nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒08‒31
fifteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Does Emigration Drain Entrepreneurs? By Massimo Anelli; Gætano Basso; Giuseppe Ippedico; Giovanni Peri
  2. The Short-Term Effect of COVID-19 on Self-Employed Workers in Canada By Beland, Louis-Philippe; Fakorede, Oluwatobi; Mikola, Derek
  3. Rising Wealth Inequality: Intergenerational Links, Entrepreneurship, and the Decline in Interest Rate By Ayşe İmrohoroğlu; Kai Zhao
  4. Puritan Motivation for Serial Entrepreneurship: The Haugean Example By Grytten, Ola Honningdal
  5. Partnership for inclusive growth: Can linkages with large firms spur the growth of SMEs in Tanzania? By Josaphat Kweka; Fadhili Sooi
  6. Does Innovation Affect the Demand for Employment and Skilled Labor? By Adriana Peluffo
  7. Entrepreneurship, Human Capacity Development and Youth Employment Generation: A Study of Selected Sub-Saharan Africa Countries By Oyolola, Feyisayo; Otonne, Adewumi
  8. The Scientific Output of a Database on Commercialized Patents By Svensson, Roger
  9. Patent Puzzle, Inflation, and Internal Financial Constraint By Suzuki, Keishun
  10. The ‘Welfare Loss from Monopoly’ Re-visited By Richard Carson
  11. Firm’s innovation strategies and employment: new evidence from Uruguay By Carlos Bianchi; Hugo Laguna
  12. Does Growth Enhancement Support Scheme (GESS) Contribute to Youth Development in Informal Farm Entrepreneurship? Evidence from Rural Communities in Nigeria By Joseph I. Uduji; Elda N. Okolo-Obasi; Simplice A. Asongu
  13. The COVID-19 shock and equity shortfall: Firm-level evidence from Italy By Carletti, Elena; Oliviero, Tommaso; Pagano, Marco; Pelizzon, Loriana; Subrahmanyam, Marti G.
  15. Entrepreneurs immigrants créateurs d’emplois : le cas des entreprises privées canadiennes constituées en société By Picot, Garnett; Rollin, Anne-Marie

  1. By: Massimo Anelli; Gætano Basso; Giuseppe Ippedico; Giovanni Peri
    Abstract: Emigration of young, motivated individuals may deprive countries-of-origin of entrepreneurs. We isolate exogenous variation in a large emigration wave from Italy between 2008 and 2015 by interacting diaspora networks with economic pull factors in destination countries, and find that larger emigration rates reduced firm creation and innovative start-ups. We estimate that for every 100 emigrants, 26 fewer firms were created. An accounting exercise shows that 37 percent of the effect was due to the disproportionate loss of young people. The remaining effect was due to selection into emigration of highly entrepreneurial individuals, as well as negative spillovers on firm creation.
    Keywords: emigration, demography, brain drain, entrepreneurship, innovation, EU integration
    JEL: J61 H70 O30 M13
    Date: 2020
  2. By: Beland, Louis-Philippe; Fakorede, Oluwatobi; Mikola, Derek
    Abstract: Using the Canadian Labour Force Survey, we document the short-term impact of COVID-19 on self-employed individuals in Canada, which we interpret as small business owners. We document an important decrease in business ownership between February 2020 and May 2020 (-14.8 percent for incorporated and -10.1 percent for unincorporated entities). We find a greater decrease in ownership and aggregate hours for women, immi- grants and less educated over the same period. The industries with the largest decrease are in art, culture, and recreation (-14.8 percent); in education, law and social, commu- nity and government services (-13.6 percent); and in sales and service occupations (-12.8 percent).
    Keywords: COVID-19,Self-Employed workers,Entrepreneurship,Employment,Labour Force,Hours
    JEL: L26 J21 J24 I18
    Date: 2020
  3. By: Ayşe İmrohoroğlu (University of Southern California); Kai Zhao (University of Connecticut)
    Abstract: The share of wealth held by the top one percent of Americans has increased from about 24% in 1980 to 40% in 2010. This paper examines the potential role played by three factors in accounting for this increase – decline in the corporate tax rates, increase in the income risk, and the decline in the world interest rates. Our model consists of altruistic households who either run a business or work for others. Entrepreneurial households enjoy high returns due to high productivity while worker households' savings earn the bank deposit rate that is determined in a competitive banking sector and equals the rate of return on foreign bonds. We find that entrepreneurship and intergenerational links via altruism are important factors generating a wealth distribution that mimics the data in the 2000s. However, it is the decline in the interest rate that plays a major role in accounting for the increase in the U.S. wealth inequality since the 1980s. In our model, the decline in the interest rate increases wealth inequality as it affects the two types of households differently. Entrepreneurial households benefit from lower financing costs and increase their investments while worker households face lower returns to their savings as the interest rate declines. Other changes such as the changes in taxation and income risk play a less significant role.
