nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒07‒27
ten papers chosen by
Marcus Dejardin
Université de Namur

  1. Microentrepreneurship in Developing Countries By Jayachandran, Seema
  2. Age-Specific Entrepreneurship and PAYG Public Pensions in Germany By Burkhard Heer; Mark Trede
  3. Enterprising women in Southern Africa: When does land ownership matter? By Zuzana Brixiová; Thierry Kangoye; Fiona Tregenna
  4. Entry determinants of the Software and Video games firms in Barcelona By Méndez Ortega, Carles
  5. Firms’ expectations on access to finance at the early stages of the Covid-19 pandemic By Ferrando, Annalisa; Ganoulis, Ioannis
  6. Cloud Computing and Firm Growth By Timothy DeStefano; Richard Kneller; Jonathan Timmis
  7. Unlocking Access to Finance for SMEs: A Cross-Country Analysis By Armand Fouejieu; Anta Ndoye; Tetyana Sydorenko
  8. Voluntary adoption of environmental standards and limited attention: Evidence from the food and beverage industry in Vietnam By Massimo Filippini; Suchita Srinivasan
  9. Protecting Investors in Equity Crowdfunding: An Empirical Analysis of the Small Investor Protection Act By Maximilian Goethner; Lars Hornuf; Tobias Regner
  10. Are Sustainability-Oriented Investors Different? Evidence from Equity Crowdfunding By Lars Hornuf; Eliza Stenzhorn; Tim Vintis

