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on Entrepreneurship |
| By: | Naudé, Wim (UNU-MERIT, Maastricht University, RWTH Aachen, and IZa, Bonn.) |
| Abstract: | Entrepreneurship in most advanced economies is in decline. This comes as a surprise: many scholars have expected an upsurge in entrepreneurship. What are the reasons for the decline? In this paper I first document the extent of the decline in terms of entrepreneurial entry rates; the share of young and small firms; and in terms of labor market mobility and in innovativeness. I then critically discuss the explanations that have been offered in the literature: slow population growth, market concentration, zombie-firm congestion, slower diffusion of knowledge, and burdensome business regulations. While having merit, these explanations are largely supply-side oriented and moreover fail to explain why the decline in entrepreneurship is associated with high levels of economic complexity. I argue that we need to consider the potential of negative scale effects and evolutionary pressures from rising complexity, as well as long-run changes in aggregate demand and energy costs. Whether the decline in entrepreneurship and the ossification of the economy is undesirable, is a point for debate, calling for more research and more attention to entrepreneurship in growth theories. |
| Keywords: | Entrepreneurship, start-ups, development, economic complexity, growth theory |
| JEL: | O47 O33 J24 E21 E25 |
| Date: | 2019–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2019030&r=all |
| By: | Sebastian Dyrda (University of Toronto); Benjamin Pugsley (University of Notre Dame) |
| Abstract: | From 1980 to 2012 the share of U.S. business receipts from businesses organized as pass-through entities (for example LLCs and S-corporations) rather than traditional C-corporations nearly triples. This paper investigates the origins of the secular rise of pass-throughs and evaluates it's macroeconomic consequences. We exploit the panel dimension of the administrative data from the Longitudinal Business Dynamics dataset to document a number of facts characterizing the pass-throughs and C-corporations and to estimate the transition matrices between the legal forms. We show that the entry margin and switching margin account for the most of the rise of pass-throughs. Further, using the Statistics of the U.S. Businesses we argue that the shift in the distribution of organizational forms is related to the structural transformation of the U.S. economy and to some other economic forces, such as rise in the dispersion of productivities, which account for within-sector increase of pass-throughs role. We quantify the impact of different economic forces using the structural macroeconomic model, in which entrepreneurs in both sectors choose endogenously the legal form of organization. We proceed to evaluate the macroeconomic consequences of growing importance of pass-through businesses for the U.S. economy with particular focus on the role of microeconomic heterogeneity for macroeconomic outcomes, propagation of aggregate shocks, misallocation and finally welfare. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:1343&r=all |
| By: | Arenal, Alberto; Feijoo, Claudio; Moreno, Ana; Armuña, Cristina; Ramos, Sergio |
| Abstract: | Text mining is being increasingly used for the automatic analysis of different corpus of documents, either standalone or complementarily to other bibliometric techniques. The case of academic research into entrepreneurship policy is particularly interesting due to the increasing relevance of the topic and since the knowledge about the evolution of themes in this field is still rather limited. Consequently, this paper analyses the key topics, trends and shifts that have shaped the entrepreneurship policy research agenda to date using text mining techniques, cluster analysis and complementary bibliographic data to examine the evolution of a corpus of 1,048 academic papers focused on entrepreneurial-related policies and published during the period 1990-2016 in ten of the most relevant entrepreneurship journals. The results of the analysis show that inclusion, employment and regulation-related papers have largely dominated the research in the field, evolving from an initial classical approach about the relationship between entrepreneurship and employment to a wider and multidisciplinary perspective, including the relevance of management, geographies, and narrower topics such as agglomeration economics or internationalization instead of previous generic sectorial approaches. Overall, the text mining analysis reveals how entrepreneurship policy research has gained increasing attention and has become both more open, with a growing cooperation among researchers from different affiliations; and more sophisticated, with concepts and themes that moved forward the research agenda closer to the priorites of policies implementation |
| Keywords: | Text mining; Cluster analysis; Entrepreneurship policy; Entrepreneurship Research |
| JEL: | L26 |
| Date: | 2019–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:96014&r=all |
| By: | Dan Cao (Georgetown University); Erick Sager (Federal Reserve Board); Henry Hyatt (US Census Bureau); Toshihiko Mukoyama (Georgetown University) |
| Abstract: | This paper analyzes firm growth along two margins: the extensive margin (adding more establishments) and intensive margin (adding more workers per establishment). We utilize administrative datasets to document the behavior of these two margins in relation to changes in the U.S. firm size distribution. Between 1990 and 2015, we find that the significant increase in average firm size was driven primarily by the expansion along the extensive margin, particularly in superstar firms. We develop a general equilibrium model of endogenous innovation that features both extensive and intensive margins of firm growth. We estimate the model to uncover the fundamental forces that caused the changes over this time period through the lens of our model. We find that, over time, the cost of innovations that lead to new establishments has declined for firms who are innovative in that dimension. Meanwhile, the duration that a firm can enjoy high growth through such innovation became shorter, and firm entry became more costly. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:1484&r=all |
| By: | Vincenzo Quadrini (USC); Qi Sun (Shanghai University of Finance and Economics); yicheng wang (University of Oslo) |
