nep-ent New Economics Papers
on Entrepreneurship
Issue of 2019‒07‒08
eleven papers chosen by
Marcus Dejardin
Université de Namur

  1. Persistence of entrepreneurship in different historical contexts By Michael Fritsch; Korneliusz Pylak; Michael Wyrwich
  2. Working for an entrepreneur: Heaven or Hell? By Nyström, Kristina
  3. Closing the Finance Gap by Nudging: Impact Assessment of Public Grants for Women Entrepreneurs By Stjepan Srhoj; Bruno Skrinjaric; Sonja Radas; Janette Walde
  4. New(s) data for Entrepreneurship Research? An innovative approach to use Big Data on media coverage By Johannes von Bloh; Tom Broekel; Burcu Oezgun; Rolf Sternberg
  5. The emergence of an innovation ecosystem in a low innovation region: Disrupting inertia by a young university By Elisa Villani; Christian Lechner
  6. Embodied and Disembodied Technological Change: The Sectoral Patterns of Job-Creation and Job-Destruction By Dosi, Giovanni; Piva, Mariacristina; Virgillito, Maria Enrica; Vivarelli, Marco
  7. Does Mandating Social Insurance Affect Entrepreneurial Activity? By Benzarti, Youssef; Harju, Jarkko; Matikka, Tuomas
  8. Individualism and Venture Capital: A Cross-Country Study By Pascal Gantenbein; Axel Kind; Christophe Volonte
  9. Lower bank capital requirements as a policy tool to support credit to SMEs: evidence from a policy experiment By Sandrine Lecarpentier; Mathias Lé; Henri Fraisse; Michel Dietsch
  10. Asset-based lending By Suzanne H. Bijkerk; Casper G. de Vries
  11. Wage Dynamics Network: SME Credit Constraints in Cyprus During the Period 2010-2013 and Effects on Employment, Wages and Prices By Charalambos P. Charalambous; Marios C. Polemidiotis

  1. By: Michael Fritsch; Korneliusz Pylak; Michael Wyrwich
    Abstract: Persistence of entrepreneurship over longer periods of time could indicate a culture of entrepreneurship among the local population that may be an important factor for regional development, but does persistence of economic activity require cultural transmission? We exploit the diverse historical developments in the territory that is Poland today to analyze the level and the sources of persistence from the 1920s until today. Persistence is mainly found in those regions that were part of Germany before World War II. This persistence is noticeable despite the exchange of most of the pre- war population, ruling out that persistence is driven by transmission of culture. In most regions that were already part of Poland before World War II, the relationship between historical and current levels of entrepreneurship is not significant. Persistence of entrepreneurship is related to the historical success of regions, which we capture by the pre-war level of and self- employment in manufacturing industries, particularly in those that can be regarded as knowledge intensive. Our main conclusion is that persistence of entrepreneurship requires a certain level of successful economic development that we capture by the degree of industrialization in the early 20th century, but it does not necessarily require persistence of the local population.
    Keywords: Persistence, entrepreneurship, self-employment
    JEL: L26 M13 O1 O18 R11
    Date: 2019–06
  2. By: Nyström, Kristina (The Ratio Institute)
    Abstract: Recruiting employees to an entrepreneurial venture is a challenging task. From the employee’s perspective, accepting a position in an entrepreneurial venture potentially implies considerable uncertainty. This paper provide a literature review and identifies research gaps related to labor mobility of employees into and out of entrepreneurial firms. Who works for an entrepreneur? What are the conditions under which the employees of entrepreneurial firms work? Additionally, labor mobility after an employee works for an entrepreneurial firm is discussed. In conclusion the quality of the jobs generated by entrepreneurial firms may be questionable (and still relatively unexplored in empirical research), but they are nevertheless important from a labor dynamics perspective. Better understanding about motives to work for an entrepreneur, issues related to job security beyond survival rates, and job quality may contribute to ease the recruitment problems that many entrepreneurial firms struggle with. Furthermore, the relevance and potential pros and cons of working for an entrepreneurial firm in future career paths (entrepreneur or employee) needs to be carefully addressed in future research.
    Keywords: entrepreneurship; labor mobility; employees in entrepreneurial firms
    JEL: J21 J62 L26
    Date: 2019–06–19
  3. By: Stjepan Srhoj (Department for Economics and Business Economics, University of Dubrovnik); Bruno Skrinjaric (The Institute of Economics, Zagreb); Sonja Radas (The Institute of Economics, Zagreb); Janette Walde (Department of Statistics, Faculty of Economics and Statistics, University of Innsbruck)
    Abstract: Several recent papers draw attention to a lack of rigorous research on public policies supporting women entrepreneurs' competitiveness. This paper evaluates the effect of small business development gender-specific matching grants using a quasi-experimental approach. The grants have a positive effect on firm survival, as well as positive effects on obtaining bank loans, turnover, value added, employment, and total factor productivity. Heterogeneous treatment effects show that the grants increase the chance of young women entrepreneurs' firm survival and are even more effective for firms owned by mature women. Cost-benefit analysis estimates an increase in value added, which outweighs scheme-induced costs by 80% in the short-run and 170% in the long run.
