nep-ent New Economics Papers
on Entrepreneurship
Issue of 2018‒08‒13
twelve papers chosen by
Marcus Dejardin
Université de Namur

  1. Insights into the Impact of Bankruptcy's Public Record on Entrepreneurial Activity: Evidence from Economic Experiments By Dulleck, Uwe; Howell, Nicola J.; Koessler, Ann-Kathrin; Mason, Rosalind F.
  2. Hiring by start-ups and regional labor supply By Bellmann, Lisa; Brixy, Udo
  3. When Does Advice Impact Startup Performance? By Aaron Chatterji; Solène Delecourt; Sharique Hasan; Rembrand M. Koning
  4. Financing Ventures By Jeremy Greenwood; Pengfei Han; Juan M. Sanchez
  5. SME investment best strategies. Outliers for assessing how to optimize performance By Marcel Ausloos; Roy Cerqueti; Francesca Bartolacci; Nicola G. Castellano
  6. Historical Evolution of Entrepreneurial Development in the Global South: The Case of Ghana, 1957-2010 By Amankwah-Amoah, Joseph; Lu, Yindfa
  7. Some Facts of High-Tech Patenting By Michael Webb; Nick Short; Nicholas Bloom; Josh Lerner
  8. Intellectual Property Rights for Software and Accessibility to Venture Capitalists By ONISHI Koichiro; YAMAUCHI Isamu
  9. The banking systems of Germany, the UK and Spain form a spatial perspective: The UK case By Flögel, Franz; Gärtner, Stefan
  10. The banking systems of Germany, the UK and Spain form a spatial perspective: The German case By Flögel, Franz; Gärtner, Stefan
  11. Die Auswirkungen des Gründungsgeschehens auf das regionale Wirtschaftswachstum By Dienes, Christian; Schneck, Stefan; Wolter, Hans-Jürgen
  12. Neugegründete Unternehmen und ihre Entwicklung: Eine empirische Analyse anhand verschiedener Erfolgsdimensionen By Brink, Siegrun; Ivens, Sören; Nielen, Sebastian; Schlömer-Laufen, Nadine

  1. By: Dulleck, Uwe; Howell, Nicola J.; Koessler, Ann-Kathrin; Mason, Rosalind F.
    Abstract: Many Anglo-American jurisdictions aim to provide debtors with a ‘fresh start’ after a personal bankruptcy. However, we query the extent to which debtors can achieve a fresh start if records of individual bankruptcies are publicly available, with no restrictions on their use. To inform the legal policy question of whether bankruptcy records should be publicly available, we study the effect of the availability of bankruptcy records, compared to their non-existence, in an economic experiment. The experiment allows us to identify empirically the effect that the exposure of bankruptcy history has on the behaviour of investors and debtors. Our exploratory research shows that the availability of bankruptcy records increases investment. Availability also increases repayment behaviour by debtors, but only if the debtor has no history of bankruptcy (non-return of payments). If, however, a debtor failed to return payments in the past, and this information is available, debtors show lower instances of return behaviour.
    Keywords: bankruptcy,investments,National Personal Insolvency Index,uncertainty,economic experiment,insolvency,public records
    JEL: K35 C90 K20
    Date: 2018
  2. By: Bellmann, Lisa (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Brixy, Udo (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Young firms find it difficult to attract (skilled) workers. Using linked employer-employee data for Germany we investigate how local labor market conditions affect the hiring success of young firms. In a first step, we estimate the probability of the founder becoming an employer. In a second step we analyze how local conditions influence the probability of hiring skilled human capital. The results indicate a positive relationship between the local unemployment level and the hiring probability of young firms." (Author's abstract, IAB-Doku) ((en))
    Keywords: Personaleinstellung, Unternehmensgründung, regionaler Arbeitsmarkt, Personalbedarf, IAB-Linked-Employer-Employee-Datensatz, Arbeitslosenquote
    JEL: D22 L26 R12
    Date: 2018–07–25
  3. By: Aaron Chatterji; Solène Delecourt; Sharique Hasan; Rembrand M. Koning
    Abstract: Why do some entrepreneurs thrive while others fail? We explore whether the advice entrepreneurs receive about people management influences their firm's performance. We conducted a randomized field experiment in India with 100 high-growth technology firms whose founders received in-person advice from other entrepreneurs who varied in their managerial style. We find that entrepreneurs who received advice from peers with an active approach to managing people–instituting regular meetings, setting goals consistently, and providing frequent feedback to employees–grew 28% larger and were 10 percentage points less likely to fail than those who got advice from peers with a passive people-management approach two years after our intervention. Entrepreneurs with MBAs or accelerator experience did not respond to this intervention, suggesting that formal training can limit the spread of peer advice.
