nep-ent New Economics Papers
on Entrepreneurship
Issue of 2018‒12‒10
fourteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Credit Rationing in European SMEs and their Lending Infrastructure By Andrea Mc Namara; Pierluigi Murro
  2. Ethnic Enclaves and Labor Market Outcomes – What Matters Most: Neighborhood, City or Region? By Öner, Özge; Klaesson, Johan
  3. Are Migrant Firms Actually Different From Native Firms? By A. Arrighetti; G. Foresti; S. Fumagalli; A. Lasagni
  4. Becoming a mompreneur: Parental leave policies and mothers' propensity for self-employment By Gerards, Ruud; Theunissen, Pomme
  5. Product Innovation of an Incumbent Firm : A Dynamic Analysis By Hagspiel, V.; Huisman, Kuno; Kort, Peter; Nunes, Claudia; Pimentel, Rita
  6. Doing Business and Inclusive Human Development in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  7. Generation Y female students perceived barriers towards entrepreneurship: A comparative study By Luzaan Hamilton; Natasha de Klerk
  8. A review of entrepreneurial knowledge and skills among students at a South African Higher Education Institution By Luzaan Hamilton; Clarise Mostert
  9. The Funding Gap and the Financing of Small and Medium Businesses: An Integrated Literature Review and an Agenda By Esho, Ebes; Verhoef, Grietjie
  10. Students? motivations and attitudes toward entrepreneurship at a South African Higher Education Institution By Clarise Mostert; Luzaan Hamilton
  11. Repayment Flexibility and Risk Taking: Experimental Evidence from Credit Contracts By Gulesci, Selim
  12. The impact of e-wallet on informal farm entrepreneurship development in rural Nigeria By Joseph I. Uduji; Elda N. Okolo-Obasi; Simplice A. Asongu
  13. Collateral Booms and Information Depletion By Vladimir Asriyan; Luc Laeven; Alberto Martín
  14. Entrepreneurship and Farm Profit in Rural Niger By Salami, A.; Kounagbe Lokonon, B.O.

  1. By: Andrea Mc Namara (National University of Ireland); Pierluigi Murro (LUISS University Author-Name: Sheila O'Donohoe; Waterford Institute of Technology)
    Abstract: We examine the influence of countries lending infrastructure on credit rationing for European SMEs. This lending infrastructure is comprised of countries information, legal, judicial, bankruptcy, social and regulatory environments. Using a sample of 13,957 SMEs from eleven European countries, we find that SMEs in countries in which there is greater information sharing, fewer legal rights, a more efficient judicial system and less efficient bankruptcy system are less likely to be credit rationed. Moreover, an efficient bankruptcy regime is more important for larger and more risky firms in reducing the likehood of they being credit rationed. Equally the impact of banks regulatory regime varies across firm riskiness; a stricter regime results in a greater likehood of credit rationing for more risky or finally weaker firms in contrast to stronger firms where less regulation sees more rationing.
    Keywords: SMEs, Lending Infrastracture, Credit Constraints.
    JEL: G20 G28
    Date: 2018
  2. By: Öner, Özge (Department of Land Economy); Klaesson, Johan (Centre for Entrepreneurship and Spatial Science, Jönköping International Business School, Jönköping)
    Abstract: The relevance of residential segregation and ethnic enclaves for labor market sorting of immigrants has been investigated by a large body of literature. Previous literature presents competing arguments and mixed results for the effects of segregation and ethnic concentration on various labor market outcomes. The geographical size of the area at which segregation and/or ethnic concentration is measured, however, is left to empirical work to determine. We argue that ethnic concentration and segregation should not be used interchangeably, and more importantly, the geographical area at which they are measured relates directly to different mechanisms. We use a probabilistic approach to identify the likelihood that an immigrant is employed or a self-employed entrepreneur in the year 2005 with respect to residential segregation and ethnic concentration at the level of the neighborhood, municipality and local labor market level jointly. We study three groups of immigrants that accentuate the differences between forced and pulled migrants: (i) the first 15 member states of European Union (referred to as EU 15) and the Nordic countries, (ii) the Balkan countries, and (iii) countries in the Middle East. We find that ethnic enclaves, proxied by ethnic concentration at varying levels indicate mixed results for the different immigrant groups we study, both for their employment and entrepreneurship probability. Whereas residential segregation has a more uniformly distributed result where its relationship to any of the two labor market outcomes is almost always negative or insignificant.
