nep-ent New Economics Papers
on Entrepreneurship
Issue of 2018‒02‒12
seventeen papers chosen by
Marcus Dejardin
Université de Namur

  1. Tax simplicity and heterogeneous learning By Aghion, Philippe; Akcigit, Ufuk; Lequien, Matthieu; Stantcheva, Stefanie
  2. Equity crowdfunding and early stage entrepreneurial finance: damaging or disruptive? By Estrin, Saul; Gozman, Daniel; Khavul, Susanna
  3. Occupational Choice and Investments in Human Capital in Informal Economies By Berniell, L
  4. Times are a changin'? The emergence of new firms and rank persistence By Schneck, Stefan
  5. A portrait of innovative start-ups across countries By Stefano Breschi; Julie Lassébie; Carlo Menon
  6. Creative and science-oriented employees and firm-level innovation By Stephan Brunow; Antonia Birkeneder; Andrés Rodríguez-Pose
  7. Immigrant entrepreneurs, diasporas and exports By Massimiliano Bratti; Luca De Benedictis; Gianluca Santoni
  8. Ethnic Enclaves and Immigrant Self-employment: A Neighborhood Analysis of Enclave Size and Quality By Andersson, Martin; Larsson, Johan P.; Öner, Özge
  9. A profile of non-farm household enterprises in Sub-Saharan Africa By Nagler, Paula
  10. Mind the gap: Institutional and individual antecedents of entrepreneurial trajectories in the academic context By Bijedić, Teita; Chlosta, Simone; Nielen, Sebastian; Werner, Arndt
  11. Do Company Builders Create Jobs? Examining the Rise of Incubation Finance in Germany By Scheuplein, Christoph; Kahl, Julian
  12. What finance for what investment? Survey-based evidence for European companies By Ferrando, Annalisa; Preuss, Carsten
  13. Innovation, Productivity Dispersion, and Productivity Growth By Lucia Foster; Cheryl Grim; John Haltiwanger; Zoltan Wolf
  14. Eclipse of the Public Corporation or Eclipse of the Public Markets? By Craig Doidge; Kathleen M. Kahle; G. Andrew Karolyi; René M. Stulz
  15. Analysis on the Determinants of Exit of Self-Employed Businesses in Korea (in Korean) By Yunmi Nam
  16. Dynamique des opportunités entrepreneuriales et processus d’internationalisation : le cas d’une entreprise ultrapériphérique By Pascal Picard; Michel Boyer; Hélène Delerue
  17. Le recours au crowdlending : Nécessité et opportunité au sein d’un système dynamique By Nathalie Duran; Hélène Delerue; Christel Dubrulle

  1. By: Aghion, Philippe; Akcigit, Ufuk; Lequien, Matthieu; Stantcheva, Stefanie
    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: 2017–11–01
  2. By: Estrin, Saul; Gozman, Daniel; Khavul, Susanna
    Abstract: Equity crowdfunding (ECF) offers founders of new ventures an online social media marketplace where they can access a large number of investors who, in exchange for an ownership stake, provide finance for business opportunities that they find attractive. In this paper, we first quantify the evolution of the ECF market in the UK, the world leader, as well as the benign regulatory environment. ECF already represents more than 15% of British early stage entrepreneurial finance. We then use qualitative methods to explore three research questions. First, do these large financial flows via ECF platforms supplement or merely divert more traditional forms of funding for entrepreneurs? Second, do investors understand and appropriately evaluate the risks that they are bearing by investing in this new asset class? Finally, does ECF finance bring with it the spillovers, e.g. advice and guidance critical to entrepreneurial success, associated with other sources of funding such as Venture Capital? Our study is based on extensive interviews with investors, entrepreneurs (including some who chose not to use ECF in favour of traditional funding sources) and regulators. We conclude that ECF provides real additionality to the sources of entrepreneurial finance while not bringing major new risks for investors. This suggests other jurisdictions might consider implementing the British “principles based” regulatory framework
    Keywords: equity crowdfunding; early stage entrepreneurial finance; financial regulation; investor choices
    JEL: G21 G3 M21
    Date: 2017–09–01
  3. By: Berniell, L
    Abstract: Countries di er greatly in their levels of schooling and also in their rates of entrepreneurship. At the same time, the share of the so-called \shadow economy" -informal economic activities- is very large in some countries and very small in others. This paper explores some key channels that connect these three phenomena. In particular, it focuses on assessing whether the extent to which rms can hide from tax authorities -i.e., operate in the informal economy- may a ect the incentives of individuals to invest in human capital and also distort their occupational choices. The cross country data shows that the levels of educational attainment, rates of entrepreneurship and the level of informality are connected. First, across countries there is a positive association between rates of entrepreneurship and the sizes of the informal sector. Second, the di erence in the skill premium received by entrepreneurs and workers is negligible for economies with low levels of informality, while it becomes positive and increasing for more informal economies. Third, in more informal economies the fraction of high-skilled individuals that choose to become entrepreneurs is larger. Moreover, the share of the labor force that is skilled and the size of the informal economy are related in a non-linear way: for low levels of informality the share of skilled individuals rst decreases but then it rapidly stabilizes for countries with su ciently large informal sectors.
