nep-ent New Economics Papers
on Entrepreneurship
Issue of 2018‒11‒26
eleven papers chosen by
Marcus Dejardin
Université de Namur

  1. Prediction Based on Entrepreneurship-Prone Personality Profiles: Sometimes Worse Than the Toss of a Coin By Konon, Alexander; Kritikos, Alexander S.
  2. The Inverted-U Relationship Between Credit Access and Productivity Growth By Aghion, Philippe; Bergeaud, Antonin; Cette, Gilbert; Lecat, Rémy; Maghin, Helene
  3. The Rise of Private Foundations as Owners of Swedish Industry: The Role of Tax Incentives 1862–2018 By Johansson, Dan; Stenkula, Mikael; Wykman, Niklas
  4. Verifying High Quality: Entry for Sale By Norbäck, Pehr-Johan; Persson, Lars; Svensson, Roger
  5. What happens when the income tax increases? By Cerqua, Augusto; ,
  7. An Analysis of China s Reforms on Mortgaging and Transacting Rural Land Use Rights and Entrepreneurial Activity By Peng, Y.; Turvey, C.; Kong, R.
  8. What Drives China's Growth? Evidence from Micro-level Data By Tomoyuki Iida; Kanako Shoji; Shunichi Yoneyama
  9. Wages, Creative Destruction, and Union Networks By Dale-Olsen, Harald
  10. The impact of e-wallet on informal farm entrepreneurship development in rural Nigeria By Joseph I. Uduji; Elda N. Okolo-Obasi; Simplice A. Asongu
  11. Ekonomická gramotnost podnikatele By Šárka Čemerková; Liběna Čespivová

  1. By: Konon, Alexander (DIW Berlin); Kritikos, Alexander S. (DIW Berlin)
    Abstract: The human personality predicts a wide range of activities and occupational choices—from musical sophistication to entrepreneurial careers. However, which method should be applied if information on personality traits is used for prediction and advice? In psychological research, group profiles are widely employed. In this contribution, we examine the performance of profiles using the example of career prediction and advice, involving a comparison of average trait scores of successful entrepreneurs with the traits of potential entrepreneurs. Based on a simple theoretical model estimated with GSOEP data and analyzed with Monte Carlo methods, we show, for the first time, that the choice of the comparison method matters substantially. We reveal that under certain conditions the performance of aver-age profiles is inferior to the tossing of a coin. Alternative methods, such as directly estimating success probabilities, deliver better performance and are more robust.
    Keywords: advice, personality, entrepreneurship, profiles
    JEL: C15 D81 L26
    Date: 2018–10
  2. By: Aghion, Philippe; Bergeaud, Antonin; Cette, Gilbert; Lecat, Rémy; Maghin, Helene
    Abstract: In this paper we identify two counteracting effects of credit access on productivity growth: on the one hand, better access to credit makes it easier for entrepreneurs to innovate; on the other hand, better credit access allows less efficient incumbent firms to remain longer on the market, thereby discouraging entry of new and potentially more efficient innovators. We first develop a simple model of firm dynamics and innovation-base growth with credit constraints, where the above two counteracting effects generate an inverted-U relationship between credit access and productivity growth. Then we test our theory on a comprehensive French manufacturing firm-level dataset. We first show evidence of an inverted-U relationship between credit constraints and productivity growth when we aggregate our data at sectoral level.. We then move to firm-level analysis, and show that incumbent firms with easier access to credit experience higher productivity growth, but that they also experienced lower exit rates, particularly the least productive firms among them. To confirm our results, we exploit the 2012 Eurosystem's Additional Credit Claims (ACC) program as a quasi-experiment that generated exogenous extra supply of credits for a subset of incumbent firms.
    Keywords: credit constraint; firms; growth; interest rate; productivity
    JEL: G21 G32 O40 O47
    Date: 2018–09
  3. By: Johansson, Dan (Örebro University School of Business); Stenkula, Mikael (Research Institute of Industrial Economics (IFN)); Wykman, Niklas (Örebro University School of Business)
    Abstract: The tax system has at times favoured firm control through private foundations, which has been argued to inhibit high-impact entrepreneurship and economic growth. However, research has been hampered due to a lack of systematic historical tax data. The purpose of this study is threefold. First, we describe the evolution of tax rules for private foundations in Sweden between 1862 and 2018. Second, we calculate the marginal effective tax rate on capital income. Third, we examine the incentives to use private foundations as a means for corporate control by comparing the taxation of private foundations and of high-impact entrepreneurs. Tax incentives help explain why economically significant private foundations were founded between World War I and the 1960s.
