nep-ent New Economics Papers
on Entrepreneurship
Issue of 2018‒01‒29
sixteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Regional Knowledge, Entrepreneurial Culture and Innovative Start-ups over Time and Space - An Empirical Investigation By Michael Fritsch; Michael Wyrwich
  2. Cities and Entrepreneurs over Time: Like a Horse and Carriage? By Naudé, Wim
  3. Entrepreneurial Success and Subjective Well-Being: Worries about the Business Explain One's Well-Being Loss from Self-Employment By Martin Binder
  4. Technological Innovation and Inclusive Growth in Germany By Naudé, Wim; Nagler, Paula
  5. Good Times, Bad Times: Innovation and Survival over the Business Cycle By Elena Cefis; Orietta Marsili
  6. Long-Term Finance and Entrepreneurship By Florian LEON
  7. The effect of cultural environment on entrepreneurial decisions By Morales, Marina; Velilla, Jorge
  8. Gender Gap in Entrepreneurship and Firm Performance in Developing Countries By Inmaculada Martínez-Zarzoso
  9. Do Company Builders Create Jobs? Examining the Rise of Incubation Finance in Germany By Scheuplein, Christoph; Kahl, Julian
  10. Entrepreneurial storytelling : A mean for legitimacy and opportunity exploitation By Yosr Ben Tahar; Sarah Mussol
  11. Did the bank capital relief induced by the supporting factor enhance SME lending? By Sergio Mayordomo; María Rodríguez-Moreno
  12. Optimizing value creation and value capture with a digital multi-sided business model By Romain Gandia; Guy Parmentier
  13. Moving to higher ground: building innovation capabilities to overcome conceptual biases in new product development By Antoine Thuillier; Matthew Fuller; Albert David
  14. Why is Business Model Innovation so poorly innovative ? Uncovering the critical role of collaborative design in Business Model Innovation By Maxime Thomas; Pascal Le Masson; Benoit Weil
  15. Patent Protection, Optimal Licensing, and Innovation with Endogenous Entry By Suzuki, Keishun
  16. The determinants of credit rationing of SMEs in France: A disequilibrium model upon a balanced panel By Philippe Adair; Mohamed Adaskou

  1. By: Michael Fritsch (FSU Jena); Michael Wyrwich (FSU Jena)
    Abstract: We investigate the role of entrepreneurship culture and the historical knowledge base of a region on current levels of new business formation in innovative industries. The analysis is for German regions and covers the time period 1907-2014. We find a pronounced positive relationship between high levels of historical self-employment in science-based industries and new business formation in innovative industries today. This long-term legacy effect of entrepreneurial tradition indicates the prevalence of a regional culture of entrepreneurship. Moreover, local presence and geographic proximity to a technical university founded before the year 1900 is positively related to the level of innovative start-ups more than a century later. The results show that a considerable part of the knowledge that constitutes an important source of entrepreneurial opportunities is deeply rooted in history. We draw conclusions for policy and for further research.
    Keywords: Innovative start-ups, universities, regional knowledge, regional cultures of entrepreneurship
    JEL: L26 L60 L80 O18 R12 R30
    Date: 2018–01–08
  2. By: Naudé, Wim (Maastricht University)
    Abstract: Entrepreneurship, being largely an urban phenomenon, co-evolves over time with cities. While this relationship is like a 'horse and carriage', it is not a straightforward one, more akin to 'love and marriage'. In this paper I explore the co-evolution of entrepreneurship and cities. First, I provide a stylized model of development wherein the rise of cities (urbanisation) is the outcome of the activities of entrepreneurs. Second, I provide a stylized overview of entrepreneurship and cities from earlier to later stages of development. In young cities a challenge for establishing an entrepreneurial ecosystem is the provision of infrastructure for business' connectivity and energy. Good urban planning and management skills, including urban policing and dealing with land disputes, may be amongst the most sorely needed in the emerging world today. At more intermediate and later stages of development, cities can become entrepreneurial hotspots and even 'global startup cities'. Three main challenges during these stages, as far as the role of entrepreneurs are concerned, relates to (i) rising property prices and rents, urban congestion and fierce business competition, (ii) environmental sustainability and (iii) the impacts of technology that could make centralization in cities for business purposes unnecessary. Entrepreneurs have important roles to play as property developers and in the creation of new business models and new markets. They can be the drivers of 'smart' cities, 'circular' cities, and of sub-urbanisation and secondary city growth. Over time not all cities, and their entrepreneurs, will necessarily continue to grow and prosper. There is nothing inevitable in the rise of any particular city and the prosperity of its entrepreneurs. Cities do not only generate, they also degenerate. I conclude that the heterogeneity, serendipity and context-specificity of global urbanisation implies that there is much that is still unknown about the specifics of the relationship between cities and its entrepreneurs over time.