    JEL: M1 M12 M13 O32
    Date: 2018–07
  4. By: Jeremy Greenwood; Pengfei Han; Juan M. Sanchez
    Abstract: The relationship between venture capital and growth is examined using an endogenous growth model incorporating dynamic contracts between entrepreneurs and venture capitalists. At each stage of financing, venture capitalists evaluate the viability of startups. If viable, venture capitalists provide funding for the next stage. The success of a project depends on the amount of funding. The model is confronted with stylized facts about venture capital; viz., statistics by funding round concerning the success rates, failure rates, investment rates, equity shares, and IPO values. Raising capital gains taxation reduces growth and welfare.
    JEL: E13 E22 G24 L26 O16 O31 O40
    Date: 2018–07
  5. By: Marcel Ausloos; Roy Cerqueti; Francesca Bartolacci; Nicola G. Castellano
    Abstract: Any research on strategies for reaching business excellence aims at revealing the appropriate course of actions any executive should consider. Thus, discussions take place on how effective a performance measurement system can be estimated, or/and validated. Can one find an adequate measure (i) on the performance result due to whatever level of investment, and (ii) on the timing of such investments? We argue that extreme value statistics provide the answer. We demonstrate that the level and timing of investments allow to be forecasting small and medium size enterprises (SME) performance, - at financial crisis times. The "investment level" is taken as the yearly total tangible asset (TTA). The financial/economic performance indicators defining growth are the sales or total assets variations; profitability is defined from returns on investments or returns on sales. Companies on the Italian Stock Exchange STAR Market serve as example. It is found from the distributions extreme values that outlier companies (with positive performance) are those with the lowest but growing TTA. In contrast, the SME with low TTA, but which did not increase its TTA, before the crisis, became a negative outlier. The outcome of these statistical findings should suggest strategies to SME board members.
    Date: 2018–06
  6. By: Amankwah-Amoah, Joseph; Lu, Yindfa
    Abstract: In spite of growing awareness among strategy, business history and entrepreneurship scholars of the benefits of entrepreneurial development, our understanding of the evolution of entrepreneurial development in developing nations remains limited. A historical analysis of the issue in post-colonial Ghana from 1957 to 2010 led to the identification of three distinctive phases. The first phase represented the immediate post-colonial reforms (1957–1966), where large-scale nationalisation and establishment of state-owned enterprises hampered development of private enterprises. The second phase was the turbulent period (1967–1979), where totalitarianism and confiscation of assets deterred private investments and ownership, thereby creating a harsh economic and institutional environment. These culminated in the last phase, the renaissance of social entrepreneurship (1980–2010) where different entrepreneurial models flourished, including the diaspora philanthropy and the “philanthropic chief”.
