nep-ent New Economics Papers
on Entrepreneurship
Issue of 2018‒07‒30
fifteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Self-Employment Can Be Good for Your Health By Nikolova, Milena
  2. Ethnic Enclaves, Self-Employment and the Economic Performance of Refugees By Andersson, Henrik
  3. The Persistent Effect of Initial Success: Evidence from Venture Capital By Ramana Nanda; Sampsa Samila; Olav Sorenson
  4. The Regional Innovation System in China: Regional comparison of technology, venture financing, and human capital focusing on Shenzhen By MOTOHASHI Kazuyuki
  5. Determinants of overall and sectoral entrepreneurship: evidence from Portugal By Gonçalo Brás; Elias Soukiazis
  6. Explanatory factors behind formalizing non-farm household businesses in Vietnam By Jean-Pierre Cling; Mireille Razafindrakoto; François Roubaud
  7. Staying Young at Heart or Wisdom of Age: Longitudinal Analysis of Age and Performance in US and Japanese Firms By YAMAGUCHI, Shotaro; NITTA, Ryuji; HARA, Yasushi; SHIMIZU, Hiroshi
  8. A research note on entrepreneurs' financial commitment and crowdfunding success By Löher, Jonas; Schneck, Stefan; Werner, Arndt
  9. Technology Sourcing in New Product Development Projects: When and how to use external resources? By KANI Masayo; MOTOHASHI Kazuyuki
  10. The Aggregate Consequences of Tax Evasion By Alessandro Di Nola; Georgi Kocharkov; Almuth Scholl; Anna-Mariia Tkhir
  11. Technology Adoption in a Declining Market By Hagspiel, V.; Huisman, Kuno; Kort, Peter; Lavrutich, Maria; Nunes, Claudia; Pimentel, Rita
  12. The entrepreneurship miracle: a desperate move to rectify Zimbabwe's socio-economic herculean? By Nyoni, Thabani
  13. European Small Business Finance Outlook: June 2018 By Kraemer-Eis, Helmut; Botsari, Antonia; Gvetadze, Salome; Lang, Frank; Torfs, Wouter
  14. Ridare centralità economica alle MicroPMI By Giuseppe Capuano
  15. Micro-finance et crowdfunding : l'essor des nouvelles alternatives de financement pour les entreprises By Nathalie Duran

  1. By: Nikolova, Milena
    Abstract: Drawing upon theoretical insights from the Job Demand-Control model, which links occupational characteristics to health, this paper provides the first causal evidence of the physical and mental health consequences of self-employment. Specifically, I utilize German longitudinal data for the period 2002-2014 and difference-in-differences estimations and find that both switches from unemployment to self-employment (necessity entrepreneurship) and transitions from regular employment to self-employment (opportunity entrepreneurship) lead to health enhancements for entrepreneurs with and without employees. Specifically, necessity entrepreneurs experience improvements in mental but not physical health, while opportunity entrepreneurship is associated with both physical and mental health gains, which is in line with the theoretical predictions. Importantly, the health improvements cannot be explained by changes in income or working conditions and are not driven by personality and risk preferences or the local unemployment conditions. The results have implications for entrepreneurship theory and practice, current and would-be entrepreneurs as well as policy-makers.
    Keywords: mental health,physical health,self-employment,difference-in-differences
    JEL: I10 J01 L26
    Date: 2018
  2. By: Andersson, Henrik (Department of Economics and Institute for Housing and Urban Research (IBF), Uppsala)
    Abstract: In this paper I estimate the causal effect of ethnic enclaves on the probability of self-employment. To account for neighborhood selection I make use of a refugee dispersal program. Results indicate that larger ethnic enclaves, measured as the share of self-employed coethnics in the municipality immigrants first arrive into, effects the probability of self-employment positively, while the share of all other coethnics has a negative effect. Results however also indicate that there is a long term economic penalty to being placed with a larger share of self-employed coethnics, an effect which is partly mediated through the choice of selfemployment.
