nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒09‒28
twelve papers chosen by
Marcus Dejardin
Université de Namur

  1. Declining Business Dynamism among Our Best Opportunities: The Role of the Burden of Knowledge By Thomas Astebro; Serguey Braguinsky; Yuheng Ding
  2. Entrepreneurial Recovery from COVID-19: Decentralization, Democratization, Demand, Distribution, and Demography By Naudé, Wim
  3. Immigration and Entrepreneurship in the United States By Pierre Azoulay; Benjamin Jones; J. Daniel Kim; Javier Miranda
  4. Entry of malls and exit of stores - The role of distance and economic geography By Klaesson, Johan; Nilsson, Helena
  5. IKEA entry - Effects on firms in retail and hospitality By Nilsson, Helena
  6. Entrepreneurial Orientation of the Companies in Bosnia and Herzegovina: The Importance of Contextual Factors By Veselinović, Ljiljan; Kulenović, Mirza; Šunje, Aziz
  7. Innovation, Firm Survival and Productivity: The State of the Art By Ugur, Mehmet; Vivarelli, Marco
  8. Entrepreneurship Education and Teacher Training in Rwanda By Blimpo, Moussa P.; Pugatch, Todd
  9. Gender Smart Financing Investing In and With Women: Opportunities for Europe By Agnieszka Skonieczna; Letizia Castellano
  10. Finance and Innovation in the Production Network By Brancati, Emanuele; Minetti , Raoul; Zhu, Susan Chun
  11. SME Bank Financing, from a European Perspective By Karen van der Wiel; Andrei Dubovik; Fien van Solinge
  12. 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

  1. By: Thomas Astebro; Serguey Braguinsky; Yuheng Ding
    Abstract: We document that since 1997, the rate of startup formation has precipitously declined for firms operated by U.S. PhD recipients in science and engineering. These are supposedly the source of some of our best new technological and business opportunities. We link this to an increasing burden of knowledge by documenting a long-term earnings decline by founders, especially less experienced founders, greater work complexity in R&D, and more administrative work. The results suggest that established firms are better positioned to cope with the increasing burden of knowledge, in particular through the design of knowledge hierarchies, explaining why new firm entry has declined for high-tech, high-opportunity startups.
    JEL: J24 J3 O3
    Date: 2020–09
  2. By: Naudé, Wim
    Abstract: Entrepreneurship, as re ected in the start-up of new firms, the growth and market exit of existing firms, and the ow of venture capital, has been severely curtailed by the lockdown and social distancing measures taken by governments around the world in the fight against COVID-19. This paper, after documenting preliminary evidence on these declines, argues that there is a strong possibility that the unintended damage to entrepreneurship, innovation and growth could be persistent. This requires that short-term economic and business rescue packages be complimented by measures aimed at the longer-term, and that these be based on at least five principles. These 5 principles (5Ds) refer to decentralization, democratization, demand, distribution and demography.
    Keywords: Entrepreneurship,innovation,COVID-19,public policy,economic growth,development
    JEL: I18 L26 L53 M13
    Date: 2020
  3. By: Pierre Azoulay; Benjamin Jones; J. Daniel Kim; Javier Miranda
    Abstract: Immigration can expand labor supply and create greater competition for native-born workers. But immigrants may also start new firms, expanding labor demand. This paper uses U.S. administrative data and other data resources to study the role of immigrants in entrepreneurship. We ask how often immigrants start companies, how many jobs these firms create, and how these firms compare with those founded by U.S.-born individuals. A simple model provides a measurement framework for addressing the dual roles of immigrants as founders and workers. The findings suggest that immigrants act more as "job creators" than "job takers" and that non-U.S. born founders play outsized roles in U.S. high-growth entrepreneurship.
