nep-ent New Economics Papers
on Entrepreneurship
Issue of 2018‒07‒09
seventeen papers chosen by
Marcus Dejardin
Université de Namur

  1. Historical Roots of Entrepreneurial Culture and Innovation Activity - An Analysis for German Regions By Michael Fritsch; Michael Wyrwich; Martin Obschonka
  2. An International Comparison of the Contribution to Job Creation by High-growth Firms By Michael Anyadike-Danes; Carl Magnus Bjuggren; Michel Dumont; Sandra Gottschalk; Werner Hölzl; Dan Johansson; Mika Maliranta; Anja Myrann; Kristian Nielsen; Guanyu Zheng
  3. Fear the walking dead: Zombie firms, spillovers and exit barriers By Ana Fontoura Gouveia; Christian Osterhold
  4. Tax Progressivity and Self-Employment Dynamics By Arulampalam. Wiji; Papini, Andrea
  5. Dismissal Laws, Innovation, and Economic Growth By Subramanian, Krishnamurthy V.
  6. Young Enterprises and Bank Credit Denials By Mascia, Danilo V.
  7. Size-Dependent Policies and Efficient Firm Creation By Sakai Ando
  8. A heterogeneous-agent model of growth and inequality for the UK By Meenagh, David; Minford, Patrick; Yang, Xiaoliang
  9. How Important Are Local Community Banks to Small Business Lending? Evidence from Mergers and Acquisitions By Jagtiani, Julapa; Maingi, Ramain Quinn
  10. The Nexus of Entrepreneurship and Regional Development By Fischer, Manfred M.; Nijkamp, Peter
  11. E-commerce Development and Entrepreneurship in the People’s Republic of China By Huang, Bihong; Shaban, Mohamed; Song, Quanyun; Wu, Yu
  12. Accelerating Digital Trade in Latin America and the Caribbean By Kati Suominen
  13. Working Capital Management, Cash Flow and SMEs’ Performance By Afrifa, Godfred; Tingbani, Ishmael
  14. Cooperative arrangements and cultural micro-enterprises. Three case studies By Philippe Henry
  15. Unternehmensgründungen und Hochschulen: Eine Analyse der Bedeutung von universitärer Entrepreneurship-Bildung und Clustermitgliedschaften auf regionale Unternehmensgründungen By Bollmann, Tobias
  16. Agiles Business Model Management mit dem Canvas Business Model By Becker, Marco; Daube, Carl Heinz
  17. EIF SME Access to Finance Index - June 2018 update By Torfs, Wouter

  1. By: Michael Fritsch (FSU Jena); Michael Wyrwich (FSU Jena); Martin Obschonka (Queensland University of Technology Business School Brisbane)
    Abstract: There is a research gap with respect to understanding the role of entrepreneurial culture and tradition for actual start-up behaviour. We combine historical self-employment data (entrepreneurial tradition) with a psychological measure for entrepreneurial attitudes (entrepreneurial culture). The results reveal a positive relationship between the historical level of self-employment in a region and the presence of people with an entrepreneurial personality structure today. Our measure for a regional culture of entrepreneurship is positively related not only to the level of new business formation but also the amount of innovation activity.
