nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒03‒02
eight papers chosen by
Marcus Dejardin
Université de Namur

  1. Is innovation (increasingly) concentrated in large cities? An international comparison By Michael Fritsch; Michael Wyrwich
  2. Creative Destruction? Local Business Conditions and the Earnings of Employees at Startups. By Mahieu, Jeroen
  3. Start-up acquisitions and innovation strategies By Igor Letina; Armin Schmutzler; Regina Seibel
  4. Public credit guarantee and financial additionalities across SME risk classes By Emanuele Ciani; Marco Gallo; Zeno Rotondi
  5. A preliminary review of policy responses to enhance SME access to trade financing in the Caribbean By McLean, Sheldon; Charles, Don
  6. STO vs ICO: A Theory of Token Issues Under Moral Hazard and Demand Uncertainty By Miglo, Anton
  7. El emprendimiento en Aragón: La salida de la crisis en forma de foto al emprendimiento By Bautista-Lacambra, Sergio
  8. Análisis del emprendimiento usando datos GEM: evidencias para la Comunidad de Madrid By Ortega Palacios, Inés

  1. By: Michael Fritsch; Michael Wyrwich
    Abstract: We investigate the geographic concentration of patenting in large cities using a sample of 14 developed countries. There is wide dispersion of the share of patented inventions in large metropolitan areas. South Korea and the US are two extreme outliers where patenting is highly concentrated in large cities. We do not find any general trend that there is a geographic concentration of patents for the period 2000-2014. There is also no general trend that inventors in large cities have more patents than in rural areas (scaling). Hence, while agglomeration economies of large cities may offer advantages for innovation activities, the extent of these advantages is not very large. We conclude that popular theories over-emphasize the importance of large cities for innovation activities.
    Keywords: innovation, patents, cities, urban scaling, creativity
    JEL: O31 R12 O57
    Date: 2020–02
  2. By: Mahieu, Jeroen
    Abstract: What drives job quality in startups? In this paper, I examine how fluctuations in local business conditions affect wages in startups and incumbent firms in the retail sector. I identify shocks to local business conditions using plausibly exogenous variation of hurricane strikes in U.S. coastal counties. I find that, on average, wages of startup employees increase in response to negative shocks to local business conditions. This effect does not appear to be driven by changes in supply or demand for labor. These findings are consistent with a “cleansing” effect of downturns, fostering the creation and retainment of more productive jobs, and driving out unproductive ones.
    Keywords: Startups; Employee Compensation; Local Business Conditions; Entrepreneurship
    JEL: J21 J31 L26
    Date: 2020–02–08
  3. By: Igor Letina; Armin Schmutzler; Regina Seibel
    Abstract: This paper provides a theory of strategic innovation project choice by incumbents and start-ups. We apply this theory to identify the effects of prohibiting start-up acquisitions. We differentiate between killer acquisitions (when the incumbent does not commercialize the acquired start-up’s technology) and acquisitions with commercialization. A restrictive acquisition policy reduces the variety of research approaches pursued by the firms and thereby the probability of discovering innovations. Furthermore, it leads to strategic duplication of the entrant’s innovation by the incumbent. These negative innovation effects of restrictive acquisition policy have to be weighed against the pro-competitive effects of preserving potential competition.
    Keywords: innovation, acquisitions, mergers, competition, start-ups.
    JEL: O31 L41 G34
    Date: 2020–02
  4. By: Emanuele Ciani (Bank of Italy); Marco Gallo (Bank of Italy); Zeno Rotondi (UniCredit)
