nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒04‒20
eight papers chosen by
Marcus Dejardin
Université de Namur

  1. Government Incentives for Entrepreneurship By Josh Lerner
  2. Innovation and Entrepreneurship in Housing By Edward Kung
  3. The deep imprint of Roman sandals: Evidence of long-lasting effects of Roman rule on personality, economic performance, and well-being in Germany By Fritsch, Michael; Obschonka, Martin; Wahl, Fabian; Wyrwich, Michael
  4. Digitalisation and its impact on SME finance in Sub-Saharan Africa: Reviewing the hype and actual developments By Disse, Sabrina; Sommer, Christoph
  5. An Alternative Strategy for Sustaining Innovations Management of Incumbent Firms By Kayak, Murat
  6. Choice Between IEO and ICO: Speed vs. Liquidity vs. Risk By Miglo, Anton
  7. ICO vs. Equity Financing Under Imperfect, Complex and Asymmetric Information By Miglo, Anton
  8. Presidential entrepreneurship and policy change: The case of the telecommunications reform in Mexico (1990 – 2015) By Aranda-Jan, Ana C.

  1. By: Josh Lerner
    Abstract: In the dozen years since the Global Financial Crisis, there has been a surge of interest on the part of governments in promoting entrepreneurial activity, largely by providing financing. This essay explores these policies, focusing on financial incentives to entrepreneurs and the intermediaries who fund them. The motivation for these efforts is clear: the well-documented relationships between economic growth, innovation, entrepreneurship and venture capital. Yet despite good intentions, many of these public initiatives have ended in disappointment. I argue that these failures have not simply been a matter of bad luck. Instead, the unfortunate outcomes have reflected the fundamental structural issues that make it difficult for governments to launch sustained successful efforts to promote entrepreneurship over sustained periods. I highlight several critical challenges, and outline two principles that might render these efforts more effective.
    JEL: G18 G24 H81
    Date: 2020–03
  2. By: Edward Kung
    Abstract: In this chapter, I discuss innovation and entrepreneurship in residential real estate and construction (housing). Based on R&D spending and patent statistics, housing does not appear to be a very innovative sector. But in the last two decades, there has been a significant increase in the amount of investment going to real estate technology companies. I discuss the companies and technologies which have drawn the most attention from investors. I then review the literature on two major innovation trends in housing: the growth of the internet as a tool for housing search, and the development of home-sharing platforms which allow homeowners to use their homes as short-term rentals. These innovations have likely increased the efficiency of housing markets, leading to higher quality matches between buyers and sellers, and more efficient utilization of space. However, the effects are hard to measure due to the difficulty of separating quality changes from price changes. In comparison to residential real estate, there appears to have been less recent innovation in residential construction. In many areas, residential construction is artificially constrained by local land use policies, and estimates from the literature suggest that relaxing these constraints could increase economic growth significantly. Finally, I discuss anti-competitive practices in real estate which may hinder entrepreneurship and the adoption of new innovations, and I discuss how innovation and entrepreneurship in other sectors may affect the housing market.
    JEL: O30 R31
    Date: 2020–03
  3. By: Fritsch, Michael; Obschonka, Martin; Wahl, Fabian; Wyrwich, Michael
    Abstract: We investigate whether the Roman presence in the southern part of Germany nearly 2,000 years ago had a deep imprinting effect with long run consequences on a broad spectrum of measures ranging from present-day personality profiles to a number of socioeconomic outcomes and why. Today's populations living in the former Roman part of Germany score indeed higher on certain personality traits, have higher life and health satisfaction, longer life expectancy, generate more inventions and behave in a more entrepreneurial way. These findings help explain that regions under Roman rule have higher present-day levels of economic development in terms of GDP per capita. The effects hold when controlling for other potential historical influences. When addressing potential channels of a long term effect of Roman rule the data indicates that the Roman road network plays an important role as a mechanism in the imprinting that is still perceptible today.
    Keywords: Romans,personality traits,culture,well-being,regional performance,Limes
    JEL: N9 O1 I31
    Date: 2020
  4. By: Disse, Sabrina; Sommer, Christoph