| Abstract: | In this paper we ask the question of whether the managerial and organizational inputs of entrepreneurs enhance the efficiency of their businesses. We ask this question empirically using registry data from Norway. To identify the managerial skills of the entrepreneur (human capital) we explore how the productivity of the business changes after the premature death of the entrepreneur. We find that, if the entrepreneur is wealth-rich, the productivity of the business falls substantially (close to 40%) after the entrepreneur's death. This supports the view that entrepreneurs’ human capital adds value to the business. But why are the entrepreneurial skills only important for wealth-rich entrepreneurs? The empirical analysis reveals other interesting patterns. New firms founded by wealth-rich entrepreneurs are 40% more productive and they have twice higher capital compared to those founded by wealth-poor entrepreneurs. Furthermore, rich entrepreneurs tend to allocate more of their wealth in the business and hold more shares of the business. These findings show that the wealth of the entrepreneur plays an important role also for the financial structure of the business. Motivated by these empirical findings, we construct a quantitative structural model that is capable of capturing these patterns. In the model, risk-averse entrepreneurs can invest in financial assets and choose to run private businesses in an incomplete market environment. They face possible credit constraints and are heterogeneous in managerial human capital. We study how the entrepreneurs' human capital affects entry, exit, portfolio composition and the consequent macroeconomic implications. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:1155&r=all |
| By: | Roberto Gabriele; Andrea Mazzitelli; Giuseppe Espa; Maria Michela Dickson |
| Abstract: | The paper presents an empirical analysis of the effect of formal network agreements on growth of firm in Italy in the years 2011-2013. The theoretical background is given by evolutionary theories that assign a key role in determining the ability of firms to capture business opportunities to internal capabilities and to external knowledge and capabilities. We suggest that firms establishing formal relationships with other firms can extend the “set of things that they are able to do†–the set of capabilities– so that they are able to capture opportunities and grow. The study is based on a novel database of Italian firms that matches networked firms in year 2012 with firms that did not sign a formal network agreement but possess similar structural characteristics. In order to deal with possible self-selection phenomenon, we use difference-in-differences regression models to assess the effect on growth of belonging to a formal network agreement. Moreover, to study the effect of characteristics of network we employ two stage Hackman regression models. Results show that networked firms have a higher growth rate and that the size of the network plays a role. Results are in line with the evolutionary interpretation and suggest that formal network agreement can function as long-range antennas for firms that are more constrained from the geographical point of view. These agreements allow to acquire capabilities and knowledge of the market that allow firms to expand their economic activity. |
| Keywords: | Collaboration agreements, Difference in differences, firm growth |
| JEL: | D22 L25 M21 L52 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwprg:2019/16&r=all |
| By: | Aubhik Khan (Ohio State University); Julia Thomas (Ohio State University); Tatsuro Senga (Queen Mary University of London) |
| Abstract: | We develop a model with endogenous entry and exit in an economy subject to non-stationary shocks to aggregate total factor productivity. Firms exhibit a life-cycle consistent with microeconomic data, and our model reproduces key moments of the empirical firm age and size distribution. In this setting, persistent shocks to trend growth can drive long term reductions in business formation. The economic consequences of a persistent decline in entry grow over time and, together with "wait-and-see" effects on aggregate capital investment, can compound and protract a productivity slowdown. We apply our model to understanding the last decade of U.S. economic activity, an episode marked by slow GDP growth and persistently low entry rates and business fixed investment in the aftermath of the Great Recession. Firms vary in the permanent and transitory components affecting their productivity and in their capital stocks, and their capital adjustments are subject to one period time-to-build, alongside convex and nonconvex costs. Thus, the economy's aggregate state includes a distribution of firms over productivity and capital, and changes in this distribution have a persistent influence on economic activity. Epstein-Zin preferences and a time-varying relative price of capital goods combine to accommodate countercyclical risk premia capable of driving large changes in firm values. Following a persistent shock to trend growth, equilibrium movements in firms' stochastic discount factors imply long-run reductions in the value of entry. The resulting declines in new business formation propagate the shock's effects on investment and GDP, slowing aggregate recovery. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:1453&r=all |
| By: | Enghin Atalay (University of Wisconsin, Madison); sarada sarada (UNIV OF WISCONSIN-MADISON) |
| Abstract: | Using the text of vacancy postings from 1940 to 2000, we examine the characteristics of firms which hire for newly emerging and soon-to-be disappearing work practices. To do so, we classify job titles as emerging or disappearing according to the years in which they appear. We verify that emerging work involves higher skill levels and is closer to the technological frontier --- qualities inherent to innovation. We find that, among the set of publicly listed firms, those which post ads for emerging work tend to be younger, more R&D intensive, and have higher future sales growth. Among privately held firms, those which post ads for emerging work are more likely to go public in the future. We then explore heterogeneity in the job vintage-firm performance relationship according to jobs that are in product-related technical fields versus in business related non-technical fields. New technological work correlates with R&D intensity and future sales growth, while survival and publicly traded status is more closely related to having newer vintages of business-related non-technological jobs. Our measures of firm innovativeness can be constructed for all employers, and are not limited to publicly traded firms or to industries in which R&D spending and patenting are prevalent. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:484&r=all |