    Keywords: entrepreneurial development; Ghana; Africa; government policy
    JEL: L0 L1 L5
    Date: 2018–07–19
  7. By: Michael Webb; Nick Short; Nicholas Bloom; Josh Lerner
    Abstract: Patenting in software, cloud computing, and artificial intelligence has grown rapidly in recent years. Such patents are acquired primarily by large US technology firms such as IBM, Microsoft, Google, and HP, as well as by Japanese multinationals such as Sony, Canon, and Fujitsu. Chinese patenting in the US is small but growing rapidly, and world-leading for drone technology. Patenting in machine learning has seen exponential growth since 2010, although patenting in neural networks saw a strong burst of activity in the 1990s that has only recently been surpassed. In all technological fields, the number of patents per inventor has declined near-monotonically, except for large increases in inventor productivity in software and semiconductors in the late 1990s. In most high-tech fields, Japan is the only country outside the US with significant US patenting activity; however, whereas Japan played an important role in the burst of neural network patenting in the 1990s, it has not been involved in the current acceleration. Comparing the periods 1970-89 and 2000-15, patenting in the current period has been primarily by entrant assignees, with the exception of neural networks.
    JEL: L86 O34
    Date: 2018–07
  8. By: ONISHI Koichiro; YAMAUCHI Isamu
    Abstract: Although computer software has been protected by both patent rights and copyrights, the mixed effects of these two intellectual property rights have not been relatively explored. In this study, we examine the signaling value of patenting and copyright protection in software technology on receiving venture capital (VC) financing using notable Japanese software SMEs data. We find that both obtaining software patents and copyright registrations accelerate the VC financing for smaller firms. We also find that possessing both intellectual property rights have a significantly negative impact on the finance of VC. The results show that software patents and copyright registrations are largely substitutes in terms of signaling.
    Date: 2018–06
  9. By: Flögel, Franz; Gärtner, Stefan
    Abstract: As expected, this comparison of the German and the UK banking systems shows substantial differences between the countries. In the UK, savings banks disappeared long ago and other regional banks have never become important in lending to business. Instead, the five large commercial banks dominate business lending. Hardly any short-distance lenders still currently exist in the UK according to our qualitative distance classification of banks and other financial providers for small firms. The closure of the very last local savings bank in 2017 marks the preliminary end of traditional regional banking in the UK and indicates that the financial crisis indirectly challenges small and regional banks disproportionally. This is because the low interest rate environment and more complex banking regulations affect small and regional banks more, making it almost impossible for small standalone banks to survive. Problems in small firm finance have been discussed in the UK at least since the 1990s and government support has been given to community development financial institutions and credit unions in order to close the financial gap for small firms. Due to the financial crisis, access to finance has become increasingly difficult for small businesses, especially in remote regions, so the debate on how to reinvent local banking (and hence how to improve access to finance) has gathered momentum. Three options are under discussion. The first is to create in one stroke a regional and public banking group with a substantial market share by restructuring the Royal Bank of Scotland into a network of local and public banks. The second is to recreate regional banks on an entirely new basis with the help of a new association that would provide economies of scale and knowledge in order to enable local people to create their local banks. The third is to establish local banking by upscaling other financial providers, such as credit unions and responsible finance providers. Whether any of these options are realistic is difficult to say right now. One additional option that could improve SME finance are the so-called challenger banks, a type of bank unknown in Germany. These banks differ in terms of ownership, business model and regional market orientation, yet our findings suggest that they tend to operate on a more decentralised (short-distance) business model than large commercial banks.