    Keywords: women entrepreneurship, public grants, policy evaluation, gender financing gap, behavioral additionality, nudging
    JEL: B54 J16 H81 L26 L38 H43
    Date: 2019–05
  4. By: Johannes von Bloh; Tom Broekel; Burcu Oezgun; Rolf Sternberg
    Abstract: Although conventional register and survey data on entrepreneurship have enabled remarkable insights into the phenomenon, the added value has slowed down noticeably over the last decade. There is a need for fresh approaches utilising modern data sources such as Big Data. Until now, it has been quite unknown whether Big Data actually embodies valuable contributions for entrepreneurship research and where it can perform better or worse than conventional approaches. To contribute towards the exploration of Big Data in entrepreneurship research, we use a newly developed dataset based on publications of the German Press Agency (dpa) to explore the relationship between news coverage of entrepreneurship and regional entrepreneurial activity. Furthermore, we apply sentiment analysis to investigate the impact on sentiment of entrepreneurial press releases. Our results show mixed outcomes regarding the relationship between reporting of entrepreneurial events, i.e., media coverage, and entrepreneurial activity in German planning regions. At this stage, our empirical results reject the idea of a strong relationship between actual entrepreneurial activities in regions and the intensity of it being reported. However, the results also imply much potential of Big Data approaches for further research with more sophisticated methodology approaches. Our paper provides an entry point into Big Data usage in entrepreneurship research and we suggest a number of relevant research opportunities based on our results.
    Keywords: entrepreneurship, media coverage, mass media, Big Data, sentiment analysis, GEM, entrepreneurial ecosystem, region, news data
    JEL: C8 L26 R12
    Date: 2019–06
  5. By: Elisa Villani (University of Bologna, Italy); Christian Lechner (Free University of Bolzano, Italy)
    Abstract: Innovation ecosystems are characterised by a variety of complementary actors and relationships among them. Universities are considered a key player in innovation ecosystems for their ability of generating knowledge and qualified expertise for entrepreneurial innovation. While much attention has been paid to mature ecosystems characterised by cutting-edge technologies, the role of less established universities in less innovative regions, characterised by a lack of relationships, familyowned firms, difficult university-industry collaborations, but great potential, has remained very much underexplored. Based on a longitudinal case study of a young university in Italy, this paper aims at contributing to existing literature by looking at the role of the university in defining actors’ positions and relationships in establishing an innovation ecosystem. In doing so, we contribute to existing literature in several ways. First, we highlight that the formation of an innovation ecosystem in a small area highly depends on the university’s potential of disrupting established relationships, creating new ones and, thus, playing an active role in designing the ecosystem. Second, we provide a process-based view for understanding the establishment of an innovation ecosystem through the evolution of interactions, roles and activities. Finally, we describe the micro-dynamics characterising innovation ecosystem emergence and institutionalisation and we show that bottomup approaches are possible as well.
    Keywords: Ecosystems, university, university-industry collaboration, innovation, longitudinal case study
    JEL: M10
    Date: 2019–06
  6. By: Dosi, Giovanni (Sant'Anna School of Advanced Studies); Piva, Mariacristina (Università Cattolica del Sacro Cuore); Virgillito, Maria Enrica (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: This paper addresses, both theoretically and empirically, the sectoral patterns of job creation and job destruction in order to distinguish the alternative effects of embodied vs disembodied technological change operating into a vertically connected economy. Disembodied technological change turns out to positively affect employment dynamics in the "upstream" sectors, while expansionary investment does so in the "downstream" industries. Conversely, the replacement of obsolete capital vintages tends to exert a negative impact on labour demand, although this effect turns out to be statistically less robust.
    Keywords: innovation, disembodied and capital-embodied technological change, employment, job-creation, job-destruction, sectoral interdependencies
    JEL: O14 O31 O33
    Date: 2019–06
  7. By: Benzarti, Youssef; Harju, Jarkko; Matikka, Tuomas
    Abstract: This paper estimates the effect of relaxing the social insurance mandate on entrepreneurial activity using rich administrative data from Finland. We find that relaxing the social insurance mandate leads entrepreneurs to reduce their contributions by 16%, which they channel instead into their firms. While young firms use the saved cash to increase their sales by 11% and labor costs by 6%, older firms use it to improve their net lending position by purchasing stocks. Our results imply that the impact of the social insurance mandate on business activity is heterogeneous and depends on the age of the firm.
