nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒10‒12
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Entrepreneurial discrete choice: Modelling decisions between self-employment, employer and worker status. Working paper 15. By Bennett, Robert; Montebruno, Piero; Smith, Harry; van Lieshout, Carry
  2. One transition story does not fit them all: Initial regional conditions and new business formation after socialism By Michael Fritsch; Maria Kristalova; Michael Wyrwich
  3. Reconstructing business proprietor responses for censuses 1851-81: a tailored logit cut-off method. Working paper 9.2. By Bennett, Robert; Montebruno, Piero; Smith, Harry; van Lieshout, Carry
  4. Latent Technology as an Outcome of R&D By Cunningham, James; Link, Albert
  5. Financial Capital and Immigrant Self-Employment: Evidence from a Swedish Reform By Aldén, Lina; Hammarstedt, Mats; Miao, Chizheng
  6. The effortful process of routines emergence: The interplay of entrepreneurial actions and artefacts By Aura Cajaiba; Nathalie Lazaric; Giovany Santana
  7. Clean Energy Innovation and the Influence of Venture Capitalists' Social Capital By Till Fust
  8. Effects of interest rate caps on microcredit: evidence from a natural experiment in Bolivia By María José Roa; Alejandra Villegas; Ignacio Garrón
  9. EU start-up calculator: impact of COVID-19 on aggregate employment: Scenario analysis for Austria, Belgium, Germany, Hungary, Italy and Spain By Cristiana Benedetti Fasil; Petr Sedlacek; Vincent Sterk
  10. Sustainable Peace building and Development in Nigeria’s Post-Amnesty Programme: the Role of Corporate Social Responsibility in Oil Host Communities By Uduji, Joseph; Okolo-Obasi, Elda; Asongu, Simplice
  11. Values of Farmers in the Context of Entrepreneurship – Evidence from Germany By Graskemper, Viktoria; Meine, Karolin; Feil, Jan-Henning
  12. The COVID-19 Shock and Equity Shortfall: Firm-level Evidence from Italy By Elena Carletti; Tommaso Oliviero; Marco Pagano; Loriana Pelizzon
  13. Financial Distress and the Role of Management in Micro and Small-Sized Firms By Alexandre, Fernando; Cruz, Sara; Portela, Miguel

  1. By: Bennett, Robert; Montebruno, Piero; Smith, Harry; van Lieshout, Carry
    Abstract: This paper estimates an entrepreneurial choice model between different forms of business organisation, focusing on the choice to operate as a sole proprietor operating on own account, or as an employer, rather than as a waged employee. ‘Own account’ was the phrasing used through the censuses of the period we cover: it describes an entrepreneur who operates as self-employed on their own with no employees. A discrete choice decision model is used to estimate probabilities of different choices using the large scale data for England and Wales contained in the ‘British Business Census of Entrepreneurs 1851-1911’ to be deposited at UKDA. This paper uses the data for the later censuses, 1891-1911. This database is one of the outputs of ESRC project ES/M010953 Drivers of Entrepreneurship and Small Businesses’.
    Keywords: Entrepreneurship; Employers; Self-employment; Small businesses; Census
    JEL: D13 D22 L25 L26
    Date: 2019–02
  2. By: Michael Fritsch (Friedrich Schiller University Jenam and Halle Institute for Economic Research (IWH)); Maria Kristalova (Friedrich Schiller University Jena); Michael Wyrwich (University of Groningen, and Friedrich Schiller University Jena)
    Abstract: We investigate the reasons for the pronounced regional differences of new business formation after the transformation from a socialist planned system to a market economy in East Germany. Relatively high start-up rates are found in regions that had a well-qualified workforce and a relatively high share of remaining self-employed at the end of the socialist period. This also holds for high-tech manufacturing start-ups. Based on our conclusion that policy should account for these initial regional conditions, we use two criteria to introduce a classification of regions.
    Keywords: Entrepreneurship, new business formation, regional conditions, transformation, East Germany
    JEL: L26 R11 N94 P25
    Date: 2020–09–18
  3. By: Bennett, Robert; Montebruno, Piero; Smith, Harry; van Lieshout, Carry
    Abstract: This paper extends the reconstruction method developed in WP 9 to identify entrepreneurs 1851-81. Its aim is to identify the individual employers and own-account business people for 1851-1881, where employment status was not explicitly identified in the population censuses. This paper develops a method of variable logit cut-offs tailored to each occupation code. This allows the original census responses can be supplemented to give approximately all employers and own account. The aim is to provide a further resource for subsequent researchers, which is available in the database deposited at UK Data Archive (UKDA) as the British Census of Entrepreneurs 1851-1911 (BBCE), derived from the ESRC-supported project ES/M010953 Drivers of Entrepreneurship and Small Businesses.
