nep-ent New Economics Papers
on Entrepreneurship
Issue of 2017‒12‒11
sixteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Who Creates Jobs and Who Creates Productivity? Small versus Large versus Young versus Old By Heyman, Fredrik; Norbäck, Pehr-Johan; Persson, Lars
  2. The determinants of entrepreneurship for migrants in Italy. Do Italian migrants become entrepreneurs by “opportunity” or through “necessity”? By Marina De Angelis; Marcella Corsi; Daniele Frigeri
  3. Cross-faculty proximity and academic entrepreneurship: The role of business schools By Maximilian Goethner; Michael Wyrwich
  4. Tax Simplicity and Heterogeneous Learning By Philippe Aghion; Ufuk Akcigit; Matthieu Lequien; Stefanie Stantcheva
  5. Literature review on taxation, entrepreneurship and collaborative economy By Dondena; CASE; IEB; PWC
  6. Confronting the zombies: Policies for productivity revival By Dan Andrews; Muge Adalet McGowan; Valentine Millot
  7. Unleashing Innovation and Entrepreneurship in Europe: People, Places and Policies By Leceta, José Manuel; Renda, Andrea; Könnölä, Totti; Simonelli, Felice
  8. Incumbents' responses to innovative entrants: A multi-country dynamic analysis By Diekhof, Josefine; Cantner, Uwe
  9. Regional Innovator Networks - A Review and an Application with R By Holger Graf
  10. Are politically connected firms less constrained in credit markets? By John Rand
  11. Response of firms to listing: Evidence from SME exchanges By Aggarwal, Nidhi; Susan Thomas
  12. Venture Capital Investments and Merger and Acquisition Activity Around the World By Gordon M. Phillips; Alexei Zhdanov
  13. Hierarchical similarity biases in idea evaluation: A study in enterprise crowdfunding By Schweisfurth, Tim; Zaggl, Michael A.; Schöttl, Claus P.; Raasch, Christina
  14. Mutual Funds as Venture Capitalists? Evidence from Unicorns By Sergey Chernenko; Josh Lerner; Yao Zeng
  15. Uncertainty Shocks and Firm Dynamics: Search and Monitoring in the Credit Market By Brand, Thomas; Isoré, Marlène; Tripier, Fabien
  16. Spin-Outs and Patterns of Subsequent Innovation: Technological Development of Laser Diodes in the US and Japan By SHIMIZU, Hiroshi; WAKUTSU, Naohiko

  1. By: Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: This paper examines employment and productivity dynamics in the Swedish business sector during the period 1996–2013. In order to analyze employment and productivity in a consistent way we apply a novel implementation of a method, which previously has been used extensively to analyze job dynamics, on both job and productivity dynamics. Our results, based on detailed matched employer-employee data for Sweden, indicate substantial heterogeneity in terms of job and productivity dynamics for different types of firms. We find that most of the net jobs were created in young, small firms, but at the same time we also find that most of the productivity gains were created in large old incumbent firms, thus suggesting a division of labor between the two. Our analysis provides new insights into the importance of age and size of firms in the restructuring process, stressing the dichotomy between employment growth and productivity growth in different types of firms.
    Keywords: Job dynamics; Productivity; Matched employer-employee data; Industrial structure and structural change
    JEL: E24 J23 L16 L25 L26
    Date: 2017–11–20
  2. By: Marina De Angelis; Marcella Corsi; Daniele Frigeri
    Abstract: This research aims to contribute to the literature on migrants’ entrepreneurship by investigating the determinants of self-employment for migrants in Italy. The analysis is carried out using a data set by the National Observatory for the Financial Inclusion of Migrants in Italy, developed and managed by the Centre of International Political Studies (CeSPI).Controlling for the macroeconomic context and for the migration plan, we find out that the main determinants of migrant entrepreneurship in Italy are related to migrants’ nationality, length of stay, ownership of a current account, gender, proximity of partner, and education. Moreover, our data show that, despite the aftermath of the crisis, the decision of starting a business is for men a matter of opportunity and not of necessity, and that being married increases the negative effect of being a woman on the probability of being an entrepreneur. Furthermore, data shows that the causal relation between risk taking and being an entrepreneur holds true for migrant entrepreneurs in Italy and that the difficulties faced in having qualifications and competences recognised push migrants into self-entrepreneurship.
