nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒02‒17
sixteen papers chosen by
Marcus Dejardin
Université de Namur

  1. The value orientation of entrepreneurs in challenging institutional contexts: Insights from a unique historical episode By Michael Wyrwich
  2. Do Temporary Demand Shocks have Long-Term Effects for Startups? By Hvide, Hans K.; Meling, Tom G.
  3. The Dynamics of High-Growth Firms : Evidence from Tunisia By Marcio,Cruz; Baghdadi,Leila; Arouri,Hassen
  4. Firm Growth through New Establishments By Dan Cao; Henry Hyatt; Toshihiko Mukoyama; Erick Sager
  5. Entrepreneurial Access to Finance in the US By Inessa Love
  6. Microentrepreneurship in Developing Countries By Seema Jayachandran
  7. Venture Capital Contracts By Ewens, Michael; Gorbenko, Alexander; Korteweg, Arthur
  8. Enterprising women in Southern Africa: When does land ownership matter? By Brixiová, Zuzana; Kangoye, Thierry; Tregenna, Fiona
  9. Effect of Stigmaon Women Entrepreneurship By Deepika Dixit; Anubha Shekhar Sinha
  10. Gender Bias in SME Lending : Experimental Evidence from Turkey By Alibhai,Salman; Donald,Aletheia Amalia; Goldstein,Markus P.; Oguz,Alper Ahmet; Pankov,Alexander; Strobbe,Francesco
  11. Does FDI benefit incumbent SMEs?: FDI spillovers and competition effects at the local level By Alexander C. Lembcke; Lenka Wildnerova
  12. The Nature of Sustainability Challenge in Small and Medium Enterprises and its Management By Jayasundara, JMSB; Rajapakshe, PSK; Prasanna, RPIR; Naradda Gamage, Sisira Kumara; Ekanayake, EMS; Abeyrathne, GAKNJ
  13. Global Challenges and Survival Strategies of the SMEs in the Era of Economic Globalization: A Systematic Review By Naradda Gamage, Sisira Kumara; Ekanayake, EMS; Abeyrathne, GAKNJ; Prasanna, RPIR; Jayasundara, JMSB; Rajapakshe, PSK
  14. The business angel portfolio under the European Angels Fund: An empirical analysis By Gvetadze, Salome; Pal, Kristian; Torfs, Wouter
  15. Accompagnement des stratégies collaboratives à l’international : Le cas des éco-PME By Mireille Héral; Karim Messeghem; Alexis Catanzaro
  16. Opportunity recognition by SME buyer: an approach by prototype By Dorian Boumedjaoud; Karim Messeghem

  1. By: Michael Wyrwich (University of Groningen and FSU Jena)
    Abstract: Previous research suggests that entrepreneurs value autonomy more than non-entrepreneurs do across countries and institutional contexts. However, most evidence exists for contexts with more or less entrepreneurship-facilitating and stable institutional framework conditions while we do not know whether this connection also exists in situations, in which entrepreneurs operate under challenging institutional conditions. This paper exploits a historical episode to first analyze a context where entrepreneurs faced massive institutional barriers and, second, a context marked by significant changes of the institutional framework conditions for entrepreneurship. In both contexts, entrepreneurs are challenged either by external resistance toward their activity or by uncertainty regarding the future prospects of their endeavor. Our results show an above-average endorsement of autonomy as an important societal value among people that were entrepreneurs in the autocratic anti-entrepreneurial regime and those respondents that started or planned to start an own venture during institutional upheaval. The findings of our analysis suggest that the mark-up entrepreneurs reveal with respect to valuing autonomy found in the previous literature is not an artefact of stable entrepreneurship-facilitating institutional framework conditions.
