nep-ent New Economics Papers
on Entrepreneurship
Issue of 2018‒07‒16
seventeen papers chosen by
Marcus Dejardin
Université de Namur

  1. The Nature of Firm Growth By Benjamin W. Pugsley; Peter Sedlacek; Vincent Sterk
  2. Older and Slower: The Startup Deficit’s Lasting Effects on Aggregate Productivity Growth By Titan Alon; David Berger; Robert Dent; Benjamin Pugsley
  3. Workers' Replacements and Firms' Innovation Dynamics: New Evidence from Italian Matched Longitudinal Data By Elena Grinza; Francesco Quatraro
  4. The Collaborative Innovation Bloc: A New Mission for Austrian Economics By Elert, Niklas; Henrekson, Magnus
  5. Going Abroad to Innovate? The Role of Entrepreneurial Orientation in Foreign Business Expansion for Japanese Small and Medium-Sized Manufacturers By Yamamoto, Satoshi; Kan, Viktoriya; Bartnik, Roman
  6. Born Globals, BGs: Who Are They? By Hamza El Guili
  7. Solutions for SMEs’ difficulties in accessing finance: Asian experiences By Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad
  8. Financing innovative business investment in Poland By Antoine Goujard; Pierre Guérin
  9. Access of micro-, small and medium-sized enterprises (MSMEs) to finance in North and Central Asia By Hiroaki Ogawa
  10. Plunging into the Sea: Ideological Change, Institutional Environments and Private Entrepreneurship in China By Jin Yang; Jian Huang; Yanhua Deng; Massimo Bordignon
  11. Firm Growth Dynamics and Financial Constraints: Evidence from Serbian Firms By Milos Markovic; Michael Stemmer
  12. On the Dynamics of Small and Medium-Sized Enterprises: Evidence from Japan By Yamada, Kazuo; El Kalak, Izidin; Takahashi, Hidenori
  13. R&D, Embodied Technological Change and Employment: Evidence from Spain By Pellegrino, Gabriele; Piva, Mariacristina; Vivarelli, Marco
  14. Credit Guarantees and New Bank Relationships By William Mullins; Patricio Toro
  15. Dynamique de l'entrepreneuriat informel au Sénégal : caractéristiques et particularités By Serge Francis Simen
  16. Innovations entrepreneuriales en Afrique : défis agricoles et enjeux alimentaires By Cheriet, F.

  1. By: Benjamin W. Pugsley; Peter Sedlacek; Vincent Sterk
    Abstract: Only half of all startups survive past the age of five and surviving businesses grow at vastly different speeds. Using micro data on employment in the population of U.S. Businesses, we estimate that the lion's share of these differences is driven by ex-ante heterogeneity across firms, rather than by ex-post shocks. We embed such heterogeneity in a firm dynamics model and study how ex-ante differences shape the distribution of firm size, "up-or-out" dynamics, and the associated gains in aggregate output. "Gazelles" - a small subset of startups with particularly high growth potential - emerge as key drivers of these outcomes. Analyzing changes in the distribution of ex-ante firm heterogeneity over time reveals that the birth rate and growth potential of gazelles has declined, creating substantial aggregate losses.
    Keywords: Firm Dynamics, Startups, Macroeconomics, Big Data
    JEL: D22 E23 E24
    Date: 2018–06
  2. By: Titan Alon; David Berger; Robert Dent; Benjamin Pugsley
    Abstract: We investigate the link between declining firm entry, aging incumbent firms and sluggish U.S. productivity growth. We provide a dynamic decomposition framework to characterize the contributions to industry productivity growth across the firm age distribution and apply this framework to the newly developed Revenue-enhanced Longitudinal Business Database (ReLBD). Overall, several key findings emerge: (i) the relationship between firm age and productivity growth is downward sloping and convex; (ii) the magnitudes are substantial and significant but fade quickly, with nearly 2/3 of the effect disappearing after five years and nearly the entire effect disappearing after ten; (iii) the higher productivity growth of young firms is driven nearly exclusively by the forces of selection and reallocation. Our results suggest a cumulative drag on aggregate productivity of 3.1% since 1980. Using an instrumental variables strategy we find a consistent pattern across states/MSAs in the U.S. The patterns are broadly consistent with a standard model of firm dynamics with monopolistic competition.