    Keywords: Entrepreneurship, self-employment, new business for mation, personality traits, culture, innovation
    JEL: L26 N94 O11 O30 R11
    Date: 2018–06–25
  2. By: Michael Anyadike-Danes; Carl Magnus Bjuggren; Michel Dumont; Sandra Gottschalk; Werner Hölzl (WIFO); Dan Johansson; Mika Maliranta; Anja Myrann; Kristian Nielsen; Guanyu Zheng
    Abstract: This paper addresses three simple questions: how should the contribution of high-growth firms to job creation be measured? how much does this contribution vary across countries? to what extent does the cross-country variation depend on variation in the proportion of high-growth firms in the business population? The first is a methodological question which we answer using a more highly articulated version of the standard job creation and destruction accounts. The other two are empirical questions which we answer using a purpose-built data set assembled from national firm-level sources and covering nine countries, spanning the ten three year periods from 2000-2003 to 2009-2012. The basic principle governing the development of the accounting framework is the choice of appropriate comparators. Firstly, when measuring contributions to job creation, we should focus on just job creating firms, otherwise we are summing over contributions from firms with positive, zero, and negative job creation numbers. Secondly, because we know growth depends in part on size, the "natural" comparison for high-growth firms is with job creation by similar-sized firms which simply did not grow as fast as high-growth firms. However, we also show how the measurement framework can be further extended to include, for example, a consistent measure of the contribution of small job creating firms. On the empirical side, we find that the high-growth firm share of job creation by large job creating firms varies across countries by a factor of 2, from around one third to two thirds. A relatively small proportion of this cross-country variation is accounted for by variations in the influence of high-growth firms on job creation. On average high-growth firms generated between three or four times as many jobs as large non-high-growth job creating firms, but this ratio is relatively similar across countries. The bulk of the cross-country variation in high-growth firm contribution to job creation is accounted for by the relative abundance (or rarity) of high-growth firms. Moreover, we also show that the measurement of abundance depends upon the choice of measurement framework: the "winner" of a cross-national high-growth firm "beauty contest" on one measure will not necessarily be the winner on another.
    Keywords: high-growth firms, firm growth, job creation
    Date: 2018–05–18
  3. By: Ana Fontoura Gouveia; Christian Osterhold
    Abstract: Productivity growth is slowing down among OECD countries, coupled with increased misallocation of resources. A recent strand of literature focuses on the role of non-viable firms (“zombie firms”) to explain these developments. Using a rich firm-level dataset for one of the OECD countries with the largest drop in barriers to firm exit and restructure, we assess the role of zombies on firm dynamics, both in the extensive and intensive margins. We confirm the results on the high prevalence of zombie firms, significantly less productive than their healthy counterparts and thus dragging aggregate productivity down. Moreover, while we find evidence of positive selection within zombies, with the most productive restructuring and the least productive exiting, we also show that the zombies' productivity threshold for exit is much lower than that of nonzombies, allowing them to stay in the market, distorting competition and sinking resources. Zombie prevalence curbs the growth of viable firms, in particular the most productive, harming the intra-sectoral resource reallocation. We show that a reduction in exit and restructuring barriers promotes a more effective exit channel and fosters the restructuring of the most productive. These results highlight the role of public policy in addressing zombies' prevalence, fostering a more efficient resource allocation and enabling productivity growth.
    Keywords: Firm Dynamics, Insolvency Frameworks, Labor Productivity, Resource Allocation, Zombie Firms
    JEL: D24 E22 E24 G33 J24 L25
    Date: 2018–06–25
  4. By: Arulampalam. Wiji; Papini, Andrea
    Abstract: Analysis of the relationship between taxes and self-employment should account for the interplay between responses in self-employment and wage employment. To this end, we estimate a two-state multi-spell duration model which accounts for both observed and unobserved heterogeneity using a large longitudinal administrative dataset for Norway for 1993-2011. Our findings confirm theoretical predictions, and are robust to various changes to de nitions and sample selections. A policy experiment simulating a fl atter tax schedule in the year 2000, is found to encourage both entry into and exit from self-employment, with an increase of about 11.5 percent innet in flow into self-employment.
    Keywords: Tax progressivity ; Income tax ; Self-employment
    JEL: H24 H25 J24 C41
  5. By: Subramanian, Krishnamurthy V. (Asian Development Bank Institute)
    Abstract: We show theoretically and empirically that dismissal laws—laws that impose hurdles on firing of employees—spur innovation and thereby economic growth. Theoretically, dismissal laws make it costly for firms to arbitrarily discharge employees. This enables firms to commit to not punish short-run failures of employees. Because innovation is inherently risky and employment contracts are incomplete, dismissal laws enable such commitment. Specifically, absent such laws, firms cannot contractually commit so ex ante. The commitment provided by dismissal laws encourages employees to exert greater effort in risky, but path-breaking, projects thereby fostering firm-level innovation. We provide empirical evidence supporting this thesis using the discontinuity provided by the passage of the federal Worker Adjustment and Retraining Notification Act. Using the fact that this Act only applied to firms with 100 or more employees, I undertake difference-in-difference and regression discontinuity tests to provide this evidence. Building on endogenous growth theory, which posits that economic growth stems from innovation, I also show that dismissal laws correlate positively with economic growth. However, other forms of labor laws correlate negatively with economic growth and swamp the positive effect of dismissal laws.
