nep-ent New Economics Papers
on Entrepreneurship
Issue of 2017‒11‒19
nine papers chosen by
Marcus Dejardin
Université de Namur

  1. Estimating labor supply in self-employment: Pitfalls and resolutions By Lechmann, Daniel S. J.
  2. Female owners versus female managers: Who is better at introducing innovations? By Dohse, Dirk; Goel, Rajeev K.; Nelson, Michael A.
  3. Public R&D Subsidies: Collaborative versus Individual Place-Based Programs for SMEs By Andrea Bellucci; Luca Pennacchio; Alberto Zazzaro
  4. Firm R&D and Financial Analysis: How Do They Interact? By Goldman, Jim; Peress, Joël
  5. How do African SMEs respond to climate risks? Evidence from Kenya and Senegal By Florence Crick, Shaikh Eskander, Sam Fankhauser, Mamadou Diop
  6. Informal sector heterogeneity and income inequality: Evidence from the Democratic Republic of Congo By Franck M. Adoho; Djeneba Doumbia
  7. Radius Restriction and Firms' Survival: Evidence from the Coffee Franchise Industry By Yun Jeong Choi; Jee Young Kim; Min Hee You
  8. Entrepreneurship, Sectoral Outputs and Environmental Improvement : International Evidence By OMRI, ANIS
  9. Disentangling novelty and usefulness : Essays on creativity in the arts and sciences By Haans, Richard

