nep-ent New Economics Papers
on Entrepreneurship
Issue of 2019‒03‒18
ten papers chosen by
Marcus Dejardin
Université de Namur

  1. The German Mittelstand: Antithesis to the Silicon Valley entrepreneurship model? By Pahnke, André; Welter, Friederike
  3. Community Origins of Industrial Entrepreneurship in Pre-Independence India By Gupta, Bishnupriya; Mookherjee, Dilip; Munshi, Kaivan; Sanclemente, Mario
  4. Entrepreneurial and intrapreneurial growth in Central and Eastern European ventures driven by the fit between micro and macro level opportunity exploitation By Esin Yoruk
  5. Financing and obstacles for high growth enterprises: The European case By Ferrando, Annalisa; Pal, Rozalia; Durante, Elena
  7. Statistics on the Small Business Administration’s Scale-Up America Program By C.J. Krizan
  8. Do Public Firms Respond to Industry Opportunities More Than Private Firms? The Impact of Initial Firm Quality By Vojislav Maksimovic; Gordon M. Phillips; Liu Yang
  9. Standard Setting Organizations, Information Flows and Business Strategies: An Empirical Investigation By Ray Lambert; Paul Temple
  10. Analysis of the determinants of the emergence and localization of new enterprises in Russia at the micro level By Pleskachev, Yuriy (Плескачев, Юрий); Ponomarev, Yuriy (Пономарев, Юрий)