    Keywords: Immigrant entrepreneurship; Ethnic enclaves; Segregation; Push entrepreneurship; Local labor market
    JEL: F22 L26 O18 R23
    Date: 2018–11–22
  3. By: A. Arrighetti; G. Foresti; S. Fumagalli; A. Lasagni
    Abstract: A matched-pair analysis was performed to verify the existence or not of significant differences between native and migrant companies regarding firm-specific variables and the governance structure. Controlling for firm size, industry and geographical location, we found that proxy values for efficiency, capital intensity of production and services and profitability are not significantly different (or not lower) than those of native-owned small business. Evidence shows that previous studies concerning the diversity of immigrant-owned businesses are likely marked biased by methodological choices that did not take account of the concentration of these companies in “disadvantaged” firm size categories, industries or geographical locations.
    Keywords: ethnic firms, native firms, immigrant enterpreneurship, matched-pair analysis
    JEL: J15 L25 L26
    Date: 2018
  4. By: Gerards, Ruud (ROA / Training and employment); Theunissen, Pomme (Finance)
    Abstract: Contractionary parental leave policy reforms decrease the time mothers can stay at home after giving birth. This might discourage them to become an entrepreneur. Exploiting a German parental leave policy reform, we apply a regression discontinuity approach to establish a causal relationship between parental leave policies and the probability for mothers to become entrepreneurs (i.e., “mompreneurs”). We find that a decrease in the generosity of parental leave lowers the odds of mothers to become self-employed by 17%. We show additional evidence that suggests that this is particularly due to the reduced period of paid parental leave.
    Keywords: female entrepreneurship, mompreneurs, parental leave, policy reform, female labor supply
    JEL: H31 J10 J20 L26
    Date: 2018–12–04
  5. 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); Nunes, Claudia; Pimentel, Rita
    Abstract: In case of a product innovation firms start producing a new product. While doing so, such a firm should decide what to do with its existing product after the firm has innovated. Essentially it can choose between replacing the established product by the new one, or keep on producing the established product so that it produces two products at the same time. The aim of this paper is to design a theoretical framework to analyze this problem. Due to technological progress the quality of the newest available technology, and thus the quality of the innovative product that can be produced by this technology, increases over time. The implication is that a later innovation enables the firm to produce a better innovative product. So, typically the firm faces the tradeoff between innovating fast, which boosts its profits soon but only by a small amount, or innovating later, which leads to a larger payoff increase. The drawback here is that the firm is stuck with producing the established product for a longer time. We fund that a highly uncertain economic environment makes the firm delay abolishing the old product market. But if the innovative market is more volatile, the firm enters the market sooner, provided it will be active on the old market, at least for some time. Moreover, the smaller the initial demand for the innovative product market, the better the quality of the innovative product needs to be for the product innovation to be optimal.
