nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒11‒02
eleven papers chosen by
Marcus Dejardin
Université de Namur

  1. Survival and the ergodicity of corporate profitability By Mundt, Philipp; Alfarano, Simone; Milaković, Mishael
  2. She Could Not Agree More: The Role of Failure Attribution in Shaping the Gender Gap in Competition Persistence By Manar Alnamlah; Christina Gravert
  3. Why Are Africa's Female Entrepreneurs Not Playing the Export Game? Evidence from Ghana By Ackah, Charles G.; Görg, Holger; Hanley, Aoife; Hornok, Cecília
  4. Explaining Firm-Level Gender Productivity Differential in Africa By Amira El-Shal; Hanan Morsy
  5. Macroeconomics, firm dynamics and IPOs By Beatriz González
  6. Determinants of Growth Performance of High Growth Firms: An Analysis of The Turkish Manufacturing Sector By Fatma M. Utku-ismihan; M. Teoman Pamukçu
  7. Money, Growth, and Welfare in a Schumpeterian Model with the Spirit of Capitalism By Qichun He; Yulei Luo; Jun Nie; Heng-fu Zou
  8. Social Capital and Corporate Performance: Evidence from State Capital Enterprises in Vietnam By Ngo, Chin; Nguyen, Quyen Le Hoang Thuy To; Nguyen, Phong Thanh
  10. Business Models for Starting Software Companies By Ivanov, Svetoslav; Petrov, Pavel
  11. Mehr weibliche Business Angels führen zu mehr Startup Gründerinnen By Wuttig, Alexandra; Weber, Susanne Theresia

  1. By: Mundt, Philipp; Alfarano, Simone; Milaković, Mishael
    Abstract: The cross-sectional variation in corporate profitability has occupied research across fields as diverse as strategic management, industrial organization, finance, and accounting. Prior work suggests that industry affiliation as well as different forms of corporate idiosyncrasies are important determinants of profitability, but it disagrees widely on the quantitative importance of particular effects. This paper shows that industry and corporate specificities become irrelevant in the long run because profitability is ergodic conditional on survival, implying that there is a uniform, time-invariant regularity in profitability that applies across firms. Conditional on survival, we cannot reject the hypothesis that corporations are on average equally profitable and also experience equally volatile fluctuations in their profitability, irrespective of their individual characteristics. The same is not true for shorter-lived firms, even for up to 20 years after entry or before exit, and would explain the contradictory findings in the extant literature, which usually considers samples containing heterogeneous mixtures of surviving and shorter-lived companies. Therefore the mere fact of survival, rather than any previously suggested set of variables, becomes the only relevant information for corporate profitability in the long run.
    Keywords: performance,dynamic competition,corporate strategy,stochastic differential equation
    JEL: C14 L10 D21 E10
    Date: 2020
  2. By: Manar Alnamlah (Department of Strategy and Innovation, Copenhagen Business School); Christina Gravert (CEBI, Department of Economics, University of Copenhagen)
    Abstract: In competitive and high-reward domains such as corporate leadership and entrepreneurship, women are not only underrepresented but they are also more likely to drop-out after failure. In this study, we conducted a laboratory experiment to investigate the influence of attributing failure to one of the three causal attributions - luck, effort, and ability - on the gender difference in competition persistence. Participants compete in a real effort task and then their success or failure is attributed to one of three causal attributions. We find significant gender differences in competition persistence when failure is attributed to a lack of ability, with women dropping out more. On the contrary, when suggested that failure was due to lack of luck, women’s competition persistence after failure increases relative to men. We find no gender difference when failure is attributed to a lack of effort. Our findings have important implications for designing feedback mechanisms to reduce the gender gap in competitive domains.
