nep-ent New Economics Papers
on Entrepreneurship
Issue of 2019‒02‒25
fourteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Immigrant Entrepreneurs and Innovation in the U.S. High-Tech Sector By J. David Brown; John S. Earle; Mee Jung Kim; Kyung Min Lee
  2. Taxation and Self-Employment By Zsofia Barany
  3. Entrepreneurial Spirits in Women and Men. The Role of Financial Literacy and Digital Skills By Noemi Oggero; Maria Cristina Rossi; Elisa Ughetto
  4. Econometric study on the impact of EU loan guarantee financial instruments on growth and jobs of SMEs By Bertoni, Fabio; Brault, Julien; Colombo, Massimo G.; Quas, Anita; Signore, Simone
  5. Job creation in Colombia vs the U.S.: “up or out dynamics” meets “the life cycle of plants”. By Marcela Eslava; John C. Haltiwanger; Alvaro Pinzón
  6. Structural transformation in Africa: New technologies, resurgent entrepreneurship and the revival of manufacturing By Naude, Wim
  7. Do young innovative companies create more jobs? Evidence from Pakistani textile firms By Wadho, Waqar; Goedhuys, Micheline; Chaudry, Azam
  8. New Entrepreneurial Learning Phase I Evaluation By Mikia Manley; Margaret Sullivan; Karina Edouard; Eric Brower; Jonathan Ladinsky; Hanzhi Zhou
  9. SMEs Sector: A Key Driver to the Egyptian Economic Development By Abdel bary, Amr
  10. 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
  11. The effects of cultural policy on nascent cultural entrepreneurship: A Bayesian nonparametric approach to longitudinal mediation By Andrej Srakar; Marilena Vecco
  12. Social entrepreneurship before neoliberalism?: The life and work of Akhtar Hameed Khan By Lewis, David
  13. Managerial Style and Attention By Dessein, Wouter; Santos, Tano
  14. Motherhood, Migration, and Self-Employment of College Graduates By Cai, Zhengyu; Stephens, Heather M.; Winters, John V.

  1. By: J. David Brown; John S. Earle; Mee Jung Kim; Kyung Min Lee
    Abstract: We estimate differences in innovation behavior between foreign versus U.S.-born entrepreneurs in high-tech industries. Our data come from the Annual Survey of Entrepreneurs, a random sample of firms with detailed information on owner characteristics and innovation activities. We find uniformly higher rates of innovation in immigrant-owned firms for 15 of 16 different innovation measures; the only exception is for copyright/trademark. The immigrant advantage holds for older firms as well as for recent start-ups and for every level of the entrepreneur’s education. The size of the estimated immigrant-native differences in product and process innovation activities rises with detailed controls for demographic and human capital characteristics but falls for R&D and patenting. Controlling for finance, motivations, and industry reduces all coefficients, but for most measures and specifications immigrants are estimated to have a sizable advantage in innovation.
    JEL: F22 J15 J6 L26 O3 O31
    Date: 2019–02
  2. By: Zsofia Barany (Département d'économie)
    Abstract: In this paper I study the relation between self-employment and the tax rates on wages and on self-employment income. Using variation in the statutory tax rates across countries, industries, and occupations, I find that while the share of self-employed is strongly positively correlated with the tax rate on wage income, it is weakly negatively correlated with the tax rate on self-employed income. The asymmetry between the effects of the tax rates suggests that those who choose self-employment partly do so in order to evade taxes. This extensive margin of adjustment – between employment and self-employment – should be taken into account when considering the effects of tax rates on labor income, on taxable income and on welfare.
    Keywords: Tax-rates; Self-employment; Tax evasion
    Date: 2018–05
  3. By: Noemi Oggero (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Maria Cristina Rossi (Department of Management, University of Torino, Italy); Elisa Ughetto (Department of Management and Production Engineering, Politecnico di Torino, Italy)
    Abstract: We investigate the attitudes to entrepreneurship of Italian households, focusing on the importance of digital skills and financial literacy as potentially relevant factors shaping entrepreneurial entry. We put the gender focus to our analysis to detect whether, and to what extent, women and men differ in their propensity to run a business. We carry out our research by using a sample of the Bank of Italy SHIW dataset for the year 2008 and 2010. Our findings suggest a strong heterogeneity, between men and women, of the importance of digital skills and financial literacy as entrepreneurial drivers. Results show that the impact of financial literacy on the probability of being an entrepreneur is significant, but only for men. Digital skills increase the probability of being entrepreneur with a bigger effect for men than for women.
    Keywords: entrepreneurship, financial literacy, digital, gender economics.