    Keywords: Migration; Entrepreneurship,; Development; Remittances
    JEL: J60 L26 O15 F22
    Date: 2017–11–24
  3. By: Maximilian Goethner (Friedrich Schiller University Jena, School of Economics and Business Administration); Michael Wyrwich (Friedrich Schiller University Jena, School of Economics and Business Administration)
    Abstract: Over the past decades, entrepreneurial activity has started to be considered a third mission of higher education institutions. Our study examines the extent to which entrepreneurship at universities is driven by spatial proximity between university faculties. To this end, we use a new dataset that links information on business idea generation by faculties of German universities between 2007 and 2014 with comprehensive data on structural characteristics of these universities and faculties (e.g., number of academic staff, students, industry funding). Our analysis shows that the emergence of entrepreneurial ideas in natural sciences is positively affected by proximity to business schools. This pattern suggests the presence of knowledge flows between university faculties as an important source of science-based and technology-oriented business ideas.
    Keywords: Academic entrepreneurship, Knowledge Spillover, Spatial Proximity, Entrepreneurial Human Capital
    JEL: D24 L26 M13 O31 O32
    Date: 2017–12–01
  4. By: Philippe Aghion; Ufuk Akcigit; Matthieu Lequien; Stefanie Stantcheva
    Abstract: We study the effects of fiscal incentives for self-employment using new French tax data from 1994 to 2012. France serves as a good quasi-laboratory: It has three fiscal regimes - or modes of taxation - for the self-employed, which differ in their financial payoffs and in their administrative simplicity. These regimes have changed extensively over time - offering the opportunity to study how people learn about them and understand them. We find that the self-employed respond to the tax and administrative notches created by the eligibility thresholds: there is strong bunching right before the eligibility thresholds, which we use to estimate self-employed taxable income elasticities and the value of administrative simplicity. Even a small preference for administrative simplicity could explain the bunching observed. There is a sizable cost of tax complexity; agents are not immediately able to understand what the right regime choice is and there is evidence for costly learning over time. The cost of complexity is regressive because it affects mostly the uneducated, low income, and low skill agents. Agents who can be viewed as more informed and knowledgeable (e.g., the more educated or high-skilled) are more likely to make the correct regime choice and to learn faster.
    Keywords: self-employment, taxation, entrepreneurship
    JEL: H21
    Date: 2017–11
  5. By: Dondena; CASE; IEB; PWC
    Abstract: This study provides a comprehensive review of the theoretical and empirical economic literature on tax and entrepreneurship, taking also into account a number of open, tax-related questions raised by the changing nature of entrepreneurship, symbolised by the growing importance of the collaborative economy
    Keywords: taxation, innovation, digital, entrepreneurship, collaborative economy
    JEL: H24 H25 L86 O32 O33
    Date: 2017–11
  6. By: Dan Andrews; Muge Adalet McGowan; Valentine Millot
    Abstract: Policies that spur more efficient corporate restructuring can revive productivity growth by targeting three inter-related sources of labour productivity weakness: the survival of “zombie” firms (low productivity firms that would typically exit in a competitive market), capital misallocation and stalling technological diffusion. New OECD policy indicators show that there is much scope to improve the design of insolvency regimes in order to reduce the barriers to restructuring of weak firms and the personal costs associated with entrepreneurial failure. Insolvency regime reform can not only address the aforementioned sources of productivity weakness but also enhance the productivity impacts of reducing entry barriers in product markets. As the zombie firm problem may partly stem from bank forbearance, complementary reforms to insolvency regimes are essential to ensure that a more aggressive policy to resolve non-performing loans is effective. Distortions in the banking sector highlight the importance of market-based financing instruments for productivity growth with the inherent debt bias in corporate tax systems emerging as a key barrier to technological diffusion. Finally, well-designed job search and retraining policies are effective at returning workers displaced by firm exit to work, particularly in environments where barriers to firm entry are low.