    Keywords: Economía, Jóvenes, Investigación socioeconómica, Políticas públicas,
    Date: 2017
  4. By: Schneck, Stefan
    Abstract: Young firms are known to grow at a faster rate than incumbents. With administrative firm data from Germany, we show that the higher growth rates indeed translate into upward mobility within the firm size distribution. Young firms are therefore not only able to catch up, but also to grow larger in absolute values. Recentered influence function regression results reveal that young firms cause significant rank mobility within the stock of firms, which even holds when the local skewness of the firm size distribution is accounted for. The results clearly indicate a Schumpeterian growth process where young firms challenge established ones.
    Keywords: competition,entrepreneurship,firm entry,firm growth,sales mobility
    JEL: L10 L25 L26
    Date: 2018
  5. By: Stefano Breschi (OECD); Julie Lassébie (OECD); Carlo Menon (OECD)
    Abstract: The report presents new cross-country descriptive evidence on innovative start-ups and related venture capital investments drawing upon Crunchbase, a new dataset that is unprecedented in terms of scope and comprehensiveness. The analysis employs a mix of different statistical techniques (descriptive graphics, econometric analysis, and machine learning) to highlight a number of findings. First, there are significant cross-country differences in the professional and educational background of start-ups’ founders, notably the share of founders with previous academic experience and in the share of “serial entrepreneurs”. Conversely, the founders’ average age is rather constant across countries, but shows a fair degree of variability across sectors. Second, IP assets, and in particular the presence of an inventor in the team of founders, are strongly associated with start-ups’ success. Finally, female founders are less likely to receive funding, receive lower amounts when they do receive financing, and have a lower probability of successful exit, when other factors are controlled for.
    Date: 2018–02–08
  6. By: Stephan Brunow; Antonia Birkeneder; Andrés Rodríguez-Pose
    Abstract: This paper examines the link between innovation and the endowments of creative and science-oriented STEM - Science, Technology, Engineering and Mathematics ? workers at the level of the firm and at the city-/regional-level in Germany. It also looks into whether the presence of these two groups of workers has greater benefits for larger cities than smaller locations, thus justifying policies to attract these workers in order to make German cities 'smarter'. The empirical analysis is based on a probit estimation, covering 115,000 firm-level observations between 1998 and 2015. The results highlight that firms that employ creative and STEM workers are more innovative than those that do not. However, the positive connection of creative workers to innovation is limited to the boundaries of the firm, whereas that of STEM workers is as associated to the generation of considerable innovation spillovers. Hence, attracting STEM workers is more likely to end up making German cities smarter than focusing exclusively on creative workers.
    Keywords: Innovation, Creative workers, STEM workers, Smart Cities, Spillover, Germany
    JEL: D22 J82 R12 J21 J24 R23
    Date: 2018–02
  7. By: Massimiliano Bratti; Luca De Benedictis; Gianluca Santoni
    Abstract: In this paper we highlight a new complementary channel to the business and social network effect à la Rauch (2001) through which immigrants generate increased export flows from the regions in which they settle to their countries of origin: they can become entrepreneurs. Using very small-scale (NUTS-3) administrative data on immigrants’ location in Italy, the local presence of immigrant entrepreneurs (i.e. firms owned by foreign-born entrepreneurs) in the manufacturing sector, and on trade flows in manufacturing between Italian provinces and more than 200 foreign countries, we assess the causal relationship going from diasporas and immigrant entrepreneurs towards export flows. Both the size of the diaspora and the number of immigrant entrepreneurs have a positive, significant and economically meaningful effect on exports. In particular, we find that increasing the stock of (non-entrepreneur) immigrants by 10% would lead to a 1.7% increase in exports in manufacturing, while increasing the number of immigrant entrepreneurs in manufacturing by 10% would raise exports by about 0.6%.
    Keywords: Exports;immigrants;gravity;immigrant entrepreneurs;Italy
    JEL: F10 F14 F22 R10
    Date: 2018–01
  8. By: Andersson, Martin (Blekinge Institute of Technology); Larsson, Johan P. (Swedish Entrepreneurship Forum); Öner, Özge (Research Institute of Industrial Economics (IFN))
    Abstract: We explore the effects of neighborhood-level ethnic enclaves on the propensity of immigrants to use business ownership as a vehicle to transcend from labor market outsiders to insiders. We exploit an exogenously partitioned grid of geocoded 1–by–1 km squares to approximate neighborhoods, and match it with Swedish full-population data from 2011–2012 to study immigrants from the Middle East. We demonstrate a robust tendency for people to leave non-employment for self-employment if many members of the neighborhood ethnic diaspora are business owners, while we observe weak effects emanating from business ownership in other groups. Net of these effects, the overall scale of the enclave, measured by local concentration of co-ethnic peers, negatively influences the propensity to become self-employed. The results are consistent with the argument that it is not the scale, but the quality of local ethnic enclaves that influence labor market outcomes for immigrants.
