|
on Entrepreneurship |
| By: | Josh Siepel (SPRU - Science and Technology Policy Research - University of Sussex, University of Sussex [London, UK]); Marcus Dejardin (UCL - Université Catholique de Louvain, Université de Namur [Namur]) |
| Abstract: | This paper aims to provide a succinct overview of the important challenges facing researchers seeking to perform firm level research, along with an overview of the different data sources that may be used, and some techniques that can be employed to ensure that data is robust. An emphasis is put on the linked importance of research design and choice of data. We discuss quantitative data and, more specifically, the measures used to observe firm performance, and present different types of data sources that researchers may use when studying firm level data, i.e. self-report data, official statistics, commercial data, combinations of data, and Big Data. We examine potential problems with data, from measurement to respondent and researcher errors. Finally, some key points and some avenues for future research are briefly reviewed. |
| Keywords: | Firm Growth,Firm Performance,Methodology,Data Sources,Self-report Data,Official Data,Big Data |
| Date: | 2020–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02571478&r=all |
| By: | Michael Fritsch (Friedrich Schiller University Jena and Halle Institute for Economic Research (IWH), Germany); Maria Kristalova (Friedrich Schiller University Jena, Germany); Michael Wyrwich (University of Groningen, The Netherlands, and Friedrich Schiller University Jena, Germany) |
| Abstract: | We investigate how major historical shocks affect regional trajectories of economic activity. To this end, we conduct a comparative analysis of the development of entrepreneurship in East and West Germany after World War II. The introduction of an anti-entrepreneurial socialist economy in East Germany in 1949, and the subsequent transformation to a market economy four decades later were major historical shocks to the economy in general, and to entrepreneurship specifically. Our comparative analysis of East and West Germany assesses how these shocks affected the level of entrepreneurship at the regional level. Surprisingly, our results show that socialism does not have a long-run negative effect on the prevalence of self-employment in East Germany, despite the severe anti- entrepreneurial policies prevalent in Soviet-style socialism. Quite to the contrary, there is actually a positive treatment effect of German separation and reunification. Further analyses suggest that current structural differences in regional levels of self-employment in Germany are not pre- dominantly due to the socialist legacy of the East, but mainly a result of the shock transformation that occurred with reunification. |
| Keywords: | Entrepreneurship, self-employment, transition, socialism, regional development, GDR |
| JEL: | L26 R11 N94 P25 |
| Date: | 2020–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2020-010&r=all |
| By: | Fossen, Frank M. (University of Nevada, Reno); Neyse, Levent (DIW Berlin); Johannesson, Magnus (Stockholm School of Economics); Dreber Almenberg, Anna (University of Innsbruck) |
| Abstract: | The 2 D:4D digit ratio, the ratio of the length of the 2nd digit to the length of the 4th digit, is often considered a proxy for testosterone exposure in utero. A recent study by Nicolaou et al. (2018) reported an association between the lefthand 2D:4D and self-employment (in a sample of about 1,000 adults). In this preregistered study we replicate these results on a new and larger sample of about 2,600 adults from the German Socioeconomic Panel-Innovation Sample (SOEP-IS). We find no statistically significant associations between 2D:4D and self-employment and thus cannot confirm the findings of Nicolaou et al. (2018) for left-hand 2D:4D. Our estimated 99.5% confidence intervals are within an about 2 percentage points change in self-employment for a one standard deviation change in the 2D:4D when we pool results for men and women (the association does not differ significantly between men and women). Even larger studies are needed to rule out smaller effect sizes. |
| Keywords: | hormones, entrepreneurship, self-employment, testosterone, digit ratio |
| JEL: | J23 L26 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13180&r=all |
| By: | Nikolova, Milena (University of Groningen); Nikolaev, Boris (Emory University); Popova, Olga (Leibniz Institute for East and Southeast European Studies (IOS)) |
| Abstract: | We explore how involuntary and voluntary exits from self-employment affect life and health satisfaction. To that end, we use rich longitudinal data from the German Socio-Economic Panel from 1985 to 2017 and a difference-in-differences estimation. Our findings suggest that while transitioning from self-employment to salaried employment (i.e., a voluntary self-employment exit) brings small improvements in health and life satisfaction, the negative psychological costs of business failure (i.e., switching from self-employment to unemployment) are substantial and exceed the costs of involuntarily losing a salaried job (i.e., switching from salaried employment to unemployment). Meanwhile, leaving self-employment has no consequences for selfreported physical health and behaviors such as smoking and drinking, implying that the costs of losing self-employment are largely psychological. Moreover, former business owners fail to adapt to an involuntary self-employment exit even two or more years after this traumatic event. Our findings imply that policies encouraging entrepreneurship should also carefully consider the costs of business failure. |
| Keywords: | entrepreneurship, self-employment, health, well-being, unemployment, job switches |
| JEL: | E24 I10 I31 J28 L26 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13187&r=all |