    Date: 2018–06
  3. By: Elena Grinza; Francesco Quatraro
    Abstract: In this paper, we explore the impact of a firm's workers' replacements on innovation performance, by using rich matched employer-employee panel data for the Veneto region of Italy. We take the well-known resource-based theory of the firm as our departure point, and develop a set of hypotheses which we test empirically with negative binomial regressions. Coherently with our theoretical framework, we find that workers' replacements significantly dampen innovation performance, because they generate losses in the tacit knowledge base of the firm. We also nd that workers' replacements are especially detrimental to large and young rms, because large companies have more hierarchical rigidities and innovative capabilities in young rms are mostly dependent on specific human capital. Finally, our results show that firms' localization in industrial districts significantly mitigates the negative impact of workers' replacements, and that a similar picture emerges when firms are more exposed to knowledge spillovers, particularly of related knowledge.
    Keywords: Workers' replacements, excess worker turnover, innovation performance, tacit knowledge, knowledge spillovers, employer-employee matched longitudinal data.
    JEL: J63 O30
    Date: 2018
  4. By: Elert, Niklas (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: We argue that scholars in the Austrian tradition of economics should incorporate the notion of a collaborative innovation bloc into their study of spontaneous market order. We demonstrate how successful entrepreneurship depends on an innovation bloc of this kind, a system of innovation that evolves and within which activity takes place through time. The innovation bloc consists of five pools of economic skills from which people are drawn or recruited to form part of a collaborative team, which is necessary if innovation-based venturing is to flourish. The five skills are entrepreneurs, early- and later-stage-financiers, key personnel, and customers. Through real-world examples, we show how the application of the collaborative innovation bloc perspective could help make Austrian economics more concrete, relevant and persuasive, especially in regard to policy prescriptions.
    Keywords: Austrian Economics; Entrepreneurship; Innovation; Institutions; Schumpeterian entrepreneurship; Spontaneous order
    JEL: B53 D20 G32 L23 L26 O33
    Date: 2018–06–20
  5. By: Yamamoto, Satoshi; Kan, Viktoriya; Bartnik, Roman
    Abstract: This paper explores why a specific group of highly specialized Japanese toolmakers have chosen to expand their limited customer base to include Germany, despite strong cultural and geographical differences. Analyzing the phenomenon through the theoretical lens of International Entrepreneurship research, we find that compared to existing Japanese customers, Japanese SMEs perceived the German customers as less hierarchically dominant and more open and appreciative of their products. Japanese SMEs cited a highly interactive learning relationship with their German customers as a strong potential source for product and process innovation. In sum, we find that this the aspiration for innovativeness is a key motivator for these specialized Japanese SMEs to expand their business to Germany.
    Keywords: Innovativeness, Internationalization, IEO, Japanese manufacturers, German Customers
    Date: 2018–06
  6. By: Hamza El Guili (University of Abdelmalek Essasdi, Morocco)
    Abstract: The acceptance and recognition of born global firms (BGs) as relevant and singular organizations across the world’s economy has been flourishing in the recent years. Born globals are commonly entrepreneurial and relatively young small and medium sized enterprises (SMEs), with limited resources. Although these restrictions and constraints, BGs initiate their internationalization process from early stages. Thus, they conduct their internationalization process more rapidly than traditional firms operating in domestic markets and using incremental processes. Nevertheless, theories on BGs are still not fully developed by researchers. Few studies have tried to advance theoretical reflections on born global firms and their internationalization. This paper examines how research on BGs internationalization has emerged and its development over time. Furthermore, it identifies the challenges faced by these firms when they internationalize and gives future research suggestions to academicians for the advance of the research in the internationalization of born global firms.