    Keywords: family firms; foundations; high-impact entrepreneurship; owner; taxation
    JEL: H20 K34 L26 N44
    Date: 2018–11–12
  4. By: Norbäck, Pehr-Johan; Persson, Lars; Svensson, Roger
    Abstract: When and how do entrepreneurs sell their inventions? To address this issue, we develop an endogenous entry-sale asymmetric information oligopoly model. We show that low quality inventions are sold directly or used for own entry. Inventors who sell post-entry use entry to credibly reveal information on quality. Incumbents are then willing to pay high prices for high-quality inventions to preempt rivals from obtaining them. Using Swedish data on patents granted to small firms and individuals, we find evidence that high-quality inventions are sold under preemptive bidding competition, post entry.
    Keywords: Acquisitions; Innovation; ownership; patents; Quality; start-ups; Verification
    JEL: G24 L1 L2 M13 O3
    Date: 2018–09
  5. By: Cerqua, Augusto; ,
    Abstract: This paper exploits a sudden income tax rate increase in a large Italian region to examine whether this induced taxpayers to change their tax-related behavior. By using a spatial regression discontinuity design and a detailed dataset at the municipality level, we find a sizable and persistent decrease in declared income only for the self-employed and entrepreneurs.
    Keywords: Income tax; tax evasion; spatial regression discontinuity design
    JEL: C21 H26 J21
    Date: 2018–11–05
  6. By: Elena Karnoukhova (National Research University Higher School of Economics); Anastasia Stepanova (National Research University Higher School of Economics); Maria Kokoreva (National Research University Higher School of Economics)
    Abstract: Innovative companies are a major driver of the global economy. The typical major owner is an institutional investor. In recent years the stakes of institutional owners have increased, which should increase the role of institutional investors. Institutional investors, however, differ. Traditional investment managers, banks, insurance companies and hedge funds have different goals and strategies, so their roles in firms differ significantly. In this article we analyze the difference between technology and non-technology companies to find out the reason for the success of fast-growing corporations. This research uses a Generalized Least Square model on a sample of 12,565 firm-year observations 2004–15, to justify the assumption that different types of investors have different effects on the performance of innovative companies. The research reveals a distinction between the type of investor and the investor strategy. By focusing on the concentration of ownership, we demonstrate the performance effect on different blockholders. Our findings suggest, first, that grey investors decrease firm value; second, that passive independent institutions enhance firm performance in virtue of their active monitoring and long-term investment horizons; third, that innovative firms have different ownership patterns to traditional ones.
    Keywords: ownership structure, institutional investors, innovative companies, ownership concentration
    JEL: G32
    Date: 2018
  7. By: Peng, Y.; Turvey, C.; Kong, R.
    Abstract: This paper aims to determine, how providing the right of collateral to LUR might change farmers investment behavior and incentivize entrepreneurial activity. To achieve this objective, we try to solve two issues. The first issue of economic importance is in understanding the market value of LUR transactions; creating now a tradable asset from one which held value but no market. To examine this we build an argument around the idea of economic and marginal rents from Ricardo. The second issue relates to the extent by which deepening the rural financial landscape by allowing the mortgaging of LUR will promote and advance much needed entrepreneurial activity. To explore this issue we draw on Schumpeter. Then, based on a survey of 1,465 farm households in rural China and an endogenous 2SLS model. We find that a positive and significant relationship between a willingness to mortgage LUR and entrepreneurship, which suggest that the new policy may well meet that objective. However, we do not find that that entrepreneurs alone will have a willingness to mortgage LUR; non-entrepreneurs traditional farmer types- would also be willing to mortgage LUR, but with a caveat that either group already has a disposition or demand for credit. Acknowledgement : Funding for this research from the China National Nature Science Fund with ratification number 71373205.
