nep-ent New Economics Papers
on Entrepreneurship
Issue of 2019‒02‒11
nine papers chosen by
Marcus Dejardin
Université de Namur

  1. Immigrant Networking and Collaboration: Survey Evidence from CIC By Sari Pekkala Kerr; William R. Kerr
  2. Effects of the Community Reinvestment Act (CRA) on Small Business Lending By Ding, Lei; Lee, Hyojung; Bostic, Raphael
  3. Immigrant Innovators and Firm Performance By Fornaro, Paolo; Maliranta, Mika; Rouvinen, Petri
  4. Discretely Innovating: The Effect of Barriers to Entry on Innovation and Growth By Steven Bond-Smith
  5. The Impact of Compatibility on Innovation in Markets with Network Effects By Steven Bond-Smith
  6. Cluster externalities, firm capabilities, and the recessionary shock: How the macro-to-micro-transition shapes firm performance during stable times and times of crisis By Hundt, Christian; Holtermann, Linus; Steeger, Jonas; Bersch, Johannes
  7. The impact of e-wallet on informal farm entrepreneurship development in rural Nigeria By Uduji, Joseph; Okolo-Obasi, Elda; Asongu, Simplice
  8. Neue Daten zu den Auswirkungen der Teilderegulierung des Handwerks 2004 By Müller, Klaus
  9. L’avènement de la microfinance islamique au Sénégal By SECK, Massamba Souleymane; BIAYE, Abdoulaye