    Keywords: inequality, intergenerational links, saving, lifecycle models
    Date: 2020–08
  4. By: Grytten, Ola Honningdal (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: It is well known that protestant and puritan environments historically have fostered entrepreneurs. This paper looks at serial entrepreneurship which took place in Norway in the 19th century in networks led by the puritan leader Hans Nielsen Hauge (1771-1824) and his followers. The paper seeks to give an overview of their entrepreneurship and discusses their motivation behind their actions. It concludes they were heavily engaged in serial entrepreneurship, not only within business, but also concerning, politics, welfare and education and that there was a clear religious motivation for their activities.
    Keywords: Puritanism; Protestantism; Entrepreneurship; Education; Welfare
    JEL: B15 B25 N10 N30 N90 O10 O40 O47 P10 P30 P41 P47 P50
    Date: 2020–08–07
  5. By: Josaphat Kweka; Fadhili Sooi
    Abstract: A recent strand of literature on small and medium enterprise (SME) development identifies linkages with large firms as some of the enablers of development and competitiveness. However, there is a dearth of empirical studies on the topic. In this study, we assess the extent and determinants of linkages between SMEs and large firms in Tanzania and to what degree the linkage is an important driver of SME performance.
    Keywords: SMEs, firm linkages, firms, SME growth
    Date: 2020
  6. By: Adriana Peluffo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: The objective of this work is to analyze the effect of innovation on labor demand, particularly, the level of employment and the skills composition of the labor force, in level and growth rates. Additionally, we analyze the ratio of skilled to unskilled labor and wages. The data for this study come from the Innovation Surveys for Uruguayan manufacturing and service firms over the 2000-2015 period matched with the Industrial Surveys of Economic Activity. We analyze the whole sample and each sector according to technological/knowledge intensity and firm size. Our results for ordinary least squares, instrumental variables, and generalized method of moments show positive effects of innovation in the level of total employment and skilled workers, its rate of growth, and wages. Product and Enhancing productivity innovation show positive impact on employment. Splitting by manufacturing firms we observe that product innovation affect growth in employment for high-tech firms while organizational innovation and productivity enhancing innovation affects growth in skilled labor with a greater effect for low-tech firms, while organizational innovation affects growth in skilled labor and in the share of skilled labor. Small manufacturing and service firms are less responsive to innovation. Growth in employment of service firms are affected mainly by organizational innovation and productivity enhancing innovation. Thus, enhancing productivity innovation and its component of organizational innovation seems to play an important role on employment growth.
    Keywords: Employment, Skilled Labor, Product Innovation, Process Innovation
    JEL: D2 J23 L1 O31 O33
    Date: 2020–07
  7. By: Oyolola, Feyisayo; Otonne, Adewumi
    Abstract: This study examined entrepreneurship, human capacity development and youth employment generation in 20 selected sub-Saharan African countries from 2005 to 2017. We employed the fixed effect Panel estimator on the secondary annual data sourced for the study. Findings from the study show that entrepreneurial activities and infrastructural development are important determinants of youth employment generation in the selected countries. The implication of these findings is that entrepreneurial activities and infrastructural development should be of concern to policy makers, and well meaning private individuals as they are observed to be significant determinant of youth employment. More importantly, individual are required to posses refined skills to match the quality of infrastructural facilities in the work place. Therefore, as a matter of policy implication these African Countries should ensure that the conclusion of this study is considered and implemented, and make considerable effort to reduce the large informal sector by putting in place laws and rules that will ensure that the activities of the self-employed people are recognized and accounted for on a large scale.