| By: | Philippe Aghion (Harvard University [Cambridge]); Antonin Bergeaud (PSE - Paris School of Economics); Gilbert Cette (Centre de recherche de la Banque de France - Banque de France, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Rémy Lecat (Centre de recherche de la Banque de France - Banque de France); Hélène Maghin |
| Abstract: | We identify two counteracting effects of credit access on productivity growth: on the one hand, better access to credit makes it easier for entrepreneurs to innovate; on the other hand, better credit access allows less efficient incumbent firms to remain longer on the market, thereby discouraging entry of new and potentially more efficient innovators. We first develop a simple model of firm dynamics and innovation‐based growth with credit constraints, where the above two counteracting effects generate an inverted‐U relationship between credit access and productivity growth. Then we test our theory on a comprehensive French manufacturing firm‐level dataset. We first show evidence of an inverted‐U relationship between credit constraints and productivity growth when we aggregate our data at the sectoral level. We then move to firm‐level analysis, and show that incumbent firms with easier access to credit experience higher productivity growth, but that they also experience lower exit rates, particularly the least productive firms among them. To support these findings, we exploit the 2012 Eurosystem's Additional Credit Claims programme as a quasi‐experiment that generated an exogenous extra supply of credits for a subset of incumbent firms. |
| Keywords: | credit constraint,firms,growth,interest rate,productivity |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:hal-01976402&r=all |
| By: | Velilla, Jorge (University of Zaragoza); Molina, José Alberto (University of Zaragoza); Ortega, Raquel (University of Zaragoza) |
| Abstract: | This paper studies the reasons underlying the entrepreneurial decisions of low-, middle-, and high-income workers in South America. Using data from the GEM APS for the period 2005-2017, we apply fuzzy set Qualitative Comparative Analysis, allowing us to find causal links in the form of necessary conditions linked to entrepreneurship in the sample countries. Results show some differences in the conditions that lead individuals to become entrepreneurs, depending on income levels and gender. However, peer effects, the social perception of entrepreneurship, entrepreneurial skills, and formal education seem decisive in different contexts, although they may operate in both complementary and substitutive ways. The same combination of conditions does not appear to work for all the countries, even when taking into account the gender and income level of workers. |
| Keywords: | South America, entrepreneurship, income, fsQCA, GEM data |
| JEL: | L26 J22 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13209&r=all |
| By: | Corina Boar (New York University); Matthew Knowles (University of St Andrews) |
| Abstract: | We study optimal capital taxation in a model with financial frictions, where the distribution of wealth across heterogeneous entrepreneurs affects how efficiently capital is used in the economy. The government sets linear taxes on wealth, consumption, capital and labor income to maximize the steady state welfare of workers, who own no wealth. In our setting, capital income taxes are particularly costly, because these taxes lead to a more inefficient allocation of capital and, ultimately, lower aggregate total factor productivity. We model financial frictions as arising endogenously as a result of an asymmetric information problem and find that the tightness of financial frictions is affected by tax rates. In our setting, optimal tax rates can be written as simple closed-form functions of pre-tax prices and parameters. We find that the optimal total tax burden on entrepreneurs should be zero, even though the government cares only about workers’ welfare. |
| Keywords: | Optimal Taxation, Capital Taxation, Entrepreneurship, Financial Frictions |
| JEL: | E44 H21 D31 D82 |
| Date: | 2020–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:san:wpecon:2004&r=all |
| By: | Link, Albert (University of North Carolina at Greensboro, Department of Economics) |
| Abstract: | The purpose of this paper is to identify covariates with publication activity, a form of knowledge transfer, from SBIR publicly funded research. The paper offers an argument about the policy relevance of studying knowledge transfers from publicly funded research that occurs in private sector firms. Relevant explanatory variables are the length of the funded research project, university involvement in the project, the firm's history of SBIR funding, and the academic background of firms' founders. |
| Keywords: | Technology transfer; Public sector R&D; Entrepreneurship; Program evaluation; SBIR program; |
| JEL: | H54 L26 O31 O32 O38 |
| Date: | 2020–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:ris:uncgec:2020_005&r=all |
| By: | Bianco, Dominique |
| Abstract: | The traditional economic argument states that compliance with environmental policy diverts resources from innovation. In his engaging paper, Porter (1991) argues counterintuitively that more stringent environmental policies induce innovations the benefits of which exceed the costs. We build a Schumpeterian endogenous growth model that takes account of both arguments by including satisficing and profit-maximizing managers. Our theoretical results enable us to determine the validity condition of the strong Porter hypothesis which is consistent with empirical results. |
| Keywords: | Endogenous growth, Environmental Porter hypothesis, Environmental policy, Entrepreneurial Behaviours. |
| JEL: | D40 H23 L21 O33 O44 Q58 |
| Date: | 2020–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:100116&r=all |