    JEL: J15 L26 M13 O3
    Date: 2020–09
  4. By: Klaesson, Johan (Center for Entrepreneurship and Spatial Economics); Nilsson, Helena (Institute of Retail Economics (Handelns Forskningsinstitut))
    Abstract: The empirical literature on the effects of external malls on incumbent stores is inconclusive, and quantitative research on this topic is limited. In an attempt to add to the literature, this study examines the effect of the entry of external retail malls on store survival. Using a full firm population panel dataset at the store level covering the period 2000-2014, we examine the effect of a change in the distance to an external retail mall on the probability of retail store exit. In doing this we explicitly model the economic geography. We measure the economic activity in the location where these stores are situated using a market potential measure to gauge the economic density. The main result of this study is that the effects differ depending on where the incumbent firm is located. The effects on firms located in low-density areas and those on firms located in high-density areas differ dramatically. In low-density areas we find complementary effects which means that the probability of incumbent store exit is lesser. In high-density areas the estimated effect is the opposite, the entry of a new external mall increases the probability of incumbent store exit. The strength of the effects is dependent on the distance between the incumbent firm and the newly established external mall. Additionally, the size of effects differs between different parts of the retail sector. Effects remain over a number of years after entry of external malls but become smaller over time.
    Keywords: external shopping malls; complements; retail; panel-data; firm-exit; market potential
    JEL: C33 D22 L81 P25
    Date: 2020–08–31
  5. By: Nilsson, Helena (Institute of Retail Economics (Handelns Forskningsinstitut))
    Abstract: This study examines the entry effects of a durable goods big box, IKEA, on incumbent firms in the retail, accommodation and restaurant sectors in Sweden. Using a difference-in-difference approach combined with matching, the effects of IKEA entry on the net turnover and employment of incumbent firms located at varying distances from the new IKEA store are examined. The results show that entry by IKEA increases the net turnover of retail firms near the entry site that sell complement goods, indicating that IKEA entry causes demand spillovers due to multipurpose shopping. IKEA entry also increases the net turnover of accommodation firms in the region, which indicates that the entrant has a positive effect on the attractivity of the area. The estimations reveal no effects on retail firms located in the affected city centers, which suggests that retail in central places may have a certain resilience to competition from out-of-town retail clusters. No robust effects on substitute goods retailers or restaurants are found.
    Keywords: IKEA; retail; hospitality; agglomeration economies; competition; difference-in-difference
    JEL: C33 D22 L81 L83
    Date: 2020–08–31
  6. By: Veselinović, Ljiljan; Kulenović, Mirza; Šunje, Aziz
    Abstract: Entrepreneurial orientation (EO) represents a firm-level construct that captures innovativeness, proactiveness, and risk-taking of the existing companies. The main focus of this paper is to present the EO of 477 companies in Bosnia and Herzegovina and to compare EO between companies operating within different contextual factors. We used descriptive statistics and statistical testing to draw conclusions. Our paper presents the mean values of entrepreneurial orientation for each NACE industry category. In addition, our results confirm that there are statistically significant differences in entrepreneurial orientation between (a) the companies operating in a more competitive environment and the companies operating in a less competitive environment; (b) the companies with acquired ISO certificates and high level of TQM practices and the companies without ISO certificates and low level of TQM practices; (c) the companies operating in predominantly export-oriented markets and the companies operating in predominantly local markets; and finally (d) the companies located in Federation of Bosnia and Herzegovina and the companies located in Republic of Srpska. However, there are no statistically significant differences in entrepreneurial orientation between the older companies (older than two, five and ten years) and younger companies; nor between companies of different sizes. By analyzing organizational contextual factors, this paper identifies key variables that may play an important role in designing more complex structural models. Additionally, this paper presents the current state of entrepreneurial orientation of existing companies in Bosnia and Herzegovina.
    Keywords: entrepreneurial orientation,contextual factors,firm behavior,entrepreneurship,Bosnia and Herzegovina
    JEL: L2
    Date: 2019
  7. By: Ugur, Mehmet (University of Greenwich); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: We review the theoretical underpinnings and the empirical findings of the literature that investigates the effects of innovation on firm survival and firm productivity, which constitute the two main channels through which innovation drives growth. We aim to contribute to the ongoing debate along three paths. First, we discuss the extent to which the theoretical perspectives that inform the empirical models allow for heterogeneity in the effects of R&D/innovation on firm survival and productivity. Secondly, we draw attention to recent modeling and estimation effort that reveals novel sources of heterogeneity, non-linearity and volatility in the gains from R&D/innovation, particularly in terms of its effects on firm survival and productivity. Our third contribution is to link our findings with those from prior reviews to demonstrate how the state of the art is evolving and with what implications for future research.
