nep-ent New Economics Papers
on Entrepreneurship
Issue of 2019‒12‒02
twenty-one papers chosen by
Marcus Dejardin
Université de Namur

  1. Unintended side effects: stress tests, entrepreneurship, and innovation By Sebastian Doerr
  2. Former Communist Party Membership and Present-Day Entrepreneurship in Central and Eastern Europe By Ivlevs, Artjoms; Nikolova, Milena; Popova, Olga
  3. Emotions and entrepreneurship education: State of the art and future research agenda By Pérez, Víctor Centeno; Kansikas, Juha
  4. Training, Human Capital, and Gender Gaps in Entrepreneurial Performance By Brixiova, Zuzana; Kangoye, Thierry
  5. Youth Drain Entrepreneurship and Innovation By Massimo Anelli; Gaetano Basso; Giuseppe Ippedico; Giovanni Peri
  6. Collaborative Innovation Blocs – A Meso Perspective to Achieve Antifragility By Elert, Niklas; Henrekson, Magnus
  7. Linking opportunity types and value creation: A relational analysis of entrepreneurship in war-affected communities. By Castellanza, Luca
  8. Technical Efficiency Analysis Of Indonesian Small And Micro Industries: A Stochastic Frontier Approach By Hery Purnomo Tunggal; Tati Suhartati Joesron
  9. Innovation and Entrepreneurs’ Subjective Well-being The mediation effect of job satisfaction and satisfaction with work-life balance. By Jiequn Liu; Francis Munier
  10. The Optimal Taxation of Business Owners By Phelan, Tom
  11. Gender and Corporate Success: An Empirical Analysis of Gender-Based Corporate Performance on a Sample of Asian Small and Medium-Sized Enterprises By Taghizadeh-Hesary, Farhad; Yoshino, Naoyuki; Fukuda, Lisa
  12. Early-Stage Business Formation: An Analysis of Applications for Employer Identification Numbers By Kimberly Bayard; Emin Dinlersoz; Timothy Dunne; John Haltiwanger; Javier Miranda; John Stevens
  13. Do Local Bank Branches Reduce SME Credit Constraints? Evidence from Public-Private Bank Interaction By Gustafsson, Anders; Manduchi, Agostino; Stephan, Andreas
  14. Challenges in Implementing the Credit Guarantee Scheme for Small and Medium-Sized Enterprises: The Case of Viet Nam By Dang, Le Ngoc; Chuc, Anh Tu
  15. Impacts of industrial and entrepreneurial jobs on youth: 5-year experimental evidence on factory job offers and cash grants in Ethiopia By Blattman, Chris; Franklin, Simon; Dercon, Stefan
  16. The impact of international financial institutions on small and medium enterprises: The case of EIB lending in Central and Eastern Europe By Gereben, Áron; Rop, Anton; Petriček, Matic; Winkler, Adalbert
  17. Structural Change in Firm Dynamics: From Inter-Firm Network and Geospatial Perspectives By Gee Hee HONG; OGURA Yoshiaki; SAITO Yukiko
  18. Early Individual Stakeholders, First Venture Capital Investment, and Exit in the UK Startup Ecosystem By Albert Banal-Estañol; Inés Macho-Stadler; Jonás Nieto-Postigo; David Pérez-Castrillo
  19. Lending a Hand: How Small Black Businesses Supported the Civil Rights Movement By Louis A. Ferleger; Matthew Lavallee
  20. Regional policies for Italian innovative start-ups By Giuseppe Albanese; Raffaello Bronzini; Luciano Lavecchia; Giovanni Soggia
  21. The Role of Subsidies in the Innovation Policy Mix - The Case of the Supporting Industry Program in Japan (Japanese) By SUZUKI Jun

  1. By: Sebastian Doerr
    Abstract: Post-crisis stress tests have helped to enhance financial stability and to reduce banks' risk-taking. In order to quantify their overall impact, regulators have turned to evaluating the effects of stress tests on financing and the real economy. Using the U.S. as a laboratory, this paper shows that stress tests have had potentially unintended side effects on entrepreneurship and innovation at young firms. Banks subject to stress tests have strongly cut small business loans secured by home equity, an important source of financing for entrepreneurs. Lower credit supply has led to a relative decline in entrepreneurship during the recovery in counties with higher exposure to stress tested banks. The decline has been steeper in sectors with a higher share of young firms using home equity financing, i.e. where the reduction in credit hit hardest. Counties with higher exposure have also seen a decline in patent applications by young firms. I provide suggestive evidence that the decline in credit has negatively affected labor productivity, reflecting young firms' disproportionate contribution to growth. My results do not imply that stress tests reduce welfare, but highlight a possible trade-off between financial stability and economic dynamism. The effects of stress tests on entrepreneurship should be taken into account when evaluating their effectiveness.
