nep-ent New Economics Papers
on Entrepreneurship
Issue of 2019‒01‒21
ten papers chosen by
Marcus Dejardin
Université de Namur

  1. From Population Growth to Firm Demographics: Implications for Concentration, Entrepreneurship and the Labor Share By Hugo Hopenhayn; Julian Neira; Rish Singhania
  2. Habitual Entrepreneurs in the Making: How Labour Market Rigidity and Employment Affects Entrepreneurial Re-entry By Wennberg, Karl; Larsson, Anne-Sophie; Fu, Kun
  3. When does privatization spur entrepreneurial performance? The moderating effect of institutional quality in an emerging market By Christopher Boudreaux
  4. Optimal Regulation of P2P Lending for Small and Medium-Sized Enterprises By Nemoto, Naoko; Huang, Bihong; Storey, David
  5. Firm Size and Innovation in the Service Sector By Audretsch, David; Hafenstein, Marian; Kritikos, Alexander S.; Schiersch, Alexander
  6. Financial frictions, cyclical fluctuations, and the growth potential of new firms By Christoph Albert; Andrea Caggese
  7. Female Entrepreneurs' Pre-Exposure to a Business Environment and Its Influence on Selected Entrepreneurial Factors: A South African Perspective By Natanya Meyer; Jhalukpreya Surujlal
  8. How to be acquired by Google?: Analysis of target firms acquired by Google Inc. By Yeon, Soojung
  9. Credit constraints and firm exports: Evidence from SMEs in emerging and developing countries By Filomena Pietrovito; Alberto Franco Pozzolo
  10. When Opportunity Moves To Or Away From You: Mechanisms Linking Geographic, Economic, Institutional, And Social Space With Entrepreneurship, Innovation, And Business Performance By Jason Greenberg; Matt Marx

  1. By: Hugo Hopenhayn; Julian Neira; Rish Singhania
    Abstract: The US economy has undergone a number of puzzling changes in recent decades. Large firms now account for a greater share of economic activity, new firms are being created at a slower rate, and workers are getting paid a smaller share of GDP. This paper shows that changes in population growth provide a unified quantitative explanation for these long-term changes. The mechanism goes through firm entry rates. A decrease in population growth lowers firm entry rates, shifting the firm-age distribution towards older firms. Heterogeneity across firm age groups combined with an aging firm distribution replicates the observed trends. Micro data show that an aging firm distribution fully explains i) the concentration of employment in large firms, ii) and trends in average firm size and exit rates, key determinants of the firm entry rate. An aging firm distribution also explains the decline in labor’s share of GDP. In our model, older firms have lower labor shares because of lower overhead labor to employment ratios. Consistent with our mechanism, we find that the ratio of nonproduction workers to total employment has declined in the US.
    JEL: E13 E20 J11 L16 L26
    Date: 2018–12
  2. By: Wennberg, Karl (Linköping University); Larsson, Anne-Sophie (The Ratio Institute); Fu, Kun (Loughborough University London)
    Abstract: We investigate the impact of country-level labour market regulations on the reentry decision of experienced entrepreneurs, whereby they become habitual entrepreneurs. Multilevel logit models on entry decisions among 15,709 individuals in 29 European countries show that labour market regulations have a positive influence on the decision to reenter into entrepreneurship. This positive impact is stronger among individuals holding wage jobs at the time of re-entry compared to those that do not. Our results indicate that novice and habitual entrepreneurs may respond very differently to labour market rigidity. We discuss and provide tentative explanations for these differences, and outline potential policy implications.
