nep-ent New Economics Papers
on Entrepreneurship
Issue of 2019‒07‒15
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. A Theory of Gazelle Growth: Competition, Venture Capital Finance and Policy By Persson, Lars; Kaya, Mehmet Caglar
  2. Local Rates of New Firm Formation: An Empirical Exploration using Swedish Data By Andersson, Martin; Lavesson, Niclas; Partridge, Mark D.
  3. The Fountain of Knowledge: An Epistemological Perspective on the Growth of U.S. SBIR-Funded Firms By Audretsch, David; Link, Albert
  4. Political Economy of Transparency By Raphael Galvão
  5. The Failure of Free Entry By Germán Gutiérrez; Thomas Philippon
  6. The Role of Nonemployers in Business Dynamism and Aggregate Productivity By Pedro Bento; Diego Restuccia
  7. Networking Frictions in Venture Capital, and the Gender Gap in Entrepreneurship By Sabrina T. Howell; Ramana Nanda
  8. What Skills Lead to Entrepreneurial Success? Evidence from Non-Farm-Household Enterprises in Indonesia By Niken Kusumawardhani; Daniel Suryadarma; Luca Tiberti; Veto Tyas
  9. Business development and the growth of rural SMEs By David Freshwater; Enrique Garcilazo; Julia Latto; Julian Pace; Alvin Simms; Jamie Ward; Tim Wojan
  10. Organizational Stigma and Resource Mobilization Challenges in a Social Enterprise: Arguing for a Grounded Research By Sumit Mitra; Pradeep Kumar Hota
  11. Impact of Credit and Training on Enterprise Performance: Evidence from Urban Ethiopia By Abdelkrim Araar; Yesuf Mohammednur Awel; Jonse Bane Boka; Hiywot Menker; Ajebush Shafi; Eleni Yitbarek; Mulatu Zerihun
  12. Place-Based Innovation Ecosystems: Volvo companies in Gothenburg (Sweden) By Jens Sorvik; Anna Zingmark; Matilda Ardenfors
  13. Les tests génétiques vendus en accès libre : biomédicalisation et nouveaux entrants dans le champ médical. By Henri Jautrou

  1. By: Persson, Lars (Research Institute of Industrial Economics (IFN)); Kaya, Mehmet Caglar (Department of Economics)
    Abstract: This paper proposes a theory of gazelle growth in which gazelles can either grow organically or by acquisitions. In the model, there are three types of firms: incumbent, target, and gazelle. We show that the lower cost of organic growth can increase the incentives for acquisition growth. The reason for this is that the incumbent understands that if it acquires the target firm, the gazelle will then invest organically anyway to grow, and therefore, the acquisition will not be sufficient to protect the incumbent's market power. The gazelle could then acquire the target firm at a good price. We also show that financial support for the organic growth of gazelles can increase gazelles' growth by acquisitions since incumbents' preemptive motives are reduced.
    Keywords: Gazelles; Acquisitions; Organic growth; Entrepreneurial policy; Venture capital; Financial support
    JEL: G24 G34 G38 L10 L26
    Date: 2019–07–02
  2. By: Andersson, Martin (Department of Economics, Blekinge Institute of Technology); Lavesson, Niclas (CIRCLE, Lund University); Partridge, Mark D. (Ohio State University)
    Abstract: We assess the empirical literature on the determinants of spatial variations in new-firm formation rates by undertaking a systematic empirical analysis of the relative roles of different demand- and supply-side factors. Using instrumental variables to address endogeneity, we find that local growth drives local entrepreneurship exclusively in services industries. Average establishment size has a robust negative influence on local new-firm formation rates, but its effect varies across industries. Local industry diversity is only positive for new-firm formation in high-tech and knowledge-intensive activities. There is also some evidence of that longer distances to urban centers is associated with higher new-firm formation rates. The only local factor with a consistent positive effect on new-firm formation across industries is local density of skilled workers. We conclude that industry structure, geography and agglomeration matter, but in the end, new firms are started by people, so it is unsurprising that the main factor driving local entrepreneurship is the characteristics of the local residents.