    Keywords: Immigration; Self-employment; Sweden; Foreign born; Ethnic Enclaves; Coethnics
    JEL: C21 J15 M13 R23
    Date: 2018–03–18
  3. By: Ramana Nanda (Harvard Business School, Entrepreneurial Management Unit); Sampsa Samila (National University of Singapore); Olav Sorenson (Yale School of Management)
    Abstract: We use investment-level data to study performance persistence in venture capital (VC). Consistent with prior studies, we find that each additional IPO among a VC firm's first ten investments predicts as much as an 8% higher IPO rate on its subsequent investments, though this effect erodes with time. In exploring its sources, we document several additional facts: successful outcomes stem in large part from investing in the right places at the right times; VC firms do not persist in their ability to choose the right places and times to invest; but early success does lead to investing in later rounds and in larger syndicates. This pattern of results seems most consistent with the idea that initial success improves access to deal flow. That preferential access raises the quality of subsequent investments, perpetuating performance differences in initial investments.
    Keywords: venture capital, performance, monitoring, selection
    JEL: G24 M13
    Date: 2017–01
  4. By: MOTOHASHI Kazuyuki
    Abstract: Shenzhen has become a hot spot of innovation in China. In this paper, we characterize Shenzhen's innovation by comparing it with that of Beijing and Shanghai using patent and venture investment data. First, the role of universities and public research institutions is small in Shenzhen's innovation system as compared to Beijing and Shanghai. In contrast, private high-tech firms, such as Huawei, ZTE, and Tencent, are leading the innovation scene in Shenzhen. Second, we find that high-tech start-ups are geographically concentrated in the Nanshan district, particularly Yuehai Jiedao, where national-level high-tech zones are located. Recently, the number of start-ups has been increasing, and local, big firms, such as ZTE, are providing the human resources for such start-up firms. Third, inventor-disambiguated information based on patent data allows us to look at interorganizational talent movements. We find that such movements tend to occur within short distances, such as within the same district (e.g., Nanshan district). To sum up, Shenzhen has truly become a hot spot of high-tech entrepreneurship and innovation, but the dynamics are very much regionally bound. Therefore, it is important to become a local player in order to take advantage of innovation movements in Shenzhen by means of minority investment by corporate venture capital into local start-up firms.
    Date: 2018–07
  5. By: Gonçalo Brás (Polytechnic Institute of Tomar); Elias Soukiazis (CeBER and Faculty of Economics, University of Coimbra)
    Abstract: As a multidisciplinary concept, entrepreneurship can be explained by numerous factors. Therefore, the aim of this study is to test empirically the determinants of entrepreneurship (overall and sectoral) in the Portuguese economy. Despite the methodological limitations inherent in such studies, which are mainly due to the incompatibility of some series and the temporal limitations of some data, the novelty involving a cross-sectoral view of the entrepreneurial phenomenon fuels this challenge. For this purpose, we employ an estimation approach based on time series models to confirm (or reject) a diversity of hypotheses. The main results indicate that the determinants of entrepreneurship in industry are significantly different from the determinants of entrepreneurship in the service sector in Portugal. On the other hand, the determinants of entrepreneurship in the service sector are very similar to those explaining the overall entrepreneurial activity, due to the high share of services in total economic activity. The main conclusions of the study can guide institutional decision-makers to adopt adequate policies for promoting entrepreneurship in Portugal. Additionally, strategic routes for the sustainable development of entrepreneurial activity are suggested.
    Keywords: entrepreneurship; sectoral entrepreneurship; determinants of entrepreneurship; entrepreneurial activity; business services; time series models.
    JEL: L26 O11 O14
    Date: 2018–04
  6. By: Jean-Pierre Cling (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Mireille Razafindrakoto (LEDa - Université Paris Dauphine (Paris 9)); François Roubaud (LEDa - Université Paris Dauphine (Paris 9))
    Abstract: This article sets out to investigate the reasons why some household businesses decide to register and become formal (while others do not) in order to shed light on the origins of informality. We use qualitative as well as quantitative data on household businesses (HB) derived from first-hand representative surveys implemented in Hanoi and Ho Chi Minh city. The study reveals that although most of the informal businesses operate ‘illegally', this is more due to unclear registration legislation than the mark of a deliberate intention to evade the economic regulations.Among the different factors which influence the registration decisions, the reason for setting up the business appears to be a determining one: the more it is a real choice (businesses set up to be independent or to follow a family tradition) and the less a constraint (set up for lack of an job alternative), the more the HB is more inclined to be registered. Furthermore, the analysis highlights that incentives do prove decisive insofar as the probability of having a formal business is greater among HB heads who consider that registration provides at least partial protection from corruption. Besides, access to information, the market and large business orders also drive the informal entrepreneurs to register. These results stress the need for clarification of the legal framework as well as incentive policies in order to address the issue of informality.
