nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒06‒22
twelve papers chosen by
Marcus Dejardin
Université de Namur

  1. Winning Big: Scale and Success in Retail Entrepreneurship By Hollenbeck, Brett; Giroldo, Renato
  2. Green production as a factor of survival for innovative startups. Evidence from Italy By Riccardo Gianluigi Serio; Maria Michela Dickson; Diego Giuliani; Giuseppe Espa
  3. Kill Zone By Kamepalli, Sai Krishna; Rajan, Raghuram G; Zingales, Luigi
  4. Patents to Products: Product Innovation and Firm Dynamics By Argente, David; Baslandze, Salomé; Hanley, Douglas; Moreira, Sara
  5. The COVID-19 Shock and Equity Shortfall: Firm-level Evidence from Italy By Elena Carletti; Tommaso Oliviero; Marco Pagano; Loriana Pelizzon; Marti G. Subrahmanyam
  6. Determinants of firms’ efficiency: do innovations and finance constraints matter? The case of European SMEs By Ferrando, Annalisa; Rossi, Stefania P. S.; Bonanno, Graziella
  7. Exposure to Transit Migration, Public Attitudes and Entrepreneurship By Ajzenman, Nicolas; Aksoy, Cevat Giray; Guriev, Sergei
  8. 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
  9. What does the proof-of-concept (POC) really prove? A historical perspective and a cross-domain analytical study By Caroline Jobin; Pascal Le Masson; Sophie Hooge
  10. The Rise of Fintech: A Cross-Country Perspective By Aurore Oskar KOWALEWSKI; Paweł PISANY
  11. Taxpayer responsiveness to taxation: Evidence from bunching at kink points of the South African income tax schedule By Neryvia Pillay Bell
  12. Barreras sistémicas y discriminación en el acceso a financiamiento para la mujer: el caso de la cadena del turismo rural en Sacatepéquez (Guatemala) By Hess, Sara

  1. By: Hollenbeck, Brett; Giroldo, Renato
    Abstract: In this paper we study a novel setting where firms were randomly allocated differently sized retail chains in a new and rapidly growing industry. Beginning in 2014, Washington State used a lottery to allocate licenses to firms in the newly legalized retail cannabis industry. This lottery generates random variation in firm size and in the level of market concentration. We also observe detailed data on all subsequent industry transactions, including prices, wholesale costs, markups, and product assortments. We find that firms that are randomly allocated more retail store licenses in the lottery ultimately earn much higher per store profits than single-store firms. Retailers in multi-store chains charge lower margins, offer larger product assortments, and pay lower wholesale prices. They also face higher but more elastic consumer demand. Similarly at the market level, more concentrated markets have lower average prices and markups. We conclude that higher retail scale and a more concentrated retail sector can benefit consumers and firms alike.
    Keywords: Economies of scale, retail pricing, markups, entrepreneurship
    JEL: L11 L22 L81
    Date: 2020–05–20
  2. By: Riccardo Gianluigi Serio; Maria Michela Dickson; Diego Giuliani; Giuseppe Espa
    Abstract: Many studies have analyzed empirically the determinants of survival for innovative startup companies using data about the characteristics of entrepreneurs and management or focusing on firm- and industry-specific variables. However, no attempts have been made so far to assess the role of the environmental sustainability of the production process. Based on data describing the characteristics of the Italian innovative startups in the period 2009-2018, this article studies the differences in survival between green and non-green companies. We show that, while controlling for other confounding factors, startups characterized by a green production process tend to survive longer than their counterparts. In particular, we estimate that a green innovative startup is more than twice as likely to survive than a non-green one. This evidence may support the idea that environment sustainability can help economic development.
    Date: 2020–05
  3. By: Kamepalli, Sai Krishna; Rajan, Raghuram G; Zingales, Luigi
    Abstract: We study why high-priced acquisitions of entrants by an incumbent do not necessarily stimulate more innovation and entry in an industry (like that of digital platforms) where customers face switching costs and enjoy network externalities. The prospect of an acquisition by the incumbent platform undermines early adoption by customers, reducing prospective payoffs to new entrants. This creates a "kill zone" in the space of startups, as described by venture capitalists, where new ventures are not worth funding. Evidence from changes in investment in startups by venture capitalists after major acquisitions by Facebook and Google suggests this is more than a mere theoretical possibility.