    Keywords: Entrepreneurship, Value orientation, Autonomy, Institutions
    JEL: L26 P20 Z10
    Date: 2020–02–11
  2. By: Hvide, Hans K. (University of Bergen, Department of Economics); Meling, Tom G. (University of Bergen, Department of Economics)
    Abstract: Using detailed procurement auctions and register data from Norway, we find that temporary demand shocks have long-term effects on startup outcomes. Startups that win a procurement auction are more than 20% larger in terms of sales and employment than startups that narrowly lose an auction, even several years after the contract work ends. For mature firms, we do not find long-term effects of auction wins. The persistent effects of temporary demand shocks for startups appear driven by learning-by-doing effects and by winning startups undertaking irreversible investments. The results point to the importance of path dependence in shaping the long-term outcomes of startups.
    Keywords: Entrepreneurship; Path-dependency; Productivity; Startups
    JEL: D21 D24 G39 J23 L11 L25
    Date: 2019–12–24
  3. By: Marcio,Cruz; Baghdadi,Leila; Arouri,Hassen
    Abstract: This paper examines the dynamics and characteristics of high-growth firms in Tunisia. Further knowledge about the dynamics of these firms can inform the design of business support policies, especially toward small and medium-size firms. The analysis suggests that between 1999 and 2015, about 9 to 10.5 percent of the firms in Tunisia achieved high-growth status per year, on average, depending on the definition used, and these shares have been remarkably stable over time. Although a small share of firms achieves high growth annually, almost one in every three firms that survive for more than a decade has achieved high-growth status at least once. High-growth status is more prevalent among small and young firms, as well as firms that export, import, or receive foreign direct investments.
    Date: 2020–02–10
  4. By: Dan Cao (Department of Economics, Georgetown University); Henry Hyatt (Center for Economic Studies, U.S. Census Bureau); Toshihiko Mukoyama (Department of Economics, Georgetown University); Erick Sager (Division of Research and Statistics, Federal Reserve Board)
    Abstract: This paper analyzes the distribution and growth of firm-level employment along two margins: the extensive margin (the number of establishments in a firm) and the intensive margin (the number of workers per establishment in a firm). We utilize administrative datasets to document the behavior of these two margins in relation to changes in the U.S. firm-size distribution. In the cross section, we find the firm-size distribution, as well as both extensive and intensive margins, exhibits a fat tail. The increase in average firm size between 1990 and 2014 is primarily driven by an expansion along the extensive margin, particularly in very large firms. We develop a tractable general-equilibrium growth model with two types of innovations: external and internal. External innovation leads to the extensive margin of firm growth, and internal innovation leads to intensive-margin growth. The model generates fat-tailed distributions in firm size, establishment size, and the number of establishments per firm. We estimate the model to uncover the fundamental forces that caused the distributional changes from 1995 to 2014. The largest contributors to the increase in the number of establishments per firm are the external innovation cost and the decline in establishment exit rate. Classification-JEL E24, J21, L11, O31
    Keywords: firm growth, firm-size distribution, establishment, innovation
    Date: 2020–01–31
  5. By: Inessa Love (University of Hawaii at Manoa)
    Abstract: We present a critical assessment of the literature on entrepreneurial access to finance in the US. We present a comprehensive list of sources of finance that entrepreneurs use to start and grow their businesses and evaluate available research on each source. We also discuss different categories of entrepreneurs and identify underserved segments of the population. We perform a meta-analysis of available research on the actual use of different sources of funds and we perform an analysis of citations in the entrepreneurial literature. We conclude that there is a misalignment between the popularity of topics in the literature and the prevalence of different sources of funds. Finally, we identify gaps in existing literature, i.e. what sources of finance don’t have as much research available, and suggest avenues for future research.
    Keywords: Gender entrepreneurship, access to finance, venture capital
    JEL: L26 G32
    Date: 2020–01
  6. By: Seema Jayachandran
    Abstract: This article reviews the recent literature in economics on small-scale entrepreneurship ("microentrepreneurship") in low-income countries. Major themes in the literature include the determinants and consequences of joining the formal sector; the impacts of access to credit and other financial services; the impacts of business training; barriers to hiring; and the distinction between self-employment by necessity and self-employment as a calling. The article devotes special attention to unique issues that arise with female entrepreneurship.