    Keywords: product innovation; technology adoption; Dynamic Programming
    JEL: C61 D81 O33
    Date: 2018
  6. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (University of South Africa, Pretoria, South Africa)
    Abstract: Purpose- This study examines how doing business affects inclusive human development in 48 sub-Saharan Africa for the period 2000-2012. Design/methodology/approach- The measurement of inclusive human development encompasses both absolute pro-poor and relative pro-poor concepts of inclusive development. Three doing business variables are used, namely: the number of start-up procedures required to register a business; time required to start a business; and time to prepare and pay taxes. The empirical evidence is based on Fixed Effects and Generalised Method of Moments regressions. Findings- The findings show that increasing constraints to the doing of business have a negative effect on inclusive human development. Originality/value- The study is timely and very relevant to the post-2015 Sustainable Development agenda for two fundamental reasons: (i) Exclusive development is a critical policy syndrome in Africa because about 50% of countries in the continent did not attain the MDG extreme poverty target despite enjoying more than two decades of growth resurgence. (ii) Growth in Africa is primarily driven by large extractive industries and with the population of the continent expected to double in about 30 years, scholarship on entrepreneurship for inclusive development is very welcome. This is essentially because studies have shown that the increase in unemployment (resulting from the underlying demographic change) would be accommodated by the private sector, not the public sector.
    Keywords: Doing Business; Inclusive Development; Entrepreneurship; Africa
    JEL: M20 I30 O10 O30 O55
    Date: 2018–01
  7. By: Luzaan Hamilton (North West University); Natasha de Klerk (North West University)
    Abstract: Entrepreneurship is a critical ingredient for stimulating economic growth and employment opportunities in all societies. Female participation in entrepreneurial venture creation, including Generation Y, in both developed and emerging economies are seen as a key contributor to economic growth. However, entrepreneurs face numerous barriers on the road to success, which may have significant influence on an individual?s motivation to become entrepreneurs. Using a convenience sample of 328 South African and 250 Netherland?s female students, this paper reports on study conducted to compare female generation Y students? perceived barriers towards entrepreneurship, in South African and the Netherland?s. The collected data was analysed using reliability analysis and a two independent-samples t-test. The findings suggest that South African students perceived barriers towards? entrepreneurship is higher than those of their counterparts in the Netherlands.
    Keywords: Barriers, entrepreneurship, females, Generation Y, South Africa, Netherlands
    JEL: L26 M20 M29
    Date: 2018–10
  8. By: Luzaan Hamilton (North West University); Clarise Mostert (North West University)
    Abstract: Entrepreneurship are regarded as a key element in fostering economic growth and job creation. However, growth of a country?s economy rely on developing future leaders with the right skills and knowledge to be entrepreneurs. Entrepreneurial knowledge and skills are key attributes for students if they consider self-employment. In South Africa entrepreneurship is common in higher education, however young individuals in South Africa urgently need to be trained, educated and equipped with the necessary entrepreneurial knowledge and skills to foster an entrepreneurial activity in their complex environment. The purpose of this paper is to determine students at a South African HEI perception of their level of entrepreneurial knowledge and skills. A descriptive research design approach was followed. A self-administered questionnaire was used to collect the data from a convenience sample of 338 students at a South African public HEI situated in the Gauteng Province. Data were analysed using descriptive statistics, reliability and validity analysis and a one-sample t-test. The findings infer that at this specific HEI, students feel they have the necessary knowledge and skills to be entrepreneurial. This study contributes by implementing initiatives to equip students with the knowledge and skills they may lack in becoming active individuals in economic growth.
    Keywords: Entrepreneurial knowledge, Entrepreneurial skills, Students, Higher education institutions, South Africa
    JEL: I25 M21 M29
    Date: 2018–10
  9. By: Esho, Ebes; Verhoef, Grietjie
    Abstract: Small and medium businesses contribute to the economies of developed and developing countries. However, they face constraints that are very different from large businesses. Chief amongst these constraints is access to finance. This paper provides an integrated review of the literature on the financing of small and medium businesses. Applying a qualitative critical context text analysis, the authors explore extant studies and identify the major themes and the different literature streams on small and medium business financing. The paper concludes by providing suggestions for future research from the gaps identified in the literature.
    Keywords: SME, small business, medium business, funding-gap, SME financing, SME funding.