    Keywords: innovation, R&D, survival, productivity
    JEL: O30 O33
    Date: 2020–09
  8. By: Blimpo, Moussa P. (University of Oklahoma); Pugatch, Todd (Oregon State University)
    Abstract: We assess, via an experiment across 207 secondary schools, how a comprehensive teacher training program affects the delivery of a major entrepreneurship curriculum reform in Rwanda. The reform introduced interactive pedagogy and a focus on business skills in the country's required upper secondary entrepreneurship course. In addition to the government's standard training, a random sample of schools received intensive training organized by an NGO for two years. The training consisted of (i) six training sessions during school breaks, ii) exchange visits each term where teachers provided feedback to their peers, and (iii) outreach and support from NGO staff at least twice per year. The program increased teachers' use of active instruction, consistent with the reform's features. These effects on pedagogy did not translate into improvements in student academic outcomes or skills. Treated students increased their participation in businesses by 5 percentage points, or 17% of the control mean, with a commensurate decrease in wage employment, and no effect on overall income. These results suggest substitution between entrepreneurship and employment among students in treated schools.
    Keywords: entrepreneurship education, teacher training, secondary school, pedagogy, randomized control trials, Rwanda
    JEL: I25 I26 I28 J24 O12 O15
    Date: 2020–08
  9. By: Agnieszka Skonieczna; Letizia Castellano
    Abstract: Gender-diverse teams produce better results. However, women remain underrepresented when it comes to investment, both as beneficiaries of investment and as decision-makers. In 2018, over 90% of capital raised by tech companies backed by European venture capital (VC) went to teams that did not have a single female founder. This paper discusses the reasons behind the gender investment gap, with a focus on the lack of female investors. Women’s wealth is on the rise and women tend to invest in more long-term and impactful projects. Investing in and with women is thus an opportunity that Europe needs to seize for more sustainable and inclusive growth. InvestEU, the EU investment programme as of 2021, could act as a catalyst of these benefits by stimulating gender-smart financing, i.e. financing that funds, empowers and inspires female founders and investors.
    JEL: G20 G30 O16
    Date: 2020–07
  10. By: Brancati, Emanuele (University of Rome, La Sapienza); Minetti , Raoul (Michigan State University, Department of Economics); Zhu, Susan Chun (Michigan State University, Department of Economics)
    Abstract: Disruptions of the production network, such as that triggered by the 2020 global crisis, can spill over to firms’ financing and investment processes. This paper studies the role of the production network in the nexus between finance and investment in innovation. Using matched firm-bank data on 25,000 Italian businesses over the 2011-2017 period, we find that firms’ participation in supply chains significantly attenuates the negative effect of bank credit constraints on innovation. A disruption of 25% of the supply chain linkages is predicted to magnify the impact of credit constraints on innovation by about 17%. The support of supply chains to credit constrained innovators reflects not only liquidity pooling in supply chains but also the substitution of liquidity-intensive innovations with transfers of knowledge along R&D-oriented chains. The support fails however to materialize for radical innovations.
    Keywords: Banks; Financial Constraints; Innovation; Supply Chains
    JEL: G21 O30
    Date: 2020–09–08
  11. By: Karen van der Wiel; Andrei Dubovik; Fien van Solinge
    Abstract: Bank loans continue to be the main source of external financing for small and medium-sized enterprises (SMEs), in both the Netherlands and other European countries. Businesses are using those loans for expansion, innovation or as working capital. But Dutch SMEs are applying for fewer bank loans, and those applications are often rejected by the banks. How does SME bank financing in the Netherlands relate to other European countries, and what are the reasons for the differences?
    Date: 2019
  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: 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

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