    Abstract: Small and medium-sized enterprises (SMEs) are pivotal for inclusive economic development, but suffer disproportionally from institutional and market failures, especially from constrained access to external finance. Digitalisation of the financial industry is often seen as a game changer. This paper aims to answer the question what the role is of digital financial instruments in SME finance in Sub-Saharan Africa (SSA). It discusses the opportunities and challenges of digital advances for SME finance in general and of three specific financing instruments in Sub-Saharan Africa, namely mobile money (including digital credits), crowdfunding (including peer-to-peer lending) and public equity, in order to contrast the hype around digital finance with actual market developments and trends. Over 90 per cent of firms are small and medium-sized enterprises employing more than half of the formal workforce worldwide and more than 60 per cent in low- and middle-income countries (LMICs). SMEs also account for most of the new jobs created (or at least as much as larger firms). They create economic opportunities such as employment, skill development and upward mobility in diverse geographic areas and economic sectors, and provide a livelihood and income for diverse segments of the labour force, including low-skilled workers as well as disadvantaged and marginalised groups such as young people, women and minorities. Hence, SMEs can foster inclusive economic development and subsequently contribute to social cohesion. A substantial share of national value added is attributed to SMEs and the SME segment is strongly and positively associated with economic growth (even though no causality can be claimed in this respect) and economic diversification. SMEs are also vital for advances in productivity and innovation, as small and young firms may introduce new, efficient technologies or - especially important for LMICs -make small modifications in order to adapt innovations to the local or national contexts or benefit from knowledge spillover. In short, SMEs play a crucial role for economic development. (...)
    Date: 2020
  5. By: Kayak, Murat
    Abstract: Innovation is a prominent phenomenon that enables a firm to gain a competitive advantage against its rivals. However, this does not mean that being innovative allows a firm to perform better. Although innovation has been investigated in the literature, the types of innovations still remain esoteric. As discussed, there are different types of innovations. Different kinds of innovation require different kinds of a business model and may have varying impacts on consumer product decisions. First, this study seeks to highlight the distinction between sustaining and disruptive innovations. Second, this study offers a conceptual framework for the antecedents of sustaining innovations. Theoretical and practical implications are discussed in the light of observations.
    Date: 2020–04–08
  6. By: Miglo, Anton
    Abstract: This paper analyzes 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 initial exchange offering (IEO) and initial coin offering (ICO). Compared to ICO, under IEO the firm is subject to screening by an exchange that reduces the risk of investment in tokens; also the firm gets access to a larger set of potential investors; finally tokens become listed on an exchange faster. We argue that IEO is a better option for the firm if: 1) the investment size is relatively large; 2) the extent of moral hazard problems faced by the firm is relatively large; 3) the degree of investors' impatience is relatively small. We aslo find a non-linear relationship between firm quality and its financing choice. Most of these predictions are new and have not been tested sofar.
    Keywords: FinTech; Entrepreneurial Finance; Initial Coin Offering; Initial Exchange Offering; Moral Hazard; Utility Tokens; Listing
    JEL: D82 D84 G32 L11 L26 M13 O32
    Date: 2020–04
  7. By: Miglo, Anton
    Abstract: This paper offers a model of a firm that raises funds for financing an innovative business project and chooses between ICO (initial coin offering) and equity financing. The model is based on information problems associated with both ICO and equity financing well documented in literature. The model provides several implications that have not yet been tested. For example we find that the message complexity can be benefitial for firms conducting ICOs. Also high-quality projects can use ICO as a signal of quality. Thirdly the average size of projects undertaking equity financing is larger than that of firms conducting ICO.
    Keywords: asymmetric information, complex information, initial coin offering (ICO), equity financing, signalling
    JEL: D82 G32 L11 L26 M13 M15 O32
    Date: 2020–04
  8. By: Aranda-Jan, Ana C.
    Abstract: This article studies presidential policy change by using the agenda-setting theory of Kingdon (1984) and Baumgartner and Jones (1993). It focuses on studying the reform of the telecommunications sector in Mexico from the administrations of Carlos Salinas de Gortari (1988 – 1994) to Enrique Peña Nieto (2012 – 2018). The process of creating a common understanding of the problem and its solutions contribute to generating policy change. It considers that the president is an actor that takes an active role in policymaking. This analysis uses a most-similar comparative approach. The analysis shows that policy changes are sensitive to presidential policy entrepreneurship.
    Date: 2020–03–30

This nep-ent issue is ©2020 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.