    Keywords: labor laws; R&D; technological change; law and finance; entrepreneurship; growth
    JEL: F30 G31 J08 J50 K31
    Date: 2018–05–25
  6. By: Mascia, Danilo V. (Asian Development Bank Institute)
    Abstract: By employing a sample of 20,956 observations of nonfinancial small and medium-sized enterprises (SMEs) headquartered in the euro area, between 2009 and 2015, we test whether young businesses are more likely to face credit rejections from lenders than their older peers. Our findings appear to confirm our suspicions that new enterprises consistently experience higher denials from banks compared with more established businesses. Such a result is stable to different model specifications and is also confirmed once we handle the issue of sample selection bias potentially affecting our data. Additional tests also reveal that credit constraints are particularly difficult for young SMEs located in Southern and Central Europe, as well as for those operating in the “trade” industry. Overall, our evidence suggests that actions from the policy maker could be desirable to support the viability of credit and, thus, ensure the growth of young businesses in the euro area.
    Keywords: SMEs; young enterprises; bank loans; credit rationing
    JEL: D82 G20 G21 G30 L26 M13
    Date: 2018–05–09
  7. By: Sakai Ando
    Abstract: I study the welfare implications of size-dependent firm regulation policies (SDPs) in the presence of entrepreneurial risks. Although SDP has been considered a source of misallocation, I show that, once entrepreneurial risks are taken into account, SDP can improve efficiency. Quantitatively, I show that, based on French data, removing the SDP leads to output and welfare loss by 1.5% and 1.3%, respectively, in opposition to the output gain reported by the previous literature that abstracts from risks. Qualitatively, I solve an optimal non-linear SDP problem and show that the observed SDP shares certain features with the optimal SDP. The analysis uncovers a novel tradeoff between the inefficiencies of the intensive and extensive margins. In extension, it is shown that (1) whether SDPs improve efficiency depends on the level of financial development and (2) capital accumulation and consumption-smoothing motive further justify SDPs.
    Date: 2017–10
  8. By: Meenagh, David (Cardiff Business School); Minford, Patrick (Cardiff Business School); Yang, Xiaoliang (Cardiff Business School)
    Abstract: This paper analyses the effect of wealth inequality on UK economic growth in recent decades with a heterogeneous-agent growth model where agents can enhance individual productivity growth by undertaking entrepreneurship. The model assumes wealthy people are more able to afford the costs of entrepreneurship. Wealth concentration therefore stimulates entrepreneurship among the rich and so aggregate growth, whose fruits in turn are largely captured by the rich. This process creates a mechanism by which inequality and growth are correlated. The model is estimated and tested by indirect inference and is not rejected. Policy-makers face a trade-off between redistribution and growth.
    Keywords: Heterogeneous-agent Model, Entrepreneurship, Aggregate Growth, Wealth Inequality, Redistribution, Indirect Inference
    JEL: E10 C63 O30 O40
    Date: 2018–06
  9. By: Jagtiani, Julapa (Federal Reserve Bank of Philadelphia); Maingi, Ramain Quinn (Federal Reserve Bank of Philadelphia)
    Abstract: We investigate the shrinking community banking sector and the impact on local small business lending (SBL) in the context of mergers and acquisitions. From all mergers that involved community banks, we examine the varying impact on SBL depending on the local presence of the acquirers’ and the targets’ operations prior to acquisitions. Our results indicate that, relative to counties where the acquirer had operations before the merger, local SBL declined significantly more in counties where only the target had operations before the merger. This result holds even after controlling for the general local SBL market or local economic trends. These findings are consistent with an argument that SBL funding has been directed (after the mergers) toward the acquirers’ counties. We find even stronger evidence during and after the financial crisis. Overall, we find evidence that local community banks have continued to play an important role in providing funding to local small businesses. The absence of local community banks that became a target of a merger or acquisition by nonlocal acquirers has, on average, led to local SBL credit gaps that were not filled by the rest of the banking sector.