    Abstract: Cet article se propose d'analyser les raisons pour lesquelles certaines unités de production (household businesses, HB) décident de s'enregistrer et de devenir formelles (et pourquoi d'autres ne le font pas) afin d'éclairer les origines de l'informalité. Nous mobilisons des données aussi bien quantitatives que qualitatives sur les HB, issues d'enquêtes représentatives et de première main conduite par nos soins à Hanoï et Ho Chi Minh ville. L'étude révèle que bien que la plupart des unités informelles opère "illégalement", ce trait procède plus d'une législation floue et méconnue que d'une volonté délibérée d'échapper aux régulations publiques. Parmi les différents facteurs qui jouent sur la décision de s'enregistrer, le motif qui a conduit à s'établir à son compte est déterminant : plus il s'agit d'un véritable choix (volonté d'échapper au salariat ou par tradition familiale) et moins il résulte d'une contrainte (manque d'alternative d'emploi), et plus le chef d'unité sera enclin à s'enregistrer. De plus, l'analyse met en évidence le rôle des incitations dans la probabilité de devenir formel. Ainsi, ceux qui considèrent que l'enregistrement protège (au moins partiellement) de la corruption sont plus nombreux à régulariser leur situation. Enfin, l'accès à l'information, aux marchés et aux commandes des grandes entreprises favorisent l'enregistrement. Ces résultats soulignent le besoin de clarification de la législation des entreprises ainsi que l'importance de politiques incitatives pour s'attaquer à la question de l'informalité.
    Keywords: Informal Sector,Vietnam,Registration,Corruption,Incentives
    Date: 2017–12–14
  7. By: YAMAGUCHI, Shotaro; NITTA, Ryuji; HARA, Yasushi; SHIMIZU, Hiroshi
    Abstract: How does ageing influence the profitability of firms? This study uses an analysis of corporations listed on the NYSE and TSE between 1978 and 2015 to highlight clear differences between US and Japanese firms with respect to the relationship between age and profitability. It shows that US firms lose efficiency, as measured by total asset turnover as they age, whereas Japanese firms’ ability to generate profit from sales declines. This study explores the factors underlying these national differences in the relationship between ageing and profitability, focusing on rigidity of resource allocation. By examining the technological distance, we calculate resource allocation rigidity of the firms. The results show at all ages, Japanese firms are more rigid than their US counterparts, although the slope is steeper in the case of US firms. These observations suggest that Japanese firms’ operating profit margins decline as they age because they are less likely to change how they allocate resources and tend to stay in their existing business sectors, even if they are underperforming. In other words, these findings suggest that being flexible about allocation of resources mitigates the negative effect of ageing on profitability. The results suggest that changing patterns of resource allocation retards learning in the business domains in which a firm is already active.
    Date: 2018–06
  8. By: Löher, Jonas; Schneck, Stefan; Werner, Arndt
    Abstract: Established early stage investors decide to invest in new ventures after evaluating the propensity of success and the risk of failure. Consequently, it is of considerable importance that the new business owners have substantial 'skin in the game' and are thus highly committed to business success. Despite its key role in practice, the entrepreneurs' own financial commitment has not yet been discussed in a crowdfunding context. Applying a signaling approach, our empirical findings show that entrepreneurs with comparatively more ex ante financial commitment in their project achieve significantly higher funding success. Moreover, our results suggest that financial commitment is the single most important variable determining funding success.
    Keywords: equity crowdfunding,crowdinvesting,campaign success,financial commitment,signaling,entrepreneurial finance
    JEL: G11 G19 G21 M13
    Date: 2018
  9. By: KANI Masayo; MOTOHASHI Kazuyuki
    Abstract: This paper provides empirical analyses to understand the management of external technology sourcing using a novel dataset of new product development (NPD) projects in Japanese firms, focusing on the difference between bilateral and unilateral contract-based alliances. External technology sourcing takes on various forms that can be divided into two categories: bilateral alliances, such as joint research and development (R&D), and unilateral alliances, such as licensing and commissioned R&D. The former style involves the cooperation process of joint R&D with a partner, whereas the latter involves the straightforward process of technology acquisition from a partner. In this paper, the determinants of the sourcing strategy for each contract type are investigated, and we find that a firm is likely to use external technology sourcing in exploratory projects, and that the type of sourcing will differ between large and small firms. Furthermore, a bilateral alliance is likely found to be used for market pull-type projects, while technology push-type ones are more often managed by unilateral alliances.