    Keywords: Entrepreneurship; Employers; Self-employment; Small businesses; Census
    JEL: D13 D22 L25 L26
    Date: 2019–09
  4. By: Cunningham, James (Northumbira University); Link, Albert (University of North Carolina at Greensboro, Department of Economics)
    Abstract: This paper focuses on a situation in which a firm decides to sell its non-commercialized technology to another firm rather than commercialize it (a latent entrepreneurial firm), and the other firm then adopts the appearance of an emergent entrepreneur. Using U.S. project data from firms funded through the U.S. Small Business Innovation Research (SBIR) program, we find using a qualitative choice model that firms that do not commercialize their newly developed SBIR-funded technology have a greater probability of selling their technology to another firm than do firms that do commercialize. We also identify other covariates with the probability that such a firm will sell their technology.
    Keywords: Latent entrepreneurship; Emergent entrepreneurship; SBIR; Commercialization;
    JEL: O32 O33 O38
    Date: 2020–09–29
  5. By: Aldén, Lina (Department of Economics and Statistics); Hammarstedt, Mats (Linnæus University and); Miao, Chizheng (Department of Economics and Statistics)
    Abstract: We study the role of capital requirement in immigrants’ self-employment decision with the help of a reform implemented in Sweden in 2010 which reduced capital requirements for limited liability companies. For both men and women, the reform increased both the probability of starting a limited liability firm and the probability of changing corporate form for those self-employed prior to the reform. We found that the reform affected immigrants and natives differently. Natives primarily responded to the reform by changing corporate form whereas immigrant men, especially those originating from the Middle East, responded to the reform by starting limited liability firms. Small differences emerge when we compare native women with immigrant women. Finally, it is the wage employed who start a limited liability business in the post-reform period, underlining the fact that access to financial capital is an obstacle for wage-employed individuals who opt for self-employment. This is true for both immigrants and natives. In contrast, more marginalised groups (i.e. unemployed immigrants), do not respond to the reform by starting limited liability firms.
    Keywords: Self-employment; Financial capital; Limited liability; Immigrants
    JEL: J15 J68 L26 L51
    Date: 2020–09–29
  6. By: Aura Cajaiba (UCA - Université Côte d'Azur); Nathalie Lazaric (UCA - Université Côte d'Azur, GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019) - CNRS - Centre National de la Recherche Scientifique); Giovany Santana (KEDGE Business School [Marseille])
    Abstract: Despite recent calls for processual analysis of routines creation, little work has been done to investigate the entrepreneurial mechanisms that explain the creation and adoption of new routines. This paper provides a processual contribution to the study of organizational routines by proposing a model for routine creation, based on an analysis of collective entrepreneurial actions. Using an entrepreneurial bricolage lens, we show how agents, during the creation of new routines, develop mechanisms to adapt firm processes, enact external constraints and validate novel practices. Our analysis is based on a three-year collaborative study in a French biotechnology firm. We develop a processual model of routine creation comprising three phases: scanning, performing and adopting. The model provides new insights into the interplay between artefacts and entrepreneurial actions in the creation of new routines.
    Keywords: routines,entrepreneurship,biocontrol
    Date: 2020
  7. By: Till Fust
    Abstract: This study contributes to the understanding of the enabling role that venture capitalists can play in bringing new innovative technologies to market, with a focus on clean energy technologies. Applying the structural model introduced by Sorensen (2007) that allows to control for a potential sorting bias, I estimate the influence of venture capital investor's social capital on startups' funding and exit performance, with social capital de ned as the investors' eigencentrality and constraint within the network of investors. Looking at startups' first venture capital funding rounds in California between 2001 and 2019, this study finds a positive and significant influence of the lead investor's eigencentrality on the funding amount raised and the exit probability of the firm. Furthermore, a less constrained lead investor also increases the chance of the startup's eventual exit. But no differentiated effect for cleantech startups compared to other industries is found.
    Keywords: Venture Capitalists;CleanEnergy; Clean Technologies; Startups; Capital Funding; Cleantech startup
    JEL: O14 O33 Q41 Q42
    Date: 2020–09–29
  8. By: María José Roa (Investigadora del Instituto de Investigaciones Económicas y Sociales Francisco de Vitoria); Alejandra Villegas (Investigadora de Universidad Iberoamericana Ciudad de México); Ignacio Garrón (Consultor indpendiente)
    Abstract: This paper evaluates the imposition of caps on microcredit lending rates through directed credit policies for productive sectors. This financial inclusion intervention provides a unique quasi-experiment, allowing to estimate its causal effect following a difference-in-differences analysis. Our results suggest that the imposition of interest rate ceilings negatively affected the portfolio balance of new microcredits and loans to SMEs granted by MFIs. Particularly, we find robust results indicating that the balance of the microcredit and SME loans portfolio granted by MFIs, relative to the company portfolio granted by banks, decreased by 26.1% for an average MFI for the period 2011-2018.
