nep-ent New Economics Papers
on Entrepreneurship
Issue of 2019‒08‒12
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Does FDI Promote Entrepreneurial Activities? A Meta-Analysis By Sanghyun Hong; W. Robert Reed; Bifei Tian; Tingting Wu; Gen Chen
  2. Eco-Innovation and Firm Growth in the Circular Economy: Evidence from European SMEs By Pelin Demirel; Gamze Ozturk Danisman
  3. On Average Establishment Size across Sectors and Countries By Pedro Bento; Diego Restuccia
  4. A Vision for a Dynamic World: Reading Capitalism, Socialism and Democracy for Today By Dalton, John; Logan, Andrew
  5. Lack of Successors, Firm Default, and the Performance of Small Businesses By TSURUTA Daisuke
  6. Mapping the emergence of a new research field: an exploration of the intellectual structure of the B Corp research By Silvia Blasi; Silvia Rita Sedita
  7. “Entrepreneurial Spirits in Women and Men. The Role of Financial Literacy and Digital Skills" By Noemi Oggero; Mariacristina Rossi; Elisa Ughetto
  8. Does Social Health Insurance Help Owners of Micro- and Small Firms Cope with Family Hardships? Evidence from Indonesia By Lau, Siew Yee; Parinduri, Rasyad; Lee, Yoong Hon
  9. Local entrepreneurship ecosystems and emerging industries: Case Study of Mazowieckie, Poland By OECD
  10. The impact of e-wallet on informal farm entrepreneurship development in rural Nigeria By Joseph I. Uduji; Elda N. Okolo-Obasi; Simplice A. Asongu
  11. Current Status and Issues Regarding the Role of Financial Institutions in Promoting BCP Efforts: Based on RIETI's Business Consciousness Survey on Business Continuity Plans (BCP) (Japanese) By YAMORI Nobuyoshi; HAMAGUCHI Nobuaki; NODA Kentaro
  12. Industry Dynamics from Resource Redistribution in the Japanese Economy—Empirical research using Economic, Establishment and Enterprise Censuses of Japan (Japanese) By FUKAO Kyoji; KWON Hyeog Ug; KIM Young Gak; IKEUCHI Kenta
  13. Entrepreneurs (novices vs. experts) and investors: Interaction and rationality dynamics (effectual vs. causal) By Laurence Cohen; Kirsten Burkhardt

  1. By: Sanghyun Hong; W. Robert Reed (University of Canterbury); Bifei Tian; Tingting Wu; Gen Chen
    Abstract: This study uses meta-analysis to analyze 557 estimates from 35 studies that estimate the effect of inward FDI on entrepreneurial activity. We address two questions: (i) Does FDI lead to greater entrepreneurial activity in host countries? (ii) What factors are responsible for the different estimates across studies? In addressing these questions, we make two methodological contributions. We extend the new Andrews-Kasy meta-analysis estimators (Andrews & Kasy, 2019) to allow for explanatory variables, and we develop a nested framework of multiple meta-analysis models that allows for testing between models and model selection. We estimate that, across all studies, the average estimated effect of FDI on entrepreneurship is positive but small in size, and statistically insignificant. In contrast, the average effect from studies that control for endogeneity is negative and statistically significant.
    Keywords: Meta-analysis, FDI, Entrepreneurship
    JEL: L26 F21 C10
    Date: 2019–08–01
  2. By: Pelin Demirel (Dyson School of Design Engineering, Imperial College London, UK.); Gamze Ozturk Danisman (Faculty of Economics Administrative and Social Sciences, Bahcesehir University, Istanbul,Turkey)
    Abstract: As the circular economy (CE) concept gains growing popularity among consumers and producers, small and medium-sized enterprises (SME) increasingly look for ways to reorganize their offering and operations to integrate into the CE. This study examines the impact of (1) circular eco-innovations and (2) external funding available for CE activities on the growth of European SMEs using a dataset of 5100 SMEs across 28 European countries in 2016. Findings reveal that a significant threshold investment (i.e. higher than 10% of revenues) into circular eco-innovations is required for SMEs to benefit from investing into the CE. Moreover, the majority of circular eco-innovations fail to boost the growth rates of SMEs, with the exception of investments into eco-design innovations. While traditional forms of debt and grant finance targeted to CE activities are found to have no or negative impact on the growth of SMEs, equity finance (i.e. angel and venture capital investments) contributes positively to their growth. The study offers insights into the lower levels of SME engagement in the CE as well as policy implications for improving engagement.
    Keywords: Circular Economy, Eco-Innovation, Eco-design, Entrepreneurship, Finance, Growth, SMEs.
    Date: 2019–06
  3. By: Pedro Bento; Diego Restuccia
    Abstract: We construct a new dataset for the average employment size of establishments across sectors and countries from hundreds of sources. Establishments are larger in manufacturing than in services, and in each sector they are larger in richer countries. The cross-country income elasticity of establishment size is remarkably similar across sectors, about 0.3. We discuss these facts in light of several prominent theories of development such as entry costs and misallocation. We then quantify the sectoral and aggregate impact of entry costs and misallocation in an otherwise standard two-sector model with endogenous firm entry, firm-level productivity, and sectoral employment shares. We find that observed measures of misallocation account for the entire range of establishment-size differences across sectors and countries and almost 50 percent of the difference in non-agricultural GDP per capita between rich and poor countries.