    Keywords: social insurance, entrepreneurs, economic activity, eläkevakuutusmaksut, yrittäjät, yritysten kehitys, Social security, taxation and inequality, Sosiaaliturva, verotus ja tulonjako, H25, H32, H55,
    Date: 2019
  8. By: Pascal Gantenbein (University of Basel, Faculty of Business and Economics, Switzerland); Axel Kind (University of Konstanz, Department of Economics, Universitätsstrasse 10, D-78457 Konstanz, Germany); Christophe Volonte (University of Basel, Faculty of Business and Economics, Switzerland)
    Abstract: We investigate the effect of individualism – a dimension of culture that is strongly associated with entrepreneurship – on venture-capital investments using a large cross-country sample. Our sample consists of 1,496 country-year observations and includes 88 countries from 1998 to 2014. Controlling for economic conditions, the legal environment, and different aspects of culture, we find that individualism is positively and significantly related to venture-capital investments and explains 30% of cross-country variation. This result is stable across different subsamples, several measures of venture-capital investments, and even holds when using the political system 200 years ago as an instrument for individualism. The quality of formal institutions (rule of law) and entrepreneurial attitudes (uncertainty avoidance) partially mediate the effect of individualism on venture-capital investments, while economic conditions (GDP per capita) moderate this effect.
    Keywords: Comparative Entrepreneurship; Cultural values; Individualism; Institutions; Venture Capital
    Date: 2019–06–25
  9. By: Sandrine Lecarpentier; Mathias Lé; Henri Fraisse; Michel Dietsch
    Abstract: Starting in 2014 with the implementation of the European Commission Capital Requirement Directive, banks operating in the Euro area were benefiting from a 25% reduction (the Supporting Factor or "SF" hereafter) in their own funds requirements against Small and Medium-sized enterprises ("SMEs" hereafter) loans. We investigate empirically whether this reduction has supported SME financing and to which extent it is consistent with SME credit risk. Economic capital computations based on multifactor models do confirm that capital requirements should be lower for SMEs. Taking into account the uncertainty surrounding their estimates and adopting a conservative approach, we show that the SF is consistent with the difference in economic capital between SMEs and large corporates. As for the impact on credit distribution, our differences-in-differences specification enables us to find a positive and significant impact of the SF on the credit supply.
    Keywords: SME finance, Credit supply, Basel III, Credit risk modelling, SME Supporting Factor
    JEL: C13 G21 G33
    Date: 2019
  10. By: Suzanne H. Bijkerk; Casper G. de Vries
    Abstract: Asset-based lending, the supply of loans based on floating collateral, is an important source of funding for small .rms. We analyze the effect of competition on asset-based loan markets on interest rate distributions and the mobility of small firms. Close monitoring of collateral by lenders results in an informational advantage for the incumbent lender and third-degree price discrimination. We find that adverse selection results in a unique equilibrium in which lenders randomize interest rates and firms switch lender with positive probability. Increased competition between lenders does not benefit firms through lower expected interest rates, neither does it improve their mobility.
    Keywords: asset-based lending, floating, collateral, adverse selection
    JEL: D53 D82
    Date: 2019
  11. By: Charalambos P. Charalambous (Central Bank of Cyprus); Marios C. Polemidiotis (Central Bank of Cyprus)
    Abstract: In the context of its participation in the ESCB Wage Dynamics Network (WDN), the Central Bank of Cyprus (CBC) conducted a survey regarding the wage- and price-setting policies of domestic firms covering the period 2010-2013. This paper focuses on the behaviour of small- and medium-sized enterprises (SMEs) employing between 3-19 workers driven by changes in financing conditions. This is particularly important given the unprecedented shock to the banking system following the March 2013 events. The survey results suggest that, in the run up to the crisis, SMEs focused primarily on the use of price reduction strategies in an attempt to increase or maintain their volume of sales as a response to a shift in demand from SMEs to larger firms. SMEs also resorted to cost reduction strategies, including wage cuts. Since 2012, SMEs increased the average wage cut to broadly match the reduction in prices. Overall, the survey suggests that SMEs’ ability to maintain adequate liquidity for operational purposes via significant price and cost reductions, allowed a share of SMEs to overcome the obstacles related to the tighter financing conditions following the crisis.
    Keywords: wages, labour, prices, crisis, small- and medium-sized enterprises, access to finance, credit constraints, bail-in.
    JEL: D21 E30 G21 G32 J21 J30
    Date: 2017–10

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