    JEL: M13 O10 O17
    Date: 2020–01
  7. By: Ewens, Michael (California Institute of Technology); Gorbenko, Alexander; Korteweg, Arthur
    Abstract: We estimate the impact of venture capital (VC) contract terms on startup outcomes and the split of value between the entrepreneur and investor, accounting for endogenous selection via a novel dynamic search and matching model. The estimation uses a new, large data set of first financing rounds of startup companies. Consistent with efficient contracting theories, there is an optimal equity split between agents that maximizes the probability of success. However, VCs use their bargaining power to receive more investor-friendly terms compared to the contract that maximizes startup values. Better VCs still benefit the startup and the entrepreneur, due to their positive value creation. Counterfactual exercises show that eliminating certain contract terms benefits entrepreneurs and enables low-quality entrepreneurs to finance their startups more quickly, increasing the number of deals in the market. Lowering search frictions shifts the bargaining power to VCs and benefits them at the expense of entrepreneurs. The results show that selection of agents into deals is a first-order factor to take into account in studies of contracting.
    Date: 2019–07–17
  8. By: Brixiová, Zuzana; Kangoye, Thierry; Tregenna, Fiona
    Abstract: Limited access to finance is one of the major barriers for women entrepreneurs in Africa. This paper presents a model of start-ups in which firms’ sales and profits depend on their productivity and access to credit. However, due to the lack of collateral assets such as land, female entrepreneurs have more constrained access to credit than do men. Testing the model on data from the World Bank Enterprise Surveys in Eswatini, Lesotho, and Zimbabwe, we find land ownership to be important for female entrepreneurial performance in terms of sales levels. This finding suggests that the small Southern African economies would benefit from removing obstacles to women’s land tenure and enabling financial institutions to lend against movable collateral. While land ownership is linked with higher sales levels, it seems less critical for sales growth and innovation where access to short term loans for working capital seems to be key.
    Keywords: entrepreneurial sales,innovation,credit,land,gender,Africa
    JEL: G21 L26 D24 O17
    Date: 2020
  9. By: Deepika Dixit (Indian Institute of Management Kozhikode); Anubha Shekhar Sinha (Indian Institute of Management Kozhikode)
    Date: 2020–02
  10. By: Alibhai,Salman; Donald,Aletheia Amalia; Goldstein,Markus P.; Oguz,Alper Ahmet; Pankov,Alexander; Strobbe,Francesco
    Abstract: Gender disparities in small and medium-size enterprise lending exist around the world and impede the growth of millions of women-led firms. This paper examines a potential driver of these disparities: gender-biased loan officers. Officer bias is measured through a novel loan application experiment conducted with 77 loan officers in Turkish banks. The analysis finds that 35 percent of the loan officers are biased against female applicants, with women receiving loan amounts $14,000 lower on average compared with men. Experience in the banking sector can attenuate this bias, with each year of experience reducing gender biased loan allocations by 6 percent. The results suggest that loan officers may use gender bias as a heuristic device given limited information and risk aversion. Helping newly recruited and lesser experienced loan officers to better discern loan application quality may thus improve financing of business loans to women and reduce gender gaps in entrepreneurship.
    Date: 2019–12–30
  11. By: Alexander C. Lembcke; Lenka Wildnerova
    Abstract: That global networks provide positive externalities to participating firms is a well‑documented fact. Less is known about how the performance of non-participating firms, especially those that are small or medium-sized, changes with exposure to an increase in the presence of globally integrated firms in their vicinity. With global trade being dominated by large firms, the benefits for SMEs are often indirect, e.g. through input relationships with larger companies or through knowledge spillovers that facilitate the adoption of best practices in firms with access to globally integrated peers. This paper combines industry and regional exposure to global links in form of foreign ownership. It uses firm-level microdata for 13 OECD countries, allowing for local spillovers (or crowding out) within the same industry and across industries. Foreign investment in the firm in the same region is associated with increasing productivity of local firms, especially in form of cross-sector externalities. Horizontal (same sector) externalities are negative, especially if they are coming from foreign firms locating in distanced regions. FDI tends to be associated with employment decline in manufacturing firms, but some growth in small firms.