    Keywords: entrepreneurship, urbanisation, development
    JEL: L26 L53 M13 O18 R10
    Date: 2017–12
  3. By: Martin Binder
    Abstract: Despite lower incomes the self-employed often report higher job satisfaction. But this increased job satisfaction only sometimes translates into higher life satisfaction, likely due to the heterogeneous nature of self-employment. By distinguishingdifferent types of self-employment, this paper sheds light onto why some self-employeds even report lower life satisfaction, focussing specifically on poor performance enterprises, a prevalent but disregarded type of entrepreneurship. Using German panel data (1984-2015), I find that self-employment (compared to employment) typically negatively impacts on life satisfaction, especially so if one enters self-employment from unemployment, earns low incomes from self-employment or has no employees. Worries about one's financial situation and job security appear to be the driving forces behind this negative effect. Only very few self-employeds report higher life satisfaction, a boost that seems to relate to the pursuit of entrepreneurial opportunities. In sum, looking at the average self-employed obscures the heterogeneity of well-being impacts resulting from different types of self-employment one might find themselves in, and being on the lower end of the success distribution carries a well-being cost instead of bringing joy.
    Keywords: subjective well-being, self-employment, entrepreneurial success, SOEP, life satisfaction
    JEL: I31 L26 J28
    Date: 2017
  4. By: Naudé, Wim (Maastricht University); Nagler, Paula (Erasmus University Rotterdam)
    Abstract: Technological innovation has historically contributed to inclusive economic growth in Germany. In more recent decades, however, this contribution has weakened due to the declining impact of technological innovation on labor productivity growth. Fearing that this declining impact would undermine the international competitiveness of the economy, real labor compensation was progressively curbed since the mid-1990s. This occurred inter alia through the government's erosion of the social welfare state, as well as through offshoring and reduced fixed capital investment of the corporate sector. The outcome was rising income and wealth inequalities. Between the mid-1990s and 2010 the rise in wage inequality was faster in Germany than in the United States, the United Kingdom, and Canada. To restore inclusive growth, two broad policy measures are recommended: first, to have appropriate compensatory social welfare policies in place; and second, to improve the effectiveness of technological innovation to raise labor productivity. This paper identifies three reasons why technological innovation has become less and less effective:(i) historical legacies, (ii) weaknesses in the education system, and (iii) entrepreneurial stagnation. Improving the impact of technological innovations on labor productivity growth will require a more diversified education system, a deepening of active labor market policies, better immigration policies, and a greater contestability of markets. Ensuring these recommendations in a coordinated fashion suggests the need for an appropriate industrial-innovation policy.
    Keywords: entrepreneurship, Germany, inequality, innovation, social protection, technology
    JEL: D31 L26 O33 O38 O52
    Date: 2017–12
  5. By: Elena Cefis; Orietta Marsili
    Abstract: High-potential new ventures are a source of economic growth, which policy makers call upon in times of crisis when entrepreneurship is seen as a remedy to economic downturn. Yet at these times new ventures face intensified selection, and survival hinges on heterogeneous capabilities. We examine how the innovative capabilities of new firms created in the Netherlands in 2001-2006, affected their survival likelihood before, during and after the 2007-2008 global financial crisis. We estimate a piecewise exponential model linking survival times, observed in the time period from 2001 to 2015, to longitudinal innovation data from the CIS. Our results show that new ventures innovating within two years from founding benefit of a long-term adaptive survival premium during and after the crisis. This premium and its duration over the stages of the crisis are contingent to the form of innovation: technological innovations entail a more effective and enduring premium, as compared to managerial innovations, which can be even detrimental for survival. Our study has implications for entrepreneurial management, by highlighting how the development of innovative capabilities at founding, lays the foundations for organisational adaptation and resilience in the longer term. Furthermore, our results can inform a policy approach that aims at sheltering from the storm of a financial crisis, those new ventures that do possess the specific and necessary adaptive capabilities, but that are also vulnerable because of the liabilities of newness and smallness. Such an approach could help to maintain alive the process of entrepreneurial experimentation during the crisis, and to boost economic recovery, without dispersing precious resources.