    Keywords: decision analysis, competition, gender gap, performance feedback, laboratory experiment
    JEL: C91 D03 M50 J24
    Date: 2020–10–19
  3. By: Ackah, Charles G. (University of Nottingham); Görg, Holger (Kiel Institute for the World Economy); Hanley, Aoife (Kiel Institute for the World Economy); Hornok, Cecília (Kiel Institute for the World Economy)
    Abstract: We explore the export performance of Africa's underperforming female entrepreneurs, using the Ghanaian ISSER-IGC panel, a comprehensive dataset of manufacturing firms for 2011–2015. Uniquely, the data provides information about the severity of key business constraints, across both male and female entrepreneurs. We find that females are less likely to export (and optimize their exporting) than their male peers. Although reduced access to finance seriously constrains the exports of female entrepreneurs, this limitation does not explain their relative inability to leverage value from exports. Consistent with related work, we find that certain social and cultural constraints, in particular constraints linked to bribes and security concerns, are more deeply felt by female entrepreneurs. This may hint at the exclusion of Africa's females (voluntarily or involuntarily) from male-dominated networks or business practices.
    Keywords: female entrepreneurship, business constraints, productivity, exporting, Africa, Ghana
    JEL: D22 F14 J16
    Date: 2020–10
  4. By: Amira El-Shal (African Development Bank); Hanan Morsy (African Development Bank)
    Abstract: The gender gap in firm productivity is the widest in Africa, and evidence on the determinants of this variation remains thin. We exploit a harmonized firm-level survey dataset of 46 African countries over the period 2006-2018 to explain the productivity gender differential and identify the association pathways. Special focus is placed on the behavior with respect to innovation and technology adoption and dealing with market inefficiencies and institutional barriers. We construct five composite indices to reflect the categories of productivity determinants and apply mean and quantile decomposition approaches. Our estimates indicate a significant productivity differential by the gender of entrepreneur in Africa, specifically in the Northern and Eastern regions. Interestingly, the differential is not induced by educational nor entrepreneurial abilities but rather by women being more negatively affected by institutional barriers, such as corruption and perceptions about it, and market inefficiencies, such as the lack of access to finance. These results can be explained by gender-based behavioral differences and institutional structures, which can as well affect women’s selection of business activity, making their firms less likely to benefit from some innovation and technology adoption activities.
    Date: 2020–10–20
  5. By: Beatriz González (Banco de España)
    Abstract: This paper extends a model of firm dynamics to incorporate heterogeneous privately held and publicly traded firms facing different financial frictions, and the decision to become publicly traded (Initial Public Offering, or IPO) is endogenous. This allows changes in the economic environment to affect these firms differently, impacting the selection into becoming publicly traded, and its macroeconomic outcomes. Firms are born privately held and small due to financial frictions. They finance investment with internal resources and debt and have the choice to go public (IPO). The main trade-off is access to external equity financing, at a one-off cost of IPO and an increased cost of operation. The calibrated model is successful in capturing the size distribution of firms, the share of publicly traded firms, and the dynamics around the IPO date. The decrease in corporate and dividend taxes experienced from the 1970s to the 1990s benefited more publicly traded firms financing with equity at the margin. This helps explaining the stock market boom, and the observed changes in the characteristics of firms going public, their investment and payout behavior. I perform some counterfactual exercises to understand what could be the reasons behind the decrease in publicly traded firms since the 2000s: increased cost of being public, increased access to debt, or changes in the idiosyncratic shock process. I find these changes are consistent with part (though not all) of the changes in IPO choice, payout and investment behavior of publicly traded firms in this period.
    Keywords: firm life cycle, macroeconomics, fiscal policy, corporate finance, IPO
    JEL: E23 G32 G35 H25 H32
    Date: 2020–10
  6. By: Fatma M. Utku-ismihan (Ministry of Agriculture and Forestry); M. Teoman Pamukçu (Middle East Technical University, Ankara, Turkey)
    Abstract: Due to their important contribution to overall growth performance of economies policy makers have attributed great importance to high growth firms (HGFs). In order to examine and support their efforts, researchers have tried to identify the factors that initiate and promote the growth performance of HGFs. However, this is not a simple task since the factors that contribute to the growth performances of firms seem to vary across sectors and countries. This study examines the characteristics of HGFs and attempts to identify those factors that stimulate HGFs in the Turkish manufacturing sector using a rich firm-level dataset over the period 2003-2014.