    Date: 2018–06
  10. By: Alessandro Di Nola (University of Konstanz); Georgi Kocharkov (Goethe University Frankfurt); Almuth Scholl (University of Konstanz); Anna-Mariia Tkhir (University of Konstanz)
    Abstract: There is a sizable overall tax gap in the U.S., albeit tax non-compliance differs sharply across income types. While only small percentages of wages and salaries are underreported, the estimated misreporting rate of self-employment business income is substantial. This paper studies how tax evasion in the self-employment sector affects aggregate outcomes and welfare. We develop a dynamic general equilibrium model with incomplete markets in which heterogeneous agents choose between being a worker or self-employed. Self-employed agents may hide a share of their business income but face the risk of being detected by the tax authority. Our model replicates important quantitative features of the U.S. economy in terms of income, wealth, self-employment, and tax evasion. Our quantitative ndings suggest that tax evasion leads to a larger self-employment sector but it depresses the average size and productivity of self-employed businesses. Tax evasion generates positive aggregate welfare effects because it acts as a subsidy for the self-employed. Workers, however, suffer from substantial welfare losses.
    Keywords: Tax evasion, Self-employment, Wealth inequality, Tax policy
    JEL: H24 H25 H26 C63 E62 E65
    Date: 2018–07–26
  11. By: Hagspiel, V. (Tilburg University, Center For Economic Research); Huisman, Kuno (Tilburg University, Center For Economic Research); Kort, Peter (Tilburg University, Center For Economic Research); Lavrutich, Maria (Tilburg University, Center For Economic Research); Nunes, Claudia; Pimentel, Rita
    Abstract: Rapid technological developments are inducing the shift in consumer demand from existing products towards new alternatives. When operating in a declining market, the profitability of incumbent firms is largely dependent on the ability to correctly time the introduction of product innovations. This paper contributes to the existing literature on technology adoption by considering the optimal innovation investment in the context of the declining market. We study the problem of a firm that has an option to undertake the innovation investment and thereby either to add a new product to its portfolio (add strategy) or to replace the established product by the new one (replace strategy). We are able to quantify the value of the option to adopt a new technology, as well as the optimal timing to exercise it. We find that it can be optimal for the firm to innovate not only because of the significant technological improvement, but also due to demand saturation. In the latter case profits of the established product may become so low that the firm will adopt a new technology even if the newest available innovation has not improved for some time. This way, our approach allows to explicitly account for the effect of a decline in the established market on technology adoption. Furthermore, we find that under certain conditions an inaction region exists, in which the firm does not innovate, while for lower technology levels it applies the add strategy and for higher technology levels the replace strategy.
    Keywords: Technology adoption; Declining demand; Product innovation; Dynamic programming
    JEL: C61 D81 O33
    Date: 2018
  12. By: Nyoni, Thabani
    Abstract: Entrepreneurship development has been a topical issue having been popularized by ancient great economists such as Adam Smith and Joseph Schumpeter. Today, governments and non – governmental organizations around the world; are busy trying to find out practical strategies of influencing entrepreneurship activities. This is mainly attributed to the overwhelming fact that entrepreneurship is now the new engine of economic growth. This is the major reason why many economists continue to step on each other’s toes in a desperate endeavor to unpack the dern behind entrepreneurship. Owing to her abundant, vibrant and dynamic human and natural resource endowments, Zimbabwe boasts of numerous business and investment opportunities. In an attempt to demystify entrepreneurship in Zimbabwe, this study unbundles some of the most pertinent issues within the concept of entrepreneurship. In order to address rampant unemployment in Zimbabwe, the researcher recommends the promotion of an entrepreneurial culture; amongst other policy prescriptions.
    Keywords: Entrepreneur, entrepreneurship, entrepreneurial orientation, entrepreneurial process, graduate entrepreneurship
    JEL: L26
    Date: 2018–06–30
  13. By: Kraemer-Eis, Helmut; Botsari, Antonia; Gvetadze, Salome; Lang, Frank; Torfs, Wouter
    Abstract: This European Small Business Finance Outlook (ESBFO) provides an overview of the main markets relevant to EIF (equity, guarantees, securitisation, microfinance). It is an update of the December 2017 ESBFO edition. We start by discussing the general market environment, then look at the main aspects of equity finance and guarantees/SME Securitisation (SMESec). Finally, before we conclude, we briefly highlight some important aspects of microfinance and Fintech in Europe.