  1. By: Jayachandran, Seema
    Abstract: This article reviews the recent literature in economics on small-scale entrepreneurship ("microentrepreneurship") in low-income countries. Major themes in the literature include the determinants and consequences of joining the formal sector; the impacts of access to credit and other financial services; the impacts of business training; barriers to hiring; and the distinction between self-employment by necessity and self-employment as a calling. The article devotes special attention to unique issues that arise with female entrepreneurship.
    Keywords: female entrepreneurship; Informal sector; Self-employment; small businesses
    JEL: J16 J24 L26
    Date: 2020–01
  2. By: Burkhard Heer; Mark Trede
    Abstract: We present new empirical evidence on the distribution of earnings, income and wealth among entrepreneurs in Germany. We document that both earnings and income are more concentrated among entrepreneurs than among workers and describe a large-scale overlapping-generations model that can replicate these findings. As an application, we compute the equilibrium effects of a reform of the German pay-as-you-go pension system in which entrepreneurs must also contribute and receive a pension. We show that in the presence of mobility between workers and entrepreneurs, the expected lifetime utility of all newborn households unanimously declines due to the general equilibrium effects of lower aggregate savings, and welfare losses amount to approximately 5% of total consumption. In addition, the integration of self-employed workers into the social security system in Germany does not help to improve its fiscal sustainability, and only an increase in the retirement age to 70 years will help to finance pensions at the present level beyond the year 2050.
    Keywords: Entrepreneurship, aging, income distribution, overlapping
    JEL: H55 D31 J11 L26 C68
    Date: 2020–07
  3. By: Zuzana Brixiová (University of Economics in Prague and VSB – Technical University of Ostrava, SALDRU Research Affiliate, University of Cape Town); Thierry Kangoye (African Development Bank); Fiona Tregenna (University of Johannesburg)
    Abstract: Limited access to finance is one of the major barriers for women entrepreneurs in Africa. This paper presents a model of start-ups in which firms' sales and profits depend on their productivity and access to credit. However, due to the lack of collateral assets such as land, female entrepreneurs have more constrained access to credit than do men. Testing the model on data from the World Bank Enterprise Surveys in Eswatini, Lesotho, and Zimbabwe, we find land ownership to be important for female entrepreneurial performance in terms of sales levels. This finding suggests that the small Southern African economies would benefit from removing obstacles to women's land tenure and enabling financial institutions to lend against movable collateral. While land ownership is linked with higher sales levels, it seems less critical for sales growth and innovation where access to short term loans for working capital seems to be key.
    Keywords: entrepreneurial sales, innovation, credit, land, gender, Africa
    Date: 2020
  4. By: Méndez Ortega, Carles
    Abstract: This paper aims to determine which reasons lead Software and Video games firms (SVE hereafter) to locate in certain areas of Barcelona. This high-tech industry is a key industry in developed economies mainly located in urban areas. To carry out this analysis, we use SVE firm entries at neighbourhood level between 2011 and 2013 and a set of covariates that capture neighbourhood characteristics (localization and agglomeration economies, high-tech amenities, diversity, human capital and crime). Our results show that i) SVE firms tend to choose locations with a high diversity and good high-tech amenities (e.g. 22@ district), ii) the importance of the localization and agglomeration economies, since spatial spillovers are a key factor for this type of firms and iii) the role of the diversity in the location process of these firms, since SVE firms choose places with a high diversity of cultural and creative activity. JEL Codes: R10, R30, L86. Keywords: Software and Video games Industry, location determinants, Count Data models, Barcelona
    Keywords: Localització industrial, Indústria informàtica, Videojocs -- Indústria i comerç, 332 - Economia regional i territorial. Economia del sòl i de la vivenda,
    Date: 2019
  5. By: Ferrando, Annalisa; Ganoulis, Ioannis
    Abstract: This paper provides novel information on the propagation of the pandemic-induced real shock to firms’ financial conditions. It uses firm-level survey data from end February to early April 2020 for a large sample of euro area SMEs and large firms. Firms’ expectations on the availability of credit lines, bank loans and trade credit deteriorated significantly in the first half of March. Firms mostly expected to be affected if they had previously difficulties in securing finance, had higher indebtedness and, hence, less capacity to deal with a liquidity shock. Conditional on these factors, firm size does not seem to matter, except for trade credit, in which case SMEs had more positive conditional expectations. Together with the overall deterioration of expectations, there seems to have also been a reallocation of opportunities to access finance amidst the crisis. Small firms were more likely to have conditional expectations of improvement in their access to finance. JEL Classification: C83, D22, D84, E65, L25
    Keywords: Covid-19, expectation formation, survey data
    Date: 2020–07
  6. By: Timothy DeStefano; Richard Kneller; Jonathan Timmis
    Abstract: Cloud computing enables a shift in the costs of ICT adoption from investment in fixed capital to pay-on-demand services allowing firms to scale and reorganize. Using new firm-level data we examine the impact of cloud on firm growth, using zip-code-level instruments of the timing of high-speed fiber availability and speeds. Cloud leads to the growth of employment and revenue for young firms, but they become concentrated in fewer establishments. For incumbents, we find smaller scale effects but dispersed activity through closing establishments and moving employment farther from the headquarters. Moreover, cloud adoption leads to worker relocation across establishments within firms.
    Keywords: cloud, digital, productivity, firms
    JEL: J23 J24 L20 O33
    Date: 2020
  7. By: Armand Fouejieu; Anta Ndoye; Tetyana Sydorenko
    Abstract: Countries in the MENAP and CCA regions have the lowest levels of financial inclusion of small and medium enterprises (SMEs) in the world. The paper provides empirical evidence on the drivers of SME access to finance for a large sample of countries, and identifies key policy priorities for these two regions: economic and institutional stability, competition, public sector size and government effectiveness, credit information infrastructure (e.g., credit registries), the business environment (e.g., legal frameworks for contract enforcement), and financial supervisory and regulatory capacity. The analysis also shows that improving credit information, economic competition, the business environment along with economic development and better governance would help close the SME financial inclusion gap between MENAP and CCA regions and the best performers. The paper concludes on the need to adopt holistic policy strategies that take into account the full range of macro and institutional requirements and reforms, and prioritize these reforms in accordance with each country’s specific characteristics.
    Keywords: Financial crises;Financial services;Macroprudential policies and financial stability;Bank credit;Financial systems;Small and Medium Sized Enterprises,Financial Inclusion,WP,SME,SMEs,CCA,risky borrower,informality
    Date: 2020–03–13
  8. By: Massimo Filippini (Center of Economic Research (CER-ETH), ETH Zurich and Universita della Svizzera italiana, Switzerland); Suchita Srinivasan (Center of Economic Research (CER-ETH), ETH Zurich, Switzerland)
    Abstract: Voluntary approaches to environmental policy can contribute to stemming environmental degradation in developing countries with weak institutions. We evaluate the role of a behavioral anomaly, limited attention paid by owners or managers, in explaining the voluntary adoption of environmental certification by small and medium enterprises (SMEs) in the food and beverage industry in Vietnam. We find that firms where owners or managers were inattentive were 30 percentage points less likely to receive environmental certification. Moreover, this effect is larger for firms that were previously inspected for technical violations, and that exported or bribed, and it is weaker for household enterprises.
    Keywords: Voluntary environmental standards; Limited attention; Small and medium enterprises; Food and beverage industry; Vietnam
    JEL: D22 D83 D91 O13 Q56 Q59
    Date: 2020–07
  9. By: Maximilian Goethner; Lars Hornuf; Tobias Regner
    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
  10. By: Lars Hornuf; Eliza Stenzhorn; Tim Vintis
    Abstract: In this article, we examine how investor motives affect investment behavior in equity crowdfunding. In particular, we compare the investment behavior of sustainability-oriented with ordinary crowd investors on six leading equity crowdfunding platforms in Austria and Germany and investigate whether they suffer from a default shock that was recently identified by Dorfleitner et al. (2019). In general, we find evidence of a default shock in equity crowdfunding that occurs immediately after the event and if investors experience more than two insolvencies. Moreover, we find that sustainability-oriented investors pledge larger amounts of money and invest in more campaigns than ordinary crowd investors. The results also suggest that sustainability-oriented crowd investors care about non-financial returns, as they react more sensitively after experiencing a default in their equity crowdfunding portfolios, which indicates that they suffer beyond the pure financial loss. These findings contribute to recent literature on equity crowdfunding, socially responsible investing, and how individual investment motives and personal experiences affect investment decisions.
    Keywords: equity crowdfunding, individual investor behaviour, entrepreneurial finance, social , ethical, and environmental investing, socially responsible investing
    JEL: G11 G24 K22 M13
    Date: 2020

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