  1. By: Pahnke, André; Welter, Friederike
    Abstract: Whilst internationally, the Mittelstand in Germany is admired and many countries try to emulate it, the current debate in Germany praises the Silicon Valley model of entrepreneurship, contrasting the Mittelstand as low-growth, low-tech and non-innovative - in short: as a hindrance to Germany's economic future. We therefore ask whether the Mittelstand actually is the antithesis to the Silicon Valley entrepreneurship model. We show that Mittelstand is more than a small and medium enterprise size, identifying its distinctive features (identity of ownership and management, sense of belonging). In this regard, we also discuss the influence of historical paths and current institutional settings on the Mittelstand model. Asking to what extent the Mittelstand is distinctive, we address its diverse contributions to economy and society. We suggest that the Mittelstand is an excellent example of everyday entrepreneurship and a vibrant segment of economy which is also competitive, innovative, and growth orientated; albeit in different ways compared to Silicon Valley entrepreneurship. In concluding, we outline ideas for future research and implications for policymakers. In our view, future research and policies should stand back from dichotomies such as "Mittelstand versus Silicon Valley entrepreneurship" and acknowledge the diversity and heterogeneity of entrepreneurship.
    Keywords: Mittelstand,context,everyday entrepreneurship
    JEL: L26 M13
    Date: 2019
  2. 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.
    Date: 2019–02
  3. By: Gupta, Bishnupriya (University of Warwick); Mookherjee, Dilip (Boston University); Munshi, Kaivan (University of Cambridge); Sanclemente, Mario (University of Warwick)
    Abstract: We argue that community networks played an important role in the emergence of Indian entrepreneurship in the early stages of the cotton textile and jute textile industries in the late 19th and early 20th century respectively, overcoming the lack of market institutions and government support. From business registers, we construct a yearly panel dataset of entrepreneurs in these two industries. We find no evidence that entry is affected by prior trading experience or price shocks in the corresponding upstream sector. Firm directors exhibited a high degree of clustering of entrepreneurs by community. The dynamics of entry is consistent with a model of network-based dynamics.
    Keywords: JEL Classification:
    Date: 2019
  4. By: Esin Yoruk
    Abstract: Based on theories from entrepreneurship and intrapreneurship literatures, this paper investigates how the fit between micro level entrepreneurial opportunity exploitation and macro level entrepreneurial influence sales and employment growth in the Central and Eastern European (CEE) firms. A multiple case study analysis contrasts young entrepreneurial and established intrapreneurial firms to the established conservative firms. Our findings for entrepreneurial and intrapreneurial ventures are in stark contrast to those of conservative firms. Not only entrepreneurial but also intrapreneurial firms are better at exploiting micro-level opportunities in the technology and market domains empowered by their intra-organisational competences. Moreover, they may purposefully select what macro-level opportunity to exploit, a process which contributes to their higher sales and employment growth. In other words, they are able to create the fit between micro and macro environments to generate high growth in stark contrast to conservative firms.
    Date: 2019–03
  5. By: Ferrando, Annalisa; Pal, Rozalia; Durante, Elena
    Abstract: This paper investigates the links between alternative growth phases of firms and barriers to financing and investment using firm-level information for a representative sample of EU companies. We propose a novel classification of corporates: high growth (HGEs), stable and declining enterprises. We find that during the phase of high growth, firms are on average more financially constrained. To match their needs for external finance, HGEs are more likely to apply for equity financing. Furthermore, we identify firms with high growth potential. Using survey data, we investigate the barriers to investment activities faced by actual and potential HGEs. Our findings suggest that the most stringent obstacles for actual HGEs are the availability of skilled staff and business regulations, while potential HGEs are blocked by uncertainty about the future.
    Keywords: high growth enterprises,financing conditions,bank financing,equity financing,obstacles to investment
    JEL: D22 G01 G20 G32
    Date: 2019
  6. By: Ahmet Faruk Faysan; Mustafa Disli (-)
    Abstract: Because of their opaque nature, SMEs are overly reliant on bank lending. Therefore, we examine whether banks’ credit supply to SMEs are affected by their financial conditions. To this end, we employ a Granger causality analysis to examine whether there is an indication of a significant direction of determination between SME lending and non-performing SME loans. The results reveal no bidirectional relationship between SME lending and NPL for the entire banking sector. For Islamic banks, however, we find two-way linkages between these two parameters: a negative causation is running both from SME lending to NPL growth and from NPL to SME lending. Given Islamic banks’ deposit-oriented funding practices and their adherence to profit-and-loss sharing principles, this finding suggests the presence of heightened market discipline within the Islamic banking system.
    Keywords: Small business lending, Non-performing loans, Islamic banks.
    JEL: G21 G28 G3
    Date: 2019–03
  7. By: C.J. Krizan
    Abstract: This paper attempts to quantify the difference in performance, of “treated” (program participant) and “non-treated” (non-participant) firms in SBA’s Scale-Up initiative. I combine data from the SBA with administrative data housed at Census using a combination of numeric and name and address matching techniques. My results show that after controlling for available observable characteristics, a positive correlation exists between participation in the Scale-Up initiative and firm growth. However, publicly available survey results have shown that entrepreneurs have a variety of goals in-mind when they start their businesses. Two prominent, and potentially contradictory ones are work-life balance and greater income. That means that not all firms may want to grow and I am unable to completely control for owner motivations. Finally, I do not find a statistically significant relationship between participation in Scale-Up and firm survival once other business characteristics are accounted for.
    Date: 2019–04
  8. By: Vojislav Maksimovic; Gordon M. Phillips; Liu Yang
    Abstract: We track firms at birth and compare the growth pattern of IPO firms and their birth-matched counterparts. Firms that are larger at birth with faster initial growth are more likely to attain a larger size later in life and go public. Firms in the top percentile of predicted propensity to go public grow 29 times larger fifteen years later than matched firms if they actually become public, and 14 times larger if they stay private, showing a large selection effect. We show that public firms, and especially those public firms backed by venture capital, respond more to demand shocks post-IPO.
    JEL: G20 G24 G3 G32 L1 L22 L23 L25 L26
    Date: 2019–03
  9. By: Ray Lambert (Birbeck); Paul Temple (University of Surrey)
    Abstract: The paper investigates the link between standards, business strategy and innovation, based upon a factor analysis of the stated ‘context’ for innovation contained in the 2012-2014 UK Innovation Survey (UKIS). The analysis reveals a distinction between pro-active ‘entrepreneurial’ strategies and reactive and ‘defensive’ strategies, as well as firms, although regarded in the survey as innovation ‘active’ have no clear innovation based objective. We combine this classification with sectoral indicators of the significance of standards to investigate how firms deliver these strategies. We find that, in addition to the important role played by the type of innovation strategy, standards have a significant impact not only on the extensive margin of R&D expenditures, but also on the likelihood that firms will invest in related complementary investments, notably in training and design. We test these propositions with a specific UKIS question on the value that firms put on standards. The positive impact that standards have on the acquisition of innovation related assets suggest that, on balance, the impact of standards has significant pro-competitive effects on an innovation system.
    JEL: L21 O31 O32 O34
    Date: 2019–03
  10. By: Pleskachev, Yuriy (Плескачев, Юрий) (The Russian Presidential Academy of National Economy and Public Administration); Ponomarev, Yuriy (Пономарев, Юрий) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: Entrepreneurial activity and especially emergence of new companies, according to international literature, has a positive effect on GDP and other important macroeconomic parameters. Increasing budget efficiency spending and economy growth rates above the world average are have very high priorities in Russia and are closely connected to the questions of properly stimulating the emergence and development of new companies. The empirical model presented in this paper allows evaluating the influence of various factors on the emergence of new companies in Russia.
    Date: 2019–03

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