    Keywords: comparing banking systems,SME finance in the UK,decentralised vs. centralised banking
    JEL: D43 E21 G01 G21 G38 R12
    Date: 2018
  10. By: Flögel, Franz; Gärtner, Stefan
    Abstract: A comparison of the German banking system with that of the United Kingdom (UK) and Spain shows Germany to be decentralised not only regarding the distribution of banks, but also its financial and political system more generally. Decentralised banks, which are predominantly regional savings banks and cooperative banks in Germany, nearly account for most lending to business and have extended lending at the expense of centralised banks (such as the four big banks, for example). Federalism and strong redistribution mechanisms between the regions support decentralised banking in Germany. Furthermore, close cooperation in their banking groups is shown to allow decentralised banks to realise economies of scale and develop superior techniques for retail banking, like bank-ICT and rating systems. The detailed comparison of a savings bank with a big bank suggests that shorter (functional) distances allow regional banks to consider soft information easily and reliably when lending to SMEs. Short-distance lending not only reduces the financial constraints of (financially distressed) SMEs, but can also be profitable for banks as they are able to realise higher interest earnings in business with informationally opaque enterprises. However, decentralised banking is also under threat in Germany due to tightening (more complex) banking regulations and the continuing low interest rate environment. Therefore, decentralised banks need to cut costs, which is why they have merged to larger units and closed branches in recent years. Furthermore, they have tried to increase fee earnings at the risk of disintermediation. This paper identifies two dilemmas of these cost-cutting strategies. First, disintermediation challenges regional savings-investment cycles and thus regional independency. Second, mergers, branch closures and the standardisation of processes endanger local decision-making authority and hence short-distance lending. As the detailed comparison make clear, the ability of regional banks to decide on credit at a short distance enables profitable lending to informationally opaque SMEs, meaning SMEs that appear to be very risky on the basis of hard information, by utilising soft information. Accordingly, short distance tends to be a key competitive advantage of regional banks, especially in a low interest rate environment. Cost-cutting measures must be conducted with full awareness of this advantage. With respect to lending to SMEs, branch closures may be less critical than mergers and standardisation because most branches are not involved in lending to SMEs anyway.
    Keywords: comparing banking systems,SME finance in Germany,savings and cooperative banks,decentralised vs. centralised banking
    JEL: D43 E21 G01 G21 G38 R12
    Date: 2018
  11. By: Dienes, Christian; Schneck, Stefan; Wolter, Hans-Jürgen
    Abstract: Die vorliegende Studie untersucht den Einfluss des Gründungsgeschehens auf die wirtschaftliche Entwicklung. Hierfür wurden die 402 deutschen Kreise und kreisfreien Städte betrachtet. Dabei zeigt sich, dass Kreise mit hohen Gründungsraten nicht automatisch ein höheres Wachstum generieren. Zwar wirken sich Markteintritte junger Unternehmen grundsätzlich positiv auf die wirtschaftliche Entwicklung aus. Dieser Effekt wird bei höheren Startup-Raten aber immer geringer und kann sich schließlich sogar ins Negative umkehren. Vor diesem Hintergrund ist eine spezielle Gründungsförderung nicht per se falsch. Sie wird aber häufig wenig wirksam sein, da sie auch dann gewährt wird, wenn von weiteren Gründungen kaum noch positive Wachstumsimpulse ausgehen. Im Zweifelsfall sollte daher der Schaffung wirtschaftsfreundlicher Rahmenbedingungen der Vorrang vor speziellen Gründungsförderungsprogrammen gegeben werden.
    Keywords: Gründungsgeschehen,Wachstum,Wettbewerb,Kreisdaten,entrepreneurial activity,growth,competition,district data
    JEL: M13 O1 R11
    Date: 2018
  12. By: Brink, Siegrun; Ivens, Sören; Nielen, Sebastian; Schlömer-Laufen, Nadine
    Abstract: Die vorliegende Studie widmet sich der Entwicklung neugegründeter Unternehmen in den ersten vier Jahren. Ziel war es anhand von verschiedenen Erfolgsdimensionen (Überleben am Markt, Deckung des Lebensunterhaltes und Schaffung von Arbeitsplätzen) zu analysieren, wie sich die Unternehmen in der Nachgründungsphase entwickeln. Es zeigt sich, dass fast drei Viertel der Neugründungen am Markt verbleiben. Allerdings schafft nur eine Minder-heit dieser Unternehmen neue Arbeitsplätze. Auch den Lebensunterhalt kann vier Jahre nach Gründung nur rund die Hälfte aus der unternehmerischen Tätigkeit bestreiten. Es zeigt sich, dass dafür beispielsweise eine hybride Selbstständigkeit, ein weiteres Haushaltseinkommen und/oder persönliche Wahrnehmung der Vorteile einer Selbstständigkeit verantwortlich sind.
    Keywords: Unternehmensentwicklung,Gründungen/Selbstständigkeit,Entrepreneurship,new firm survival
    JEL: L25 L26 M13
    Date: 2018

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