    Keywords: Land Economics/Use
    Date: 2018–07
  8. By: Tomoyuki Iida (Bank of Japan); Kanako Shoji (Bank of Japan); Shunichi Yoneyama (Bank of Japan)
    Abstract: This paper discusses the sustainability of China fs rapid growth mainly based on the estimation of the corporate-level total factor productivity of Chinese listed firms. Since the 1980s, both capital accumulation and rapid technological progress -- measured as total factor productivity (TFP) -- have contributed to the high growth of the Chinese aggregate output. Should the prediction of the standard growth theory be correct, however, economic growth led by capital accumulation is not likely to be long lasting, hence we mainly focus on firm level TFP growth. As a result, we identify four channels that would continue to promote the TFP growth of the Chinese corporate sector at an aggregate level: (i) declining proportion of low-productivity state-owned enterprises, (ii) continuous influx of highly competent new start-ups, (iii) broad catching up trend among the laggards in the firm distribution, and (iv) innovation spawning R&D activities. These four channels would underpin the medium-term economic growth of the Chinese economy.
    Keywords: China; Total Factor Productivity; Catching up; R&D
    JEL: N15 O30 O47
    Date: 2018–11–13
  9. By: Dale-Olsen, Harald (Institute for Social Research, Oslo)
    Abstract: Do unions promote creative destruction? In this paper we apply a shift-share approach and historical unionisation data from 1918 to study the impact of changes in regional unionisation on regional wage and productivity growth and job creation and destruction during the period 2003-2012. As local regional-industrial unionisation increases, wages grow. Lay-offs through plant closure and shrinking workplaces increase, but entry and new hires are unaffected. Overall, the increased unionisation yields a positive impact on regional productivity, exceeding the wage growth, partly due to the closure of less productive firms, but also enhanced productivity of the survivors and new entrants.
    Keywords: trade unions, entry/exit, creative destruction, wages, productivity, historical data
    JEL: J01 J08 J50 J51
    Date: 2018–10
  10. By: Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Transforming agriculture from a largely subsistence enterprise to a profitable commercial venture is both a prerequisite and a driving force for accelerated development and sustainable growth in sub-Saharan Africa. The objective of this investigation is to assess the impact of the Federal Government of Nigeria (FGN) e-wallet programme on informal farm entrepreneurship development in rural Nigeria. Informal sector farmers are those that are not legally registered at the national level though could be connected to a registered association. The research is motivated by the absence of literature focusing on the problem statement or objective of study. One thousand, one hundred and fifty-two rural farmers were sampled across the six geo-political zones of Nigeria. Results from the use of a bivariate probit model indicate that the mobile phone-based technology via the e-wallet programme is a critical factor that has enhanced farm entrepreneurship in rural Nigeria. However, results also show that the impact of mobile phones (as a channel to accessing and using modern agricultural inputs) is contingent on how mobile networks are able to link farmers who live in rural areas and work mainly in farming. The results suggest that increasing mobile phone services in rural Nigeria enhances farmers’ knowledge, information and adoption of improved farm inputs and by extension, spurs rural informal sector economic activities in sub-Saharan Africa. Implications for practice, policy and research are discussed.
    Keywords: Informal sector’s adoption, electronic wallet technologies, rural farmers’ entrepreneurship
    JEL: Q10 Q14 L96 O40 O55
    Date: 2018–01
  11. By: Šárka Čemerková (Department of Business Economics and Management, School of Business Administration, Silesian University); Liběna Čespivová
    Abstract: Today literacy is the springboard for a successful life. In the current world, it cannot be illiterate. And it is not just literacy in the basic sense, i.e. the ability to read, write and alternatively also count, but to have the whole range of other types of literacy that are usually specified by the adjective before the word literacy itself. One of them is also economic literacy. Literacy is understood as a set of competencies, i.e. the abilities of a given individual realized in the context of reality. The type of literacy then determines what competences, i.e. what area is related. Economic literacy should thus be defined as a set of certain competencies in the economic sphere. The aim of the text is therefore to discuss the approach to defining entrepreneurial competences and defining the concept of economic literacy of the entrepreneur.
    Keywords: Ekonomická gramotnost, EntreComp, gramotnost, kompetence
    JEL: M13 M21
    Date: 2018–11–19

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