    Keywords: Ethnic enclave; Segregation; Immigrant entrepreneurship; Self-employment; Labor market sorting; Integration
    JEL: J15 L26 P25
    Date: 2017–12–22
  9. By: Nagler, Paula (UNU-MERIT, Maastricht University, and Erasmus Research & Business Support, Erasmus University Rotterdam)
    Abstract: This paper provides a comprehensive descriptive profile of non-farm household enterprises in ten Sub-Saharan African countries, disaggregated by the households' consumption quintiles. Various enterprise-related aspects are covered, such as the share of households that operate an enterprise, the motivation to start a business venture, and various owner and enterprise characteristics. The figures show that household enterprises are more prevalent among wealthier households, although push factors overall dominate as entry motive. Enterprises in lower quintiles are more often operated by owners with less education, and in most countries female owners are more frequently found among poorer households. The enterprises themselves are characterised by a small size, generally solo entrepreneurship, which only marginally increases along wealth levels. Poorer households operate more seasonal types of businesses, which employ rarely any external labour, and which contribute less to total household income compared to wealthier households. While business profits grow along the welfare quintiles, profits show a big jump from the fourth to the top quintile. Finally, poor entrepreneurial households are considerably more often located in rural than in urban areas. Based on these findings, this paper suggests a set of policy recommendations that include expanding the access to and availability of finance, education, and infrastructure, and introducing gender-sensitive entrepreneurial policies.
    Keywords: Consumption Quintiles, Household Enterprises, Informal Sector, Self-Employment, Sub-Saharan Africa
    JEL: J43 L26 O55 Q12
    Date: 2017–11–23
  10. By: Bijedić, Teita; Chlosta, Simone; Nielen, Sebastian; Werner, Arndt
    Abstract: This study analyses institutional, job-related, and individual antecedents of entrepreneurial activi-ties from a longitudinal perspective. We take a holistic look at the start-up process incorporating entrepreneurial gestation activities (nascent entrepreneurship) and finally business creation (entre-preneurship) by combining two waves of a survey with a time interval of three years. Focusing on researchers reporting an entrepreneurial intention in wave one we found for example that pull factors as motivation to start a business reduce the probability to give up the business idea. Furthermore having generated an invention prevents researchers with a business idea from becoming a so-called "quitter" and pushes them towards starting their own business.
    Keywords: Academic Entrepreneurship,Nascent Entrepreneurship,Institutions
    JEL: L20 L26
    Date: 2017
  11. 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 organizational solution that combines both the innovative capacity of founders and the financial re-sources 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 particularly 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 M13 L22 R12
    Date: 2017
  12. By: Ferrando, Annalisa; Preuss, Carsten
    Abstract: We examine the link between corporate financing and investment decisions of European firms by using a novel firm-level survey of the European Investment Bank (EIBIS). The survey provides rich quantitative information of a wide range of financing sources and tangible and intangible investment types for a representative sample of EU28 firms in 2016. We provide new evidence and contribute to previous research in the following ways: first we consider the heterogeneous effect of internal and external finance on different tangible and intangible investment types. Second, our analysis focuses on a broad spectrum of nonfinancial corporations across size classes from different countries. By using a multinomial fractional response model to estimate the finance-investment link, we find that SMEs and large enterprises show a different financing behaviour for their investment activity. The results suggest that SMEs' tangible asset investment is positively related to the use of bank finance, whereas internal finance is preferred for intangible asset investments.
    Keywords: tangible and intangible investment,internal and external finance,R&D investment,SME finance,multivariate fractional response model
    JEL: D22 E22 G32 L25
    Date: 2018
  13. By: Lucia Foster; Cheryl Grim; John Haltiwanger; Zoltan Wolf
    Abstract: We examine whether underlying industry innovation dynamics are an important driver of the large dispersion in productivity across firms within narrowly defined sectors. Our hypothesis is that periods of rapid innovation are accompanied by high rates of entry, significant experimentation and, in turn, a high degree of productivity dispersion. Following this experimentation phase, successful innovators and adopters grow while unsuccessful innovators contract and exit yielding productivity growth. We examine the dynamic relationship between entry, productivity dispersion, and productivity growth using a new comprehensive firm-level dataset for the U.S. We find a surge of entry within an industry yields an immediate increase in productivity dispersion and a lagged increase in productivity growth. These patterns are more pronounced for the High Tech sector where we expect there to be more innovative activities. These patterns change over time suggesting other forces are at work during the post-2000 slowdown in aggregate productivity.