    Date: 2020–10–20
  7. By: Qichun He (China Economics and Management Academy, Central University of Finance and Economics); Yulei Luo (Faculty of Business and Economics, University of Hong Kong); Jun Nie (Research Department, Federal Reserve Bank of Kansas City); Heng-fu Zou (China Economics and Management Academy, Central University of Finance and Economics)
    Abstract: According to Schumpeter (1934), entrepreneurs are driven to innovate not for the fruits of success but for success itself. This description of entrepreneurship echoes Weber's (1958 ) description of the "spirit of capitalism," which states that people enjoy the accumulation of wealth irrespective of its effect on smoothing consumption. This paper explores the implica- tions of the spirit of capitalism on monetary policy, growth, and welfare in a Schumpeterian growth model. Different from the existing literature, we show that money is not superneutral in the long run and it could promote economic growth when the spirit of capitalism is strong. Furthermore, we show the optimal nominal interest rate decreases with the strength of the spirit of capitalism, potentially supporting a negative interest rate. Finally, our calibrated model suggests that the spirit of capitalism explains an important share (about one-third) of long-run growth in the United States.
    Date: 2020
  8. By: Ngo, Chin; Nguyen, Quyen Le Hoang Thuy To; Nguyen, Phong Thanh
    Abstract: The research has been conducted to explore the combination of three intangible resources, including social capital, entrepreneurship, and resilience capability on the performance of State Capital Enterprises (SCEs) in Vietnam. Both qualitative and quantitative approaches are applied in the study. An in-depth interview of ten CEOs at SCEs in Vietnam was made to explore new indicators for the contextual latent variables in the research models. By employing the data from the authors’ survey of 568 SCEs in Vietnam in 2019, using Cronbach’s alpha, confrmatory factor analysis (CFA) and path analysis (SEM), the mechanism that social capital impacts on SCE performance has been analyzed. In addition to the direct role, social capital indirectly affects corporate performance through entrepreneurship and resilience capability. It was found that social capital has a larger impact on entrepreneurship than resilience capacity. However, the contribution of resilience capacity to the frm performance is much more than the entrepreneurship’s in Vietnamese context. This study enriches the theory by proposing a measurement scale of the contextual latent variables as a result of in-depth interviews with experts using a qualitative analysis technique. In addition, the path analysis fndings suggest practical implications for managers to effectively use their resources in SCEs.
    Keywords: Social Capital, Entrepreneurship, Resilience Capability, Performance, State-Owned Enterprises, State-Capital Enterprises
    JEL: E24 J24 L31
    Date: 2020–04–07
  9. By: Diana Elena Toma (Nastasia) (Valahia University of Târgovi?te)
    Abstract: One of the main features of an entrepreneur may be his ability to understand the economic environment as a whole, in terms of challenges, risks and opportunities that may arise in the future. The entrepreneur has an essential role in identifying innovative solutions, being in the position of accessing the opportunities offered by the economic environment, in its dynamics. Recently, progress has been made in studying and understanding the relationship between entrepreneurship and economic growth. However, a comprehensive understanding of the link between creativity, entrepreneurship and economic development is not enough covered the given the extent of knowledge needs in the field.Therefore, the paper treats entrepreneurship as an essential way for ensuring sustainable economic growth. Also, it pursuits to understand the basics of knowledge creation, the appropriate means of disseminating and communicating innovation and the role of the entrepreneur in this process. The paper is of current interest, given the high interest in entrepreneurship, an approach that can ensure the reduction of economic and social disparities, contributing to long-term economic development.
    Keywords: Entrepreneurship, innovation, management, economy, accounting information, SMEs
    JEL: L26 O31 M21
  10. By: Ivanov, Svetoslav; Petrov, Pavel
    Abstract: Companies implement and utilize business models in their activity. The starting companies and software companies have specific ones. The paper aims a theoretical review of the business models appropriate for starting software companies. The subject is a starting software company that develops software products or services to prove their expediency, feasibility and market potential. The products can be sold on the market with one or a combination of available theoretical business models. These models are an essential part of the entrepreneurial process to reach market success and growth.
    Keywords: Software development, business model, entrepreneurship, starting company
    JEL: L22 L26 L86
    Date: 2019–10–24
  11. By: Wuttig, Alexandra; Weber, Susanne Theresia
    Keywords: Entrepreneurship,Finanzen und Kapital,Gender Studies,Business Angels,Venture Capital,Frauenförderung
    JEL: O4 G2
    Date: 2020

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