    Keywords: Entrepreneurship; New firm formation; Geography; Human capital; Agglomeration; Local growth; Startups
    JEL: L26 M13 R11 R30
    Date: 2019–06–27
  3. By: Audretsch, David (Indiana University); Link, Albert (University of North Carolina at Greensboro, Department of Economics)
    Abstract: The premise of this paper is that a basis for firms receiving Small Business Innovation Research (SBIR) research awards to develop commercializable technologies is not only their proposed creative ideas but also their endowment of attendant knowledge necessary to develop the technology being proposed. Based on this premise, we propose that those firms that have higher growth rates attributable to their SBIR awards are also those firms that are more creative and have more knowledge endowments. Empirically, we quantify a firm's creativity and its sources of research knowledge in terms of its past experiences, and we find that firms with more technical experience and sector experience are those that have realized higher growth rates from their SBIR-funded research.
    Keywords: knowledge; creativity; entrepreneurship; SBIR program; technology;
    JEL: D83 H43 L26 O33 O38
    Date: 2019–07–01
  4. By: Raphael Galvão (Universidad Alberto Hurtado)
    Abstract: This paper studies the effects of short-term reputation concerns on the public disclosure of information about the state of the economy. There are efficient and inefficient governments, and high productivity states are more likely under the ecient type. Governments know the state and make public reports with the objective to be perceived as ecient. Entrepreneurs use public information to make investment decisions and their actions are strategic complements. In equilibrium, the inecient type is optimistic: it sends false reports high productivity states with positive probability. This creates uncertainty for entrepreneurs: if the true state is high, productivity is underestimated; if the true state is low, productivity is overestimated. This bias reduces welfare in the high state, but there is a tradeo↵ in the low state: marginal entrepreneurs lose from overestimating productivity; all entrepreneurs receive complementarity gains from a higher aggregate investment. I show that when the trust in the government’s report is low, the inecient government can improve welfare in the low state by sending false reports that increase investment (a small economic boom). However, as the trust in the false reports rises, the bias in entrepreneurs’ beliefs becomes large and welfare decreases (there is too much investment).
    Date: 2018–08
  5. By: Germán Gutiérrez; Thomas Philippon
    Abstract: We study the entry and exit of firms across U.S. industries over the past 40 years. The elasticity of entry with respect to Tobin’s Q was positive and significant until the late 1990s but declined to zero afterwards. Standard macroeconomic models suggest two potential explanations: rising entry costs or rising returns to scale. We find that neither returns to scale nor technological costs can explain the decline in the Q- elasticity of entry, but lobbying and regulations can. We reconcile conflicting results in the literature and show that regulations drive down the entry and growth of small firms relative to large ones, particularly in industries with high lobbying expenditures. We conclude that lobbying and regulations have caused free entry to fail.
    JEL: D4 D6 E22 E23 K2 L0 O3 O4
    Date: 2019–06
  6. By: Pedro Bento; Diego Restuccia
    Abstract: A well-documented observation of the U.S. economy in the last few decades has been the steady decline in the net entry rate of employer firms, a decline in business dynamism, suggesting a possible connection with the recent slowdown in aggregate productivity growth. We consider the role of nonemployers, businesses without paid employees, in business dynamism and aggregate productivity. Notwithstanding the decline in the growth of employer firms, we show that the total number of firms, which includes nonemployer businesses, has increased in the U.S. economy since the early 1980s. We interpret this trend, along with the evolution of the employment distribution across firms, through the lens of a standard theory of firm dynamics. The model implies that firm dynamics have contributed to an average annual growth rate of aggregate productivity of at least 0.26% since the early 1980s, over one quarter of the productivity growth of 1% in the data. Further, our implied measure of productivity growth moves closely over time with measured productivity growth in the data.
    JEL: E02 E1 O1 O4 O51
    Date: 2019–06
  7. By: Sabrina T. Howell (New York University); Ramana Nanda (Harvard Business School, Entrepreneurial Management Unit)
    Abstract: Exploiting random assignment of judges to panels at Harvard Business School's New Venture Competition (NVC) between 2000 and 2015, we find that exposure to more venture capitalist (VC) judges increases male participants' chances of starting a VC-backed startup after HBS much more than this exposure increases female participants' chances. A survey suggests this is in part because male participants more often proactively reach out to VC judges after the NVC. Our results suggest that networking frictions are an important reason men benefit more than women from exposure to VCs. Such frictions can help explain part of the gender gap in entrepreneurship, and also have implications for how to design networking opportunities to facilitate financing of the best (rather than just the best networked) ideas.