    Date: 2018–02
  14. By: Craig Doidge; Kathleen M. Kahle; G. Andrew Karolyi; René M. Stulz
    Abstract: Since reaching a peak in 1997, the number of listed firms in the U.S. has fallen in every year but one. During this same period, public firms have been net purchasers of $3.6 trillion of equity (in 2015 dollars) rather than net issuers. The propensity to be listed is lower across all firm size groups, but more so among firms with less than 5,000 employees. Relative to other countries, the U.S. now has abnormally few listed firms. Because markets have become unattractive to small firms, existing listed firms are larger and older. We argue that the importance of intangible investment has grown but that public markets are not well-suited for young, R&D-intensive companies. Since there is abundant capital available to such firms without going public, they have little incentive to do so until they reach the point in their lifecycle where they focus more on payouts than on raising capital.
    JEL: G18 G24 G28 G32 G35 K22 L26
    Date: 2018–01
  15. By: Yunmi Nam (Economic Research Institution, The Bank of Korea)
    Abstract: The proportion of self-employed and unpaid family workers in Korea is 25.9% as of 2015, which is in a decreasing trend but still very high compared to other OECD countries. In addition, there exist a lot of concerns over a high shutdown rate of self-employed businesses while only a few studies have dealt with their survival. Therefore, we empirically analyze the determinants of exit of self-employed businesses in Korea, using panel data on wholesale & retail trade, restaurant & lodging, repair and other individual service industries from "Census on Establishments" provided by the Statistics Korea. With Cox's proportional hazards model, we estimate the effects of various demand, cost, and competition factors on the exit rate of businesses in major industries of self-employment. According to estimation results, cost factors: rents, lending interest rates, and fixed personnel expenses as well as demand factors: consumer price index (CPI) and gross regional domestic product (GRDP) have considerable effects on the shutdown rate of self-employed businesses. The number of competitors and business-specific characteristics such as the age and size of business are also estimated to have significant effect.
    Keywords: Self-Employment, Exit rate, Cox’s proportional hazards model
    JEL: L10 D4 C10
    Date: 2017–01–31
  16. By: Pascal Picard (IAE - Institut d'Administration des Entreprises - UR - Université de la Réunion); Michel Boyer (IAE - Institut d'Administration des Entreprises - UR - Université de la Réunion); Hélène Delerue (UQAM - Université du Québec à Montréal)
    Abstract: Cette recherche explore le processus d'internationalisation de l'entreprise et plus particulièrement, la manière dont les opportunités internationales engendrent ce processus. Elle s'appuie sur l'étude de cas d'une PME localisée dans un Territoire Périphérique Insulaire (ou territoire ultrapériphérique) et confrontée à des enjeux d'internationalisation. Les résultats montrent que l'exploitation et l'exploration d'opportunités génèrent d'autres opportunités ; les opportunités se transforment au fil du processus d'internationalisation qu'elles génèrent.
    Keywords: Opportunités,Internationalisation,Entreprenariat international,PME
    Date: 2016–10–26
  17. By: Nathalie Duran (IAE - Institut d'Administration des Entreprises - UR - Université de la Réunion); Hélène Delerue (UQAM - Université du Québec à Montréal); Christel Dubrulle (IAE - Institut d'Administration des Entreprises - UR - Université de la Réunion)
    Abstract: Le crowdlending est un nouveau mode de financement qui permet aux entrepreneurs d'emprunter des fonds auprès de la foule-le crowd-en vue de réaliser leur projet. L'objectif de cette recherche est d'explorer les raisons pour lesquels les entrepreneurs ont recours au crowdlending et les facteurs qui favorisent le développement de ces plateformes. Dans ce papier, nous présentons les résultats d'une recherche qualitative, s'appuyant sur la netnographie et l'étude des trois premiers cas d'entreprises localisées à l'île de la Réunion dont les dirigeants ont obtenu des fonds via les plateformes de crowdlending. Les résultats suggèrent que les plateformes de crowdlending peuvent avoir des conséquences importantes sur les entreprises et plus largement sur les économies, en raison des motivations des entrepreneurs : elles ouvrent les voies à des comportements entrepreneuriaux nouveaux. D'un point de vue conceptuel, elle souligne l'apport de la théorie des potentialités (théories des affordances) à l'étude de ces plateformes, et montre que leur développement constitue des systèmes dynamiques, dans lesquels les biais cognitifs jouent un rôle important.
    Keywords: crowdlending,motivations des entrepreneurs,potentialité,dynamique
    Date: 2016–10–26

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