nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒01‒20
six papers chosen by
Marcus Dejardin
Université de Namur

  1. What is the Impact of Increased Business Competition? By Sonia Feliz; Chiara Maggi
  2. Who are business owners and what are they doing? By Jonathan Cribb; Helen Miller; Thomas Pope
  3. Defining and Measuring the Innovativeness of Firms By Giuliana Battisti; Paul Stoneman
  4. Networks, Start-up Capital and Women’s Entrepreneurial Performance in Africa: Evidence from Eswatini By Brixiová, Zuzana; Kangoye, Thierry
  5. Gender Differences in Equity Crowdfunding By Kovacs, Attila
  6. Contract Work at Older Ages By Katharine G. Abraham; Brad Hershbein; Susan Houseman

  1. By: Sonia Feliz; Chiara Maggi
    Abstract: This paper studies the macroeconomic effect and underlying firm-level transmission channels of a reduction in business entry costs. We provide novel evidence on the response of firms' entry, exit, and employment decisions. To do so, we use as a natural experiment a reform in Portugal that reduced entry time and costs. Using the staggered implementation of the policy across the Portuguese municipalities, we find that the reform increased local entry and employment by, respectively, 25% and 4.8% per year in its first four years of implementation. Moreover, around 60% of the increase in employment came from incumbent firms expanding their size, with most of the rise occurring among the most productive firms. Standard models of firm dynamics, which assume a constant elasticity of substitution, are inconsistent with the expansionary and heterogeneous response across incumbent firms. We show that in a model with heterogeneous firms and variable markups the most productive firms face a lower demand elasticity and expand their employment in response to increased entry.
    Date: 2019–12–13
  2. By: Jonathan Cribb; Helen Miller; Thomas Pope
    Abstract: Business owners have been the fastest-growing part of the UK labour force since at least 2000. Between 2000–01 and 2015–16, the number of employees grew by 15%, while selfemployment (including those operating as a sole trader or as a partner in a partnership) grew by 25% and the number of directors of companies with at most two directors more than doubled. The number of new businesses created in the UK between 2007–08 and 2015–16 was higher than in any other OECD country. This is an important labour market trend and is often hailed as a success because small businesses and start-ups are commonly viewed as the engines of growth. This is questionable in light of evidence that the UK has a long tail of low-productivity firms. However, to date, our understanding of business owners has been limited because they are not well captured in traditional survey data sources. Learning more about this group is crucial for understanding labour market trends better and informing public policy as it relates to business owners. In this report, we use the universe of business owners’ administrative tax records provided by HM Revenue and Customs (HMRC) to learn more about business owners and their businesses than has previously been possible using survey data. Specifically, using these data, this report documents the numbers, characteristics, incomes and business activities of business owner-managers in the UK. We track the same business owners over time – something that has not been possible before – and use this to analyse patterns of business start-up and closure and to explain substantial falls in sole trader incomes since 2008
    Keywords: self-employment, business ownership, entrepreneurship
    JEL: L26 J21 J31
    Date: 2019–08
  3. By: Giuliana Battisti; Paul Stoneman
    Abstract: In this paper an encompassing, output orientated, indicator of the innovativeness of firms which defines innovation as the successful exploitation of new ideas, is formalised as the contribution of innovative activity to firm profit growth and measured as the difference between growth in the (endogenously determined) nominal profits of the firm and an appropriately weighted sum of exogenously determined (i) growth in wage rates and (ii) inflation/demand shifts in the market for the firm’s output. The measure can be calculated for any firm using publicly available accounting data. For an unbalanced sample of 16,457 quoted firms over the period 1988-2012, operating in 39 sectors, and in 38 countries, the mean value of the innovativeness measure over the whole panel data set is estimated as 5.15% p.a. Statistically significant differences in innovative performance within and across countries, sectors and time are identified.
    Keywords: Firms, innovativeness, international, measurement
    JEL: O32
    Date: 2019–11
  4. By: Brixiová, Zuzana; Kangoye, Thierry
    Abstract: This paper analyzes the role of networks in the access of female entrepreneurs to start-up capital and firm performance in Eswatini, a country with one of the highest female unemployment rates in Africa. The paper first shows that higher initial capital is associated with better sales performance for both men and women entrepreneurs. Women entrepreneurs start their firms with smaller start-up capital than men and are more likely to fund it from their own sources, which reduces the size of their firm and sales level. However, women with higher education start their firms with more capital than their less educated counterparts. Moreover, women who receive support from professional networks have higher initial capital, while those trained in financial literacy more often access external funding sources, including through their networks.
    Keywords: networks,start-up capital,women’s entrepreneurship,multivariate analysis,Africa
    JEL: L53 O12
    Date: 2019
  5. By: Kovacs, Attila
    Abstract: Online peer-to-peer investment platforms are increasingly popular venues for entrepreneurs and investors to engage in financial transactions without the involvement of banks and loan managers. Despite their purported transparency and lack of bias, it is unclear whether social inequalities present in traditional capital markets transfer to these platforms as well, impeding their hoped revolutionary potential. In this paper we analyze nearly four years’ worth of data from one of the leading UK-based equity crowdfunding platforms. Specifically, we investigate gender-related differences in patterns of entrepreneurship, investment, and success. In agreement with offline trends, men have more activity on the platform. Yet, women entrepreneurs benefit of higher success rates in fundraising, a finding that mimics trends seen on some rewardsbased crowdfunding platforms. Surprisingly, we also find that female investors tend to choose campaigns that have lower success rates. Our findings contribute to a better understanding of gender-related discrepancies in success on the online capital market and point to differences in activity that are key factors in the apparent patterns of gender inequality.
    Date: 2018–11–07
  6. By: Katharine G. Abraham; Brad Hershbein; Susan Houseman
    Abstract: The share of workers who are self-employed rises markedly with age. Given policy concerns about inadequate retirement savings, especially among those with lower education, and the resulting interest in encouraging employment at older ages, it is important to understand the role that self-employment arrangements play in facilitating work among seniors. New data from a survey module fielded on a Gallup telephone survey distinguish independent contractor work from other self-employment and provide information on informal and online platform work. The Gallup data show that, especially after accounting for individuals who are miscoded as employees, self-employment is even more prevalent at older ages than suggested by existing data. Work as an independent contractor is the most common type of self-employment. Roughly one-quarter of independent contractors age 50 and older work for a former employer. At older ages, self-employment generally—and work as an independent contractor specifically—is more common among the highly educated, accounting for much of the difference in employment rates across education groups. We provide suggestive evidence that differences in opportunities for independent contractor work play an important role in the lower employment rates of less-educated older adults.
    JEL: J26 J41 J46
    Date: 2020–01

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