    Date: 2019–04
  8. By: Niken Kusumawardhani; Daniel Suryadarma; Luca Tiberti; Veto Tyas
    Abstract: The abundance of small enterprises in developing countries has led to debates regarding the role that of entrepreneurial skill in business performance. Analyses of the skills and characteristics important for success can inform entrepreneurship training programs or educational curricula designed to increase the number of successful entrepreneurs. We addressed these issues in the context of Indonesia, a low-middle-income country in which almost half of workers are self-employed. After developing a conceptual framework linking fluid intelligence, crystallized intelligence, and educational attainment, we estimated the effect of these different types of intelligence on the profit and value of non-farm-household businesses. We found that fluid intelligence had sizeable and positive returns on business. On the other hand, crystallized intelligence had a positive and large effect only in sectors that required intense concentration or computers. Some heterogeneous effects regarding business size were also found. Our results were robust when we controlled for possible selection into non- farm entrepreneurship.
    Keywords: cognitive skills, human capital, entrepreneurship, household firm, farm business, non-farm business
    JEL: J24 O15 L26
    Date: 2019
  9. By: David Freshwater; Enrique Garcilazo; Julia Latto; Julian Pace; Alvin Simms; Jamie Ward; Tim Wojan
    Abstract: The paper reviews the role of Small and Medium Size Enterprises (SMEs) as drivers of employment and economic growth in rural regions across a number of OECD geographies. It argues that SME creation is especially important for rural economic development and identified lessons for national level policy that can help strengthen the performance of SMEs and enhance the creation of new SMEs. This working paper focuses on four cases studies in Atlantic Canada, Quebec, Scotland and the United States to derive general findings and recommendations.
    Keywords: benchmarking, economic development incentives/tools, geography, innovation, place, rural development, SMEs
    JEL: R51
    Date: 2019–07–12
  10. By: Sumit Mitra (Indian Institute of Management Kozhikode); Pradeep Kumar Hota (LM Thapar School of Manegement)
    Abstract: Social enterprises (SEs) blend social goals with for-profit motive and such a blending provides unique opportunity and challenges for the enterprise. Owing to their primary goal of solving social problems, SEs emerge in areas where government fails to solve issues and private sector does not find them to be profitable to pursue. Such a context poses unique challenges for social enterprise in terms of availability of resource because their predominant social focus fail to tap in to traditional sources for resources unlike their private counterparts. This creates challenges for resource management of SEs. SEs, which otherwise fulfill their social mission, but due to nature of their business are ‘core-stigmatized’ further discourage external resource holders to associate and share resources with such SE creating additional resource challenges because of the stigma attached to the business. Hence, it is interesting to understand how such ‘core stigmatized’ SEs manage their resources. With limited research in this area, studies may need to understand this through in- depth investigation of one or more revelatory cases of a SE that is stigmatized because of the nature of its core product like tobacco, men’s’ bath-house. Following established process of inductive theory building such studies may develop grounded resource management framework. Such studies have important implications for literature on social entrepreneurship particularly of the stigmatized type as also contribute to designing grounded research in such emerging areas.
    Keywords: Social Enterprise, Resource Mobilization Challenges
    Date: 2019–03
  11. By: Abdelkrim Araar; Yesuf Mohammednur Awel; Jonse Bane Boka; Hiywot Menker; Ajebush Shafi; Eleni Yitbarek; Mulatu Zerihun
    Abstract: This study evaluates the impact of business-development-support programs (credit, training, and a combination of both) on the performance of micro- and small enterprises (MSEs) in Ethiopia. Using 2015 Ethiopian urban survey data and employing endogenous-switching regressions for multiple treatments, we document a positive and significant effect of credit, training, and a combination of training and credit on MSEs. Our results highlight the heterogeneity in treatment effects between women- and men-owned MSEs: women-owned businesses do not benefit from access to treatments. Our results suggest that improving the performance of MSEs requires fine-tuned interventions that meet the specific needs of men and women who own small businesses rather than one-size-fits-all programs.