    Keywords: stress tests, small business lending, entrepreneurship, innovation, productivity slowdown
    JEL: G20 G21 L26
    Date: 2019–11
  2. By: Ivlevs, Artjoms (University of the West of England, Bristol); Nikolova, Milena (University of Groningen); Popova, Olga (Leibniz Institute for East and Southeast European Studies (IOS))
    Abstract: After the collapse of Communism in Central and Eastern Europe, former party members were particularly likely to start businesses and become entrepreneurs. However, it remains unclear whether this entrepreneurial activity was driven by the resources, information and opportunities provided by former party membership or because people with specific individual attributes were more likely to become party members (self-selection). This study is the first to separate the causal effect of former Communist party membership from self-selection. Using individual-level Life in Transition–III survey and instrumental variables analysis, we find that, in Central and Eastern European countries, membership of former Communist party has facilitated business set-up but not business longevity. Our results also suggest evidence of negative self-selection, meaning that people who joined the former ruling party tended have fewer of the traits associated with entrepreneurship such as motivation, risk tolerance, and entrepreneurial spirit. We show that former Communist party membership still matters for business practices, business ethics, and the nature of doing business in transition economies.
    Keywords: communism, communist party, elite networks, entrepreneurship, post-socialist countries
    JEL: L26 P20 P31
    Date: 2019–11
  3. By: Pérez, Víctor Centeno; Kansikas, Juha
    Abstract: Entrepreneurship education holds the potential to mitigate unemployment and boost prosperity, yet emotions, one of its sources of strength, remain underutilized. There is a strong consensus that emotions are tightly linked to learning processes, and vice versa. Across entrepreneurship education, the role of emotions as learning drivers is acknowledged but barely exploited. Following a systematic and reflective approach, the primary goal of this article is to examine the state of the art of the empirical evidence that touches upon the subject of entrepreneurship education and emotions. From the analysis undertaken, three relevant findings arise: 1) the research within the field has placed emphasis more on the by-products of emotions, such as emotional competencies, affective forecasting, emotional events as relevant in the execution of action-based entrepreneurship education schemes, and less on the determination and underpinnings of specific emotions critical to learning in entrepreneurship education; 2) despite the learning potential of emotions, the pedagogical use of emotions in entrepreneurship education remains neglected; and 3) there is an exclusive focus on the emotions on the student side at the expense of entrepreneurship educators' emotions, which are tremendously relevant. In the same vein, the study proposes a future research strategy based on three pillars: 1) identification of the specific emotions linked to entrepreneurial learning from both the student and teacher viewpoint; 2) the need to explore unconventional paths to integrate the strengths of emotions and emotion regulation into the teaching and learning of entrepreneurship; and 3) the incorporation of new technologies and methodologies to measure and take advantage of emotions to ehnance entrepreneurial learning among existing entrepreneurship education programmes.
    Keywords: entrepreneurship education,emotions and entrepreneurship,entrepreneuriallearning
    JEL: L26 M13 O33
    Date: 2019
  4. By: Brixiova, Zuzana (University of Economics Prague); Kangoye, Thierry (African Development Bank)
    Abstract: In the aftermath of the global financial crisis, policymakers have been increasingly striving to support female entrepreneurship as a possible growth driver. This paper contributes to reconciling mixed findings in the literature on the effectiveness of entrepreneurial training with an analysis that links training and human capital, including tertiary education and non-cognitive skills, with gender gaps in entrepreneurial performance in Africa. We have found that while financial literacy training directly benefits men, it does not raise the sales level of women entrepreneurs. Instead, tertiary education has a direct positive link with the performance of women. Consistent with our theoretical model where different skills are complements, tertiary education can act as a channel that makes training effective. Regarding non-cognitive skills, evidence shows that women entrepreneurs who are tenacious achieve stronger sales performance. Our results underscore the importance of incorporating tertiary education and entrepreneurial training programs focused on a balanced set of skills, including non-cognitive skills, among policies for women entrepreneurs.