    Keywords: Interest rate ceilings, financial inclusion, credit access, microcredit loans, small and medium enterprises loans .
    JEL: G18 G28 G38
    Date: 2020–09
  9. By: Cristiana Benedetti Fasil (European Commission – JRC); Petr Sedlacek (University of Oxford, UK, CFM-LSE & CEPR); Vincent Sterk (University College London, UK, CFM-UCL & CEPR)
    Abstract: Early data show that the COVID-19 pandemic has affected particularly strongly start-up activity. This may have dramatic and lasting effects on aggregate employment which persist as the cohort of new firms age. To assess the impact, we developed the EU start-up calculator. This is an empirical tool that allows to conduct scenario analysis to compute the impact that the disruption of start-up activity has on aggregate employment on EU Member States and their economic sectors. In particular, we simulate a strong (i.e. of magnitude equivalent to the Great Recession) but short-lived (i.e. lasting one-year) crisis in Austria, Belgium, Germany, Hungary, Italy and Spain. This shock generates important and persistent job losses in all the countries that range between 0.7 (Belgium) to 2.2% (Austria) in 2020 and adds to a cumulative employment loss for the period 2020-2030 that ranges between 82 thousand (Belgium) to 1186 thousand (Italy). The negative impact is particularly high in Austria, Hungary, Italy and Spain, as well as in the service sector, which are characterized by a high firm turnover and that rely on start-ups and young firms for job creation. We also find that in most countries the deterioration of the survival rate of young firms plays an important role in driving employment, seconded by the number of new entrants. As a consequence, policies aimed at supporting young firms and incentivizing the creation of new ones may significantly mitigate the medium-term effect of the pandemic. In fact, when we simulate bounce-back scenarios where the number of firms entering the economy rapidly increases in 2021, in every country the outlook is significantly improved, the recovery is faster and the aggregate job loss is lower.
    Keywords: COVID-19, start-ups, employment
    Date: 2020–09
  10. By: Uduji, Joseph; Okolo-Obasi, Elda; Asongu, Simplice
    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
    JEL: O1 O55 Q01
    Date: 2020–01
  11. By: Graskemper, Viktoria; Meine, Karolin; Feil, Jan-Henning
    Keywords: Farm Management
    Date: 2020–09–18
  12. By: Elena Carletti; Tommaso Oliviero; Marco Pagano; Loriana Pelizzon
    Abstract: We forecast the drop in profits and the equity shortfall triggered by the COVID-19 lockdown, using a representative sample of 80,972 Italian firms. A 3-month lockdown entails an aggregate yearly drop in profits of about 10% of GDP and results in financial distress for 17% of the sample firms, employing 8.8% of the sample employees. Distress is more frequent for small and medium-sized enterprises, for firms with high pre-COVID-19 leverage, and those belonging to the Manufacturing and Wholesale Trading sectors. Listed companies are less likely to enter distress, while there is no clear correlation between distress rates and family firm ownership.
    Keywords: COVID-19, pandemics, losses, distress, equity, recapitalization.
    JEL: G01 G32 G33
    Date: 2020–10
  13. By: Alexandre, Fernando (University of Minho); Cruz, Sara (University of Minho); Portela, Miguel (University of Minho)
    Abstract: In this paper, we focus on managerial characteristics of micro and small-sized firms. Using linked employer-employee data on the Portuguese economy for the 2010-2018 period, we estimate the impact of management teams' human capital on the probability of firms becoming financially distressed and on their subsequent recovery. Our estimates show that the relevance of management teams' formal education on the probability of firms becoming financially distressed depends on firms' size and the type of education. We show that management teams' formal education and tenure reduces the probability of micro and small-sized firms becoming financially distressed and increases the probability of their subsequent recovery. The estimates also suggest that those impacts are stronger for micro and small-sized firms. Additionally, our results show that functional experience previously acquired in other firms, namely in foreign-owned and in exporting firms and in the area of finance, may reduce the probability of micro firms becoming financially distressed. On the other hand, previous functional experience in other firms seems to have a strong and highly significant impact on increasing the odds of recovery of financially distressed firms. We conclude that policies that induce an improvement in the managerial human capital of micro and small-sized firms have significant scope to improve their financial condition, reducing the likelihood of firms entering a state of financial distress.
    Keywords: financial distress, human capital, firm performance
    JEL: G32 J24 L25
    Date: 2020–09

This nep-ent issue is ©2020 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.