    Keywords: Acquisitions; Digital Platforms; Kill Zone
    JEL: G31 G34 L41
    Date: 2020–05
  4. By: Argente, David; Baslandze, Salomé; Hanley, Douglas; Moreira, Sara
    Abstract: We study the relationship between patents and actual product innovation in the market, and how this relationship varies with firms' market share. We use textual analysis to create a new data set that links patents to products of firms in the consumer goods sector. We find that patent filings are positively associated with subsequent product innovation by firms, but at least half of product innovation and growth comes from firms that never patent. We also find that market leaders use patents differently from followers. Market leaders have lower product innovation rates, though they rely on patents more. Patents of market leaders relate to higher future sales above and beyond their effect on product innovation, and these patents are associated with declining product introduction on the part of competitors, which is consistent with the notion that market leaders use their patents to limit competition. We then use a model to analyze the firms' patenting and product innovation decisions. We show that the private value of a patent is particularly high for large firms as patents protect large market shares of existing products.
    Keywords: creative destruction; growth; Innovation; patent value; patents; productivity
    JEL: O3 O4
    Date: 2020–05
  5. By: Elena Carletti (Bocconi University and CEPR); Tommaso Oliviero (University of Naples Federico II and CSEF); Marco Pagano (University of Naples Federico II, CSEF and EIEF); Loriana Pelizzon (SAFE, Goethe University Frankfurt and Ca' Foscari University of Venice); 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.
    Date: 2020
  6. By: Ferrando, Annalisa; Rossi, Stefania P. S.; Bonanno, Graziella
    Abstract: This paper aims at investigating the relationship between firms’ profit efficiency, access to finance and innovation activities. We enrich our understanding on firms’ performance by adopting the stochastic frontier approach (SFA), which allows us to estimate profit functions and to obtain efficiency scores for a large sample of European firms. We pioneer the use of a novel dataset that merges survey-based data derived from the ECB Survey on access to finance for enterprises (SAFE) with balance sheet information. Our evidence documents that credit constrained firms display an incentive to improve their efficiency in order to increase profitability. Among firms that have embarked in product innovation, those in the industry and high-tech sectors see their effort translated in higher profit efficiency. From a policy perspective, our results could help to better understand the link between innovation, financial constraints and efficiency, which goes beyond the idea that easier access to finance is the panacea to get higher profit efficiency. JEL Classification: D22, D24, L23, O31, C33
    Keywords: access to finance, innovation, stochastic frontier approach, survey data
    Date: 2020–06
  7. By: Ajzenman, Nicolas; Aksoy, Cevat Giray; Guriev, Sergei
    Abstract: Does exposure to mass migration affect economic behavior, attitudes and beliefs of natives in transit countries? In order to answer this question, we use a unique locality-level panel from the 2010 and 2016 rounds of the Life in Transition Survey and data on the main land routes taken by migrants in 18 European countries during the refugee crisis in 2015. To capture the exogenous variation in natives' exposure to transit migration, we construct an instrument that is based on the distance of each locality to the optimal routes that minimize travelling time between the main origin and destination cities. We first show that the entrepreneurial activity of natives falls considerably in localities that are more exposed to mass transit migration, compared to those located further away. We then explore the mechanisms and find that our results are likely to be explained by a decrease in the willingness to take risks as well as in the confidence in institutions. We also document an increase in the anti-migrant sentiment while attitudes towards other minorities remained unchanged. We rule out the possibility of out-migration of natives or of trade-related shocks (potentially confounded with the mass-transit migration) affecting our results. Using locality-level luminosity data, we also rule out any effect driven by changes in economic activity. Finally, we find no statistically significant effects on other labor market outcomes, such as unemployment or labor force participation.