    Keywords: firm survival; environmental jolts; financial crisis; organisational adaptation; technological and non-technological innovation
    Date: 2018–01–09
  6. By: Florian LEON (CREA, Université du Luxembourg)
    Abstract: This paper investigates whether long-term finance affects the firm entry across the world. We construct a new database on short-term and long-term credit provided by commercial banks to the private sector in 85 countries over the period 1995-2014. We then analyze whether dif- ferences in entrepreneurship are correlated with the provision of short-term and long-term bank credit. Data on entrepreneurship are extracted from two frequently used databases: the Global Entrepreneurship Monitoring dataset and Entrepreneurship Database, each of which captures different aspects of firm creation. Econometric results indicate that long-term credit does not stimulate the firm entry. On the contrary, we find that short-term credit exerts a positive im- pact at each stage of firm creation from activity birth to registration. Our findings are robust to a battery of sensitivity tests, including additional control variables, alternative dependent variables, alternative sample, and changes in econometric specification. Our findings suggest that better provision of short-term credit allows entrepreneurs to apply for a formal loan instead of relying exclusively on informal loans or internal funds, contrary to long-term loans.
    Keywords: Long-term finance; banks; entrepreneurship; credit constraints
    JEL: G21 L26 O16
    Date: 2018
  7. By: Morales, Marina; Velilla, Jorge
    Abstract: This paper empirically examines whether the cultural environment plays a role in entrepreneurial decisions in Europe, the United States, Canada, and Australia. To explore this issue, we use data from the Adult Population Survey (APS) of 2010 to 2015 provided by the Global Entrepreneurship Monitor (GEM). To calculate the cultural factor, we utilize data from the GEM National Expert Survey (NES) data and apply a probit model to measure the effect of culture based on an unobserved latent variable of satisfaction, measured through a dichotomous variable identifying entrepreneurs. Results show a positive and statistically significant relationship between the cultural factor and the individual choice of entrepreneurial activity, suggesting that cultural environment is important, especially in European and Mediterranean countries. Our findings are robust to the introduction of several country variables, and to the use of different subsamples. Further, they do not qualitatively depend on the age of individuals.
    Keywords: Entrepreneurship. Culture. Developed countries. GEM Data.
    JEL: L26
    Date: 2018–01–10
  8. By: Inmaculada Martínez-Zarzoso (Dept of Economics and Center for Statistics, Georg-August Universitaet Goettingen, Göttingen, Germany & Dept of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: This paper uses firm-level data from the World Bank Enterprise Surveys (WBES) to investigate productivity gaps between female and male-managed companies in developing countries. We depart from the previous literature by using the gender of the top manager as target variable, which is newly available in the 2016 version of the WBES. The main results indicate that it is crucial to distinguish between female management and female ownership and also the confluence between both. We find that when the firms are managed by females and there are not female owners, they show a higher average labour productivity and total factor productivity. However, if females are among the owners and a female is the top manager, then their productivity is lower than for other firms. These results are very heterogeneous among regions. In particular, results in South Saharan Africa, East Asia and South Asia seems to be driving the general results
    Keywords: firm performance, gender gap, developing countries, top manager, TFP
    JEL: J16 O15 O44
    Date: 2017
  9. By: Scheuplein, Christoph; Kahl, Julian
    Abstract: Over the past decade, new types of business incubation have been developed. One particularly prominent example is company builders, which use their own resources to build up companies, establishing numerous companies in a series. In doing so, this investor type facilitates internal and external business ideas. It offers a new or-ganizational solution that combines both the innovative capacity of founders and the financial resources of a large company with the desire for long-term employment and corporate affiliation. This article examines the economic impact of company builders in Germany compared with other venture capital (VC) investor types on the basis of employment trends in the portfolio companies from 2011 to 2015. It is shown that company builders promote more dynamic employment growth than do other types of investors. This finding suggests that this type of investor is particular-ly well positioned to take advantage of the institutional deficiency in the German VC market. The results are also discussed in the context of the growth of the Berlin-based VC and start-up ecosystem.