    Keywords: Employment, FDI, Firms, Productivity, SME
    JEL: D22 F14 F23 F21 R12
    Date: 2020–02–12
  12. By: Jayasundara, JMSB; Rajapakshe, PSK; Prasanna, RPIR; Naradda Gamage, Sisira Kumara; Ekanayake, EMS; Abeyrathne, GAKNJ
    Abstract: The term sustainability in the context of the business world refers to the ability of a company to survive and succeed in a dynamic, competitive, and challenging business environment. Small and Medium Enterprises (SMEs) must adapt to the changing environment and take appropriate measures to mitigate the change. To strike a balance between the triple bottom line – people, planet, and profit - by SMEs, reducing pollution and resource degradation, in the long run, is necessary. It is, therefore, required to understand the nature of challenges posed by the changing environment to the sustainability of SMEs. According to the existing literature, the challenges to sustainability include the ability to deal with economic and social change, engage in responsible and ethical business practices, efficient use of natural resources and protecting the environment, provide high-quality products and services, and develop metrics to determine if the company is meeting stakeholder needs. With this background, a systematic literature review was carried out to explore the insights of the existing knowledge on the nature of environmental sustainability challenges to small and medium enterprises and its management, particularly in the Asian context. Relevant papers were selected, followed by rigorous and extensive web searching based on the standard filtering approaches, and the sustainability challenges and their dynamic interactions in the context of SMEs are broadly discussed.
    Keywords: Sustainability challenges, Efficiency, Environmental protection, Socio-economic changes, Ethical business, Stakeholder needs
    JEL: M2
    Date: 2019–01–10
  13. By: Naradda Gamage, Sisira Kumara; Ekanayake, EMS; Abeyrathne, GAKNJ; Prasanna, RPIR; Jayasundara, JMSB; Rajapakshe, PSK
    Abstract: Globalization has presented new challenges for SMEs due to the increased competition, and as a result, the mortality rate of SMEs after a shorter period of commencement is relatively high. Accordingly, SMEs necessity to adopt survival strategies and strategic decisions to succeed in the business environment facing global challenges. This study attempted to critically review the existing literature on the global challenge for SMEs to identify the survival and succeeding strategies of SMEs in the current competitive business environment. Published reports in the field by the recognized multilateral organizations and seventy-five excellent research papers published by four recognized journal publishing companies: Emerald, Elsevier, Tayler & Francis, and MDPI were selected for inclusion in this review. Based on this review, it has been found that leading global challenges for SMEs in economic globalization include: global market competition, global financial and economic crisis, information communication technology, rise of Multinational Corporations, Transnational Corporations, changing profile of consumers and their preferences, trade dumping, international terrorism and religious conflicts, and trade wars. Further research could take on survival Strategies of SMEs in the industrial level to identify the sustainability-oriented specific policies. As well as a need for a stronger theoretical examination on survival strategies of SMEs in the global challenges.