    Keywords: Treatment effects, MSEs, Ethiopia
    JEL: C31 J16 M21
    Date: 2019
  12. By: Jens Sorvik; Anna Zingmark; Matilda Ardenfors
    Abstract: There is a revival in the automotive sector in West Sweden, whereby several new companies set around the vehicle industry are attracting fresh capital and expertise into the region. An increasingly dynamic entrepreneurial ecosystem is generating new innovation intermediaries who provide added-value functions. The emergence of these innovation intermediaries is being driven by political, market-related, socio-cultural, relational and technological factors. These include societal challenges and trends that drive political interest, such as environmental issues and climate change. There is also a political interest in adapting to globalisation, to secure regional competitiveness and resilience. New technology developments include the electrification of vehicles, automation and connected vehicles. This is driving an interest from industry and academia in attracting talent and securing competences. There is also a tradition and experience of collaboration in the region. Volvo Group (AB Volvo) and Volvo Cars are very interested in continuing to nurture the regional ecosystem, by attracting other companies to the region. Civil society is eventually involved in the innovation ecosystem as user of technology, where user behaviour is analysed as an input to development processes. A common view among respondents is that it should be the needs of the stakeholders to drive the setting-up of innovation support actors or collaborative projects. These initiatives should support not only single companies but also many actors in the system, and be conducive to collaborative activities.
    Keywords: Place-based, innovation ecosystem, Gothenburg, Sweden, Volvo, quadruple helix, smart specialisation, territorial development, new technologies, automatation, connected vehicles
    Date: 2019–06
  13. By: Henri Jautrou (LISST - Laboratoire Interdisciplinaire Solidarités, Sociétés, Territoires - EHESS - École des hautes études en sciences sociales - UT2J - Université Toulouse - Jean Jaurès - ENSFEA - École Nationale Supérieure de Formation de l'Enseignement Agricole de Toulouse-Auzeville - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Comment expliquer l'apparition du marché des tests génétiques vendus en libre accès (autotests), qui suscite divers types de débats, voire des controverses ? L'hypothèse de départ est que ce marché doit être analysé comme un rapport de champs, comme une émancipation par les sciences de la tutelle médicale. La mise en place d'une webographie exhaustive des sites web pourvoyeurs d'autotests (entre 2000 et 2012) permet d'identifier les caractéristiques des entreprises à l'origine de ces sites (n=129, contre moitié moins dans la littérature académique), ainsi que de leurs entrepreneurs (n=162). Leur évolution dans le temps est étudiée par une typologie des entreprises et par des tests statistiques bidimensionnels qui répondent aux difficultés méthodologiques entravant la réalisation d'une analyse de correspondances. Au final, les autotests et leurs équivalents vendus sur prescription font apparaître de nouveaux entrants dans le champ médical, et conduisent à parler d'automédicalisation et de biomédicalisation. Nota Bene: Le texte qui suit présente un aspect de ma thèse de sociologie (soutenue en 2016, et accessible sur le registre des thèses a). Deux autres textes ont également été rédigés à cette même fin. Voici donc ce triptyque : -« Les tests génétiques vendus en accès libre : une médicalisation sans médecin ? », article soumis en 2017 à Terrains et Travaux, 20 pages. -« Le concept de médicalisation à l'épreuve des auto-tests génétiques : des médecins sans médecine ? », article soumis en 2018 à Sciences Sociales et Santé. -« Les tests génétiques vendus en accès libre : biomédicalisation et nouveaux entrants dans le champ médical », article soumis en 2018 aux Actes de la Recherche en Sciences Sociales. Les revues auxquelles ces trois articles ont été envoyés m'ont invité, directement ou non (de par leur demande de compléments, ou de par la portée implicite de leurs remarques, etc.), à réunir lesdits textes. Une version de synthèse a donc été soumise en 2019 à Sciences Sociales et Santé. Les demandes formulées par les relecteurs de cette revue ont inévitablement conduit au façonnement d'un texte qui est à la fois moins et plus qu'une synthèse. En somme, ces quatre textes peuvent être lus séparément, ou bien comme un ensemble (certains sont évidemment plus cruciaux que d'autres ; les seconds ayant justement été rédigés en appui aux premiers). Tout aussi complémentaire, un chapitre d'ouvrage a été rédigé en 2017. Il a été publié en 2019, sous le titre « Les tests génétiques en accès libre (2000-2012) : une innovation sanitaire ? », in Valat B. (dir.), Les marchés de la santé en France et en Europe (XIXe-XXe siècle), PUM, Toulouse. a Jautrou Henri, 2016, Les tests génétiques vendus en libre accès sur l'Internet: une médicalisation sans médecin ? , Thèse pour le doctorat de sociologie, Université Jean Jaurès, Toulouse, 640p.
    Date: 2019–06–13

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