nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒06‒15
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Launching with a Parachute: The Gig Economy and New Business Formation By John M. Barrios; Yael V. Hochberg; Hanyi Yi
  2. A bibliometric study on the research landscape of entrepreneurial finance from 1970-2019 By Hoàng, NGUYỄN Minh; Huyen, Nguyen Thanh Thanh; Pham, Thanh-Hang; Yen, Nguyen Thi Quynh; Vuong, Quan-Hoang
  3. Sustainable Peace building and Development in Nigeria’s Post-Amnesty Programme: the Role of Corporate Social Responsibility in Oil Host Communities By Joseph I. Uduji; Elda N. Okolo-Obasi; Simplice A. Asongu
  4. CEO Succession and New-Firm Performance: Does Successor Origin Matter? By Masatoshi Kato; Yuji Honjo
  5. Innovation and Entrepreneurship in the Energy Sector By David Popp; Jacquelyn Pless; Ivan Haščič; Nick Johnstone
  6. The Geography of Small Business Dynamics By Simon Firestone
  7. Financial Distancing: How Venture Capital Follows the Economy Down and Curtails Innovation By Sabrina T. Howell; Josh Lerner; Ramana Nanda; Richard R. Townsend
  8. The COVID-19 Shock and Equity Shortfall: Firm-level Evidence from Italy By Elena Carletti; Tommaso Oliviero; Marco Pagano; Loriana Pelizzon; Marti G. Subrahmanyam
  9. Financial Frictions, Borrowing Costs, and Firm Size Across Sectors By Bento, Pedro; Ranasinghe, Ashantha
  10. The growing digital divide in Europe and the United States By Désirée Rückert; Reinhilde Veugelers; Christoph Weiss
  11. The provision of long-term credit and firm growth By Florian Leon
  12. Monetary Policy Uncertainty and Firm Dynamics By Stefano Fasani; Haroon Mumtaz; Lorenza Rossi
  13. Teachers? Classroom Management Practices for Effective Teaching and Learning of Entrepreneurship Studies in Secondary Schools in Anambra State of Nigeria By Anthony Eze; Isaac Nwankwo; Fredrick Umeobi

  1. By: John M. Barrios; Yael V. Hochberg; Hanyi Yi
    Abstract: The introduction of the gig economy creates opportunities for would-be entrepreneurs to supplement their income in downside states of the world and provides insurance in the form of an income fallback in the event of failure. We present a conceptual framework supporting the notion that the gig economy may serve as an income supplement and as insurance against entrepreneurial-related income volatility, and utilize the arrival of the on-demand, platform-enabled gig economy in the form of the staggered rollout of ridehailing in U.S. cities to examine the effect of the arrival of the gig economy on new business formation. The introduction of gig opportunities is associated with an increase of ~5% in the number of new business registrations in the local area, and a correspondingly-sized increase in small business lending to newly registered businesses. Internet searches for entrepreneurship-related keywords increase ~7%, lending further credence to the predictions of our conceptual framework. Both the income supplement and insurance channels are empirically supported: the increase in entry is larger in regions with lower average income and higher credit constraints, as well as in locations with higher ex-ante economic uncertainty regarding future wage levels and wage growth.
    JEL: G39 J01 L26 O3
    Date: 2020–05
  2. By: Hoàng, NGUYỄN Minh; Huyen, Nguyen Thanh Thanh; Pham, Thanh-Hang; Yen, Nguyen Thi Quynh; Vuong, Quan-Hoang
    Abstract: Financing issues play essential roles in the survival and development of entrepreneurial firms. The current study, employing the bibliometric analysis of 6,903 articles from 1970 to 2019, extracted from Web of Science database, aims to provide an overview of the discipline’s landscape and major scientific domains to facilitate scientific development within the field. Entrepreneurial finance is a young and growing field with exponential growth in the number of publications (with 19.54% per year) and rising collaboration tendency among authors. Journal of Business Venturing is the most prestigious journal, while Sustainability is noteworthy for its rapid contribution to the field. We also note a sign of Western ideological homogeneity from the collaboration networks and lists of top authors, institutions, and countries. Besides, using keyword co-occurrence analysis, seven major research domains are identified: “venture capital”, “crowdfunding”, “SMEs finance”, “social entrepreneurship finance”, “financial risk”, “microfinance”, and “human-social-financial capital”. Based on these findings, we raise the concern of lacking diversity in entrepreneurial finance research and provide several recommendations for future potential research directions.
    Date: 2020–05–28
  3. By: Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: The activities and violence of militants in the Niger Delta which saw the capacity for production of oil in Nigeria fall to an all-time low resulted in the federal government of Nigeria (FGN) announcing the Presidential Amnesty Programme in return for peace in the region. We examine how multinational oil companies’ (MOCs’) corporate social responsibility (CSR) impact on entrepreneurship development and job creation to absorb the youths. 1200 youths were sampled across the nine states of Niger Delta. Results from the use of estimated logit model reveal that GMoU interventions are prevalent in communities with greater ownership, creating room for better projects, sustainability and improved trust; yet the interventions failed to make significant impact on entrepreneurship development and job creation. Clearly, facilitating how youths get involved in skill acquisition and empowerment programmes would help them become entrepreneurs, improving their self-assurance that they can prosper outside militancy activities and violence.
