nep-ent New Economics Papers
on Entrepreneurship
Issue of 2020‒12‒21
eleven papers chosen by
Marcus Dejardin
Université de Namur

  1. Beyond 140 Characters: Introduction to The Role of Innovation and Entrepreneurship in Economic Growth By Michael J. Andrews; Aaron Chatterji; Scott Stern
  2. Born in hard times: startups selection and intangible capital during the financial crisis By Guzman Gonzales-Torres; Francesco Manaresi; Filippo Scoccianti
  3. How do you design an experimental economy? By Carlsson, Bo
  4. The Importance of regional Spill-over Effects for Eco-Innovations in German Start-ups By Jens Horbach
  5. Formalization and productivity: Firm-level evidence from Viet Nam By Jann Lay; Tevin Tafese
  6. Firm growth in developing countries: Driven by external shocks or internal characteristics? By Florian Léon
  7. Digital Technologies for Small and Medium Enterprises and job creation in Sub-Saharan Africa By Joël Cariolle; David Carroll
  8. Can Venture Capital and Private Equity Work for You? Six Simple Steps to Guide SMEs in the Western Balkans By Zana Bacaj; Ana Cristina Hirata Barros
  9. Innovative activity and some features of taxation By Pushkareva, Lyudmila; Pushkarev, Mikhail
  10. Roles of Technology, Innovation, and Finance in Small and Medium-sized Enterprises (SMEs) in Sri Lanka By Jayasooriya, Sujith
  11. Impact of Alternative Funding Instruments to Improve Access to Finance in SMEs: Evidence from Vietnam By Jayasooriya, Sujith