    Keywords: banks, capital misallocation, firm exit, insolvency, Productivity, zombie firms
    JEL: D24 G21 G32 G33 G34 J63 J68 K35 L25 O16 O40 O43 O47
    Date: 2017–12–06
  7. By: Leceta, José Manuel; Renda, Andrea; Könnölä, Totti; Simonelli, Felice
    Abstract: This report sets out the elements for the design of a streamlined and future-proof policy on innovation and entrepreneurship in Europe. It is the result of a collective effort led by CEPS, which formed a Task Force on Innovation and Entrepreneurship in the EU, composed of authoritative scholars, industry experts, entrepreneurs, practitioners and representatives of EU and international institutions. The result of these deliberations is a set of policy recommendations aimed at improving the overall environment and approach for entrepreneurship and innovation in Europe and a new paradigmatic understanding of the role that innovation and entrepreneurship can and should play within the overall context of EU policy. These recommendations are based on a new, multi-dimensional approach to both innovation and entrepreneurship as social phenomena and to the policies that are meant to promote them.
    Date: 2017–02
  8. By: Diekhof, Josefine; Cantner, Uwe
    Abstract: The influence of innovative entrants on incumbents is considered important for technological change. We analyze this influence for the global transition towards alternative technology vehicles (ATVs). Our results indicate that entrants' ATV-related knowledge accumulation stimulates average incumbent's ATV-related research. Regarding global entrants, incumbents with higher ATV patent stocks increased patenting stronger; supporting previous literature on competitive reactions to entry. Responding to domestic entrants, however, incumbents with low ATV patent stocks increased whereas incumbents with high stocks decreased patenting; suggesting that advanced incumbents outsource research or overtake entrants. Further, certain characteristics and not merely the quantity of entrants drive incumbents' responses.
    Keywords: Environmental Economics,Sustainable Development,Technological Innovation,Firm Behavior: Empirical Analysis,Entrepreneurship,Industry Dynamics,Automobile Industry,Electric Vehicle
    JEL: Q01 Q55 D22 L26 L62 O31
    Date: 2017
  9. By: Holger Graf (FSU Jena)
    Abstract: The article serves as an introduction to the empirical analysis of innovation or knowledge networks based on patent data with a particular focus on regional networks. I provide a review of the literature of innovation networks and how it connects to systemic approaches within the field of innovation studies. The SNA methodology is introduced by performing a comparative regional network study based on the publicly available OECD patent databases.
    Keywords: Regional Innovation, Network Analysis, Patent Data
    JEL: L14 O31 R11
    Date: 2017–11–08
  10. By: John Rand
    Abstract: Utilizing a panel of over 2,000 Vietnamese SMEs over a 10-year period, we analyse the importance of being politically connected on both access and cost-of-credit obtained from formal financial institutions. Controlling for unobserved time-invariant firm-level heterogeneity, productivity self-selection concerns, and access to alternative credit markets, we show that political connections decreases the likelihood of being credit-constrained by 4 percentage points. Moreover, politically connected firms accessing credit face lower cost-of-capital than non-connected SMEs not excluded from formal financial markets. However, the impact of political connections is most valuable during periods of financial distress, but less prevalent during business cycle upswings.
    Date: 2017
  11. By: Aggarwal, Nidhi (Indian Institute of Management, Udaipur); Susan Thomas (Indira Gandhi Institute of Development Research)
    Abstract: Public equity markets have increasingly become accessible to small and medium firms with the introduction of dedicated exchange that lower listing criteria to allow such firms to list their equity. We exploit the introduction of such a dedicated exchange in India to ask how listing impacts the financial constraints and growth prospects of small and medium firms. The causal impact is assessed using a difference-in-differences estimation based on a sample of firms that listed on these exchanges over a three year period, where we also observe matched firms that are not listed. We find that listing improves the asset size and capital structure of listed firms relative to firms that do not list. But we find no evidence that these firms are subsequently able to access higher debt finance from formal institutions, nor evidence of improvement in the performance of these firms, after listing.