    Abstract: In this paper we study the functioning of the Italian public guarantee fund (“Fondo Centrale di Garanzia”, FCG) for Small and Medium Enterprises (SMEs). Using an instrumental variable strategy, based on the eligibility for the FCG, we investigate whether the guarantee generated additional loans and/or lower interest rates to SMEs. Differently from previous literature, by focusing on the lending activity of a single large Italian lender we control for the probability of default as assessed by the bank’s internal rating model, and we examine whether the effects of the guarantee differ across firms belonging to different classes of risk. We find that guaranteed firms receive an additional amount of credit equal to 7-8 percent of their total banking exposure. We also estimate a reduction of about 50 basis points of interest rates applied to term loans granted to guaranteed firms. The effects on credit availability are concentrated in the intermediate class of solvent firms, i.e. those neither too safe nor too risky. Conversely, interest rate effects are present in all classes, but for the least risky firms. Finally, we observe a stronger impact of the guarantee for solvent firms with a longer relationship with the bank. This finding questions their ability to reduce financial frictions for very young firms.
    Keywords: credit guarantees, access to credit, banking
    JEL: L25 O12 G28
    Date: 2020–02
  5. By: McLean, Sheldon; Charles, Don
    Abstract: The economies of the Caribbean face several challenges, such as a lack of economies of scale in production of goods and services exacerbated by small populations, narrow internal markets and scarce capital, which limit the economic gains from self-sufficiency. For this reason, more emphasis should be placed on building export capacity and facilitating trade. If we examine the characteristics of firms in the subregion, the majority can be categorized as small and medium-sized enterprises (SMEs). Moreover, only about 13 per cent of these SMEs export. This suggests that on average the subregion is not utilising its potential to generate gains from international trade. Access to finance is a key factor that hinders the subregion’s small businesses from developing their export capacity. Given the importance of business finance, this study explores the factors that limit the subregion’s entrepreneurs from accessing finance and makes policy recommendations to address this challenge.
    Date: 2020–01–28
  6. By: Miglo, Anton
    Abstract: This paper considers a financing problem for an innovative firm that is considering launching a web-based platform. Our model is the first one that analyzes an entrepreneur's choice between security tokens (via a security token offering (STO)) and utility tokens (via initial coin offering (ICO)). The entrepreneur on one hand faces a large degree of demand uncertainty on his product and on the other hand has to deal with incentive problems of professional blockchain participants who contribute to the development and sales of the product. We argue that utility tokens with profit rights are a better option for the firm compared to straight utility tokens or security tokens because they help the firm better deal with both the moral hazard problems (via profit sharing incentives) and demand uncertainty (they help the firm learn the product demand). This finding is consistent with some recent evidence. The paper also generates new predictions that have not been tested sofar.
    Keywords: Entrepreneurial Finance; Blockchain; Initial Coin Offering; Security Token Offering; Moral Hazard; Demand Uncertainty; FinTech
    JEL: D82 G32 L11 L26 M13
    Date: 2020
  7. By: Bautista-Lacambra, Sergio
    Abstract: En este trabajo se intentará explicar el emprendimiento en la economía aragonesa para el año 2015 mediante un análisis descriptivo de los datos y se intentará realizar una regresión lineal sencilla que permita explicar la realidad observada. El modelo se contrastará para evaluar su posible correcto funcionamiento. Finalmente, sobre la base de las conclusiones descriptivas, destaca la diferencia por géneros del individuo que emprende a causa de las oportunidades.
    Keywords: Emprendimiento, Aragón, MLG, GEM, mercado laboral, economía regional.
    JEL: L26 R00
    Date: 2020–02–18
  8. By: Ortega Palacios, Inés
    Abstract: Este artículo estudia los determinantes del emprendimiento en la Comunidad de Madrid (España) mediante el uso de la base de datos GEM. Primero, se realiza una introducción sobre la situación actual del emprendimiento en España y en la Comunidad de Madrid. En segundo lugar, se muestra un estudio de datos y una descripción metodológica. Finalmente, se identifican los determinantes del emprendimiento. Los emprendedores se identifican como jóvenes sin responsabilidades familiares, sin miedo al fracaso, con habilidades para el emprendimiento y con el contacto con otros empresarios. Además, tener educación universitaria tiene un efecto positivo en convertirse en emprendedor.
    Keywords: Emprendimiento, Madrid, Factores microeconómicos
    JEL: L26 R10
    Date: 2020–02–17

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