    Keywords: SMEs, Internationalization, Born globals, Early internationalization
    Date: 2018–05
  7. By: Yoshino, Naoyuki (Asian Development Bank Institute); Taghizadeh-Hesary, Farhad (Asian Development Bank Institute)
    Abstract: Small and medium-sized enterprises (SMEs) are the backbone of the Asian economy. They make up more than 96% of all Asian businesses that provide 2 out of 3 private sector jobs in the continent. Therefore, it is vitally important for the Asian economies’ economic success that they have fully functioning support measures for SMEs. However, SMEs face major challenges in accessing cheap finance, mainly because there is an asymmetric information problem between suppliers and demanders of funds, which hinders their growth. We highlight the difficulties of SMEs in accessing finance, and provide remedies for mitigating them. The remedies proposed in here include the development of credit information infrastructures for SMEs to remedy the asymmetric information problem, utilization of credit rating techniques for SMEs, the development of a sustainable credit guarantee scheme, the development of specialized private banks for SME financing, and the introduction of new ways of providing community-based financing such as hometown investment trust funds. We will provide operational examples from developed Asian economies such as Japan and the Republic of Korea, and developing Asian economies such as Thailand with a view to them being implemented in the rest of Asia.
    Keywords: SMEs; Asian economies; credit rating; CRD; SME bank
    JEL: G21 G24 G32
    Date: 2017–08–04
  8. By: Antoine Goujard; Pierre Guérin
    Abstract: Poland’s productivity has grown strongly over the past two decades. However, the public and private capital stock is weak, and investment remains focused on the adoption of existing technologies, which weighs on future productivity gains and innovation. Many micro enterprises have low productivity, and structural bottlenecks reduce start-ups' growth and their chances of survival. The EU and the government are stepping up funding for business research and development, collaboration with the public sector, entrepreneurship and innovation. This is an opportunity to improve the management of public business support, and the large new programmes should be carefully discussed with stakeholders and regularly evaluated to avoid the risks of subsidising low-productivity firms and to strengthen the take up from the most productive small and medium-sized enterprises. The sustainability of this ambitious package of measures will also require significant public revenues and promoting alternative market-based financing instruments will be critical over the medium term. Ongoing improvements in insolvency procedures and efforts to reduce the regulatory burden are set to ease reallocation of resources through the economy. However, the level of state involvement would remain important, and ensuring the independence of the network industry regulators and the Competition Authority and a level playing field between alternative technologies, as well as easing labour mobility would be good moves.
    Keywords: business environment, financial markets, financing, innovation, investment, Poland
    JEL: E22 G24 O16 O38 O44 O47
    Date: 2018–06–29
  9. By: Hiroaki Ogawa (Subregional Office for North and Central Asia, ESCAP)
    Abstract: Access to financing is one of the fundamental conditions for individuals and small businesses to be able to invest and become entrepreneurs. Several economies in the Asia-Pacific region, including those in the North and Central Asian subregion, however, lag in facilitating such opportunities for potential entrepreneurs. This situation hampers the private sector’s potential contribution to the development of the country, and impedes the process of inclusive income and wealth creation. It might be tempting to advise countries in North and Central Asia to take advantage of FinTech, and hopefully they should aspire to do so: new advances such as crowdfunding or blockchain technology offer great opportunities and leapfrogging is possible. However, currently most countries in the subregion lack basic infrastructure and essential conditions, such as reliable networks and free Internet, to make such a revolution possible on a massive scale. Hence, Governments should ensure the provision of such infrastructure and promote simpler, better-established technologies, such as mobile payments. Opening the mobile market to experienced foreign companies to provide mobile banking services would be another option with considerable potential. Finally, policymakers should also consider enhancing the Internet so that people really consider it as a trustworthy option to seek investment/financing opportunities. The introduction of frameworks to regulate FinTech, so that investors do not face regulatory uncertainty and feel more empowered to invest, would be welcome. As with other fast-evolving technologies, it would be advisable that they take stock of lessons learned from the experiences of other countries which are ahead of the curve.