  1. By: Michael J. Andrews; Aaron Chatterji; Scott Stern
    Abstract: This is an introduction to the forthcoming volume "The Role of Innovation and Entrepreneurship in Economic Growth." The chapters collected in this volume seek to answer the following questions: What is the relationship between innovation/entrepreneurship and economic growth in specific industrial sectors? How has the relationship between innovation /entrepreneurship and economic growth changed over time? How much do policies, programs, and specialized institutions meant to encourage innovation or entrepreneurship ultimately spur economic growth? Does innovation or entrepreneurship affect economic performance and social progress other than through measured productivity and economic growth, and if so, how can these effects be measured? We synthesize the chapters in this volume and present broad conclusions.
    JEL: O3 O4
    Date: 2020–11
  2. By: Guzman Gonzales-Torres (Bank of Italy); Francesco Manaresi (Bank of Italy); Filippo Scoccianti (Bank of Italy)
    Abstract: We show that the credit crunch of 2007-2013 favoured the adoption by startups of more efficient, intangible-intensive technologies. Using data for the universe of Italian corporations, we document that the cohorts of firms born during the crisis significantly increased their share of intangible capital relative to both incumbents and comparable young firms born before the crisis. Moreover, the entry rates of intangible-intensive startups decreased by less than those of other firms. We estimate that this selection is directly linked to the tightening of credit conditions. We use a firm dynamics model to unveil the mechanism behind these patterns. Intangible goods make firms more efficient and profitable, reducing their demand of total capital and, crucially, their leverage at entry: this increases their resiliency to a financial shock. In the aggregate, a credit tightening changes the composition of new cohorts in favor of intangible-intensive producers, resulting in a persistent increase in intangible capital accumulation.
    Keywords: firm dynamics, intangibles, startup, financial crisis
    JEL: E22 E23 G32
    Date: 2020–11
  3. By: Carlsson, Bo (Case Western Reserve University)
    Abstract: How do you design an organization, an innovation system made up of multiple organizations, or a whole economy to encourage entrepreneurial experimentation? We know a good deal about entrepreneurial experimentation when it comes to individuals and firms (organizations), much less concerning innovation systems and even less for whole economies. The purpose of the paper is (1) to briefly examine the organization of entrepreneurial activity at three of the world’s largest and most innovative companies (Amazon, Apple, and Google), and (2) to explore the extent to which the findings at the corporate level can be applied at the more general innovation system (meso) and economy (macro) levels.
    Keywords: Experimentation; organization; innovation
    JEL: L22 L26 O31 O32 O33
    Date: 2020–12–10
  4. By: Jens Horbach (Faculty of Business, University of Applied Sciences Augsburg)
    Abstract: Eco-innovation activities are crucial for the mitigation of climate change and further envi-ronmental problems. Start-up firms might play an important role for this relatively new in-novation field as they are predestinated for realizing completely new ideas compared to in-cumbent firms that are not willing to abandon their established innovation paths. On the oth-er side, start-ups have limited resources and need external regionally available input of knowledge. Based on data of the German IAB/ZEW Start-up Panel in combination with re-gional data at the NUTS 3 level, the paper analyzes the determinants of eco-innovation in start-up firms. The econometric results show that regional spill-over effects seem to be very important for eco-innovation activities of start-up firms. In regions where the existing stock of environmentally related patents is already high, the probability that a start-up firm realiz-es eco-innovations is significantly higher. Furthermore, eco-innovative start-ups show dis-proportionally more difficulties to get financing from external investors.
    Keywords: Regional spill-over effects, environmental innovation, probit models
    JEL: Q55 R11 C25
    Date: 2020–12
  5. By: Jann Lay; Tevin Tafese
    Abstract: Using a firm-level panel dataset on private small- and medium-sized enterprises (SMEs) in Viet Nam's manufacturing sector, this paper examines productivity dynamics of formal and informal firms. We decompose productivity changes into changes within and between formal and informal firms. We assess the contributions of firm entry and exit as well as informal-formal transitions. Our results show that productivity is considerably lower and misallocation more prevalent in the informal than in the formal sector.
    Keywords: formalization, Productivity, Firm productivity, Viet Nam, Misallocation
    Date: 2020
  6. By: Florian Léon (FERDI - Fondation pour les Etudes et Recherches sur le Développement International)
    Abstract: The purpose of this paper is to assess the importance of external shocks relative to internal characteristics in explaining variation of firm growth in developing countries. To do so, we compile firm-level panel data covering 12,562 firms operating in 72 low-income and middle-income countries. Our statistical analysis reveals that, on average, firm characteristics account for a half of difference in growth rate across firms. However, the importance of internal factors is halved when we exclude firms in the tails of the distribution (top performers and worst performers). On the other hand, external shocks account for less than one tenth of variance. The role of external shocks is, however, stronger for young firms and for firms operating in unstable environments. Finally, our findings suggest that the external context is more crucial for exit than for growth.
    Keywords: Firm growth,Developing countries,Firm characteristics,External shocks
    Date: 2020–11–13
  7. By: Joël Cariolle (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); David Carroll (Friedman School of Nutrition Science and Policy [Boston, MA, USA] - Tufts University School of Medicine [Boston])
    Abstract: This report is an attempt to deepen the comprehension of the past, current and forthcoming transformations induced by the diffusion of digital technologies among African small and medium enterprises (SMEs).
    Date: 2020–09–30
  8. By: Zana Bacaj; Ana Cristina Hirata Barros
    Keywords: Finance and Financial Sector Development - Finance and Development Finance and Financial Sector Development - Microfinance Private Sector Development - Corporate Governance Private Sector Development - Enterprise Development & Reform Private Sector Development - Small and Medium Size Enterprises
    Date: 2020–04
  9. By: Pushkareva, Lyudmila; Pushkarev, Mikhail
    Abstract: Innovation activity at an industrial enterprise is a set of conditions affecting the relationship of the interaction of the business structure with other business entities and the state. The environment of innovative activity at the enterprise is variable, heterogeneous, dependent on many positive or negative factors acting on it. The ratio of these factors makes the environment either favorable, i.e. conducive to the implementation of entrepreneurial innovative ideas or adverse (risky) for the normal development of innovation. In the coming years, the structure of sources of financing technological innovation in industry will not change significantly, therefore it is important to create such conditions for organizations so that they can finance innovation in the future. In this significant role belongs to taxes. There are a number of articles in the Tax Code, a slight change of which will create a more favorable climate for innovation. In some cases, it is important for a taxpayer to receive a deferral or installment plan for a tax payment. Investment tax credit also represents a deferred payment; it can be granted to organizations that perform R&D; either technical re-equipment of own production; or carry out innovative or innovative activities, including creating new or improving applied technologies, etc.
    Keywords: Innovative activity; taxation.
    JEL: H2
    Date: 2020–05–05
  10. By: Jayasooriya, Sujith
    Abstract: Roles of technology, innovation and finance in Small and Medium Enterprise (SME) sector for economic development process is critical in emerging Asia. Growth, innovation, and productivity enhancement of the SME sector is always limited, and not up to its potential in Asia; Sri Lankan SME sector is not deviated from this dilemma. The paper discusses the case of project in economic enterprises development services and its approaches in supply-side management of SMEs in Sri Lanka. A baseline evaluation survey of 1200 SMEs was conducted to identify the potential and constrains for the supply side of the SMEs to promote technology adoption, innovation and financing in line with the national SME sector development policies. The results are discussed in three distinguished theses: (i) Enabling role of the technology and finance: creating enabling environment for the smooth procedures, capacity building, venture capital, financial development and banks, credit to the private sector and loans; (ii) Facilitative role of the finance and technology: application of technology and adaptation to the skill development and connections, information flow, and financial capacity; (iii) Innovative role of the finance and technology: microfinance, microinsurance, and transactions. The evidences show that lack of access to finance and technology demotes capacity building and skill training, information flow, business environment and networking of the SMEs. Hence, integrative solutions of finance and technology increase management of risks, adoption and enhanced networking for the enterprise development. These two pillars, technology and finance, become catalyst in the supply-side of the SMEs. Provoking business environment through technology adoption and financial sector development policies improving human capital, entrepreneurship and innovation enhance the performance of SMEs to thrive sustainable growth and development.
    Keywords: Business Environment, Finance, Innovation, SMEs, Technology
    JEL: L26 L53 O14 O31 O32
    Date: 2020–11–28
  11. By: Jayasooriya, Sujith
    Abstract: Access to finance in the digital era is innovative with the different alternative funding approaches. In emerging markets, digital innovation of the financial sources is not limited to the own capital or borrowing from bank or credit institutions but numerous paths of financing. The purpose of the research is to recognize the alternative and innovative funding tools including borrowed from bank/credit institution, borrowed against interest from other sources, and borrowed from other sources without interest, peer-to-peer (P2P) lending -borrowed from friends and relatives without interest-, and stocks issued. The data was obtained from the survey of 2647 enterprises conducted by the UNU WIDER 2015 in Vietnam. The probit model approach for access to finance is used to analyze the impact of alternative funding tools for enterprises. The results predict the use of alternative funding tools for startup capital and investment financing of the firms separately. The results revealed that sources of start-up capital from founders’ own money, loans from friends and acquaintances, finance/investments from other enterprises, domestic bank loan, and Informal credit association (money lenders, informal bank, pawnshop) are positively and significantly affect the access to finance, while loans from family members, business associations, and international bank loans are not significant. Meanwhile, own funding, bank/credit institution, borrowed against interest from other sources, and borrowed from other sources without interest, borrowed from friends and relatives without interest have significantly affected the access to finance. In a summary, the alternative funding tools are an important source for financing SMEs in Vietnam.
    Keywords: Alternative funding, P2P lending, SMEs, Access to Finance
    JEL: L11 L22 L25 M13
    Date: 2020–11–27

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