nep-ent New Economics Papers
on Entrepreneurship
Issue of 2018‒06‒18
fourteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Big Data, artificial intelligence and the geography of entrepreneurship in the United States By Ebert, Tobias; Eichstaedt, Johannes C.; Lee, Neil; Obschonka, Martin; Rodríguez-Pose, Andrés
  2. Risky Business? Earnings Prospects of Employees at Young Firms By Pawel Adrjan
  3. The Political Behavior of Wealthy Americans: Evidence from Technology Entrepreneurs By Broockman, David; Ferenstein, Greg F.; Malhotra, Neil
  4. Punctuated Entrepreneurship (Among Women) By Matt Marx
  5. Entrepreneurial Optimism and Creative Destruction By Persson, Lars; Seiler, Thomas
  6. Business Cycles and Start-ups across Industries: An Empirical Analysis of German Regions By Konon, Alexander; Fritsch, Michael; Kritikos, Alexander S.
  7. Measuring Early-Stage Business Formation By Kimberly Bayard; Emin M. Dinlersoz; Timothy Dunne; John Haltiwanger; Javier Miranda; John J. Stevens
  8. Dinner Table Human Capital and Entrepreneurship By Hvide, Hans K.; Oyer, Paul
  9. Brain-driven entrepreneurship research: Expanded review and research agenda towards entrepreneurial enhancement By Pérez-Centeno, Victor
  10. Knowledge Exhaustibility and Schumpeterian Growth. By Antonelli, Cristiano
  11. Death of the Salesman, but not the Sales Force: Reputational Entrepreneurship and the Valuation of Scientific Achievement By Pierre Azoulay; J. Michael Wahlen; Ezra W. Zuckerman Sivan
  12. Innovation and Firm Performance in the People’s Republic of China: A Structural Approach with Spillovers By Howell, Anthony
  13. Is innovation happening in George Towns's creative and cultural sectors? A comparative analysis between traditional and modern organisations By Chan, Jin; Mohd Hashim, Intan Hashima; Khoo, Suet Leng; Lean, Hooi Hooi; Piterou, Athena
  14. Improving access to finance for young innovative enterprises with growth potential: evidence of impact on firms' output - Part 2. R&D grant schemes: lessons learned from evaluations By Giuseppina Testa; Katarzyna Szkuta

  1. By: Ebert, Tobias; Eichstaedt, Johannes C.; Lee, Neil; Obschonka, Martin; Rodríguez-Pose, Andrés
    Abstract: There is increasing interest in the potential of artificial intelligence and Big Data (e.g., generated via social media) to help understand economic outcomes and processes. But can artificial intelligence models, solely based on publicly available Big Data (e.g., language patterns left on social media), reliably identify geographical differences in entrepreneurial personality/culture that are associated with entrepreneurial activity? Using a machine learning model processing 1.5 billion tweets by 5.25 million users, we estimate the Big Five personality traits and an entrepreneurial personality profile for 1,772 U.S. counties. We find that these Twitter-based personality estimates show substantial relationships to county-level entrepreneurship activity, accounting for 24% (entrepreneurial personality profile) and 32% (all Big Five trait as separate predictors in one model) of the variance in local entrepreneurship and are robust to the introduction in the model of conventional economic factors that affect entrepreneurship. We conclude that artificial intelligence methods, analysing publically available social media data, are indeed able to detect entrepreneurial patterns, by measuring territorial differences in entrepreneurial personality/culture that are valid markers of actual entrepreneurial behaviour. More importantly, such social media datasets and artificial intelligence methods are able to deliver similar (or even better) results than studies based on millions of personality tests (selfreport studies). Our findings have a wide range of implications for research and practice concerned with entrepreneurial regions and eco-systems, and regional economic outcomes interacting with local culture.
    Keywords: artificial intelligence; Big Data; Big Five; Counties; entrepreneurship; personality; psychological traits; social media; Twitter; U.S.
    JEL: L26 R11 R12
    Date: 2018–05
  2. By: Pawel Adrjan
    Abstract: Young ï¬ rms are an engine of job creation, but little is known about the quality of the jobs that they offer. I use a matched employer-employee dataset to study how starting wages and lifecycle earnings of employees differ between young and mature ï¬ rms. I ï¬ nd that young ï¬ rms pay a small premium to new hires, but subsequent wage growth is better at mature ï¬ rms, both within continuing job matches and when individuals change jobs. These results are conï¬ rmed by several approaches to addressing sorting and selection of employees into ï¬ rms of different ages. There is substantial heterogeneity of outcomes: the few young ï¬ rms that survive and become highly productive pay higher wages to employees from the outset than less successful young ï¬ rms. Overall, highly-paid and stable jobs at young ï¬ rms are rare. Policies that aim to stimulate job growth by encouraging the formation of new ï¬ rms should therefore pay close attention to the types of ï¬ rms that form as a result.