  10. By: Jin Yang; Jian Huang; Yanhua Deng; Massimo Bordignon
    Abstract: This paper examines the integration of Chinese Communist Party membership and private entrepreneurship in China after 2002, when the Party revised its constitution and officially removed ideological discrimination against private entrepreneurs. Using six waves of a nationwide survey of privately owned enterprises in China from 1997 to 2008, we find that the constitutional change led to an exodus of Party members, and particularly senior officials, into the private sector. On the contrary, very few private entrepreneurs were admitted to the Party. The exodus of Party members was more prominent in regions with weaker market-supporting institutions. After the reform, Party affiliation is also shown to provide considerable private benefits to entrepreneurs, in the form of easier access to loans from state owned banks, reduced government expropriation, improved firms’ performance. These political rents were larger in regions with weaker market-supporting institutions.
    Keywords: party membership, private entrepreneur, ideology, market institutions, political rents
    JEL: H19
    Date: 2018
  11. By: Milos Markovic (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Michael Stemmer (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Using a unique dataset of unlisted Serbian firms during the period between 2005 and 2012, we analyze the impact of internal financial constraints on firm growth with respect to several firm-level characteristics. We also assess potential effects created by the 2008-2009 Global Financial Crisis. To do so, we rely on panel data models, which estimate via GMM cash flow sensitivities of firm growth, following the dynamic specification of Guariglia et al. (2011). Controlling for investment opportunities, our results show that Serbian firms face high financial constraints and exhibit generally a high reliance on retained earnings for firm growth. We do not find evidence for a crisis effect, potentially due to ex ante accumulated internal funds. Conventional firm characteristics such as age, size or overall performance largely determine the dependency on cash for firm growth. Moreover, foreign-owned companies seem to escape the financing gap by tapping other resources. A comparison with Belgian firms contrasts our results with an advanced country setting.
    Keywords: Financial constraints,firm growth,transition countries,dynamic panel data,GMM
    Date: 2017–02
  12. By: Yamada, Kazuo (Asian Development Bank Institute); El Kalak, Izidin (Asian Development Bank Institute); Takahashi, Hidenori (Asian Development Bank Institute)
    Abstract: We examine how changes in macroeconomic conditions (the global financial crisis) relate to investment and financial decision making for each of the different size categories of small and medium-sized enterprises (SMEs). We use a large dataset of 764,963 observations in Japan for the time period from 2006 to 2014 to understand the heterogeneity of SMEs in financing and investment decision making, such in size, industry, and region. Our findings are of particular importance for regulators because we show that SMEs are dynamic in nature where they change their financial behavior in response to any macroeconomic shock. In addition, we report differences among the different size subsample at the sales growth and state/industry GDP growth levels. Hence, this requires designing a unique set of regulations for each group accordingly to effectively enhance the growth potential for each group and for SMEs as a whole. These findings have implications for lenders, especially banks, which should treat each size group within SMEs differently while lending or assessing creditworthiness.
    Keywords: SMEs; size categories; macro-economic shocks; investment; financing policy; Japan
    JEL: G28 G32 G38
    Date: 2018–03–09
  13. By: Pellegrino, Gabriele; Piva, Mariacristina; Vivarelli, Marco
    Abstract: In this work, we test the employment impact of distinct types of innovative investments using a representative sample of Spanish manufacturing firms over the period 2002-2013. Our GMM-SYS estimates generate various results, which are partially in contrast with the extant literature. Indeed, estimations carried out on the entire sample do not provide statistically significant evidence of the expected labor-friendly nature of innovation. More in detail, neither R&D nor investment in innovative machineries and equipment (the so-called embodied technological change, ETC) turn out to have any significant employment effect. However, the job-creation impact of R&D expenditures becomes highly significant when the focus is limited to the high-tech firms. On the other hand - and interestingly - ETC exhibits its labor-saving nature when SMEs are singled out.