    Keywords: venture capital; company builder; incubation; employment; Germany
    JEL: G24 L22 M13 R12
    Date: 2017–11–15
  10. By: Yosr Ben Tahar (DD - Dynamiques du droit - CNRS - Centre National de la Recherche Scientifique - UM1 - Université Montpellier 1 - UM - Université de Montpellier); Sarah Mussol (Marketing - MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier, MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier)
    Abstract: Stories are an important tool to create shared meanings about ventures and entrepreneurs. To analyze how storytelling contributes to legitimacy, identity and resources access, data was collected from press articles (2005-2016) about a french small business Michel & Augustin. Thematic analysis of the 275 press articles shows that the balance between alignment with norms and uniqueness is crucial for entrepreneurial identification and acceptance. Further perspectives of this research relate to the effects of developing effective mediatic storytelling on customer relationships and human resources strategy.
    Abstract: Les histoires sont un outil important pour créer des significations partagées sur les entreprises et les entrepreneurs. Pour analyser comment le storytelling contribue à la légitimité, à l'identité et à l'accès aux ressources, des données ont été collectées à partir d'articles de presse (2005-2016) sur Michel & Augustin, une petite entreprise française. L'analyse thématique de 275 articles de presse montre que l'équilibre entre l'alignement sur les normes et la création d'une identité unique est crucial pour l'identification et l'acceptation entrepreneuriales. D'autres perspectives de cette recherche portent sur les effets de l'élaboration de récits médiatiques efficaces, et leur utilisation dans le développement des relations avec les consommateurs et dans la stratégie des ressources humaines.
    Keywords: storytelling,legitimacy,opportunities,customer relationship
    Date: 2017–06–29
  11. By: Sergio Mayordomo (Banco de España); María Rodríguez-Moreno (Banco de España)
    Abstract: The introduction of the SME Supporting Factor (SF) allows banks to reduce capital requirements for credit risk on exposures to SME. This means that banks can free up capital resources that can be redeployed in the form of new loans. Our study documents that the SF alleviates credit rationing for medium-sized firms that are eligible for the application of the SF but not for micro/small firms. These results suggest that European banks were aware of this policy measure and optimized both their regulatory capital and their credit exposures by granting loans to the medium-sized firms, which are safer than micro/small firms.
    Keywords: SME, credit access, supporting factor, bank lending
    JEL: E51 E58 G21
    Date: 2017–12
  12. By: Romain Gandia (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Guy Parmentier (CERAG - Centre d'études et de recherches appliquées à la gestion - UPMF - Université Pierre Mendès France - Grenoble 2 - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Faced with the limits of cooperative approaches to business model in optimizing the value creation and value capture, we propose here a new multi-sided business model architecture adapted to digital industries which allows considering new opportunities to create and capture value, for the growth and survival of innovative SMEs.
    Keywords: value creation,value capture,digital business model,multi-sided platform
    Date: 2017–07
  13. By: Antoine Thuillier (DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique); Matthew Fuller (DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique); Albert David (DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Startup companies face many challenges in the early years of their existence. During these critical stages, they are often required to convince decision makers to allocate critical resources to themto obtain venture capital, support from a startup incubator, orgovernment subsidies
    Keywords: startups,design theory,conceptual architecture,pitch presentation,new product development,creativity
    Date: 2017–06
  14. By: Maxime Thomas (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Pascal Le Masson (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Benoit Weil (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In this paper we propose to analyze two cases of business model innovation process Uber and a French health care company-with the models developed by design theory. In particular we demonstrate, relying on C-K theory, how the traditionally unchallenged figure of a lone firm performing business model innovation has implications on the outcomes of the process, preventing innovative business models to emerge. In particular we show that the coordination structure chosen by the firms engaging in business model innovation has major consequences. Therefore we propose a categorization of business model innovation process based on the level of implication of each firm. We argue that a more collaborative approach in designing business models that overcomes the difficulties raised by collective design is needed so that the outcomes are innovative. We discuss the implications of this result for business model innovation literature, disruptive innovation theory and design theory. Introduction In this paper, we propose, using recent advances in design theory, to discuss the innovative power of business model innovation. We thus propose analysing two business model innovation processes: the case of Uber business model and an ongoing business model innovation project in a French Health care company. The first case is famous among practitioners as it is used as an example of current disruptions occurring in several industries. The second project is an example of such a process in an incumbent company. Although the study of business models (Amit and Zott, 2001) and in particular business model innovation (Chesbrough, 2010) opens new fields for the innovation literature, the literature seems to focus on the model of a focal firm performing alone a business model innovation process (Amit and Zott,
    Keywords: Business Model Innovation,Design
    Date: 2017–06
  15. By: Suzuki, Keishun
    Abstract: How does patent policy affect innovation when patent licensing is crucial for firms? To address this question, the present paper incorporates voluntary patent licensing between an innovator and followers, which has been discussed in the literature of industrial organization, into a dynamic general equilibrium model. Unlike in existing studies, both the licensing fee and the number of licensees are endogenously determined by the innovator’s maximization and the free-entry condition. Using this model, we show that strong patent protection does not enhance innovation, economic growth, and welfare. Furthermore, the extended analysis provides a policy implication that the effect of patent policy depends on how difficult further innovation is without patent licensing of the current leading technology.
