | L26 C93 D91 M13 |
| Date: | 2017–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20170100&r=ent |
| By: | Dirk Schindler |
| Abstract: | How to incorporate hard-to-measure assets into the wealth tax? We analyze the effect of an optimal wealth tax on risk-taking behavior and welfare when investors do not only have the standard portfolio choice with a well-diversified market portfolio, but can alternatively choose to invest all their wealth into a non-diversifiable, indivisible project. The latter is interpreted as entrepreneurial investment into a small, non-listed firm for which the actual value is hard to measure and non-verifiable. For such firms, real-world wealth tax systems base the wealth tax on deterministic book values. We show that this tax treatment does not distort the choice of projects if the tax is set optimally with an imputed interest rate on book values, actually larger than the risk-free market rate of return. The market equilibrium and a proportional tax on the market portfolio will ensure an efficient risk allocation between private and public consumption and across projects. Failing to apply an imputed inflation of book values, instead, gives rise to an implicit subsidy on entrepreneurial activity and distorts investment. Our findings also have implications for taxation of hard-to-measure assets under capital-gains and inheritance taxation. |
| Keywords: | wealth taxation, portfolio choice, non-listed firms, risk diversification, hard-to-measure assets |
| JEL: | H21 D14 G11 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6537&r=ent |
| By: | Lars Hornuf; Matthias Schmitt |
| Abstract: | Today, start-ups often obtain financing via the Internet through many small contributions of non-sophisticated investors. Yet little is known about whether these start-ups can ultimately build enduring businesses. In this paper, we hand-collected data from 38 different equity crowdfunding (ECF) portals and 656 firms that ran at least one successful ECF campaign in Germany or the United Kingdom. The evidence shows that German firms that receive ECF stand a higher chance of obtaining follow-up funding through business angels or venture capitalists and have a relatively lower likelihood to survive. We find firm age, the average age of the management team, and excessive funding during the ECF campaign all have a negative effect on firms’ likelihood to obtain post-campaign financing. By contrast, the number of senior managers, registered trademarks, subsequent successful ECF campaigns, crowd exits, and the amount of the funding target all have a positive impact. Subsequent successful ECF campaigns, crowd exits, and the number of venture capital investors are significant predictors reducing firm failure. Finally, we find that some of these factors have a differential impact for Germany and the United Kingdom. |
| Keywords: | equity crowdfunding, follow-up funding, firm survival |
| JEL: | G24 M13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6642&r=ent |
| By: | Breen, Michael; Gillanders, Robert |
| Abstract: | Does corruption ease the burden of regulation? We test this question using survey data on business managers’ experience of dealing with regulation and corruption. We find that there is substantial within-country variation in the burden of regulation and that corruption is associated with worse regulatory outcomes across a range of indicators at the country and subnational level. Our results, which hold over a number of specifications, are inconsistent with the hypothesis that corruption greases the wheels of commerce by easing the burden of regulation on the average firm in poor regulatory environments. Rather, our results suggest that corruption increases the burden and imposes large costs on businesses |
| Keywords: | Corruption, regulation, governance, entrepreneurship, business regulation |
| JEL: | D73 K20 L51 R50 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82088&r=ent |
| By: | Chang, Jae Hee.; Rynhart, Gary. |
| Keywords: | decent work, enterprise creation, corporate social responsibility, employers organization, armed conflict, peace, Asia |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:994965593502676&r=ent |
| By: | Maxin, Hannes |
| Abstract: | The present paper solely focuses on the investment decisions of two corporate venture capital firms. These investors have to decide whether to finance a wealthless venture alone or to share the profits and the costs with the other investor, called syndication. The critical point are the innovation objectives of the corporate investors respectively the nature of innovation of the venture. To my knowledge, no other theoretical paper considers such a financing situation consisting of two CVCs. |
| JEL: | G24 M13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168199&r=ent |
| By: | Steiner, Viktor; Fossen, Frank; Rees, Ray; Rostam-Afschar, Davud |
| Abstract: | We investigate how comprehensive personal income taxes affect the portfolio share of personal wealth that entrepreneurs invest in their own business. Using detaild wealth information form waves 2002, 2007 and 2013 of the SOEP, 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. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168302&r=ent |
| By: | Götz, Georg; Ederington, Josh |
| Abstract: | We develop a model in which ex ante identical firms make endogenous entry and technology adoption decisions. We show that this model is capable of matching the stylized facts in which entry is dispersed over time and that, in many industries, it is the newest firms which are the most likely to exhibit high productivity growth and adopt new innovations (i.e., leapfrogging). We then derive the characteristics of those industries where such leapfrogging is likely to occur. |
| JEL: | L11 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168126&r=ent |
| By: | Jens Matthias Arnold; Lisandra Flach |
| Abstract: | Brazil's 2005 bankruptcy law reform strengthened creditor protection, resulting in a substantial acceleration of credit expansion and business investment growth. In this paper, we go beyond average effects and examine to what extent the pro-creditor reform affected the allocation of resources across firms. We find evidence that the reform was particularly effective in alleviating credit constraints for high productivity firms. After the reform, better access to credit allowed these firms to thrive on the expense of others. Our results suggest that better access to credit can improve the allocation of resources across firms, thus raising aggregate productivity. |
| Keywords: | TFP, credit constraint, credit reform, heterogeneous firms |
| JEL: | G33 O16 F12 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6677&r=ent |