    Keywords: Public equity, IPO, reduced listing requirement, small and medium enterprises, transparency, access to finance, firm performance
    JEL: G15 G24 G28
    Date: 2017–11
  12. By: Gordon M. Phillips; Alexei Zhdanov
    Abstract: We examine the relation between venture capital (VC) investments and mergers and acquisitions (M&A) activity around the world. We find evidence of a strong positive association between VC investments and lagged M&A activity, consistent with the hypothesis that an active M&A market provides viable exit opportunities for VC companies and therefore incentivizes them to engage in more deals. We also explore the effects of country-level pro-takeover legislation passed internationally (positive shocks), and US state-level antitakeover business combination laws (negative shocks), on VC activity. We find significant post-law changes in VC activity. VC activity intensifies after enactment of country-level takeover friendly legislation and decreases following passage of state antitakeover laws in the U.S.
    JEL: G3 G34 L12 O3 O31 O34
    Date: 2017–11
  13. By: Schweisfurth, Tim; Zaggl, Michael A.; Schöttl, Claus P.; Raasch, Christina
    Abstract: To be successful innovators, organizations must select the best ideas for implementation. Extant research shows that idea selection is distorted by a number of biases, but has failed to consider hierarchy, a key element of organizations. We examine how hierarchical distance between an idea's creator and its evaluator affects evaluation outcomes and thus advance three competing theoretical predictions based on homophily, competition, and status. To test our predictions, we use a unique dataset from an enterprise crowdfunding initiative at Siemens where 265 employees evaluated 77 ideas by allocating corporate funds, resulting in 20,405 evaluation dyads. We find that idea evaluations are more favorable if the idea creator is hierarchically similar to the evaluator, thus supporting the homophily perspective. Idea novelty amplifies this bias, inducing more social evaluations. Our findings are robust to various specifications and tests, and are absent in a subsample where idea creators remained anonymous. We contribute to the idea evaluation research and inform organizational idea selection process designs.
    Keywords: idea evaluation,idea selection,crowdfunding,hierarchy,homophily,status,competition
    JEL: D91 M19 O31
    Date: 2017
  14. By: Sergey Chernenko; Josh Lerner; Yao Zeng
    Abstract: Using novel contract-level data, we study the recent trend in open-end mutual funds investing in unicorns—highly valued, privately held start-ups—and the consequences of these investments for corporate governance provisions. Larger funds and those with more stable funding are more likely to invest in unicorns. Compared to venture capital groups (VCs), mutual funds have weaker cash flow rights and are less involved in terms of corporate governance, being particularly underrepresented on boards of directors. Having to carefully manage their own liquidity pushes mutual funds to require stronger redemption rights, suggesting contractual choices consistent with mutual funds’ short-term capital sources.
    JEL: G23 G24
    Date: 2017–10
  15. By: Brand, Thomas; Isoré, Marlène; Tripier, Fabien
    Abstract: We develop a business cycle model with gross flows of firm creation and destruction. The credit market is characterized by two frictions. First, entrepreneurs undergo a costly search for intermediate funding to create a firm. Second, upon a match, a costly-state-verification contract is set up. When defaults occurs, banks monitor firms, seize their assets, and a fraction of financial relationships are severed. The model is estimated using Bayesian methods for the U.S. economy. Among other shocks, uncertainty in productivity turns out to be a major contributor to both macro-financial aggregates and firm dynamics.
    Keywords: Uncertainty shocks, Financial frictions, Search and Matching, Business Cycles, Firm Dynamics
    Date: 2017–12
  16. By: SHIMIZU, Hiroshi; WAKUTSU, Naohiko
    Abstract: By exploring the technological development of laser diodes in the US and Japan, this study examines how the existence or absence of an entrepreneurial strategic choice for spin-outs influences patterns of subsequent technological development. The results show that spin-outs could hinder the subsequent development of existing technology when that technology is still at a nascent level, because the cumulative effects of technological development could disappear if research and development personnel left their parent firms in order to target different sub-markets.
    Keywords: innovation, R&D competition, technological trajectory, spin-out, sub-market, laser diode
    JEL: O31 O32 O33 M13 L63
    Date: 2017–08

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