    Keywords: Human Capacity Development, Entrepreneurship and Youth Employment Generation
    JEL: J0
    Date: 2020–03–18
  8. By: Svensson, Roger (Research Institute of Industrial Economics (IFN))
    Abstract: The purpose of this study is to present a unique database on commercialized patents and to illustrate how it can be used to analyze the commercialization process of patents. The dataset is based on a survey of Swedish patents owned by inventors and small firms with a remarkably high response rate of 80 percent. It contains some key variables on commercialization not found anywhere else, including whether, when and how (acquisition, licensing, existing or new firm) patents were commercialized as well as whether this commercialization was profitable or not. Thus, this patent database measures technological innovation. The dataset is complemented with indicators of patent quality (patent renewal, forward citations, and patent family) from archive sources. Basic statistics for the key variables are described. Finally, the scientific output in terms of published articles in peer-reviewed journals shows how this database can be used to analyze the commercialization process of patents. The dataset has, for instance, been used to 1) evaluate government loan programs for inventors; 2) analyze the different roles of the inventor and the Schumpeterian entrepreneur during commercialization; 3) estimate the transfer of tacit knowledge when patents are sold or licensed; and 4) analyze the entry strategy among inventors in oligopolistic markets.
    Keywords: Patents; Commercialization; Innovation; Small firms; Inventors; Acquisition; Licensing; New start-up firms; Forward citations; Renewal; Patent equivalents; Financing; Entry strategy; Venture capital
    JEL: G24 G34 L10 L20 M13 O30 O31 O32 O34 O38
    Date: 2020–08–12
  9. By: Suzuki, Keishun
    Abstract: Although Schumpeterian growth models typically predict that stronger patent protection enhances innovation-driven economic growth, the empirical evidence does not support this idea. We explore the unclear relationship at work by shedding light on the financing of R&D investment. Empirically, R&D-intensive firms preferentially rely on their internal cash flows rather than external funds. We develop a simple monetary Schumpeterian growth model in which R&D firms face an endogenous financing choice that is consistent with this evidence. In our model, the scale of R&D investment may be financially constrained by internal cash because external financing is costly. Our model shows that the relationship between patent protection and growth can be either N-shaped, inverted-U shaped, or positive depending on the inflation rate. Specifically, we find that the growth effect of the pro-patent policy is likely to be negative under a high inflation rate, while the growth effect is always positive under the Friedman rule.
    Keywords: Innovation, Patent Protection, Inflation, Financing of R&D
    JEL: E44 O31 O34
    Date: 2020–07
  10. By: Richard Carson (Department of Economics, Carleton University)
    Abstract: In the 1950s, economists claimed that the ‘welfare loss from monopoly’ was well below 1% of GNP. This led to the literature on rent seeking that argued for an additional loss equal to all or part of the economic profit. Here I identify a third loss in the form of suppression of innovation and entrepreneurship when this leads to a decrease in political support. This decrease results from an increase in political competition and loss of rent on old technology. The third loss may be the highest of all.
    Keywords: Efficiency, Inclusiveness, Political Support, Rent Seeking.
    JEL: D42 O30 P59
    Date: 2020–08
  11. By: Carlos Bianchi (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Hugo Laguna (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración)
    Abstract: A large and rich body of literature has shown that the relationship between innovation and employment is complex and dynamic in nature. From a firm’s level analysis, recent researches have shown heterogeneous empirical patterns for developed and developing countries. This paper contributes by inquiry in the role of innovation strategies as determinants of the firm’s employment growth in a Latin American small middle-income country. Adapting econometric structural models currently in vogue, we discuss the effects of three innovation strategies (Make, Buy, Make&Buy) on the firm’s workforce growth. In line with the literature, we identify a significant positive relation between product innovation associated with Make and Make&Buy strategies, however, on the contrary to most recent research we find a positive and significant effects of process innovation associated to Buy strategies. Considering technological, sectoral and firm characteristics, our findings show a clear positive effect of any innovation strategy in the growth of the firm’s workforce. Meanwhile, no innovative strategies negatively affect workforce growth. Our findings contribute by deepening the understanding of the firm level determinants of employment in developing countries. We analyze our result in the light of a recent but extensive evidence on the relationship between innovation and employment at firm’s level in Uruguay. In particular, we discuss the traditional explanation on the firm’s technological behavior in Latin America, to discuss the effects on employment of integrative innovation strategies in Uruguay.