| By: | Yutao Han (University of International Business and Economics, Beijing, CH); Patrice Pieretti (Department of Economics and Management, Université du Luxembourg) |
| Abstract: | The aim of the paper is to analyze tax competition with inter- nationally mobile individuals who make occupational choices. Two types of migration are distinguished, namely entrepreneur and worker migration. When the competing jurisdictions put a sufficiently high valuation on public good expenditures, entrepreneurship migration increases joint welfare relative to autarky. However, in case of labor migration, tax competition can decrease joint welfare independently of how much the jurisdictions value public expenditures. |
| Keywords: | migration, tax competition, occupational choice, social Welfare |
| JEL: | F22 H24 H73 J24 J61 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:20-07&r=all |
| By: | Rahul R. Gupta |
| Abstract: | This paper investigates the effects of a large firm’s geographical expansion (anchor firm) on local worker transitions into young firms through wage effects in industries economically proximate to the anchor firm. Using hand-collected data matched to administrative Census microdata, I exploit anchor firms’ site selection processes to employ a difference-in-differences approach to compare workers in winning counties to those in counterfactual counties. The arrival of an anchor firm induces worker reallocation towards young firms in industries linked through input-output channels by a magnitude of 120 new businesses that account for approximately 2,300 jobs. Consistent with the literature in personnel and organizational economics, incumbent firms experiencing the fastest wage growth due to these shocks shed mid-layer employees who select into young firms within the county and in their own industry of experience. These effects are strongest in the most specialized and knowledge-intensive industries. Attracting an anchor firm to a county appears to have limited spillover effects in overall employment that are mainly driven by reorganization of incumbent firms in the anchor’s input-output industries that face rising labor costs. |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:20-17&r=all |
| By: | Morsy, Hanan; El-Shal, Amira; Woldemichael, Andinet |
| Abstract: | Women are disproportionately disadvantaged in access to finance in Africa. While supply-side detriments, such as high interest rates and collateral requirements, are well documented in the literature, little is understood about how demand-side factors contribute to the observed gender gap in access to finance. This paper provides the first empirical evidence on how women managers’ perception about their creditworthiness contributes to the large gender gap in Africa, particularly in the Northern region. One of the innovations of the paper is introducing a theoretical model using the credit market framework with imperfect and asymmetric information to explain what may drive loan applicants to self-select. We use firm-level data for 47 African countries from the World Bank Enterprise Survey. We find that women entrepreneurs in Africa, in general, and in North Africa, in particular, are more likely to self-select themselves out of the credit market due to low perceived creditworthiness compared to their men counterparts. The results also suggest that the observed self-selection behavior is not a response mechanism to current discriminatory lending practices by the banks. The results are robust to different empirical specifications. The findings will inform policies towards greater financial inclusion of women in the region. |
| Keywords: | Gender Inequality; Access to Finance; Perception of Creditworthiness; Discrimination;Imperfect Information; Africa; North Africa. |
| JEL: | D1 D22 D8 G02 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:100395&r=all |
| By: | Hanan Morsy (Research Department, African Development Bank); Amira El-Shal (Research Department, African Development Bank); Andinet Woldemichael (Research Department, African Development Bank) |
| Abstract: | Women are disproportionately disadvantaged in access to finance in Africa. While supply-side detriments, such as high interest rates and collateral requirements, are well documented in the literature, little is understood about how demand-side factors contribute to the observed gender gap in access to finance. This paper provides the first empirical evidence on how women managers’ perception about their creditworthiness contributes to the large gender gap in Africa, particularly in the Northern region. One of the innovations of the paper is introducing a theoretical model using the credit market framework with imperfect and asymmetric information to explain what may drive loan applicants to self-select. We use firm-level data for 47 African countries from the World Bank Enterprise Survey. We find that women entrepreneurs in Africa, in general, and in North Africa, in particular, are more likely to self-select themselves out of the credit market due to low perceived creditworthiness compared to their men counterparts. The results also suggest that the observed self-selection behavior is not a response mechanism to current discriminatory lending practices by the banks. The results are robust to different empirical specifications. The findings will inform policies towards greater financial inclusion of women in the region. |
| Keywords: | Gender Inequality; Access to Finance; Perception of Creditworthiness; Discrimination; Imperfect Information; Africa; North Africa. |
| Date: | 2019–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:adb:adbwps:2443&r=all |
| By: | Maximilian Goethner (Friedrich Schiller University Jena); Lars Hornuf (University of Bremen, and Max Planck Institute for Innovation and Competition, Munich); Tobias Regner (Friedrich Schiller University Jena) |