    JEL: L26 J16 D14
    Date: 2019–02
  4. By: Bertoni, Fabio; Brault, Julien; Colombo, Massimo G.; Quas, Anita; Signore, Simone
    Abstract: This working paper investigates the economic effects of guaranteed loans granted under the EU programmes MAP and CIP on SMEs' growth in Italy, the Benelux and the Nordic countries (Denmark, Finland, Norway and Sweden) from 2002 to 2016. In these macro-regions, the facilities supported 174,107 loans to SMEs, for a total of EUR 15.58bn. Using a sample of these loans with corresponding firm-level data, this study estimates the average treatment effect on firms' growth, profitability, assets intangibility and survival. The analysis compares beneficiary SMEs to similar firms that were not supported by the programmes, identified through coarsened exact matching (CEM) and propensity score matching (PSM). Overall, guaranteed loans are found to positively affect the growth in assets (+19.6 percentage points over the two years after the end of the signature year), sales (+14.8 percentage points), employment (+16.9 percentage points) and the share of intangible assets (+1 percentage point). No significant effect on profits is observed. Beneficiary SMEs also have lower bankruptcy rates compared to control firms. Consistent with the literature on financing constraints, positive effects are stronger for smaller, younger SMEs. Treatment effects are more pronounced in the Benelux and Nordic countries, mostly due to the sample composition of treated firms in each macro-region.
    Keywords: EIF,credit guarantees,credit constraints,real effects,small and medium-sized enterprises
    JEL: G2 H25 O16
    Date: 2019
  5. By: Marcela Eslava; John C. Haltiwanger; Alvaro Pinzón
    Abstract: There is growing consensus that a key difference between the U.S. and developing economies is that the latter exhibit slower employment growth over the life cycle of the average business. At the same time, the rapid post entry growth in the U.S. is driven by an “up or out dynamic”. We track manufacturing establishments in Colombia vs. the US and find that slower average life cycle growth in Colombia is driven by a less enthusiastic contribution of extraordinary growth plants and less dynamic selection of young underperforming plants. As a consequence, the size distribution of non-micro plants exhibits more concentration in small-old plants in Colombia, both in unweighted and employment-weighted bases. These findings point to a shortage of high-growth entrepreneurship and a relatively high likelihood of long-run survival for small, likely unproductive plants, as two key elements at the heart of the development problem. An extreme concentration of resources in micro plants is the other distinguishing feature of the Colombian manufacturing sector vis a vis the US.
    JEL: O14 O47
    Date: 2019–02
  6. By: Naude, Wim (UNU-MERIT, and Maastricht University)
    Abstract: In this paper I argue that manufacturing is still important for structural transformation in Africa. Despite failing to industrialize in the past, there may be a new window of opportunity. This is due to the convergence of new technologies of the Fourth Industrial Revolution (4IR) and a resurgence of start-up entrepreneurship. In this light I (i) show why manufacturing is vital for African economies, (ii) critically analyze the nature and impact, both in terms of opportunities and risks, of the new technologies associated with the 4IR for Africa; (iii) describe the resurgence of tech start-up entrepreneurship in Africa and (iv) call for policy support in the form of complimentary investments and regulations to allow entrepreneurs to utilize opportunities and to minimize threats. The paper show that a new narrative for African structural transformation is possible.
    Keywords: Technology, industry 4.0, entrepreneurship, development, Africa
    JEL: O33 O14 O55 L52 L26
    Date: 2018–11–30
  7. By: Wadho, Waqar (Lahore School of Economics); Goedhuys, Micheline (UNU-MERIT); Chaudry, Azam (Lahore School of Economics)
    Abstract: Using unique innovation survey data collected among a homogenous sample of firms active in the textiles and apparel sector in Pakistan, this paper analyses the role of innovation for employment growth. In particular, it develops and tests the hypothesis that innovation is conducive to employment creation, and that this is especially the case for smaller and younger firms, supporting the hypothesis that young innovative companies grow faster by engaging in riskier and more radical innovation to catch up with incumbent firms. We find empirical evidence for these hypotheses, which is robust to different model specifications and estimation techniques and to different measures of innovation. Young innovative companies also perform well in absolute employment creation making them interesting from a policy perspective.
    Keywords: Technological innovation, Firm growth, Employment growth, Quantile regression, Textiles, Pakistan
    JEL: L25 L26 L67 O30 O53
    Date: 2019–01–11
  8. By: Mikia Manley; Margaret Sullivan; Karina Edouard; Eric Brower; Jonathan Ladinsky; Hanzhi Zhou
    Abstract: This report is the first annual report for the Ewing Marion Kauffman Foundation's evaluation of the New Entrepreneurial Learning initiative, which currently encompasses the FastTrac and 1 Million Cups (1MC) programs.