    Date: 2018
  14. By: Giuseppe Capuano
    Abstract: The principal objective of the article is to identify measures that progressively (medium-term objectives), with a view to the growth of the entrepreneurial system, encourage the improvement of the structural conditions both internal and external to enterprises in order to "value chain†and supporting their competitive positioning on international markets at all stages of the "life cycle" of the company giving economic centrality to micro and small Italian companies.
    Keywords: SMEs economic role; national and international policies
    JEL: L25 H32
    Date: 2018–07–21
  15. By: Nathalie Duran (CEMOI - Centre d'Économie et de Management de l'Océan Indien - UR - Université de la Réunion)
    Abstract: Micro-finance et crowdfunding : l'essor des nouvelles alternatives de financement pour les entreprises. « Avec Lendopolis votre argent ne dort pas sur un Livret A ou sur votre assurance vie. Il travaille pour des PME françaises ! Vous prêtez en direct aux entreprises françaises de votre choix et recevez jusqu'à 12% d'intérêts chaque mois ». L'année 2015 étant l'année de décollecte du livret A la plus haute depuis 20 ans, le groupe les Echos propose aux français une solution pour valoriser leurs économies grâce au prêt aux entreprises. Le gouvernement a mis fin au monopole bancaire sur les prêts rémunérés par le décret du 1 er octobre 2014 qui a instauré le statut d'Intermédiaire en Financement Participatif. Les particuliers peuvent désormais « donner un sens à leur épargne » et deviennent des micro-prêteurs. Ils peuvent confier jusqu'à 1000 € aux projets qui les attirent, tandis que les porteurs de projet peuvent lever jusqu'à un million d'euros sur les plateformes. Comment expliquer cet engouement pour les plateformes de financement participatif ? Sur les marchés financiers parfaits, les entreprises trouvent toujours un financement suffisant et approprié aux investissements de création de valeur. Par conséquent, les décisions de financement ne sont pas pertinentes. Les marchés financiers en réalité ne sont pas parfaits, et les imperfections du marché nécessitent des décisions de financement en matière de développement d'affaires et de création de valeur pour l'entreprise. Plusieurs recherches se sont intéressées aux décisions de financement et aux choix des sources de financement par les entreprises. Les entrepreneurs préfèrent les sources de financement qui ne conduisent pas à une perte de contrôle et celles aux coûts les plus faibles. Par conséquent, ils optent généralement pour des ressources financières personnelles ou d'autres ressources informelles plutôt que des financements externes. Les solutions alternatives de financement qu'offrent les plateformes de financement participatif semblent se substituer aux sources de financement informelles. Ces modèles d'affaire nouveaux ont suscité un intérêt en tant que moyen d'introduction dans le marché d'une plus grande liquidité. Par exemple, de son lancement le 12/11/2013 au 30/04/2016, la plateforme Unilend (pionner français et leader en crowdlending) a permis de financer 18 442 650 €, pour 241 projets. Au regard du crowdlending, il semblerait que les activités sur les plateformes de financement participatif intègrent davantage de processus sociaux et psychologiques que le traditionnel capital-risque. Les raisons des choix pour l'une ou l'autre des plateformes dépendent des objectifs des entrepreneurs, de ceux des supporteurs, ainsi que de l'environnement institutionnel. Des travaux récents soulignent, par ailleurs, que les perceptions des entrepreneurs quant aux possibilités d'accès au capital peuvent influencer les sources à partir desquelles ils recherchent des fonds. Les facteurs cognitifs sembleraient être des éléments clefs, ils peuvent notamment générer des émotions négatives comme le découragement : certains entrepreneurs se détournent des sources de financement traditionnelles car ils perçoivent des difficultés excessives quant à l'obtention de fonds auprès des institutions financières. Les plateformes de financement participatif rencontrent ainsi un franc succès mondial, elles ont permis de récolter 31.4 milliards en 2015 (dont 296.8 millions d'euros pour la France), ce qui correspond à une croissance de 2000 % en quatre ans, causée par une multiplication du nombre de contributeurs (de 1,3 millions à 2,3 millions pour les français par exemple). Cet article a pour objet de faire un état des lieux sur le financement participatif en France. Nous présentons tout d'abord ses diverses formes et les besoins qu'elles permettent de satisfaire, puis nous évoquerons les risques de fraude et les premières désillusions ainsi que les partenariats récemment conclus afin de limiter les risques de défaillance.
    Date: 2016–07–01

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