    Keywords: female entrepreneurship, training, non-cognitive skills, tertiary education
    JEL: L53 O12 J4
    Date: 2019–11
  5. By: Massimo Anelli (Bocconi Univerity); Gaetano Basso (Bank of Italy); Giuseppe Ippedico (University of California, Davis); Giovanni Peri (University of California, Davis)
    Abstract: Migration outflows, especially of young people, may deprive an economy of entrepreneurial energy and innovative ideas. We exploit exogenous variation in emigration from Italian local labor markets to show that between 2008 and 2015 larger emigration flows reduced firm creation. The decline affected firms owned by young people and innovative industries. We estimate that for every 1,000 emigrants, 100 fewer young-owned firms were created cumulatively over the whole period. A simple accounting exercise shows that about 60 percent of the effect is generated simply by the loss of young people; the remaining 40 percent is due to a combination of selection of emigrants among highly entrepreneurial people, negative spillovers on the entrepreneurship rate of locals, and negative local firm multiplier effect.
    Keywords: emigration, demography, brain drain, entrepreneurship, innovation
    JEL: J61 H7 O3 M13
    Date: 2019–10
  6. By: Elert, Niklas (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: We present the theory of the collaborative innovation bloc (CIB), an evolving system of innovation within which activity takes place over time. We show how the application of the CIB perspective can help make institutional and evolutionary economics more concrete, relevant, and persuasive, especially regarding policy prescriptions. Such policy actions should strive to improve the antifragility of CIBs and the economic system as a whole, thus enabling individual CIBs and the broader economic system to thrive when faced with macroeconomic shocks. With this in mind, we develop diagnostic tools to evaluate antifragility at the micro, meso, and macro levels before identifying a set of institutional areas where reform can be undertaken to improve antifragility.
    Keywords: Evolutionary economics; Entrepreneurship; Innovation; Institutional Economics; Institutions; Schumpeterian entrepreneurship
    JEL: B53 D20 G32 L23 L26 O33
    Date: 2019–11–20
  7. By: Castellanza, Luca
    Abstract: Are entrepreneurial opportunities objectively discovered or subjectively created? In a relational ontology, the question is moot. Through an ethnography of 104 entrepreneurs operating subsistence, agricultural, and non-farm activities in war-affected African communities, we show that discovery and creation processes are nothing but ideal types differing in the interactions between the entrepreneur and her context. Surprisingly, we find that contextual rigidity determines not only the availability of different opportunity types but also the value-creating potential of each opportunity. The study bridges contrasting perspectives on the nature of entrepreneurial opportunities and introduces contextual dynamics linking opportunity types and value creation.
    Date: 2019–01–23
  8. By: Hery Purnomo Tunggal (Master of Applied Economics, Padjadjaran University); Tati Suhartati Joesron (Master of Applied Economics, Padjadjaran University)
    Abstract: Indonesian small and micro industries (SMIs) grow rapidly, followed by the shifting of the agricultural sector to manufacturing sector. However, its low contribution to national economy indicates there are encountered problems of productivity and efficiency. The goal of this study is analyzing technical efficiency of Indonesian SMIs categorized by size and five subsectors classified by Indonesia Standard Industrial Classification (ISIC). This study examines crosssectional data from survey of Indonesian small and micro industries (VIMK) in 2014 estimated statistically using Stochastic Frontier Analysis (SFA). The results show that SMIs are labor intensive business, yet it faces diseconomies of scale. Hence, the role of capital increase should not be ignored. The key findings are mainly female ownership in the food processing industry positively contribute to efficiency improvement, the greater the sales the more efficient the business will function, younger entrepreneur is more efficient to manage several subsectors and access to financial sources positively contribute to efficiency improvement in clothing industry. Empowerment strategy to improve technical efficiency of SMIs should emphasis on intensively vocational/entrepreneurial training particularly for female and younger entrepreneurs, promotion for network building activity and deregulating microcredit scheme, especially for clothing industry.
    Keywords: small and micro industries, efficiency, stochastic frontier analysis
    JEL: L0
    Date: 2019–11
  9. By: Jiequn Liu; Francis Munier
    Abstract: The aim of the article is to study the relationship between the subjective well-being of the entrepreneur and innovation according to the mediation effect of job satisfaction and satisfaction with work-life balance. we define the concepts and interpret theoretical contributions to identify our assumptions. The research design based on correlational relationship, mediation effect and interaction effect to explore relationship among innovation, life satisfaction, job satisfaction and satisfaction with work-life balance of the entrepreneur.