    Keywords: entrepreneurship, foundation, business, performance measurement
    JEL: J
  9. By: Abdel bary, Amr
    Abstract: The focus of this paper is the discussion of the competitiveness facing SMEs in the global business environment by examining the opportunities and supports from the government. The purpose of this paper is to review the experiences of some countries that have benefited greatly from SME development and have been able to achieve high economic growth rates. On the other hand, presented the problems facing the Egyptian economy in order to achieve rapid growth rates at the level of small and medium enterprises and finally propose the strategies that can contribute effectively to the development of these projects.
    Keywords: Small and Medium Enterprises (SMEs),Challenges,Competitiveness,SME Development
    Date: 2019
  10. 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
  11. By: Andrej Srakar (Institute for Economic Research, Faculty of Economics, University of Ljubljana, Slovenia); Marilena Vecco (Burgundy School of Business – Université Bourgogne Franche-Comté)
    Abstract: Despite the topic of nascent entrepreneurship receiving quite extent in coverage in the scientific literature there is very few, if any, knowledge on the characteristics of nascent firms in the cultural and creative sector. In this article we use Amadeus database for a sample of firms from 28 European Union countries in the period 2007-2016, to study the effects of cultural policy on nascent entrepreneurship. We model the effects as a mediation problem and show that while cultural policy has an effect on general performance of cultural firms it is mediated through its indirect effect on nascent cultural and creative firms and mediation happens with time delay. This finding is robust to numerous cultural policy variables, definitions of nascent entrepreneurship, performance indicators and model specifications. The article also implements and discusses a Bayesian nonparametric (BNP) approach to longitudinal mediation analysis (using Bayesian additive regression trees used on cross-lagged panel modelling of the Baron-Kenny approach to mediation) which is to our knowledge the first application of BNP in longitudinal mediation in statistical and econometric literature. We conclude by policy and research recommendations and reflections.
    Keywords: Nascent cultural entrepreneurship, cultural policy, longitudinal mediation, Baron-Kenny approach, BART, Amadeus
    Date: 2019–02
  12. By: Lewis, David
    Abstract: The life history method can be used to historicise the study of social and public policy. Reviewing the life and work of Pakistani social entrepreneur A.H. Khan provides a useful reminder that what Jyoti Sharma recently termed ‘the neoliberal takeover of social entrepreneurship’ is a relatively recent phenomenon. While Khan’s achievements across the public and non-governmental (NGO) sectors continue to be debated amongst scholars and activists in South Asia, his life and work – which is not well known in the Global North as it perhaps should be – highlights a much broader and more inclusive way of thinking about the social entrepreneur as an organiser of change
    Keywords: social entrepreneurship; non-governmental organisations (NGOs); community development; public administration; rural development; life history
    JEL: N0
    Date: 2019–01–01
  13. By: Dessein, Wouter; Santos, Tano
    Abstract: Is firm behavior mainly driven by its environment or rather by the characteristics of its managers? We develop a cognitive theory of manager fixed effects, where the allocation of managerial attention determines firm behavior. We show that in complex environments, the endogenous allocation of attention exacerbates manager fixed effects. Small differences in managerial expertise then may result in dramatically different firm behavior, as managers devote scarce attention in a way which amplifies initial differences. In contrast, in less complex environments, the endogenous allocation of attention mitigates manager fixed effects. Firm owners prefer `managers with style' only in complex environments.
    Keywords: attention; Firm behavior; Firm Strategy; Managerial Style
    Date: 2019–02
  14. By: Cai, Zhengyu; Stephens, Heather M.; Winters, John V.
    Abstract: Women face unique challenges in starting and running their own businesses and may have differing motives to men for pursuing self-employment. Previous research suggests that married women with families value the flexibility that self-employment can offer, allowing them to balance their family responsibilities with their career aspirations. This may be especially true for college graduates, who tend to have more successful businesses. Access to childcare may also affect their labor force decisions. Using American Community Survey microdata, we examine how birth-place residence, a proxy for access to extended family and child care, relates to self-employment and hours worked for college-graduate married mothers. Our results suggest that flexibility is a major factor pulling out-migrant college-educated mothers into self-employment. Additionally, it appears that, in response to fewer childcare options, self-employed mothers away from their birth-place work fewer hours, while self-employed mothers residing in their birth place are able to work more hours per week.
    Keywords: motherhood,migration,self-employment,childcare,hours worked
    JEL: J13 J22 L26
    Date: 2019

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