    Keywords: Habitual entrepreneurship; employment; labour market rigidity; institutional context; multilevel modelling
    JEL: J24 J41 K31 L26
    Date: 2018–12–10
  3. By: Christopher Boudreaux
    Abstract: We explore how institutional quality moderates the effectiveness of privatization on entrepreneurs sales performance. To do this, we blend agency theory and entrepreneurial cognition theory with insights from institutional economics to develop a model of emerging market venture performance. Using data from the World Banks Enterprise Survey of entrepreneurs in China, our results suggest that private-owned enterprises (POEs) outperform state-owned enterprises (SOEs) but only in environments with high-quality market institutions. In environments with low-quality market institutions, SOEs outperform POEs. These findings suggest that the effectiveness of privatization on entrepreneurial performance is context-specific, which reveals more nuance than previously has been attributed.
    Date: 2019–01
  4. By: Nemoto, Naoko (Asian Development Bank Institute); Huang, Bihong (Asian Development Bank Institute); Storey, David (Asian Development Bank Institute)
    Abstract: Globally, the regulation of P2P lending has evolved significantly in recent years, with mostly beneficial effects on the diversification of funding for individuals and corporations. Regulatory responses have varied greatly between countries, and the characteristics of the markets that have emerged vary as a result. We describe and evaluate the range of P2P lending systems on offer to small and medium-sized enterprises (SMEs) in several countries, considering different regulatory regimes. In some countries, there are problematic incentives for platforms that rate credit and originate loans without holding the risk of these loans. In addition, when investor returns are guaranteed by platforms, investors have no incentive to distinguish among risk categories. In several countries, notably the People’s Republic of China, P2P platforms have engaged in fraudulent behavior and Ponzi-like schemes. On the other hand, stringent regulation in the United States has excessively impeded new entrants from providing competition to established platforms. Regulators should be mindful of these risks and others, while also seeking to capitalize on the benefits that the sector offers for providing new funding opportunities to SMEs. In our view, the United Kingdom can be suggested as an effective model to follow because of its tailor-made and flexible regulation.
    Keywords: fintech; P2P lending; regulation
    JEL: F34 G23
    Date: 2019–01–02
  5. By: Audretsch, David (Indiana University); Hafenstein, Marian (DIW Berlin); Kritikos, Alexander S. (DIW Berlin); Schiersch, Alexander (DIW Berlin)
    Abstract: A rich literature links knowledge inputs with innovative outputs. However, most of what is known is restricted to manufacturing. This paper analyzes whether the three aspects involving innovative activity - R&D; innovative output; and productivity - hold for knowledge intensive services. Combining the models of Crepon et al. (1998) and of Ackerberg et al. (2015), allows for causal interpretation of the relationship between innovation output and labor productivity. We find that knowledge intensive services benefit from innovation activities in the sense that these activities causally increase their labor productivity. Moreover, the firm size advantage found for manufacturing in previous studies nearly disappears for knowledge intensive services.
    Keywords: MSMEs, R&D, service sector, innovation, productivity, entrepreneurship
    JEL: L25 L60 L80 O31 O33
    Date: 2018–12
  6. By: Christoph Albert; Andrea Caggese
    Abstract: We develop a model in which entrepreneurs choose between startup types with heterogeneous short- and long-run growth potential, and we generate testable predictions on the differential effects of financial factors and cyclical fluctuations on these startups. Using a multi-country entrepreneurship survey, we find that, consistent with the model, higher borrowing costs during financial crises negatively affect high-growth startups considerably more than low-growth startups, especially during severe downturns. Our results, supported by additional tests using sector-level financial frictions indicators, uncover a new channel that is potentially important to explain slow recoveries after financial crises.