    Keywords: Innovation,R&D,Embodied Technological Change,Employment,GMM-SYS
    JEL: O33
    Date: 2018
  14. By: William Mullins; Patricio Toro
    Abstract: Credit guarantee schemes for bank loans are at the heart of most Governments’ strategies to help firms, and often direct vast volumes of credit. This paper examines Chile’s credit guarantee scheme for bank loans to small and medium enterprises (SMEs), which is structured like many OECD countries’ schemes. We use a regression discontinuity around the eligibility cutoff and find that this credit guarantee design generates large positive effects on firms’ total borrowing without large increases in default rates. The scheme also has an amplification effect: firms increase borrowing from other banks in the eighteen months following a loan guarantee. Moreover, we show that the guarantees are used to build new bank relationships, an important process for SMEs. Finally, we show that firms use the credit increase to significantly scale up their sales, employment and input purchases. These results provide evidence that credit guarantees are an effective policy tool for both boosting credit availability, and for establishing new bank relationships for SMEs.sentiment score - proxies for the monetary policy tilt. We then evaluate how the surprise component of the sentiment scores - together with unexpected policy changes - impact Chilean financial assets.
    Date: 2018–06
  15. By: Serge Francis Simen (ESP - UCAD - École Supérieure Polytechnique - Université Cheikh Anta DIOP de Dakar - UCAD - Université Cheikh Anta Diop)
    Abstract: RESUME : L'objet de ce travail est de décrire la dynamique de l'entrepreneuriat informel au Sénégal en cherchant à comprendre les motivations des entrepreneurs de l'informel qui les poussent à y rester ou à évoluer vers la formalisation de leurs activités. Pour cela, l'enquête, réalisée auprès de 40 entrepreneurs informels évoluant dans différents secteurs d'activités, nous a permis de décrire les raisons pour lesquelles les entrepreneurs travaillent de manière informelle au Sénégal, pourquoi ils souhaitent y rester ou évoluer vers la formalisation de leur activité. A partir de récits de vie d'entrepreneurs informels, notre corpus de données permet de dire que :-les motivations à investir dans le secteur informel sont principalement le coût relativement réduit d'entrée et le fait d'échapper aux tracasseries administratives et, secondairement, aux obligations fiscales.-plusieurs facteurs les poussent à y rester : le secteur s'organise, de plus en plus, avec des organisations professionnelles qui défendent leurs intérêts ; les entrepreneurs informels, généralement soutiens familiaux, veulent verser le moins possible à l'Etat et en garder suffisamment pour s'occuper d'eux et de leur famille élargie. La solidarité des réseaux familiaux et des connaissances et le peu de contraintes administratives et fiscales auxquels ils sont astreints. On peut également y ajouter le manque d'information et l'accompagnement sur les avantages que procure la formalisation des activités.
    Date: 2018–06–06
  16. By: Cheriet, F.
    Abstract: Current academic research strongly suggests adapting models of analysis of entrepreneurial innovations to the specificity of African contexts. The purpose of this short note is to explore through an up-dated literature review of academic research and empirical applications, the question of entrepreneurial innovations in African. By extension, we will examine some possible links with agricultural challenges and future food issues. ....French Abstract: Les recherches actuelles plaident pour une adaptation des modèles d’analyse des innovations entrepreneuriales à la spécificité des contextes africains. L’objet de cette note courte est d’explorer à travers une revue de littérature actualisée des recherches académiques et des applications empiriques, la question des innovations entrepreneuriales dans le contexte africain. Nous examinerons par extension certains liens possibles avec les défis agricoles et les enjeux alimentaires futurs du continent.
    JEL: O33 O55 Q16
    Date: 2018
  17. By: Serge Simen (ESP - UCAD - École Supérieure Polytechnique - Université Cheikh Anta DIOP de Dakar - UCAD - Université Cheikh Anta Diop)
    Date: 2018–06–05

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