    Keywords: establishment size, manufacturing, services, distortions, misallocation, productivity.
    JEL: O1 O4 O5 E02 E1
    Date: 2019–08–05
  4. By: Dalton, John; Logan, Andrew
    Abstract: This paper was written for a symposium on "Reconsidering the Classics." Rereading Joseph Schumpeter's Capitalism, Socialism and Democracy (CSD) for today, we argue Schumpeter's vision for a dynamic world remains essential for understanding the world. We begin the paper by briefly describing some background on Schumpeter and the context in which CSD was written. Then, we summarize the book, which Schumpeter divided into five separate parts on Marx, capitalism, socialism, democracy, and a history of socialist parties. Throughout our summary, we highlight the key arguments and touch on many ideas in the book, such as Schumpeter's description of socialism and his theory of democracy. Instead of tackling all these ideas in depth, we discuss the book's usefulness for readers today by focusing on Schumpeter's Big Idea--"creative destruction." We conclude by discussing how influential CSD has been, and continues to be, in the social sciences and then provide suggestions for those interested in reading CSD today.
    Keywords: Joseph Schumpeter; Capitalism, Socialism and Democracy; Innovation; Entrepreneurship; Creative Destruction
    JEL: B31 O3 P0
    Date: 2019–07–11
  5. By: TSURUTA Daisuke
    Abstract: We investigate the effects of the lack of successors on small businesses with an elderly manager. Using firm-level data from Japan, which is a country with an ageing population, we find the following results. First, smaller, younger, highly leveraged, and non-growing firms are likely to have no successor. Second, firms with an elderly manager are more likely to exit and default if they have no successors, and this was particularly the case during the period of the global financial crisis around 2009. This result suggests that these firms have less incentive to repay debts because they are not going concerns. As a result of the high probability of default and exit, the annual rate of change in bank borrowing is low if firms with an elderly manager have no successor. Third, using the propensity score matching method, we find that sales growth for firms with no successor is lower than that for other firms.
    Date: 2019–07
  6. By: Silvia Blasi (Department of Economics and Management, University of Padova); Silvia Rita Sedita (Department of Economics and Management, University of Padova)
    Abstract: The paper explores the emergence of a new research field, implementing a bibliometric analysis of the literature on the B Corp. We built a database including 82 articles collected by Scopus and published from 2009 to 2019 that discuss the B Corp, or the benefit corporation, or, more generally, social entrepreneurship. We performed descriptive and citation analyses, with the objective of identifying the roots and the evolution of the concept of B Corp. This emergent field is an important component of the structural change occurring in our society, which, in recent years, has seen the emergence of new for-profit organizational forms with a strong social consciousness. The bibliometric analysis reveals the foundational works and the historical evolution of the research field, which, while rooted in the corporate social responsibility literature, opened up into the analysis of how the legislation, the firm’s strategy, the entrepreneurial orientation, and the policy interventions are intertwined in the concrete development of socially and environmentally conscious businesses.
    Keywords: B Corp, benefit corporation, social entrepreneurship, sustainability, bibliometric analysis
    JEL: M10 M14 L31
    Date: 2019–08
  7. By: Noemi Oggero (Collegio Carlo Alberto); Mariacristina Rossi (University of Turin and CeRP-Collegio Carlo Alberto); Elisa Ughetto (Politecnico, Turin)
    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.
    Date: 2019–03
  8. By: Lau, Siew Yee; Parinduri, Rasyad; Lee, Yoong Hon
    Abstract: Micro- and small firms lack access to external finance and the labour market so that they are vulnerable to family hardships experienced by the owners such as deaths or sickness of family members. The literature is thin on how these firms cope with family hardships, in particular on whether owners’ access to social health insurance helps. We examine whether a social health insurance in Indonesia, Askeskin, protects owners of micro- and small firms against family hardships. We find some evidence Askeskin reduces the adverse effects of recent deaths in the family, outpatient care, and traffic accidents on net profits; Askeskin also protects the firms’ assets against owners’ outpatient care need. Social health insurance may, therefore, improve micro- and small firms’ survival, which (because most people in developing countries’ labour markets work in micro- and small firms) helps governments’ efforts to eradicate poverty.
    Keywords: social health insurance, Askeskin, family hardships, micro- and small firms, firm performance, Indonesia
    JEL: I13 I18 L25 O12
    Date: 2019–07–22
  9. By: OECD
    Abstract: This report examines the local entrepreneurship ecosystem of the Mazowieckie region in Poland and its capacity to promote productivity upgrading and industrial renewal. It forms part of the OECD’s work stream on local entrepreneurship ecosystems and emerging industries.