  1. By: Lechmann, Daniel S. J.
    Abstract: The small extant literature on the working hours of self-employed workers is deficient, because it often lacks a clear theoretical underpinning and suffers from three common mistakes: including the hourly wage as an explanatory variable, controlling for input factors of production, and not considering endogenous selection of self-employed workers. I introduce a structural causal model that makes clear that neither the wage nor input factors such as the number of employees or the amount of capital invested are determinants of working hours in self-employment. It also shows why selection bias arises when using a sample of self-employed individuals. I present an empirical discrete choice labor supply model that resolves these issues. Estimating this model with German data, I find that both non-labor income and education negatively affect labor supply in self-employment.
    Keywords: Germany,labor supply,self-employment,SOEP,structural causal model,working hours
    JEL: J22 J23
    Date: 2017
  2. By: Dohse, Dirk; Goel, Rajeev K.; Nelson, Michael A.
    Abstract: This paper uses firm-level survey responses across more than 100 emerging and developing countries to examine whether female managers or female owners of firms were better at bringing innovations to the market. Employing a range of firm-specific and country-specific controls, the econometric results show that female owners of firms, rather than female managers, were more likely to introduce innovations. As expected, innovations resulted from firms engaging in R&D. Larger and older firms reinforced these tendencies; however, sole proprietorships had the opposite effect. The presence of an informal sector and finance availability constraints actually spurred innovation. Finally, the economy-wide effects of greater economic freedom and stronger patent protections were positive, while greater economic prosperity somewhat led to complacency.
    Keywords: innovation,female,owners,managers,patent protection,R&D,firm size,sole proprietorship
    JEL: O32 O33 O57 J16
    Date: 2017
  3. By: Andrea Bellucci (European Commission - Joint Research Centre and MoFiR); Luca Pennacchio (Università di Napoli Parthenope); Alberto Zazzaro (University of Naples Federico II, CSEF and MoFiR.)
    Abstract: This paper provides novel empirical evidence on the effectiveness of regional research and innovation policies for small and medium-sized enterprises (SMEs). It investigated two subsidy programs implemented at the regional level in central Italy. One program targeted SMEs’ individual investments in research, and the other focused on collaborative research between SMEs and universities. Using a matched difference-in-differences approach, the empirical analysis showed that the two programs had different effects. The first was successful in stimulating additional private R&D investment and improving firms’ performance. The second had weaker effects, mostly restricted to R&D expenditure and employment. These effects were not always uniformly distributed among project participants.
    Keywords: Public Subsidies; R&D; Impact Evaluation; SMEs; Cooperation; Regional Policy.
    JEL: H25 L52 O31 O38 R58
    Date: 2017–11–12
  4. By: Goldman, Jim; Peress, Joël
    Abstract: Entrepreneurs undertake more R&D when financiers are better informed about their projects because they expect to receive more funding for successful projects. Conversely, financiers learn more about projects when entrepreneurs perform more R&D because then the opportunity cost of mis-investing is higher. Thus R&D and financial analysis are mutually reinforcing. Evidence based on two quasi-natural experiments supports this interaction. Quantitatively, investors' learning accounts for over a quarter of the total effect of a policy designed to stimulate R&D. A calibration suggests that the interaction's contribution to income growth represents a third of the total contributions of learning and R&D.
    Keywords: capital allocation; Financial Development; growth; Innovation; learning; technological progress
    JEL: G20 O31 O4
    Date: 2017–11
  5. By: Florence Crick, Shaikh Eskander, Sam Fankhauser, Mamadou Diop
    Abstract: This paper investigates to what extent and how small and medium-sized enterprises (SMEs) in poor countries are adapting to climate risks. We collect data from 325 SMEs in the semi-arid regions of Kenya and Senegal and use this information to estimate the quality of current adaptation measures, distinguishing between sustainable adaptation and reactive coping. We then study the link between these current adaptation practices and adaptation planning for future climate change. We find that financial barriers are a key reason why firms resort to reactive coping mechanisms, while general business support, access to information technology and adaptation assistance encourages sustainable adaptation responses. Engaging in adaptation today also increases the likelihood that a firm is preparing for future climate change. The finding lends support to the strategy of many development agencies who use adaptation to current climate variability as a way of building resilience to future climate change. There is a clear role for public policy in facilitating good adaptation. The ability of firms to respond to climate risks depends in no small measure on factors that can be shaped through policy intervention.
    Date: 2017–11
  6. By: Franck M. Adoho (World Bank, USA); Djeneba Doumbia (Paris School of Economics, France and World Bank, USA)
    Abstract: This paper uses 1-2-3 survey data on the Democratic Republic of Congo to analyze heterogeneity in the informal sector. It empirically identifies three types of entrepreneurs in the sector. The first group of entrepreneurs—top performers—is growth oriented and enjoys greater access to capital. The second group—constrained gazelles—includes entrepreneurs who share many characteristics, especially management skills, with the top performers, but operate with less capital. The third group—survivalists—comprises firms struggling to grow. Based on logit and fixed effect ordinary least squares models, the results show that poverty and income inequality are more common among constrained gazelles and survivalists. The paper also shows that income inequality is explained mainly by educational disparities and lack of credit access among entrepreneurs. Additionally, the outcomes of a Blinder-Oaxaca decomposition show that the performance of firms is a key factor in explaining differences in income. Examining the drivers of performance, the paper finds that human capital and managerial skills are important engines of performance.
    Keywords: Informal sector, income inequality, firm performance, Democratic Republic of Congo.
    JEL: D21
    Date: 2017–10
  7. By: Yun Jeong Choi (Yonsei University); Jee Young Kim (Yonsei University); Min Hee You (Yonsei University)
    Abstract: This paper investigates the effects of distance restrictions on the survival of coffee shops in Korea, which were implemented by South Korea¡¯s Fair Trade Commission to limit the opening of new shops by headquarters to protect franchisees¡¯ territorial rights. Using Cox proportional hazard regression analyses, we find that the radius restriction reduced the hazard rates of all coffee shops significantly. However, selective regulation on five big brands affected interbrand competition and changed the landscape of the coffee franchise industry. Different benefits across different coffee brands also widened the gap between small brand coffee shops and the rest.
    Keywords: radius restriction, business territory, competition, survival analysis, franchise, Cox regression model, coffee industry
    JEL: L20 D21 R11
    Date: 2017–10
  8. By: OMRI, ANIS
    Abstract: The relationship between entrepreneurship, output and environmental quality receives considerable attention from academics and policymakers, as society searches for solutions leading to environmental sustainability. Given this context, the current study contributes to this discussion by explaining how entrepreneurship and different sectoral outputs can help resolve the environmental problems of global socio-economic systems. So, we used data for 69 countries split across four homogeneous income-based panels: high-income, upper-middle-income, lower-middle-income, and low-income economies. Long-run elasticities suggest that (i) the rate of environmental damage due to the growth of sectoral outputs is much higher in the high-income sample; (ii) compared to output from other sectors, services makes the highest contribution to environmental degradation in high-income countries but its contribution in the other country samples is negative; indicating that a move to services economy would be beneficial for these countries; (iii) with the exception of the high-income sample, there is an inverted U-shaped relationship between output growth and environmental degradation across country samples and sectors; (iv) the contribution of entrepreneurial activity to environmental degradation is lower in high-income countries compared to other country samples; and (v) entrepreneurship activity in high-income countries initially degrades the environment but then improves environmental quality after a certain level, that is, an inverted U-shaped relationship between entrepreneurship and environmental pollution. The findings are sensitive to different income groups and sectoral analyzes. In particular, these empirical findings aid sound economic policymaking for improving environmental quality and sustainable economic development.
    Keywords: Entrepreneurship; Sectoral outputs; Environment; Economic stages of development.
    JEL: C5 D2 O4 Q5
    Date: 2017–11–05
  9. By: Haans, Richard (Tilburg University, School of Economics and Management)
    Abstract: Concerns that sophisticated algorithms and autonomous machines are replacing human labor have driven a recent interest in creativity as a key factor in maintaining innovation and economic growth. Within management and entrepreneurship research, the dominant definition of creativity is that it entails the generation of ideas or products that are both novel and useful. Novelty—being new, unique, or different, relative to central practices or views—and usefulness—being appropriate, correct, or valuable to the task at hand—are therefore each seen as necessary conditions for something to be classified as creative. In spite of its importance, a major obstacle to the study of creativity has been the translation of this simple two-criterion conceptual definition into an operational one to be utilized in empirical study. This dissertation aims to take a step back and answer the question of whether, how, and under what conditions novelty is related to usefulness. Following recent advances in the study of creativity it emphasizes that, although creativity may be jointly composed of the novelty and usefulness, these are distinct concepts that should best be considered as such. This dissertation contributes to research on creativity, management, and entrepreneurship by providing new insights into the conditions under which creativity emerges—yielding new insights as to why some novel offerings see widespread use whereas other ostensibly similar offerings linger in obscurity. This dissertation consists of four essays that address the overarching research question from a variety of theoretical lenses, and each essay is centered on a setting where creativity is of particular importance: university students who are close to starting knowledge-intensive and skilled work, the creative industries, and academia.
    Date: 2017

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