    Keywords: innovation, patent protection, optimal patent licensing, endogenous market structure.
    JEL: L24 O31 O34
    Date: 2017–11–15
  16. By: Philippe Adair (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - UPEM - Université Paris-Est Marne-la-Vallée); Mohamed Adaskou
    Abstract: Abstract Credit rationing results from the existence of asymmetric information, both ex ante and ex post the signing of the loan agreement. It refers to an equilibrium wherein which banks grant credit to some borrowers whereas they crowd out others that would pay nevertheless a higher interest rate. A conventional assumption is that Small and medium enterprises (SMEs) are most affected by credit crunch. We design a disequilibrium model to analyse the determinants of credit rationing upon a balanced panel of 2,370 French SMEs over the period 2002-2010. According to the estimates of simultaneous equations, the desired demand for bank credit is determined by exogenous factors from the supply-side such as interest rate and the guarantees required by banks. Banks decide to grant credit based on the means to ensure the payback of loans. The average share of rationed SMEs, whether partially or totally, is 23.46 per cent of the sample. This result suggests that access to bank loans is not a major issue for French SMEs, which have been operating for a decade. Keywords: balanced panel; credit rationing; disequilibrium model; France; SME, JEL: G21, G23
    Abstract: Communication au 2 ème Colloque International de Défaillance d'Entreprise (CIDE) "Quand les PME matent l'échec", Université Paris Ouest la Défense, 14 octobre 2016 Les déterminants du rationnement du crédit des PME en France: un modèle de déséquilibre sur un panel cylindré (2002-2010) Philippe ADAIR 1 et Mohamed ADASKOU 2 Résumé Le rationnement de crédit procède de l'existence de l'asymétrie d'information, à la fois ex ante et ex post à la signature du contrat de prêt. Il constitue un équilibre dans lequel les banques accordent du crédit à certains emprunteurs alors qu'elles en évincent d'autres qui pourraient néanmoins payer un taux d'intérêt plus élevé. Une hypothèse classique est que les petites et moyennes entreprises (PME) sont les plus affectées par le rationnement du crédit. Nous élaborons un modèle de déséquilibre afin d'analyser les déterminants du rationnement du crédit sur un panel équilibré de 2.370 PME françaises au cours de la période 2002-2010. Selon les estimations des équations simultanées, la demande désirée de crédit bancaire est déterminée par des facteurs exogènes du côté de l'offre, tels que le taux d'intérêt et les garanties exigées par les banques. Les banques décident d'accorder un crédit selon la capacité des emprunteurs d'assurer le remboursement des prêts. La part des PME rationnées, que ce soit partiellement ou totalement, s'élève en moyenne à 23,46% de l'échantillon. Ce résultat suggère que l'accès aux prêts bancaires n'est pas un enjeu majeur pour les PME françaises qui en sont en activité depuis une dizaine d'années. Mots-clés : France, modèle de déséquilibre, panel cylindré, PME, rationnement du crédit JEL: G21, G23
    Keywords: balanced panel,credit rationing,disequilibrium model,SMEs,France
    Date: 2016–10

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