    Date: 2019–08–06
  10. By: Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    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
    JEL: Q10 Q14 L96 O40 O55
    Date: 2018–01
  11. By: YAMORI Nobuyoshi; HAMAGUCHI Nobuaki; NODA Kentaro
    Abstract: This paper uses the "Business Consciousness Survey on Business Continuity Plans (BCP)" (conducted in October 2018) and presents the current status and issues regarding support programs offered by financial institutions to encourage SMEs to formulate BCPs. According to the survey results, smaller companies, companies with lower capital ratios, and companies with lower profitability are more concerned about their financial situations in the aftermath of natural disasters. Under the SME Strengthening Act (submitted to the Diet in February 2019), financial institutions are expected to support the development of BCPs for SMEs. However, in fact, financial institutions have not been proactive about providing support to SMEs to formulate BCPs. Furthermore, there is insufficient communication between financial institutions and companies in terms of risk management. Finally, the weakness of financial incentives (e.g., lower interest rates or public credit guarantor fees) is not a significant reason for SMEs not to formulate BCPs.
    Date: 2019–06
  12. By: FUKAO Kyoji; KWON Hyeog Ug; KIM Young Gak; IKEUCHI Kenta
    Abstract: This research analyzes economic dynamism by using establishment-level panel data constructed by using the following censuses conducted by the Japanese government "the Establishment and Enterprise Census of Japan," the "Economic Census for Business Frame," and the "Economic Census for Business Activity." The analysis revealed the following. 1) The majority of employment fluctuations are due to entry and exit of business establishments. Employment fluctuations due to resource allocation among surviving establishments was limited. 2) In the past, the main source of new employment creation was the entrance of single business establishments, but in recent years the role of newly opened branches of large firms has become comparatively larger. 3) Decomposition of labor productivity growth brought about by resource reallocation shows that the average improvement of labor productivity for new entries was 92,000 yen, the effect of resource allocation among surviving establishments was 56,000 yen, but that the exit of the establishments reduced labor productivity by about 137,000 yen. 4) The majority of the improvement in labor productivity was a result of branch establishment. The effect of M & A among the firms is limited and most of the improvements do not involve changes of ownership of the establishments. 5) About 60% of the entry effect was from newly established firms. 6) Labor productivity (added value per employee) is highly skewed among business establishments, and more than half of value-added produced throughout the economy is from 20% of the top business establishments. 7) The growth rate of total factor productivity tends to be higher for industries with larger disparities in labor productivity among business establishments. 8) Most of the entry and exit effects are caused by the entry and exit of the small number of highly productive establishments. It is more prominent in non-manufacturing industries such as the accommodation and food service industry and the wholesale and retail industry.
    Date: 2019–07
  13. By: Laurence Cohen (Centre de Recherche Magellan - UJML - Université Jean Moulin - Lyon III - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon); Kirsten Burkhardt (CREGO - Centre de Recherche en Gestion des Organisations [Dijon] - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UB - Université de Bourgogne - UBFC - Université Bourgogne Franche-Comté [COMUE] - UFC - Université de Franche-Comté)
    Abstract: The paper studies the mechanisms that govern the interactions between the entrepreneur (novice or expert) and the specific investors of emerging firms (business angels (BAs) and venture-capital firms (VCs)). Combining both literatures on entrepreneurship and entrepreneurial finance, our aim is to understand if the rationalities of these three actors help them or not to interact, and, to study how they influence each other during the firm's growth. In order to do so, we undertake two processual case studies. Our results show that effectual rationality underlines the interaction between the entrepreneur and the BAs at the creation of the firm, whilst causal rationality is helpful in the search for VC-investors in order to enable the firm's rapid growth. Finally, the BAs (previous successful entrepreneurs) can play the role of an intermediary, helping the novice entrepreneur to move from an effectual to a causal reasoning which help them to attract financing sources from VCs
    Abstract: L'étude focalise son attention sur les mécanismes qui gouvernent les interactions entre l'entrepreneur/fondateur (novice ou expert) et les investisseurs spécifiques dédiés aux firmes émergentes (business angels (BAs) et sociétés de capital-risque (VCs)). En croisant les littératures en entrepreneuriat et finance entrepreneuriale, nous souhaitons comprendre si les rationalités retenues lors des prises de décision par ces trois acteurs (l'entrepreneur novice ou expert, les BAs et les VCs) favorisent ou non leurs interactions et comment ils s'influencent mutuellement au fur et à mesure que la firme se développe. À ce titre, nous procédons à deux études de cas processuelles. Nos résultats montrent principalement que si la rationalité effectuale favorise l'interaction avec les investisseurs tels que les BAs lors de la création de la firme, la rationalité causale s'avère utile dans la recherche de financement auprès des VCs pour placer la jeune entreprise sur une trajectoire de forte croissance. Enfin, les BAs (anciens entrepreneurs à succès) peuvent jouer le rôle d'intermédiaires en aidant l'entrepreneur novice à basculer d'une rationalité effectuale vers une rationalité causale et en facilitant ainsi la recherche de financements auprès des VCs.
    Keywords: growth of the firm,effectuation,venture capital,governance,causation,rationalités effectuale / causale,gouvernance,capital-risque,business angels,croissance de la firme,start-ups
    Date: 2019–05–23

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