    JEL: J21 J23 J31 L26
    Date: 2018–06–01
  3. By: Broockman, David (Stanford University); Ferenstein, Greg F.; Malhotra, Neil
    Abstract: American politics overrepresents the wealthy. But what policies do the wealthy support? Many accounts implicitly assume the wealthy are monolithically conservative and that increases in their political power will increase inequality. Instead, we argue there is substantial heterogeneity by industry, wherein the wealthy from an industry can share a distinctive set of political preferences. Consequently, how increases in the wealthy's influence affect inequality depends on which industries' rich are gaining influence and which issues are at stake. We demonstrate our argument with three original surveys, including the two largest surveys of wealthy Americans to date: one of technology entrepreneurs--a burgeoning wealthy demographic' and another of political campaign donors. We show that technology entrepreneurs support liberal redistributive, social, and globalistic policies but conservative regulatory policies--a bundle of preferences rare among other wealthy individuals. Consistent with our theoretical argument, we also present evidence that suggests these differences arise from their distinctive predispositions.
    Date: 2017–12
  4. By: Matt Marx
    Abstract: The gender gap in entrepreneurship may be explained in part by employee non-compete agreements. Exploiting exogenous state-level variation in non-compete policy, I find that women more strictly subject to non-competes are 11-17% more likely to start companies after their employers dissolve. This result is not explained by the incidence of non-competes or lawsuits; however, women face higher relative costs in defending against potential litigation and in returning to paid employment after abandoning their ventures. Thus entrepreneurship among women may be “punctuated” in that would-be female founders are throttled by non-competes, their potential unleashed only by the failure of their employers.
    Date: 2018–05
  5. By: Persson, Lars (Research Institute of Industrial Economics (IFN)); Seiler, Thomas (Stockholm School of Economics)
    Abstract: We provide empirical evidence that uncertainty (rather than risk) and optimism are distinctive characteristics of high-impact entrepreneurial firms (recently listed firms) relative to old, incumbent firms. Based on this evidence, we construct an entrepreneurial entry predation model with uncertainty. We show that entrepreneurial optimism can mitigate problems associated with strong incumbents' attempts to protect markets using predatory threats. Entrepreneurial optimism can also create a strategic advantage for entrepreneurs since incumbents may react by being less aggressive in product market interactions, which will benefit not only the profitability of the entrepreneur's venture but also consumers via lower prices
    Keywords: Uncertainty; Optimism; Entrepreneurial firms; Predation; Positive externalities; Automatic textual analysis
    JEL: L20 L26 M20 O30
    Date: 2018–05–28
  6. By: Konon, Alexander (DIW Berlin); Fritsch, Michael (University of Jena); Kritikos, Alexander S. (DIW Berlin)
    Abstract: We analyze whether start-up rates in different industries systematically change with business cycle variables. Using a unique data set at the industry level, we mostly find correlations that are consistent with counter-cyclical influences of the business cycle on entries in both innovative and non-innovative industries. Entries into the large-scale industries, including the innovative part of manufacturing, are only influenced by changes in the cyclical component of unemployment, while entries into small-scale industries, like knowledge intensive services, are mostly influenced by changes in the cyclical component of GDP. Thus, our analysis suggests that favorable conditions in terms of high GDP might not be germane for start-ups. Given that both innovative and non-innovative businesses react counter-cyclically in 'regular' recessions, business formation may have a stabilizing effect on the economy.
    Keywords: new business formation, entrepreneurship, business cycle, manufacturing, services, innovative industries
    JEL: E32 L16 L26 R11
    Date: 2018–04
  7. By: Kimberly Bayard; Emin M. Dinlersoz; Timothy Dunne; John Haltiwanger; Javier Miranda; John J. Stevens
    Abstract: New businesses play an important role in overall economic activity. They account for a sizable share of job creation, and they provide a key source of innovation that contributes to overall productivity growth.
    Date: 2018–03–07
  8. By: Hvide, Hans K. (University of Bergen); Oyer, Paul (Stanford University)
    Abstract: We document three new facts about entrepreneurship. First, a majority of male entrepreneurs start a firm in the same or a closely related industry as their fathers' industry of employment. Second, this tendency is correlated with intelligence: higher-IQ entrepreneurs are less likely to follow their fathers. Third, an entrepreneur that starts a firm in the same 5-digit industry as where his father was employed tends to outperform entrepreneurs in the same industry whose fathers did not work in that industry. We consider various explanations for these facts and conclude that "dinner table human capital", where children obtain industry knowledge through their parents, is an important factor behind what type of firm is started and how well it performs.
    Date: 2017–12
  9. By: Pérez-Centeno, Victor
    Abstract: The advent of significant advances in neuroscience has produced the capacity to examine the human brain at a profound level, yet the academic and practical value of existing evidence based on neuroscience techniques and methods within the field of entrepreneurship remains unexplored. To address these issues, the author draws from entrepreneurship research and presents a braindriven approach as a basis for future in-depth studies on the role of cognitive, affective, motivational and hormonal mechanisms in entrepreneurship theory and practice. To further articulate a research agenda, the author reviews the state of knowledge of existing evidence by content analysis of articles published until 2016. The analysed articles incorporate the use of a brain-driven research perspective in their studies. It is found that although neuroscience affords unique technological opportunities, few studies have thus far benefited from these advances, and among existing studies, only the topic of entrepreneurial decision-making has been partially covered. Building on these observations, the author proposes a definition of brain-driven entrepreneurship research and a research agenda to advance the integration of neuroscience tools and technologies in entrepreneurship research.