| Abstract: | During the past decade, equity crowdfunding (ECF) has emerged as an alternative funding channel for startup firms. In Germany, the Small Investor Protection Act became binding in July 2015, with the legislative goal to protect investors engaging in this new asset class. Since then, investors pledging more than 1,000 EUR now must self-report their income and wealth. Investing more than 10,000 EUR in a single ECF issuer is only possible through a corporate entity. We examine how the Small Investor Protection Act has affected investor behavior at Companisto, Germany’s largest ECF portal for startup firms. The results show that after the new law became binding, sophisticated investors invest less on average while casual investors invest more. Moreover, the signaling capacity of large investments has disappeared. |
| Keywords: | Equity crowdfunding, Crowdinvesting, Investor protection |
| JEL: | E22 G18 G38 K22 L26 |
| Date: | 2020–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2020-009&r=all |
| By: | McGeever, Niall (Central Bank of Ireland); McQuinn, John (Central Bank of Ireland); Myers, Samantha (Central Bank of Ireland) |
| Abstract: | The recently enacted policies to contain the spread of COVID-19 have placed a temporary block between the consumption demands of households and the supply capacity of firms in many sectors. In the context of this shock, a number of firms are likely to need some form of external liquidity support if they are to re-open once these policies are eventually relaxed. We use a combination of sector- and bank-level data to estimate Small and Medium Enterprises (SME) liquidity needs over a three month period, under a range of scenarios. We estimate that non-agricultural SMEs in Ireland will need between €2.4bn and €5.7bn if their revenues are curtailed for three months. The banking system is one potential source of liquidity provision for these firms. We look at the degree to which banks are likely to have the incentives and capacity to provide this financing. In addition, we outline the possible intervention options available to policymakers to support short-term SME liquidity needs, should private sector liquidity provision prove insufficient. All intervention options involve delicate trade-offs, which must be carefully assessed. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cbi:fsnote:2/fs/20&r=all |
| By: | (Michael Ewens) (California Institute of Technology); (Ramana Nanda) (Harvard Business School, (Entrepreneurial Management) Unit); (Christopher Stanton) (Harvard Business School, (Entrepreneurial Management) Unit) |
| Abstract: | (We use individual-level data to shed light on the evolution of founder-CEO compensation in venture capital-backed startups. We document that having a tangible, marketable product is a fundamental milestone in CEOs’ compensation contracts, marking the point at which liquid cash compensation begins to increase significantly – well before a liquidity event. “Product market fit” also coincides with key human capital in the startup becoming more replaceable, marking an apparent transition in the firm's lifecycle from ‘differentiation’ to ‘standardization’. Although substantial increases in cash compensation for founder-CEOs in response to milestones improves the certainty equivalent of attempting entrepreneurship relative to flat pay, low cash compensation in the very early years can still deter entrepreneurship for potential entrants. We characterize the types of individuals most likely to be impacted by this constraint and hence those whose ideas are unlikely to be commercialized through VC-backed entrepreneurship.) |
| Keywords: | (Entrepreneurship, venture capital, executive compensation) |
| JEL: | G32 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:20-119&r=all |
| By: | Stefano Fasani (Queen Mary University); Haroon Mumtaz (Queen Mary University); Lorenza Rossi (University of Pavia) |
| Abstract: | This paper uses a FAVAR model with external instruments to show that policy uncertainty shocks are recessionary and are associated with an increase in the exit of firms and a decrease in entry and in the stock price with total factor productivity rising in the medium run. To explain this result, we build a medium scale DSGE model featuring firm heterogeneity and endogenous firm entry and exit. These features are crucial in matching the empirical responses. Versions of the model with constant firms or constant firms' exit are unable to re-produce the FAVAR response of firms' entry and exit and suggest a much smaller effect of this shock on real activity. |
| Keywords: | Monetary policy uncertainty shocks, FAVAR, DSGE. |
| JEL: | C5 E1 E5 E6 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:pav:demwpp:demwp0190&r=all |
| By: | Sowa, Frank |
| Abstract: | "In 2013, the Institute for Employment Research (IAB) evaluated as part of its statutory mandate, according to § 282 SGB III the voluntary unemployment insurance according to § 28a SGB III ('Antragspflichtversicherung'). First, this research project collected the assessments of managers and professionals from divisions of the Federal Employment Agency (BA). The research interest focused on the evaluation and implementation of the unemployment insurance upon request. Furthermore, the research project analysed the actual living conditions of solo self-employed and examined the role of the voluntary employment insurance to start a business and the relevance of social security systems for solo self-employed (unemployment insurance, health insurance, pension insurance). The study focuses on the group of solo self-employed as it is a particularly vulnerable group of self-employed." (Author's abstract, IAB-Doku) ((en)) |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabfob:202003&r=all |