    Keywords: innovation strategies, employment, Latin America, Uruguay
    JEL: O33 D22 J23
    Date: 2020–05
  12. By: Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Purpose – The purpose of this paper is to critically examine the impact of a growth enhancement support scheme (GESS) on youth development in informal farm entrepreneurship in Nigeria. Its special focus is to investigate the impact of the GESS on rural youths’ adoption of new technologies needed to sustainably increase food security in Nigeria. Design/ methodology/ approach – This paper adopts a survey research technique, aimed at gathering information from a representative sample of the population, as it is essentially cross-sectional, describing and interpreting the current situation. A total of 800 rural youths were sampled across the six geopolitical zones of Nigeria. Findings – The result from the use of a bivariate probit model indicate that the GESS has a significant impact on rural youths’ innovations in farming. Practical implication – This suggests that information and communication technology (ICT) could provide new opportunities for making farming more interesting and enterprising for rural young people. Social implication – It implies that while old male and female farmers are less likely to adopt the new farming technologies needed to achieve Nigeria’s agricultural transformation agenda (ATA), a younger generation can help introduce new technologies, whilst also learning from traditional methods. Originality/ value – This research adds to the literature on informal farm entrepreneurship and rural communities’ debate in developing countries. It concludes that engaging youths in GESS should form the foundation of the ATA in Nigeria, which, in turn, would offer adequate combination of new and traditional solutions to address the challenges of food insecurity in sub-Saharan Africa.
    Keywords: Youth Development Initiative, Informal Farm Entrepreneurship, Growth Enhancement Support Scheme (GESS), Rural Communities in Nigeria
    Date: 2020–01
  13. By: Carletti, Elena; Oliviero, Tommaso; Pagano, Marco; Pelizzon, Loriana; Subrahmanyam, Marti G.
    Abstract: We employ a representative sample of 80,972 Italian firms to forecast the drop in profits and the equity shortfall triggered by the COVID-19 lockdown. A 3-month lockdown generates an aggregate yearly drop in profits of about 10% of GDP, and 17% of sample firms, which employ 8.8% of the sample's employees, become financially distressed. Distress is more frequent for small and medium-sized enterprises, for firms with high pre-COVID-19 leverage, and for firms belonging to the Manufacturing and Wholesale Trading sectors. Listed companies are less likely to enter distress, whereas the correlation between distress rates and family firm ownership is unclear.
    Keywords: COVID-19,pandemics,losses,distress,equity,recapitalization
    JEL: G01 G32 G33
    Date: 2020
    Abstract: This paper investigates the flair for business, hard work, big ideas, disruptive innovation, the intangible characteristics of an entrepreneur that determines the success of the business, by bringing in small and medium enterprises, a set of modern tools to raise the level of entrepreneurial approaches - from capitalizing on know-how and research in partnership with the business environment, to strengthen transdisciplinary entrepreneurial approaches.Among the many qualities that help him cope with the challenges involved in developing a company, there are three essential things that every entrepreneur must possess: courage, innovation and resistance to stress.Innovations need entrepreneurs, but the reciprocal is also valid for a successful business, it is necessary to satisfy a need that has not been satisfied so far, to offer a lower price, an innovation process is necessary.Without the element of novelty, an entrepreneur is weak in the business world. That is why I say that innovation and entrepreneurship are two indestructibly linked fields. Promoting entrepreneurial approaches can start to generate positive results if the vision of young entrepreneurs, the development of skills related to entrepreneurship and innovation are correlated.
    Keywords: disruptive innovation, entrepreneurship, novelty, entrepreneurial approaches.
    JEL: J24 A00 A10
  15. By: Picot, Garnett; Rollin, Anne-Marie
    Abstract: À l’aide de données de la Base de données canadienne sur la dynamique employeurs-employés (BDCDEE) de Statistique Canada, le présent article vise trois objectifs : 1) comparer le nombre d’emplois créés ou ayant disparu au sein des entreprises privées constituées en société appartenant à des immigrants à celui des entreprises appartenant à des personnes nées au Canada; 2) déterminer si les entreprises appartenant à des immigrants étaient proportionnellement plus nombreuses que les entreprises appartenant à des personnes nées au Canada à enregistrer une forte croissance ou une réduction rapide des effectifs; 3) déterminer les caractéristiques des immigrants qui sont associées à la probabilité plus élevée que les entreprises appartenant à des immigrants présentent une forte croissance ou une réduction rapide des effectifs. Le présent article traite de la création brute d’emplois (les emplois créés par l’expansion d’entreprises demeurées en activité et par des entreprises entrant sur le marché), de la disparition brute d’emplois (les emplois ayant disparu du fait de la décroissance et de la disparition d’entreprises) et la variation nette de l’emploi (la différence entre la création brute et la disparition brute d’emplois).
    Keywords: Interruptions d'activité, Création d'emplois, Immigrants, Entrepreneurs
    Date: 2019–04–24

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