    Keywords: Presidential amnesty programme, multinational oil companies, corporate social responsibility, youths and entrepreneurship development, Nigeria
    Date: 2020–01
  4. By: Masatoshi Kato (School of Economics, Kwansei Gakuin University); Yuji Honjo (Faculty of Commerce, Chuo University)
    Abstract: This study explores the impact of chief executive officer (CEO) succession on new-firm performance, using a sample of Japanese firms founded during the period 2003–2010. When controlling for firm- and CEO-specific characteristics, we find that new firms with experience in CEO succession are more likely to increase sales than those without it. The results also reveal that CEO succession influences sales growth among new firms, but not employment growth. Moreover, based on successor origin, we classify the types of CEO succession, such as inside, outside, and family succession. The results reveal that both insider and outsider succession influences sales growth, while family succession does not.
    Keywords: CEO succession; Growth; Insider succession; Outsider succession; New firm; Successor origin.
    JEL: M13 L25
    Date: 2020–05
  5. By: David Popp; Jacquelyn Pless; Ivan Haščič; Nick Johnstone
    Abstract: Historically, innovation in the energy sector proceeded slowly and entrepreneurial start-up firms played a relatively minor role. We argue that this may be changing. Energy markets are going through a period of profound structural change. The rise of hydrofracturing lowered fossil fuel prices so much that natural gas is now the primary fuel for electricity generation in the US. Renewable energy technologies also experienced significant cost and performance improvements. However, integrating intermittent resources creates additional grid management challenges, requiring further innovation. This chapter documents the evolving roles of innovation and entrepreneurship in the energy sector. First, we provide an overview of the energy industry, highlighting that many new energy technologies are smaller, modular, and increasingly rely on innovation in other fast-moving high-tech sectors. We then conduct two descriptive data analyses that document a sharp decline in both clean energy patenting and start-up activity from about 2010 onwards. We discuss potential explanations and provide some evidence that while innovation in existing technologies may simply have been successful, continued innovation will be needed in enabling technologies that are more likely to depend on progress in other sectors.
    JEL: O31 Q4 Q42 Q55
    Date: 2020–05
  6. By: Simon Firestone
    Abstract: Business dynamism is a micro-foundation for economic growth. Productivity gains come from a reallocation of resources from less efficient to more efficient firms, often through entry of new firms and exit of existing firms.
    Date: 2020–05–28
  7. By: Sabrina T. Howell; Josh Lerner; Ramana Nanda; Richard R. Townsend
    Abstract: Although late-stage venture capital (VC) activity did not change dramatically in the first two months after the COVID-19 pandemic reached the U.S., early-stage VC activity declined by 38%. The particular sensitivity of early-stage VC investment to market conditions—which we show to be common across recessions spanning four decades from 1976 to 2017—raises questions about the pro-cyclicality of VC and its implications for innovation, especially in light of the common narrative that VC is relatively insulated from public markets. We find that the implications for innovation are not benign: innovation conducted by VC-backed firms in recessions is less highly cited, less original, less general, and less closely related to fundamental science. These effects are more pronounced for startups financed by early-stage venture funds. Given the important role that VC plays in financing breakthrough innovations in the economy, our findings have implications for the broader discussion on the nature of innovation across business cycles
    JEL: G24 O31
    Date: 2020–05
  8. By: Elena Carletti (Università Bocconi and CEPR); Tommaso Oliviero (Università di Napoli Federico II and CSEF); Marco Pagano (Università di Napoli Federico II, CSEF and EEIF); Loriana Pelizzon (SAFE, Goethe University Frankfurt and Università di Venezia Ca' Foscari); Marti G. Subrahmanyam (Stern School of Business, New York University)
    Abstract: This paper estimates the drop in profits and the equity shortfall triggered by the COVID-19 shock and the subsequent lockdown, using a representative sample of 80,972 Italian firms. We find that a 3-month lockdown entails an aggregate yearly drop in profits of €170 billion, with an implied equity erosion of €117 billion for the whole sample, and €31 billion for firms that became distressed, i.e., ended up with negative book value after the shock. As a consequence of these losses, about 17% of the sample firms, whose employees account for 8.8% of total employment in the sample (about 800 thousand employees), become distressed. Small and medium-sized enterprises (SMEs) are affected disproportionately, with 18.1% of small firms, and 14.3% of medium-sized ones becoming distressed, against 6.4% of large firms. The equity shortfall and the extent of distress are concentrated in the Manufacturing and Wholesale Trading sectors and in the North of Italy. Since many firms predicted to become distressed due to the shock had fragile balance sheets even prior to the COVID-19 shock, restoring their equity to their pre-crisis levels may not suffice to ensure their long-term solvency.
    Keywords: COVID-19, pandemics, losses, distress, equity, recapitalization.