    Keywords: Financial crisis, entrepreneurship
    JEL: E20 E32 D22 J23 M13
    Date: 2018–12
  7. By: Natanya Meyer (North-West University); Jhalukpreya Surujlal (North-West University)
    Abstract: The role of entrepreneurship in societies has become more profound in recent times. Studies suggest that pre-exposure to an entrepreneurial environment while growing up can greatly contribute to an individual’s learning process as they see first-hand how entrepreneurial tasks and activities are performed. Growing up, or being exposed to such an environment might potentially reduce the uncertainty felt by a prospective young or new entrepreneur. The objective of this study was to explore the differences in several entrepreneurial variables between two South African female entrepreneurs’ pre-exposure to entrepreneurship groups. Group 1 represented female entrepreneurs who had no previous exposure from an entrepreneurial parent, close friend or relative and Group 2 included those who had some form of previous exposure from an entrepreneurial parent, close friend or relative. The study made use of a self-reporting questionnaire and used a convenience sample to collect data from female entrepreneurs. The final sample equated to 510 usable questionnaires which included responses from all nine South African provinces. Data were analysed using reliability and validity analysis, Multiple Analysis of Variance (MANOVA) and Analysis of Variances (ANOVA). Results indicated that just one variable, internal motivation, was influenced by pre-exposure to entrepreneurship. Entrepreneurs who were raised in a business environment; that is, having a parent, close friend or relative who managed an entrepreneurial business, reported a higher mean for internal motivation compared to those who did not have this exposure. Several studies suggest that benefiting from an entrepreneur role model such as a parent, close friend or relative may lead to a more positive outlook on entrepreneurship and a stronger inclination to start a business. The results from this study prove interesting as, in the case of South African female entrepreneurs, pre-exposure to entrepreneurship had little effect on the identified entrepreneurial factors with the exception of internal motivation.
    Keywords: Female entrepreneurship, pre-exposure, entrepreneurship environment, South Africa, entrepreneurial factors
    Date: 2018–11
  8. By: Yeon, Soojung
    Abstract: Many technological and digital entrepreneurship called 'start-ups' are being established and gone out of business in the market. There are various routes for start-up success and being acquired by other company is a major option for them as an exit strategy. The purpose of this study is to find out the characteristics of firms which succeed in exit by acquisition. To do so, this study selected Google and analyzed 178 completed acquisitions of Google via two-step cluster analysis using variables drawn from a literature review. The two-step cluster analysis resulted in five clusters among Google's acquisitions. The different characteristics among each cluster are explained and the implication of the study is presented.
    Keywords: Acquisition,Exit strategy,Startup,Google,Two-step cluster analysis
    Date: 2018
  9. By: Filomena Pietrovito (University of Molise); Alberto Franco Pozzolo (University of Molise and Centro Studi Luca d'Agliano)
    Abstract: We study the relationship between credit contraints and export behavior using a large and heterogeneous sample of small and medium size firms from 65 emerging and developing countries between 2003 and 2014. We measure credit contraints by means of each firm's self-assessment of whether it is credit rationed, and we follow an instrumental variable approach that uses firm-level instruments to address the potential endogeneity of credit constraints with respect to export performance. We find robust evidence of a negative, statistically and economically significant effect of financial constraints on both the probability that a firm exports (the extensive margin of exports) and the share of exports over total sales (the intensive margin of exports).
    Keywords: export decisions; margin of exports; credit contraints; firm level
    JEL: D22 F10 F14
    Date: 2019–01–11
  10. By: Jason Greenberg; Matt Marx
    Abstract: This technical document provides an assessment of of firm age, and of minority and female-firm ownership in the Census Bureau microdata by by statistically comparing Dunn and Bradstreet (henceforth also referred to as "D&B") data with relevant data from various US Census programs. The D&B data include company profiles for millions of US. and international firms, both public and private. Because the data comprise the basis of D&B's service offerings, considerable resources are invested in its coverage and accuracy. Though not expected to be as complete as the Economic Census ("EC"), Longitudinal Business Database ("LBD"), and Longitudinal Employer-Household Dynamics ("LEHD") data, the coverage in the D&B data is extensive. For this study we have constructed extracts of company information for minority and female owned companies located in states for which LEHD are available. The D&B date were then linked to the Census business register ("SSEL/BR") using name and address matching techniques discussed in greater detail in the original PPS and associated proposal.
    Date: 2017–04

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