    Keywords: entrepreneurial neuroscience,neuro-entrepreneurship,entrepreneurial enhancement,cognition,brain-driven entrepreneurship,entrepreneurial enhancement
    JEL: L26 M13 O33
    Date: 2018
  10. By: Antonelli, Cristiano (University of Turin)
    Abstract: This paper accommodates the new understanding of the limited exhaustibility of knowledge into the Schumpeterian frame of the creative response to articulate a comprehensive model of Schumpeterian growth. The limited exhaustibility of knowledge and its transient appropriability favor the accumulation of a stock of quasi-public knowledge. The increasing stock of quasi-public knowledge together with appropriate knowledge governance conditions account for the secular decline of knowledge costs and the increase of diachronic and pecuniary knowledge externalities. Because of its limited exhaustibility and the consequent cumulability, knowledge is an endogenous endowment that accounts for growth. Unexpected out-of-equilibrium conditions in product and factor markets stir the response of firms. The availability of knowledge externalities accounts for the rate of innovation as they help making the reaction creative so as to enable the introduction of innovations. The search for technological congruence and the secular decline of the cost of technological knowledge accounts for its knowledge intensive direction as it induces the introduction of biased technological changes that augment the output elasticity of knowledge as an input. The limited exhaustibility of knowledge accounts for the secular trend towards the knowledge economy.
    Date: 2017–06
  11. By: Pierre Azoulay; J. Michael Wahlen; Ezra W. Zuckerman Sivan
    Abstract: Using citations as a measure of valuation and death as a shock that affects efforts to "sell" scientific work but not the quality of the work itself, we estimate the importance of "reputational entrepreneurship" on the valuation of life scientists' research. Insofar as reputational entrepreneurship is impactful, it is unclear whether the most effective reputational entrepreneurs are those selling their own work ("salesman") or those promoting the work of others (the "sales force"). While the salesman has more incentive to promote her work, the sales force is larger and may be seen as more credible. We find that by commemorating the death of a scientist, the sales force boosts the valuation of the deceased's work relative to what the salesman could have done had she remained alive. This suggests that while science seeks to divorce the researcher's identity from their work, scientists' identities nonetheless play an important role in determining scientific valuations.
    JEL: I23 O31
    Date: 2018–05
  12. By: Howell, Anthony (Asian Development Bank Institute)
    Abstract: We adopt a structural framework to study the process of indigenous innovation and its impact on firm performance in the People’s Republic of China (PRC). In our analysis we use a rich source of panel data comprising almost 70,000 private Chinese firms operating in the PRC from 2004 to 2007. Relying on a structural innovation framework, we estimate the effects of technological learning during each phase of the structural model: (i) the firm’s decision to innovate, (ii) the innovation effort, (iii) the innovation throughput, and (iv) the firm performance. We show that in the early stages of innovation, Chinese firms fail to incorporate learning spillovers into their innovation effort, even when considering their absorptive capacity. Conversely, we found that in the later stages of innovation, learning spillovers positively increase firms’ innovation output as well as their performance, especially for firms with high absorptive capacity.
    Keywords: innovation; firm performance; learning; agglomeration; institutions; People’s Republic of China
    JEL: O30
    Date: 2018–02–08
  13. By: Chan, Jin; Mohd Hashim, Intan Hashima; Khoo, Suet Leng; Lean, Hooi Hooi; Piterou, Athena
    Abstract: George Town World Heritage Site in Penang, Malaysia is well-endowed with creative and cultural resources, and has recently witnessed a rise in relevant activities. This study examines how 'innovation culture' is inculcated and embedded within two local organisations with distinct approaches to innovation. We adapted the measurements of entrepreneurship orientation constructs (innovativeness, risk-taking, pro-activeness), and conducted semi-structured interviews and archival study on the organisations and their networks. We documented the linkages in their value chains to understand the resulting social networks and whether such network fosters the incubation of an innovation cluster for the local creative and cultural sectors.
    Keywords: Innovativeness; World Heritage; Social Network; Cluster; Ecosystem
    Date: 2018–01–15
  14. By: Giuseppina Testa (European Commission - JRC); Katarzyna Szkuta (European Commission - JRC)
    Abstract: This policy report explores the role of R&D grant schemes in supporting young innovative firms with growth potential. This issue is important because it is associated to the ways in which the innovativeness and growth of a myriad of young innovative firms with growth potential can be effectively be supported by policy. We have used primary literature from Science direct and Scopus databases which we have organised and conducted between March and June 2017 and policy evaluations. It contributes to the current political debate in Europe on new sources and forms of R&I funding to enhance EU level support for young innovative companies with growth potential.
    Keywords: R&D grant, impact, evaluation, young innovative companies, growth potential
    Date: 2018–05

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