    JEL: M0 M1 M10
    Date: 2018–11–15
  10. By: Clarise Mostert (North-West University); Luzaan Hamilton (North-West University)
    Abstract: The fact that entrepreneurship plays a vital role in contributing to the promotion of economic. In recent decades, the South African government has highlighted that entrepreneurship training especially in Higher Education Institutions (HEI?s), is of utmost importance. The decision to be an entrepreneur is determined by specific factors based on an individual?s motivation and attitude. However, in order for HEI?s to create and foster an entrepreneurial culture, it is important to determine the entrepreneurial motivations and attitudes of the students. Descriptive analysis and one-sample t-tests indicated that students at the HEI feel they can easily pursue a career in self-employment if they wished to do so, and that the most important reason for wanting to start their own business was to become an independent person.
    Keywords: Students, motivations, attitudes, entrepreneurship, South Africa, Higher Education Institution
    JEL: L26 I23 I29
    Date: 2018–10
  11. By: Gulesci, Selim
    Abstract: A widely-held view is that small firms in developing countries are prevented from making profitable investments by lack of access to credit and insurance markets. One solution is to provide repayment flexibility in credit contracts. Repayment flexibility eases both the credit constraint, as it allows for increased spending during the startup phase, and offers insurance, in case of fluctuations in income. In a field experiment among microcredit borrowers in Bangladesh, we randomly assign the option to delay up to 2 monthly repayments at any point during a 12-month loan cycle. The flexible contract leads to substantial (0.2 standard deviation) improvements in business outcomes and socio-economic status, combined with lower default rates. The results are driven by an increase in entrepreneurial risk taking, implying that the primary mechanism is insurance provision. Repayment flexibility also attracts less risk-averse borrowers. Our findings suggest that lack of insurance is an important constraint for small firms but that a simple financial product that increases repayment flexibility can be an effective tool for enabling enterprise growth.
    Keywords: credit; entrepreneurship; Insurance; Microfinance; Repayment flexibility
    Date: 2018–11
  12. 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
    JEL: Q10 Q14 L96 O40 O55
    Date: 2018–01
  13. By: Vladimir Asriyan; Luc Laeven; Alberto Martín
    Abstract: We develop a new theory of information production during credit booms. In our model, entrepreneurs need credit to undertake investment projects, some of which enable them to divert resources towards private consumption. Lenders can protect themselves from such diversion in two ways: collateralization and costly screening, which generates durable information about projects. In equilibrium, the collateralization-screening mix depends on the value of aggregate collateral. High collateral values raise investment and economic activity, but they also raise collateralization at the expense of screening. This has important dynamic implications. During credit booms driven by high collateral values (e.g. real estate booms), the economy accumulates physical capital but depletes information about investment projects. As a result, collateral-driven booms end in deep crises and slow recoveries: when booms end, investment is constrained both by the lack of collateral and by the lack of information on existing investment projects, which takes time to rebuild. We provide new empirical evidence using US rm-level data in support of the model's main mechanism.
    Keywords: credit booms, collateral, information production, crises, misallocation
    JEL: E32 E44 G01 D80
    Date: 2018–11
  14. By: Salami, A.; Kounagbe Lokonon, B.O.
    Abstract: With numerous challenges hindering farm households entrepreneurship decision, it is often argued that entrepreneurship can play an essential role in improving farm productivity. Yet assessment of the impact of entrepreneurship on farm productivity is scarce. We address this issue by analyzing the effect of non-agricultural entrepreneurship on farm profit. Using the World Bank s Living Standards Measurement Study-Integrated Survey on Agriculture datasets for 2011 and 2014 of Niger and applying endogenous switching regression, we find that non-agricultural entrepreneurship significantly increases farm profit. Farm profit increased by 908,504.4 CFA F for the farm households that developed non-agricultural enterprises thanks to their entrepreneurship behavior. The total value of farm profit for the farm households without non-agricultural enterprises would have increased by 808,789.2 CFA F relative to the current level with the development of non-agricultural enterprises. The findings support increasing arguments on the need to promote entrepreneurship in rural areas to improve farm profit and to transform structurally the economy Acknowledgement :
    Keywords: Farm Management
    Date: 2018–07

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