    Keywords: entrepreneur, subjective well-being, innovation, work life balance, job satisfaction.
    JEL: M13 O31 L29
    Date: 2019
  10. By: Phelan, Tom (Federal Reserve Bank of Cleveland)
    Abstract: Business owners in the United States are disproportionately represented among the very wealthy and are exposed to substantial idiosyncratic risk. Further, recent evidence indicates business income primarily reflects returns to the human (rather than financial) capital of the owner. Motivated by these facts, this paper characterizes the optimal taxation of income and wealth in an environment where business income depends jointly on innate ability, luck, and the accumulated past effort exerted by the owner. I show that in (constrained) efficient allocations, more productive entrepreneurs typically bear more risk and that the associated stationary distributions of income, wealth, and firm size exhibit the thick right (Pareto) tails observed in the data. Finally, when owners may save in a risk-free bond and trade shares of their business, I show that the optimal linear taxes in this environment call for double taxation of firm profits, at both the firm and the personal income level, and for a tax/subsidy on wealth that may assume either sign.
    Keywords: Optimal taxation; moral hazard; optimal contracting; human capital;
    JEL: D61 D63 E62
    Date: 2019–11–19
  11. By: Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Yoshino, Naoyuki (Asian Development Bank Institute); Fukuda, Lisa (Asian Development Bank Institute)
    Abstract: Within a patriarchal society, women are placed in a precarious societal positioning that leads to a prevalence of gender inequality in education, financial literacy, and access to finance. In the context of Asia, where small and medium-sized enterprises (SMEs) are the backbone of most Asian economies and the financial sector is dominated by banks, women in entrepreneurship are susceptible to facing greater credit constraints relative to their male counterparts, which can compromise their corporate performance. We investigate whether there is a significant association between gender and success or failure of SMEs. Using a statistical analysis technique (principal component analysis) and running econometrics regressions on a random sample of 1,492 exporter SMEs from Iran, the research answers the question: is it plausible to conclude that female-owned SMEs are bound for lower corporate performance relative to those of male counterparts? Empirical results show that indeed, despite showing a good leverage status, female-owned SMEs perform lower relative to male counterparts as they have a higher default ratio and lower profitability, liquidity, and coverage. We provide policy suggestions, such as establishment of credit guarantee funds for easing the female-owned SMEs’ access to finance in Asia. Implementation of supportive policies for female-owned SMEs will have significant contribution to economic growth, employment, and ultimately, to gender equality.
    Keywords: economics of gender; small and medium-sized enterprises; corporate performance of SMEs; financial literacy gap; access to finance; gender inequality; financial inclusion
    JEL: G21 G32 J16
    Date: 2019–03–26
  12. By: Kimberly Bayard; Emin Dinlersoz; Timothy Dunne; John Haltiwanger; Javier Miranda; John Stevens
    Abstract: This paper reports on the development and analysis of a newly constructed dataset on the early stages of business formation. The data are based on applications for Employer Identification Numbers (EINs) submitted in the United States, known as IRS Form SS-4 filings. The goal of the research is to develop high-frequency indicators of business formation at the national, state, and local levels. The analysis indicates that EIN applications provide forward-looking and very timely information on business formation. The signal of business formation provided by counts of applications is improved by using the characteristics of the applications to model the likelihood that applicants become employer businesses. The results also suggest that EIN applications are related to economic activity at the local level. For example, application activity is higher in counties that experienced higher employment growth since the end of the Great Recession, and application counts grew more rapidly in counties engaged in shale oil and gas extraction. Finally, the paper provides a description of new public-use dataset, the “Business Formation Statistics (BFS),” that contains new data series on business applications and formation. The initial release of the BFS shows that the number of business applications in the 3rd quarter of 2017 that have relatively high likelihood of becoming job creators is still far below pre-Great Recession levels.