    Keywords: community banks; small business lending; bank mergers
    JEL: G21 G28 G34
    Date: 2018–06–29
  10. By: Fischer, Manfred M.; Nijkamp, Peter
    Abstract: This chapter offers a review on modern entrepreneurship analysis, against the background of regional development. Regions with an entrepreneurial culture tend to be forerunners in a competitive economic process. After a conceptual discussion on the importance and the measurement of entrepreneurship, the contribution discusses critical success factors and key determinants of entrepreneurship. Next, much focus is laid on the geography of entrepreneurship as well as on industrial agglomeration, while also due attention is paid to the relevance of networks for modern entrepreneurship. The chapter concludes with some retrospective and prospective remarks.
    Keywords: Entrepreneurship, definition and measurement issues, spatial aspects of entrepreneurship, regions with an entrepreneurial culture, cluster agglomeration factors, entrepreneurship and networks
    Date: 2018–06–18
  11. By: Huang, Bihong (Asian Development Bank Institute); Shaban, Mohamed (Asian Development Bank Institute); Song, Quanyun (Asian Development Bank Institute); Wu, Yu (Asian Development Bank Institute)
    Abstract: We utilize an e-commerce development indicator in tandem with big data to measure the variations of e-commerce development across counties in the People’s Republic of China and assess its impact on entrepreneurship in both rural and urban areas. We find that households living in counties with higher levels of e-commerce development are more likely to run their own businesses. Further study indicates that e-commerce development not only significantly increases the entry of new startups but also decreases the exit of incumbent businesses. We also find that e-commerce development induces sectoral change of household entrepreneurship. It promotes entrepreneurship in the manufacturing and wholesale sectors, but reduces the entrepreneurship in the retail, hotel, and catering sectors. We also show that e-commerce prosperity fuels entrepreneurship by alleviating the financial constraints and moderates the reliance of household entrepreneurship on social networks.
    Keywords: e-commerce development; big data; entrepreneurship
    JEL: L81
    Date: 2018–03–22
  12. By: Kati Suominen
    Abstract: The Internet roared to the scene in Latin America and it is transforming the way Latin Americans interact, shop, bank, and spend their time. The Internet is changing regional consumption patterns, the landscape of regional companies, and the region's economic prospects. Disruptive digital technologies riding on the web -cloud-based services, e-commerce, 3D printing, Internet of Things, and so on- are empowering LAC companies of all sizes to dramatically cut costs, improve customer service, and create brand new products and services. The region is also home to innovative digital companies run by intrepid entrepreneurs, some of whom have accessed significant investments from Silicon Valley and grown into some of the leading digital companies. The Internet, in short, has opened tremendous new opportunities for LAC economies to become more productive, expand opportunities for entrepreneurship, and drive inclusive economic growth.
    Keywords: E-Commerce, Export Diversification, Exports of Service, Small and Medium-Sized Enterprises, Startups, Integration & Trade, E-Commerce, Electronic Commerce
    JEL: O39
    Date: 2017–03
  13. By: Afrifa, Godfred; Tingbani, Ishmael
    Abstract: Purpose – The paper presents comprehensive evidence on the relationship between Working Capital Management (WCM) and SMEs’ performance by taking into consideration the plausible effect of cash flow. Design/methodology/approach – The paper adopts a panel data regression analysis on a sample of 802 British quoted small and medium enterprises listed on the Alternative Investment Market for the period from 2004 to 2013. Findings – The results of the study demonstrate the importance of cash flow on SMEs’ WCM and performance. According to our findings, WCM has a significantly negative impact on SME performance. However, with available cash flow, we find a significantly positive relationship. Additionally, our evidence revels that cash flow constrained (non-constrained) SMEs are able to enhance their performance through decreased (increased) investment in WCM. Practical implications – Overall, the results demonstrate the importance of cash flow availability on SMEs’ working capital needs. Our findings suggest that in an event of cash flow unavailability (availability) managers should strive to reduce (increase) the investment in working capital in order to improve performance. Originality/value – This current study incorporates the relevance of cash flow in assessing the association between WCM and firm performance.