    Keywords: Globalization, Global Challenges, Survival Strategies, Competitiveness, Small and Medium Enterprises
    JEL: M21
    Date: 2019–12–20
  14. By: Gvetadze, Salome; Pal, Kristian; Torfs, Wouter
    Abstract: This paper analyses the Business Angel (BA) portfolio of the European Angels Fund (EAF), an initiative of the European Investment Fund, which engages in co-investment relationships with experienced business angels across Europe. It uses EIF's proprietary database to shed light on a specific subset of the European BA sector. The first section covers the basic characteristics of EAF's BAs and draws comparisons with existing studies wherever possible. In addition, it provides a basic description of EAF's investment portfolio, outlining the geographical distribution of its portfolio companies and the sector in which they are active. The next section focusses on BAs' investment practices. For example, we take a closer look at the geographical and sectoral investment strategies, and investigate aspects related to investment timing. We also examine the innovative capacity of the investees, by analysing patenting activity during the first years of the EAF program. Finally, a brief descriptive analysis provides an overview of the post-investment growth patterns experienced by EAF's investee companies.
    Keywords: EIF,business angels,venture capital,equity financing
    JEL: G24 G38 L25
    Date: 2020
  15. By: Mireille Héral (MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier, Labex Entreprendre - UM - Université de Montpellier, UM - Université de Montpellier); Karim Messeghem (MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier); Alexis Catanzaro (COACTIS - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet [Saint-Étienne])
    Abstract: Pour réussir à l'international, les PME doivent collaborer, à la fois pour réduire les coûts et les risques et pour accéder collectivement à des marchés auxquels elles ne pourraient pas répondre seules. Or l'accompagnement des stratégies collaboratives à l'international n'est pas traité à notre connaissance dans la littérature. Cette étude, en croisant la littérature sur les stratégies collaboratives avec celle sur l'accompagnement à l'international, vise à répondre à la problématique suivante : Comment accompagner les stratégies collaboratives à l'international des PME ? Une étude qualitative exploratoire est menée dans le contexte des éco-PME auprès de 30 répondants, à la fois structures d'accompagnement à l'international et éco-PME. Les résultats permettent de regrouper les stratégies collaboratives mises en place par les éco-PME dans la typologie de Mattessich et Johnson (2018), de comprendre quels services leur sont proposés et quelles sont les pistes d'amélioration de cet accompagnement.
    Keywords: Accompagnement à l'international,collaboration,PME,entreprises vertes
    Date: 2019–06–03
  16. By: Dorian Boumedjaoud (MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier, Labex Entreprendre - UM - Université de Montpellier); Karim Messeghem (MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier, Labex Entreprendre - UM - Université de Montpellier)
    Abstract: Baron (2006) introduced prototypes theory to better understand opportunity identification process from a cognitive perspective. Since these major works, recent research has been devoted to explore business opportunity characteristics in creation context. However, to our knowledge, no research has been undertaken for the SME buyer. Yet, in takeover context, opportunity recognition is essential. Our objective is to better understand the nature of business opportunity prototypes used by buyers. From a theoretical point of view, we showed interest of prototype to evaluate the target, and conducted an exploratory study based on sixteen semi-directive interviews. Our results show that the prototype contains five attributes. This cognitive approach allows to propose a new approach of takeover process and to highlight a new support tool.
    Abstract: Baron (2006) a introduit la notion de prototypes pour mieux comprendre le processus d'identification des opportunités sous une perspective cognitive. Depuis ces travaux majeurs, des recherches ont été menées pour analyser la nature du prototype opportunité du créateur. Toutefois, à notre connaissance, aucune recherche n'a été engagée pour le repreneur de PME. Pourtant, dans le contexte de la reprise, la question de la poursuite d'opportunités est essentielle. Notre objectif est donc de mieux comprendre la nature du prototype opportunité utilisé par les repreneurs. D'un point de vue théorique, nous avons montré l'intérêt du prototype pour évaluer la cible, et avons mené une étude exploratoire basée sur seize entretiens semi-directifs. Les résultats montrent que le prototype du repreneur comprend cinq attributs. Cette approche cognitive permet de proposer une lecture originale du processus de rachat et met en lumière un nouvel outil d'accompagnement.
    Keywords: buyer,business takeovers,opportunities identification,prototypes,repreneur,processus repreneurial,identification des opportunités
    Date: 2019

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