  1. By: Sari Pekkala Kerr; William R. Kerr
    Abstract: Networking and the giving and receiving of advice outside of one's own firm are important features of entrepreneurship and innovation. We study how immigrants and natives utilize the potential networking opportunities provided by CIC, formerly known as the Cambridge Innovation Center. CIC is widely considered the center of the Boston entrepreneurial ecosystem. We surveyed 1,334 people working at CIC in three locations spread across the Boston area and CIC's first expansion facility in St. Louis, MO. Survey responses show that immigrants value networking capabilities in CIC more than natives, and the networks developed by immigrants at CIC tend to be larger. Immigrants report substantially greater rates of giving and receiving advice than natives for six surveyed factors: business operations, venture financing, technology, suppliers, people to recruit, and customers. The structure and composition of CIC floors has only a modest influence on these immigrant versus native differences.
    JEL: D85 F22 M13 O30
    Date: 2019–01
  2. By: Ding, Lei (Federal Reserve Bank of Philadelphia); Lee, Hyojung (Harvard University); Bostic, Raphael (Federal Reserve Bank of Atlanta)
    Abstract: This study provides new evidence on the effectiveness of the Community Reinvestment Act (CRA) on small business lending by focusing on a sample of neighborhoods with changed CRA eligibility status across the country because of an exogenous policy shock in 2013. The results of difference-in-differences analysis provide consistent evidence that the CRA promotes small business lending, especially in terms of number of loan originations, in lower-income neighborhoods. The generally positive effects of the CRA are sensitive to the types of CRA treatment. Losing CRA eligibility status has a relatively larger effect on small business lending activities, while the effects of newly gaining CRA eligibility are less pronounced. The results are fairly robust when alternative sample periods and control groups are used.
    Keywords: Small Business; Credit; Community Reinvestment Act
    JEL: G21 G28 G32
    Date: 2018–12–03
  3. By: Fornaro, Paolo; Maliranta, Mika; Rouvinen, Petri
    Abstract: Abstract We study immigrants’ effects on firm-level innovativeness. Managers, innovators, and other employees are considered as separate groups both in firm employment and in local areas. For each, we estimate the effects of foreignness, the share of immigrants in each group, and diversity, while controlling for an extensive set of employment and other firm characteristics. Pooled cross-section estimates suggest that a higher initial share of immigrant innovators is associated with a subsequently higher probability of a product innovation; the reverse holds for process innovation. In other words, product innovation benefits from a wider spectrum of innovator perspectives brought about by foreign influence, while process innovation suffers from it. The estimated effect for product innovation is modestly large but nevertheless indicates that a host of other covariates besides immigration are important for innovation. When measured by a fractionalization index, diversity among innovators does not promote product innovation. However, culturally the closest groups of migrants have a positive effect, when considered independently. Thus, in our interpretation, diversity does offer some benefits, provided that enough cultural homogeneity of the group is retained.
    Keywords: Immigration, Ethnicity, Diversity, Innovation, Knowledge production function, Finland
    JEL: D22 F22 J61 O31
    Date: 2019–02–01
  4. By: Steven Bond-Smith (Bankwest Curtin Economic Centre, Curtin University)
    Abstract: This article considers the effect of a discrete entry barrier (i.e. an integer number of firms) in an endogenous growth model to draw conclusions about the relationship between contestability, innovation and growth. Sector-specific workers provide a tool for calibrating numerical examples. Sectors with lower entrepreneurial contestability have lower innovation and sectors characterized by Cournot oligopoly have lower innovation than sectors characterized by Bertrand. Wage inequality varies depending on the extent that the entry barrier is binding upon a marginal entrant. The model offers policy implications to support entrepreneurial entry, particularly in relatively small or isolated regional economies.
    Keywords: innovation, contestability, Cournot, Bertrand, competition, endogenous growth
    JEL: O41 L13
    Date: 2018–12
  5. By: Steven Bond-Smith (Bankwest Curtin Economic Centre, Curtin University)
    Abstract: This article analyses the relationship between compatibility and innovation in markets with network effects using a model of competition with endogenous R&D, commercialization and compatibility. Incumbent acquisition of an innovation or profit from entry provides entrepreneurs with an incentive for developing technological improvements. Entrepreneurs receive greater returns for the innovation if larger incumbents offer compatibility with their installed base. As a result, entrepreneurs must innovate strategically to pre-empt an incompatibility response from incumbents. Similarly, small incumbents also bid strategically to block entry or rival acquisition if it also avoids an incompatibility response from a larger incumbent. A credible threat of incompatibility reduces the entrepreneur?s reserve to sell an innovation, but can also increase offers to acquire the innovation from smaller incumbents attempting to avoid incompatibility. This leads to a complex relationship between the strength of network effects, innovation incentives, the entrepreneur?s ambition for improvement and potentially disrupting the compatibility regime. For weak to moderate network effects entrepreneurs are likely to target more substantial, but improbable innovations such that their network is sufficiently attractive for incumbents to offer compatibility. For a small range of sufficiently strong network effects, entrepreneurs target incremental innovations to avoid the incumbent threatening incompatibility.
    Keywords: network effects, innovation, compatibility
    JEL: L15 L26 L50 O31
    Date: 2018–12
  6. By: Hundt, Christian; Holtermann, Linus; Steeger, Jonas; Bersch, Johannes
    Abstract: In this paper, we examine the macro-to-micro-transition of cluster externalities to firms and how it is affected by the macroeconomic instability caused by the recessionary shock of 2008/2009. Using data from 16,166 manufacturing and business services firms nested in 390 German regions, we employ within-firm regression techniques to estimate the impact of cross-level interactions between firm- and cluster-level determinants on phase-related differences in firm performance between a pre-crisis (2004-2007) and a crisis period (2009-2011). The empirical results validate the existence of a macro-to-micro-transition that evolves best in the case of broad firm-level capabilities and variety-driven externalities. Furthermore, the results indicate that the transition strongly depends on the macroeconomic cycle. While the transition particularly benefits from a stable macroeconomic environment (2004-2007), its mechanisms are interrupted when being exposed to economic turmoil (2009-2011). Yet, the crisis-induced interruption of the transition is mainly restricted to the national recession in 2009. As soon as the macroeconomic pressure diminishes (2010-2011), we observe a reversion of the transmission mechanisms to the pre-crisis level. Our study contributes to the existing literature by corroborating previous findings that the economic performance of firms depends on a working macro-to-micro transition of external resources, which presupposes sufficient cluster externalities and adequate firm-level combinative capabilities. In contrast to previous studies on this topic, the transition mechanism is not modeled as time-invariant. Instead, it is coupled to the prevailing macroeconomic regime.
    Keywords: Macro-to-micro-transition, combinative capabilities, agglomeration economies, cluster-level externalities, unrelated variety, related variety, macroeconomic regimes, Great Recession, eco-nomic resilience
    JEL: C33 R11 R58
    Date: 2019–01–28
  7. By: Uduji, Joseph; Okolo-Obasi, Elda; Asongu, Simplice
    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, Nigeria, developing countries
    JEL: L96 O40 O55 Q10 Q14
    Date: 2018–01
  8. By: Müller, Klaus
    Abstract: Die Novellierung der Handwerksordnung 2004 war ein gravierender Einschnitt in das Gefüge der deutschen Handwerkswirtschaft. In der vorliegenden Studie werden neue empirische Daten präsentiert, welche die Diskussion über die Auswirkungen dieser Reform anregen sollen. Diese Daten differenzieren erstmals nach wichtigen Gewerken innerhalb der A- und der B1-Handwerke. Eindeutige Ergebnisse über die Auswirkungen der Reform sind nur schwer möglich, da sich das meist verwendete Differenz-von-Differenzen-Verfahren nur als begrenzt anwendbar erweist. Sicher erscheint nur, dass es aufgrund der HwO-Reform in den zulassungsfrei gestellten Handwerkszweigen einen Gründungsboom gegeben hat. Es wurde ein Trend zu kleineren, häufig nicht lange am Markt bestehenden Betriebseinheiten ausgelöst, was sich auch in einem höheren Anteil an Soloselbstständigen ausdrückt. Die Erträge dieser Betriebe sind meist relativ gering, was bspw. negative Auswirkungen auf die Altersvorsorge mit sich bringt. Bei der Humankapitalbildung spielen mit Ausnahme der Meisterprüfungen, die in den B1-Gewerken deutlich gefallen sind, andere Faktoren für die Entwicklung eine viel größere Rolle als die HwO-Reform. Um zu einer umfassenderen Bewertung der HwO-Reform zu kommen, als es in der vorliegenden Studie möglich war, sind unbedingt weitere Untersuchungen notwendig. Vor allem fehlen bislang Erkenntnisse über die genauen Auswirkungen auf Innovation und Wettbewerbsfähigkeit des Handwerks.
    Keywords: Handwerk,Novellierung der Handwerksordnung 2004,Existenzgründungen,Soloselbstständige,Humankapitalbildung,Skilled crafts sector,Deregulation of the trade and crafts code,Entrepreneurship,Self-employment,Human capital formation
    Date: 2018
  9. By: SECK, Massamba Souleymane; BIAYE, Abdoulaye
    Abstract: In Senegal, as elsewhere in the WAEMU zone, access to credit for vulnerable microentrepreneurs is a major concern despite the important role of traditional microfinance institutions. To effectively solve this problem, Islamic microfinance has been identified as an alternative offer, alongside conventional finance, in order to give access to bank accounts to those underprivileged people that have not been sufficiently served by financial institutions. Thus, this article aims to study the advent of Islamic microfinance in Senegal. To do this, our research focuses on the history and role of the State of Senegal in the promotion of Islamic microfinance to finally present the characteristics of this new funding model for vulnerable populations often excluded from the traditional financial system.
    Keywords: Classical microfinance, Islamic microfinance, vulnerable microentrepreneurs
    JEL: G20 G21 G23
    Date: 2019–02

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