| By: | Chang-Tai Hsieh (University of Chicago); Munseob Lee (University of California San Diego); Yongseok Shin (Washington University in St. Louis) |
| Abstract: | A business group or conglomerate is a group of firms owned and operated by a common source of control. Business groups typically span multiple industries and countries, and they are dominant actors in many developed and developing economies. Despite their prevalence and economic importance, they have been subjected to very little economic research. The overarching theme of our proposed research is the following questions: (1) why is a business group formed—which extends the theory of the firm; (2) whether or not business groups have positive impact on allocative efficiency both at the intensive margin (allocation of resources across firms/establishments) and at the extensive margin (entry and exit of firms/establishments), especially in the presence of the agency problem between controlling shareholders and ``outside’’ shareholders; (3) whether or not the potential gains from better resource allocation within business groups come at the expense of other firms not belonging to the groups, for example because of distortionary market power; (4) whether or not the presence of dominant business groups can be a destabilizing force for the macroeconomy that amplifies firm/sector-specific shocks. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:550&r=all |
| By: | Iqbal, Muhammad; Alam Kazmi, Syed Hasnain; Manzoor, Dr. Amir; Rehman Soomrani, Dr. Abdul; Butt, Shujaat Hussain; Shaikh, Khurram Adeel |
| Abstract: | In today's world the data is considered as an extremely valued asset and its volume is increasing exponentially every day. This voluminous data is also known as Big Data. The Big Data can be described by 3Vs: the extreme Volume of data, the wide Variety of data types, and the Velocity required processing the data. Business companies across the globe, from multinationals to small and medium enterprises (SMEs), are discovering avenues to use this data for their business growth. In order to bring significant change in businesses growth the use of Big Data is foremost important. Nowadays, mostly business organization, small or big, wishes valuable and accurate information in decision-making process. Big data can help SMEs to anticipate their target audience and customer preferences and needs. Simply, there is a dire necessity for SMEs to seriously consider big data adoption. This study focusses on SMEs due to the fact that SMEs are backbone of any economy and have ability and flexibility for quicker adaptation to changes towards productivity. The big data holds different contentious issues such as; suitable computing infrastructure for storage, processing and producing functional information from it, and security and privacy issues. The objective of this study is to survey the main potentials & threats to Big Data and propose the best practices of Big Data usage in SMEs to improve their business process. |
| Keywords: | SME; Big Data; Efficieny; Analytics; Competitive Advantage |
| JEL: | C8 M1 M15 |
| Date: | 2018–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:96034&r=all |
| By: | Amaeshi, Kenneth; Adi, Bongo; Ikiebey, Godson |
| Abstract: | This study explores how small business owners talk about their tax responsibility, especially in non-enabling institutional contexts. It identifies two main types of tax responsibility discourses amongst these business owners: (1) duty-based and (2) rights-based. The duty-based talks see taxation primarily as the citizens’ responsibility to governments, which should always be fulfilled unconditionally, while rights-based talks see taxation primarily as the government’s responsibility to citizens, which should be fulfilled first, in order for the government to earn the trust of citizens for higher tax compliance. Further analyses reveal that these talks are anchored on four common discursive themes – i.e. socio-economic development, legal, moral, and philanthropic themes, which business owners respond to in different ways. The paper argues that understanding these diverse responses will help tax regulators respond to taxpayers’ attitudes effectively. |
| Keywords: | Economic Development, Finance, Governance, |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:idq:ictduk:14701&r=all |
| By: | Modou Mar (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes, UGA UFR FEG - Université Grenoble Alpes - Faculté d'Économie de Grenoble - UGA - Université Grenoble Alpes); Nadine Massard (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes, UGA UFR FEG - Université Grenoble Alpes - Faculté d'Économie de Grenoble - UGA - Université Grenoble Alpes) |
| Abstract: | We analyze financial markets in which agents face differential constraints on the set of assets in which they can trade. In particular, the assets available to each agent span a partition of the state space, which can be strictly coarser than the partition spanned by the assets available in the market. We first show that the existence of differential constraints has an impact on prices and allocations as compared to a complete financial market with unconstrained agents. We consider the implications for survival, taking the work of Blume and Easley (2006) as a starting point. We show that whenever agents have identical correct beliefs and equal discount factors, and their partitions are nested, all agents survive. When agents have heterogeneous beliefs, differential constraints may allow agents with wrong beliefs to survive. Provided constraints are relevant (in a sense we define more precisely), the condition for an agent to survive is that his survival index is at least as large as that of the agents with finer partitions. We also study the impact of deregulation (an increase in the set of assets available to some agents). Unless the agent can adopt beliefs that are closer to the truth on the newly refined partition than those of less constrained agents, increasing his opportunities for trade might harm his chances for survival. |
| Keywords: | Conditional Difference-in-Difference,Cluster Policy,Multiple Treatments,SMEs,Policy Evaluation |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02282971&r=all |