    Keywords: Working Capital Management, Performance, SMEs, Cash Flow
    JEL: G3 G31 G32
    Date: 2017
  14. By: Philippe Henry (Scènes et savoirs - UP8 - Université Paris 8 Vincennes-Saint-Denis)
    Abstract: This report deals with an exploratory research carried out between October 2016 and June 2017 on three cases of cooperative arrangement, mainly involving cultural micro-enterprises with other than profit-making goals, that’s to say : Artenréel, a “Coopérative d’activités et d’emploi” in Strasbourg ; AGEC, a “Groupe d’employeurs” in Bordeaux ; La Coursive Boutaric, a “Pôle territorial de coopération économique” in Dijon. The analysis stresses the central importance that is to be given to the socioeconomic specificities of the cultural field if we want to better understand what is at stake in the cooperative arrangements which are nowadays currently developing between micro-enterprises. The project logic specific to the micro-enterprises in the cultural field thus strongly determines the nature and the area of relevance of these groupings which are largely based on their ability to set up and develop concrete and efficient forms of mutualisation. The very interest and difficulty of these innovative organisations lie in the process of constructing and perpetuating a common pool, the object of which nevertheless also remains to accompany the development of singular projects, thus inducing a structural economic fragility, especially since the involvement of the various cooperators, most of the time, cannot be constant and equally intense in the long term. The permanent animation and coordination team of the groupings has a role that is always major and structuring as far as the communication dynamics are concerned and are themselves an essential support for the cooperative process as a whole. The diversity of their members also implies a plurality of information and communication modalities and devices. Those are not so easy to coordinate, including when they use the new digital tools that are today available. Numerous balances are thus to be found between different levels of reality and imply constant adaptations, because of the very nature of the activity of the cooperating members and of the functions that are pooled. Transmitting the grouping history and the accumulated know-how to new members is not the least of the questions that arise. The very nature of cooperative arrangements implies taking into account a diversity of actors, each one of whom has their own stakes of existence and development. It is not therefore surprising that their governance is developing according to a dynamic at several levels and modalities. While presenting itself as relatively distributed, this dynamic is in no way homogeneous. Everyone – including newcomers – will have to find their own place. Among other things, particular attention should be paid to maintaining a discussion on the substance of the cooperative project, to questioning the renewal of the formal management bodies or also to the critical size around which the project reaches its maximum relevance. In the end, only a systemic assessment of these groupings will make it possible to better understand the peculiarity of their innovative running. The analysis thus shows the full interest, but also the structural difficulties, of such approaches, if only to consolidate the economic viability of these projects whose stakes are not first and foremore economic.
    Abstract: Ce rapport porte sur une recherche exploratoire menée entre octobre 2016 et juin 2017 sur trois cas d’agencement coopératif, impliquant majoritairement des micro-entreprises culturelles poursuivant des buts d’abord autres que lucratifs : Artenréel, Coopérative d’activités et d’emploi à Strasbourg ; l’AGEC, Groupement d’employeurs à Bordeaux ; La Coursive Boutaric, Pôle territorial de coopération économique à Dijon. L’analyse souligne la centralité à accorder aux spécificités socioéconomiques du domaine culturel si l’on veut mieux comprendre ce qui se joue dans les agencements coopératifs entre micro-entreprises qui s’y développent de nos jours. Les logiques de projet propres aux micro-entreprises du domaine culturel déterminent ainsi fortement la nature et la zone de pertinence de ces groupements. Ceux-ci reposent très largement sur leur capacité à mettre en place et à développer des formes concrètes et efficientes de mutualisation. Tout l’intérêt et toute la difficulté de ces organisations innovantes résident alors