    Keywords: entrepreneurship; migration; refugee crisis
    JEL: D91 F22 L26 O10 O15
    Date: 2020–04
  8. 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: 2020–05–27
  9. By: Caroline Jobin (CGS i3 - Centre de Gestion Scientifique i3 - CNRS - Centre National de la Recherche Scientifique - PSL - PSL Research University - MINES ParisTech - École nationale supérieure des mines de Paris); Pascal Le Masson (CGS i3 - Centre de Gestion Scientifique i3 - CNRS - Centre National de la Recherche Scientifique - PSL - PSL Research University - MINES ParisTech - École nationale supérieure des mines de Paris); Sophie Hooge (CGS i3 - Centre de Gestion Scientifique i3 - CNRS - Centre National de la Recherche Scientifique - PSL - PSL Research University - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: Even though proof-of-concept (POC) has become a common practice of organizations in decision-making, and internal and external coordination processes, the literature on strategic management has so far little taken on the subject. In this paper, we looked at the following questions: Where does the concept of ‘proof-of-concept' come from and how has it evolved over time? How does ‘proof-of-concept' relate to a peculiar category of proof? To answer these questions, we first conducted a historical perspective of the genesis of the concept, namely in the U.S. aerospace and aeronautical ecosystem. Then, we conducted an analytical study of the transfer of the notion in the ecosystems of biomedical, public research, new product development / innovation / entrepreneurship and finally information technologies. This paper showed that the term, which was born in the 1960s, gradually met with success in contexts where new actors had to be brought into the previously highly integrated design value chain, and this often upstream. In this sense, POC, as proof of validation and exploration, appears to be a particularly useful tool for ‘buyers' and ‘sellers' in processes with an exploratory dimension.
    Abstract: En dépit du fait que la preuve de concept ou POC soit devenue une pratique courante des organisations dans les processus de prise de décision et de coordination internes et externes, la littérature en management stratégique s'est jusqu'à présent peu emparée du sujet. Dans ce papier, nous nous sommes intéressés aux questions suivantes : D'où vient la notion de POC et comment a-t-elle évoluée au fil du temps ? En quoi le POC constitue une catégorie particulière de preuve ? Pour répondre à ces questions, nous avons d'abord réalisé une étude historique de la genèse du concept, à savoir dans l'écosystème aérospatial et aéronautique américain. Puis, nous avons mené une étude analytique du transfert de la notion dans les écosystèmes du biomédical, de la recherche publique, du développement de nouveaux produits / de l'innovation / de entrepreneuriat et enfin des technologies de l'information. Ce papier a permis de montrer que le terme, qui est né dans les années 1960, a progressivement rencontré un succès dans les contextes où il a fallu faire entrer de nouveaux acteurs dans la chaîne de valeur de la conception qui était jusqu'alors très intégrée, et ce souvent par l'amont. En ce sens, le POC, en tant preuve de validation et d'exploration, semble être un outil particulièrement utile aux « acheteurs » et aux « vendeurs » dans des processus avec une dimension exploratoire.
    Keywords: POC,TRL,Design,Validation,Exploration,Conception
    Date: 2020–06–03
  10. By: Aurore Oskar KOWALEWSKI (IESEG School of Management & LEM-CNRS 9221); Paweł PISANY (Institute of Economics, Polish Academy of Sciences)
    Abstract: This study investigates the determinants of fintech company creation and activity using a cross-country sample that includes developed and developing countries. Using a random effect negative binomial model and explainable machine learning algorithms, we show the positive role of technology advancements in each economy, quality of research, and more importantly, the level of university-industry collaboration. Additionally, we find that demographic factors may play a role in fintech creation and activity. Some fintech companies may find the quality and stringency of regulation to be an obstacle. Our results also show the sophisticated interactions between the banking sector and fintech companies that we may describe as a mix of cooperation and competition.
    Keywords: fintech, innovation, start up, developed countries, developing countries
    JEL: G21 G23 L26 O30
    Date: 2020–07
  11. By: Neryvia Pillay Bell
    Abstract: The author applies the bunching methodology to South African administrative tax data over the period from 2011 to 2017 to investigate the responsiveness of individual taxpayers to changes in marginal personal income tax rates. She finds significant evidence of bunching among the self-employed but no evidence of bunching among wage earners. Among the self-employed, bunching is greatest at the highest kink in the income tax schedule and smallest at the lowest kink. Female self-employed exhibit greater bunching behaviour than male self-employed, and responsiveness appears to decrease with age.
    Keywords: bunching, elasticity of taxable income, personal income tax, South Africa
    Date: 2020
  12. By: Hess, Sara
    Abstract: La inclusión financiera es un factor de gran importancia en los debates sobre cómo combatir la pobreza y enfrentar la desigualdad en países de ingreso medio y bajo. Aunque los estudios sobre dicha inclusión se han multiplicado, son relativamente pocos los que aplican una perspectiva de género y aún menos los que se enfocan en el mercado crediticio. En este documento se explora la posible discriminación de género en el acceso a financiamiento, con un estudio de caso en la cadena de valor del turismo en Sacatepéquez (Guatemala), en el que se analiza si existen discriminación y barreras sistémicas que limiten el acceso al financiamiento de las mujeres.
    Date: 2020–06–02

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