    JEL: G01 G32 G33
    Date: 2020–05–28
  9. By: Bento, Pedro (Texas A&M University); Ranasinghe, Ashantha (University of Alberta, Department of Economics)
    Abstract: We document new evidence that financial under-development is associated with higher borrowing rates, lower investment in productivity, a smaller share of large firms, and smaller average firm size, both in manufacturing and services. To account for these patterns, we develop a two-sector economy with heterogeneous entrepreneurs that face financial frictions in the form of borrowing rates that rise with the cost of monitoring risky investments. The model is tractable and can be solved analytically, making clear predictions for the impact of high borrowing costs on investment, the share of large firms, and average firm size across sectors, consistent with the evidence we document. Varying monitoring costs to generate observed cross-country differences in borrowing rates, the model can account for one-third of the log-variance of observed average firm size across sectors, over 20 percent of the variation in investment, and a 30 percent drop in aggregate productivity, all substantial relative to the literature.
    Keywords: financial development; borrowing; firm size; investment; aggregate productivity
    JEL: O10 O14 O41 O43
    Date: 2020–05–28
  10. By: Désirée Rückert; Reinhilde Veugelers; Christoph Weiss
    Abstract: Using a new survey on digitalisation activities of firms in the EU and the US, we identify digitalisation profiles based on the current use of digital technologies and future investment plans in digitalisation. Our analysis confirms the trend toward digital polarisation and a growing digital divide in the corporate landscape with, on one side, many firms that are not digitally active, and on the other side, a substantial number of digitally active firms forging ahead. Old small firms, with less than 50 employees and more than 10 years old, are significantly more likely to be persistently digitally non-active. We show that these persistently non-digital firms are less likely to be innovative, increase employment or command higher mark-ups. These trends are likely to exacerbate the digital divide across firms in the EU and the US.
    Keywords: digital technology, investment, firm performance
    Date: 2020–05–18
  11. By: Florian Leon (CREA, Université du Luxembourg)
    Abstract: This paper investigates whether a higher level of long-term credit provision affects the growth of small and young firms. Firm-level data from more than 20,000 firms in 62 countries are combined with a new hand-collected database on short-term and long-term credit provided to the private sector. Using a difference-in-difference framework, our results indicate that, contrary to short-term credit, long-term credit does not stimulate growth of small and young firms. This finding is, at least partially, explained by the differential impact of short-term and long-term credit provision on small and young firms' access to credit. While the provision of short-term credit alleviates credit constraints faced by small and young firms, a larger provision of long- term bank loans has an opposite impact. Our findings are in line with the hypothesis that an increase of long-term credit provision reects a lender's choice to provide more financing to existing clients (intensive margin) to the detriment of firms without previous access to finance (extensive margin).
    Keywords: Long-term finance; firm growth; financial development; credit constraints
    JEL: G21 L25 O16
    Date: 2019
  12. By: Stefano Fasani (Queen Mary University London); Haroon Mumtaz (Queen Mary University London); Lorenza Rossi (University of Pavia)
    Abstract: This paper uses a FAVAR model with external instruments to show that the 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 scale DSGE module 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 firm' 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: 2020–05–15
  13. By: Anthony Eze (Department of Technology & Vocational Education, Nnamdi Azikiwe University, Awka, Anambra State); Isaac Nwankwo (Department of Educational Management & Policy, Nnamdi Azikiwe University, Awka, Anambra State); Fredrick Umeobi (Department of General Studies, Federal Polytechnic, Oko, Anambra State)
    Abstract: The main purpose of this study was to ascertain extent of teachers? classroom management practices for effective teaching and learning of entrepreneurship studies in secondary schools. Two research questions and two null hypotheses guided the study. The research design adopted is descriptive survey. The study was conducted in Anambra State of Nigeria and it covered all the private and public secondary schools in the state. The population for this study comprised all the three thousand, two hundred and seventy five (3275) secondary school teachers while the sample for this study comprised 1641 (one thousand, six hundred and forty-one) respondents selected through proportionate random sampling technique. A researcher-developed instrument was used for data collection. Three experts validated the instrument. The reliability of the instrument was determined using Cronbach alpha on data collected from a sample of 30 teachers from secondary schools in Enugu State. The overall scale reliability coefficient for the instrument was 0.84. The researchers collected data with the help of six research assistants who are teachers in secondary schools in the State. In answering the research questions, mean and standard deviations were used. Similarly, the null hypotheses were tested at the 0.05 level of significance using t-test. Findings indicated that teachers in public and private secondary schools in Anambra State do not ensure that the teaching and learning of entrepreneurship are effective in meeting learners? needs. Accordingly, it was among others recommended that The State Ministry of Education should organize workshops and seminars for teachers in secondary schools on how they can ensure that the teaching and learning of entrepreneurship are effective in meeting learners? needs and that tertiary institutions in Anambra State should mount on-the-job training programmes on classroom management practices for effective teaching and learning of entrepreneurship for teachers in secondary schools.
    Keywords: Entrepreneurship; Teachers; Classroom; Management Practices; Learning Environment; Effective Teaching and Learning; Secondary Schools
    JEL: A20
    Date: 2020–02

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