dans la construction et la pérennisation d’un commun, dont l’objet reste pourtant aussi d’accompagner le développement de projets singuliers. Une fragilité économique structurelle s’en trouve induite, d’autant que l’implication des différents coopérants ne saurait, la plupart du temps, être constante et à même intensité dans la durée. Le rôle de l’équipe permanente d’animation et de coordination des groupements est toujours majeur et structurant pour la dynamique communicationnelle, qui est elle-même un support essentiel du processus coopératif dans son ensemble. La diversité de leurs adhérents implique également une pluralité de modalités et de dispositifs d’information et de communication. Ceux-ci ne se révèlent pas si simples à coordonner, y compris quand ils utilisent les nouveaux outils numériques aujourd’hui disponibles. De nombreux équilibres sont ainsi à trouver entre différents niveaux de réalité et impliquent des adaptations incessantes, de par la nature même de l’activité des membres coopérants et des fonctions qui sont mises en commun. La transmission à de nouveaux membres de l’histoire du groupement et des savoir-faire accumulés n’est pas la moindre des questions qui se posent. La nature même des agencements coopératifs induit une prise en compte d’une diversité d’acteurs ayant chacun leurs propres enjeux d’existence et de développement. Il n’est donc pas surprenant que leur gouvernance se développe selon une dynamique à plusieurs niveaux et modalités. Tout en se présentant comme relativement distribuée, cette dynamique n’est en rien homogène. Chacun – dont les nouveaux entrants – aura à y trouver sa propre place. Une attention particulière est à porter, entre autres, au maintien d’une discussion sur le fond du projet coopératif, à la question du renouvellement des instances formelles de direction ou à celle de la taille critique autour de laquelle le projet atteint sa pertinence maximale. Au final, seule une évaluation systémique de ces groupements est en mesure de mieux appréhender la particularité de leur fonctionnement innovant. L'analyse montre ainsi tout l'intérêt, mais aussi les difficultés en partie structurelles, de telles démarches, ne serait-ce que pour consolider la viabilité économique de projets porteurs d’enjeux non principalement économiques.
    Keywords: Cultural entrepreneurship , Micro-enterprise , Socioeconomics,Entrepreneuriat culturel , Coopération , Micro-entreprise , Socioéconomie
    Date: 2018–02
  15. By: Bollmann, Tobias
    Abstract: Die räumliche Konzentration von wissensbasierten Unternehmensgründungen wird sowohl in der Wissenschaft als auch in der Politik diskutiert. Das vorliegende Arbeitspapier untersucht die Bedeutung universitärer Entrepreneurship-Bildung auf regionale Unternehmensgründungen und inwiefern dies durch Clustermitgliedschaften der betrachteten Hochschulen beeinflusst wird. Somit wird sowohl die steigende Bedeutung von Hochschulen als wissenserzeugende Institutionen als auch die regional-ökonomische Debatte um Innovationscluster berücksichtigt. Unter Verwendung von EXIST-Gründerstipendien gelingt es, einen positiven Zusammenhang zwischen regionalen Gründungsaktivitäten und Entrepreneurial Education festzustellen. Darüber hinaus kann eine positive Beeinflussung dieses Zusammenhangs durch Clustermitgliedschaften hinsichtlich der Qualität der Spillover identifiziert werden. Die Ergebnisse weisen somit auf potenzielle Optimierungsmöglichkeiten im Zusammenspiel der Wirtschafts- und Wissenschaftspolitik hin.
    Date: 2018
  16. By: Becker, Marco; Daube, Carl Heinz
    Abstract: Es wird in diesem Working Paper untersucht, in wie weit sich das Canvas Business Model zum agilen Business Model Management für Unternehmen in der Vorgründungs- und Gründungsphase eignet.
    Keywords: Business Model,agil,Business Model Management,Canvas Business Model
    JEL: M13 L16
    Date: 2018
  17. By: Torfs, Wouter
    Abstract: This EIF Working Paper elaborates on the most recent update of the EIF SME Access to Finance (ESAF) Index, a composite indicator used to monitor SME external financing markets in the 28 EU countries. The current update, using latest available data, constitutes the fifth iteration of this exercise. The paper is used to provide some background information underlying the aggregate ESAF results, by analysing its four subindices and their subindicators and focussing on a select number of individual results.
    Date: 2018

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