    JEL: C81 E17 L26 M13
    Date: 2018–12
  13. By: Gustafsson, Anders (Research Institute of Industrial Economics (IFN)); Manduchi, Agostino (Jönköping International Business School); Stephan, Andreas (Jönköping International Business School)
    Abstract: In the past few decades, commercial banks have substantially reduced the number of their branch offices. We address the question of whether or not the increased distance from the lenders correspondingly faced by many small and medium sized enterprises (SMEs) translates into a lower volume of loans. We use a unique dataset on loans from a state owned Swedish bank designed to support credit-constrained SMEs and interact their loan portfolio with the number of nearby commercial bank offices at the firm level along with an IV strategy to account for endogeneity. The estimation results strongly indicate that a larger number of local bank offices increases the local credit supply, and decreases the credit constraints of nearby SMEs.
    Keywords: Credit constraints; Relationship banking; State owned bank; Small business
    JEL: G28 H81 L26 L52 O38
    Date: 2019–11–20
  14. By: Dang, Le Ngoc (Asian Development Bank Institute); Chuc, Anh Tu (Asian Development Bank Institute)
    Abstract: Access to credit is still one of the greatest obstacles to the growth of small and medium-sized enterprises (SMEs) in Viet Nam. To date, only 39% of SMEs have bank loans. To cater to SMEs’ need for financial sources, especially formal sources such as the banking system, the Vietnamese government has implemented a large number of supporting programs, including the credit guarantee scheme (CGS) for SMEs, which it established in 2001. Through collecting, synthesizing, and analyzing data, we aim to study the challenges involved in implementing CGSs for SMEs as well as the causes of their poor performance. The fundamental reasons we find include the strict and impractical conditions for issuing credit guaranteed loans; the lack of adequate professional competence of staff involved in the credit guaranteeing task; the fragmented relationship between the credit institution and the CGS; and the lack of a credit database platform that facilitates access to finance for SMEs by providing comprehensive and reliable creditworthiness.
    Keywords: credit for SMEs; Vietnamese business environment; SMEs in Viet Nam
    JEL: E51 G23 G28 H81
    Date: 2019–04–08
  15. By: Blattman, Chris; Franklin, Simon; Dercon, Stefan
    Abstract: We study two interventions for underemployed youth across five Ethiopian sites: a $300 grant to spur self-employment, and a job offer to an industrial firm. Despite significant impacts on occupational choice, income, and health in the first year, after five years we see nearly complete convergence across all groups and outcomes. Short run increases in productivity and earnings from the grant dissipate as recipients exit their micro-enterprises. Adverse effects of factory work on health found after one year also appear to be temporary. These results suggest that one-time and one-dimensional interventions may struggle to overcome barriers to wage- or self-employment.
    Date: 2019–04–19
  16. By: Gereben, Áron; Rop, Anton; Petriček, Matic; Winkler, Adalbert
    Abstract: Does IFI funding provide support to SMEs receiving such funding? We assess the impact of funding by the European Investment Bank (EIB) on the performance of 5,223 SMEs in eight countries of Central and Eastern Europe (CEE) during 2008-2014. Our results, derived from propensity score matching and difference-in-difference estimation exercises, indicate that EIB lending has a positive effect on employment, revenues and profitability. This positive effect holds irrespective of the economy entering a prolonged crisis or a seeing a recovery in the years following EIB funding. Overall, our results provide support to the view that IFI funding makes a difference in a period characterized by financial and economic turmoil.
    Keywords: International financial institutions,SMEs,impact,financial crisis
    JEL: G01 H81 L25
    Date: 2019
  17. By: Gee Hee HONG; OGURA Yoshiaki; SAITO Yukiko
    Abstract: This paper examines how unprecedented population aging affects firm dynamics in Japan, using the panel data from 2007 to 2016. Our analysis confirms that during this time, average firm age increased due to low rates of firm entry and exit. Average age of CEOs also increased with population aging and low turnover of CEOs. Aging of firms and CEOs is more salient in rural areas than urban areas. Furthermore, as voluntary firm exits are positively correlated with the age of CEOs, more exits are likely to occur as population aging intensifies. In rural areas, low density of firms may imply higher search costs in finding new transaction partners. Firm exit induced by exit of transaction partners is more likely to happen for rural areas. Our results suggest that policies aimed at supporting business succession and addressing increases in voluntary exists should cater to the lifecycle of firms as well as the geographic location of firms.
