nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒02‒10
five papers chosen by
Marcus Dejardin
Université de Namur

  1. The Italian Startup Act: Empirical evidence of policy effects By Francesco Biancalani; Dirk Czarnitzki; Massimo Riccaboni
  2. The Role of Nonemployers in Business Dynamism and Aggregate Productivity By Pedro Bento; Diego Restuccia
  3. Migration and Imitation By Olena Ivus; Alireza Naghavi; Larry D. Qiu
  4. Product Innovation, Product Diversification, and Firm Growth: Evidence from Japan’s Early Industrialization By Serguey Braguinsky; Atsushi Ohyama; Tetsuji Okazaki; Chad Syverson
  5. Firming up the capital base of the Austrian business sector - Consolidating Austria’s business sector strengths and its social role in the face of new challenges By Dennis Dlugosch; Rauf Gönenç; Eun Jung Kim; Aleksandra Paciorek

  1. By: Francesco Biancalani; Dirk Czarnitzki; Massimo Riccaboni
    Abstract: Using a difference-in-difference approach this paper analyses the impact of the Italian Startup Act entered into force in December 2012. This law provides special benefits (e.g. tax incentives, public loan guarantees, tailor-made labor law, cuts to red tape and fees) for firms registered as “innovative startups” in Italy. This special legislation has been implemented by the Italian government to increase innovativeness of small and young enterprises by facilitating improved access to external capital and (high-skilled) labor. Consequently, our goal is to assess the impact of the policy on equity, debt and employment. Overall, we find that the Italian startup policy has met its primary objectives. The treated firms operating under this program show more capacity to collect equity and debt, and also achieve higher levels of employment than untreated, comparable firms.
    Keywords: start up, innovation policy, firm subsidies, small firms
    Date: 2020–01–17
  2. By: Pedro Bento; Diego Restuccia
    Abstract: A decline in the net entry rate of employer firms in the United States in the last decades, a decline in business dynamism, may explain the observed productivity slowdown. We consider the role of nonemployers, businesses without paid employees, in business dynamism and aggregate productivity. Despite the decline in the growth of employer firms, the total number of firms has increased since the early 1980s, which in the context of a standard model of firm dynamics implies an average annual growth of aggregate productivity of 0.26-0.39\%, over one quarter of the productivity growth in the data.
    Keywords: nonemployers, employer firms, business dynamism, productivity, TFP.
    JEL: O4 O51 E1
    Date: 2020–01–31
  3. By: Olena Ivus (Queen's University); Alireza Naghavi (University of Bologna); Larry D. Qiu (University of Hong-Kong)
    Abstract: This paper develops a North-South trade model with heterogeneous labour and horizontally differentiated products and compares the implications of two policies: Southern intellectual property rights (IPRs) and Northern immigration policy that aims to attract Southern talent as means of preempting imitation. Individuals self-select into becoming entrepreneurs and innovate (imitate) in the North (South). The likelihood of imitation depends on product quality, imitator’s ability, and strength of IPRs. Several interrelated channels of competition are identified. Allowing high-ability migration when IPRs protection in the South is weak shifts imitation to low-quality and innovation to high-quality products. The outcome is in stark contrast to the policy of strengthening IPRs, which limits low-quality imitation and encourages low-quality innovation. High-ability migration also increases the income of lowability entrepreneurs, as well as the average quality of products in the high-ability imitation sector in the South.
    Keywords: Intellectual propert yrights; High-skilled migration; Imitation; Innovation; Product quality; Entrepreneurability
    JEL: F22 O31 O34 J24 K37 O38
    Date: 2019–12–20
  4. By: Serguey Braguinsky; Atsushi Ohyama; Tetsuji Okazaki; Chad Syverson
    Abstract: We explore how firms grow by adding products. In contrast to most earlier work on the topic, our conceptual and empirical framework allows for separate treatment of product innovation (vertical differentiation) and diversification (horizontal differentiation). The market context is Japan’s cotton spinning industry at the turn of the last century. We find that introducing innovative products outside of the previously feasible set involves removing the “supply-side constraint” by investing in new types of machines and technologies. This process involves a high degree of uncertainty, however, so firms that take steps in this direction tend to first introduce innovative products on experimental basis. We show that conducting such experiments is a key to firm growth. It not only provides opportunities to capture the market in high-end vertically differentiated products when successful, but also facilitates horizontal differentiation of the firm’s products within its previous technical capabilities. In long-term outcomes over 20 years, the right tail of the firm size distribution becomes dominated by firms that were able to expand in both directions: moving first into technologically challenging vertically differentiated products, and then later applying their newly acquired high-end technical competence to horizontal expansion of their product portfolios.
    JEL: D2 L1 N6 N8 O3
    Date: 2020–01
  5. By: Dennis Dlugosch; Rauf Gönenç; Eun Jung Kim; Aleksandra Paciorek
    Abstract: While small- and medium sized firms in Austria are generally more productive, export more, and engage more in higher technology activities than in comparable countries, they need to adapt better to the knowledge economy to maintain their relative performance levels. The capital structure of Austrian SMEs are biased towards debt-financing and stronger equity, growth and venture capital markets would provide them with further resources for their long-term knowledge based investments. Skills shortages, in particular in advanced digital technologies, should be overcome. As around one third of all SMEs are up for ownership transmissions, ensuring successful business transfers will be crucial for maintaining the broad-based entrepreneurial dynamism. Meeting these challenges would also help to lift constraints on upscaling that many SMEs face and would provide the fruitful soil for future innovative activities.This Working Paper relates to the 2019 OECD Economic Survey of Austria ( nomic-snapshot/)
    Keywords: allowance for corporate equity, capital structure of SMEs, debt-financing, ownership transmissions, skill shortages
    JEL: E22 G30 G32 G38 G21 J11 J21
    Date: 2020–02–03

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