    Date: 2019–11
  18. By: Albert Banal-Estañol; Inés Macho-Stadler; Jonás Nieto-Postigo; David Pérez-Castrillo
    Abstract: This paper analyzes the effects of the individual stakeholders in the early stages of a startup on the perfomance and eventual success of the startup. We show first how the "quantity" and "quality" of founders, directors and individual investors affect the first VC investment, in terms of the type, quantity and quality of the first VC investors. Subsequently, we show that the characteristics of the early stakeholders also affect eventual startup exit and success, both directly as well as indirectly, through the first VC investment. Thus some of the effects that may have been attributed to VC investors should in fact be attributed to the individual stakeholders. As a result, one may draw wrong conclusions about the effects of first VC investment if the pre-institutional features are not included in the analysis.
    Keywords: startups, venture capital, founders, individual investors
    JEL: M13 G32 G24
    Date: 2019–11
  19. By: Louis A. Ferleger (Boston University); Matthew Lavallee (Boston University)
    Abstract: A large literature has detailed the seminal roles played in the Civil Rights Movement by activists, new political organizations, churches, and philanthropies. But black-owned businesses also provided a behind-the-scenes foundation for the movement’s success. Many black-owned businesses operated across the South because they provided goods and services to black customers who could not attain them from white businesses because of segregation. These small business owners very often played roles in civic matters that their counterparts in larger firms did not. Their civic participation and support contributed far more to the potential for political progress than scholars have recognized. Some accounts of the Montgomery Bus Boycott, for example, underestimate the significance of the role played by Montgomery`s community of black-owned businesses, from taxis to pharmacies. Examples from the Civil Rights Movement in Mississippi also illustrate the importance of local small businesses: black business owners were on the front lines, resisting strong pressures from the white community. This paper analyzes these episodes and places them in the context of black-owned businesses in the United States in the 1950s and 1960s, albeit descriptively given the unevenness and unavailability of standardized statistics. It also traces the debates over “Black Capitalism†and how the decline of segregation led to dramatic reorganizations of black businesses.
    Keywords: American Political Economy, Black Capitalism, Civil Rights Movement, Small Businesses, African American Businesses, Civic Participation, Martin Luther King, Jr., Andrew Brimmer
    JEL: A13 A14 B15 B52 D29 D72 G18 G21 J15 J48 L11 L21 N12 N82 N92 P48
    Date: 2017–12
  20. By: Giuseppe Albanese (Bank of Italy); Raffaello Bronzini (Bank of Italy); Luciano Lavecchia (Bank of Italy); Giovanni Soggia (Bank of Italy)
    Abstract: This paper provides an overview of the regional policies for innovative start-ups implemented in Italy in the years 2012-2018. The data were gathered from a survey carried out by Bank of Italy branches in 2018, which were later updated using several other sources. The findings show that the Regions supported a significant number of projects (101, of which 75 focused only on innovative start-ups) and allocated a large volume of funds (€515 million, of which 340 for start-ups alone). The financial resources were allocated very differently across the Regions, with Lazio, Sardinia and the province of Trento allocating the largest amount of funds in per capita terms. This tends to reflect the policymakers’ preferences rather than differences in the economic structure of the geographical areas.
    Keywords: start-ups, regional policies, innovation policy, innovation
    JEL: H2 L5 R0 R3
    Date: 2019–10
  21. By: SUZUKI Jun
    Abstract: Policy makers today are increasingly aware of the concept of an innovation policy mix which employs multiple policy instruments based on specific goals. However, the effects of such policy mix are not fully explored. This paper focuses on the " Supporting Industry Program (Sapo-in) " which has been introduced by the Ministry of Economy, Trade and Industry (METI) since 2006 as the new generation industrial policy mix supporting SMEs in Japan. The objective is to evaluate the effects of "soft-support measures" (i.e. consulting, matching, intermediation, etc.) as well as "hard support" (subsidies). Our samples consist of four categories of SMEs; those who had a) applied for the subsidy but did not receive it, b) obtained a subsidy as a main contractor, and c) obtained a subsidy as a collaborator, and d) not applied for the subsidy but had very similar characteristics with the companies in a) ~ c). We employed the amount of sales per year, the number of personnel, and the number of patent applications as output indicators. The results show that soft support measures have some impact in terms of patenting while financial support has very limited direct effects. Based on these results we suggest that the real role of subsidies is the "priming water" which pumps SMEs up to entry into an innovation contest surrounding innovation.
    Date: 2019–10

This nep-ent issue is ©2019 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.