nep-ent New Economics Papers
on Entrepreneurship
Issue of 2021‒03‒08
twelve papers chosen by
Marcus Dejardin
Université de Namur
  1. Aggregate Implications of Barriers to Female Entrepreneurship By Gaurav Chiplunkar; Pinelopi K. Goldberg
  2. Homeowners have easier and cheaper access to business credit By Benedikt Vogt
  3. Non-Standard Work and Innovation: Evidence from European industries By Jelena Relijc; Armanda Cetrulo; Valeria Cirillo; Andrea Coveri
  4. Entry under placement uncertainty By Roy, Sunanda; Singh, Rajesh; Weninger, Quinn
  5. The COVID-19 insolvency gap: First-round effects of policy responses on SMEs By Dörr, Julian Oliver; Murmann, Simona; Licht, Georg
  6. Machine Learning and Credit Risk: Empirical Evidence from SMEs By Alessandro Bitetto; Paola Cerchiello; Stefano Filomeni; Alessandra Tanda; Barbara Tarantino
  7. Promoting from the poor in competitive lending markets with adverse selection By Bernhardt, Dan; Koufopoulos, Kostas; Trigilia, Giulio
  8. Behavioral Characteristics, Stability of Preferences and Entrepreneurial Success By Pushkar Maitra; Ananta Neelim
  9. Free competition in the post-pandemic digital era: The impact on SMEs By Da Silva, Filipe; Núñez Reyes, Georgina
  10. Good business practices improve productivity in Myanmar's manufacturing sector: Evidence from two matched employer-employee surveys By Paolo Falco; Henrik Hansen; John Rand; Finn Tarp; Neda Trifkovi?
  11. Microfinance et échelle d'intermédiation: l'industrie est-elle toujours dans l'enfance By Célestin Mayoukou
  12. Researchers have long identified both FDI and entrepreneurship as potentially important determinants of economic development. Accordingly, a literature has grown to investigate whether FDI stimulates entrepreneurial activity in host countries. It is difficult to synthesize these empirical findings because many of the studies use different definitions of FDI and entrepreneurship, study different time periods and countries, and apply different estimation procedures to generate their results. In order to better understand this literature, we collect 675 estimates from 47 studies that estimate the relationship between FDI and entrepreneurial activity using country-level data. We use meta-analysis to address two questions: (1) What is the overall, mean effect of FDI on entrepreneurship?, and (2) What factors account for differences in estimated effects across studies? An innovation of our study is that it develops a nested testing framework to select among a number of competing meta-analytic models. It also extends the new Andrews-Kasy meta-analytic estimators to allow for explanatory variables. We find that the overall, mean effect of FDI on entrepreneurial activity is close to zero and statistically insignificant. While FDI and entrepreneurial activity may each play an important role in economic development, our results indicate that FDI does not generally stimulate entrepreneurship. This suggests that public policy efforts to encourage entrepreneurship through FDI are unlikely to be successful. All the files necessary to reproduce the results in this paper are available online at Harvard Dataverse. By Sanghyun Hong; W. Robert Reed; Bifei Tian; Tingting Wu; Gen Chen
  1. By: Gaurav Chiplunkar; Pinelopi K. Goldberg
    Abstract: We develop a framework for identifying and quantifying barriers to entry and operation faced by female entrepreneurs in developing countries, and apply it to the Indian economy. We find that despite considerable progress over time, female entrepreneurs still face substantial entry and business registration costs (almost twice their male counterparts’). The costs of expanding a business, conditional on entry, are also substantially higher for women. However, there is one area in which female entrepreneurs have an advantage: hiring female workers is easier for them. We show that this pattern is not driven by the sectoral composition of female employment. Counterfactual simulations indicate that removing all excess barriers faced by women entrepreneurs would: (a) increase the fraction of female-owned firms significantly (nine times); (b) increase the real wages of female relative to male workers; and (c) generate substantial aggregate productivity and welfare gains (ca. 7% and 18% respectively). These large gains are due to reallocation: low productivity male-owned firms previously sheltered from female competition are replaced by higher productivity female-owned firms previously excluded from the economy.
    JEL: J16 J70 O17 O40
    Date: 2021–02
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:28486&r=all
  2. By: Benedikt Vogt (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: Banks often demand collateral for business loans. Apart from business assets, for many small entrepreneurs their own home is the most important security they can offer. The interaction between the housing market and entrepreneurial credit can therefore amplify the consequences of an economic crisis. Because of declining collateral values, the probability of obtaining credit could be lower, making it more difficult to finance entrepreneurial activities. Between 2008 and 2013, real house prices declined by nearly 25 percent in the Netherlands. Such a decline in house prices can amplify the effect of an economic crisis via the credit channel for small entrepreneurs. In the economic literature this effect is known as collateral lending channel. In this study we answer three questions: to what extent did the decrease in house prices impact the incidence of bank credit of small companies? what is the relationship between the housing market status of an entrepreneur and the costs of credit? Is there, as a consequence, an association between the housing market status and entrepreneurial exits?
    JEL: G23 L26 R2 R31
    Date: 2021–03
    URL: http://d.repec.org/n?u=RePEc:cpb:discus:420.rdf&r=all
  3. By: Jelena Relijc; Armanda Cetrulo; Valeria Cirillo; Andrea Coveri
    Abstract: Following a market-oriented approach, policies aimed at increasing labour flexibility by weakening employment protection institutions should enable firms to efficiently allocate resources, improve their capability to compete on international markets and adjust to economic cycle. This work documents the rise of non-standard (i.e. temporary and part-time) work in five European countries (Germany, France, Italy, the Netherlands and the United Kingdom) over the period 1994-2016 and investigate the nexus between the use of non-standard work and innovation performance using data for 18 manufacturing and 23 service industries. Contrary to the objectives that market-oriented policy recommendations promised to achieve, we show that there is a significantly negative association between the share of workers employed under non- standard contractual arrangements and the introduction of both product and process innovation. Furthermore, we show that the harmful consequences of the spread of non-standard work on firms' product innovation propensity are more pronounced in high-tech sectors.
    Keywords: Non-standard work; Knowledge; Product innovation; Process innovation; Industry-level analysis.
    Date: 2021–02–21
    URL: http://d.repec.org/n?u=RePEc:ssa:lemwps:2021/06&r=all
  4. By: Roy, Sunanda; Singh, Rajesh; Weninger, Quinn
    Abstract: We present a model of firm entry in an industry that is managed with an aggregate production quota or cap-and-trade (CAT) regulation. Firms are heterogeneous in productivity; each knows its own costs of production but is uncertain about where its costs rank among an entrant population. Entry is modeled as a simultaneous move game with incomplete information. Under CAT, firms compete to secure shares of a fixed number of production permits. Entry payoffs are determined by own and rival entrant productivity. We derive the Bayesian Nash entry equilibrium and show conditions under which placement uncertainty leads to excess entry relative to full information. We derive conditions where the reverse, inefficiency due to under entry, occurs. Whereas the behavioral IO literature has attributed over-entry and over-investment to bias, i.e., entrepreneurs are overconfident believing that they are better than average, we show that rational uncertainty regarding post entry competition is sufficient. Our results offer a new explanation for often-observed rational exuberance and for rational pessimism in investment by entrepreneurs.
    Date: 2021–02–24
    URL: http://d.repec.org/n?u=RePEc:isu:genstf:202102240800001096&r=all
  5. By: Dörr, Julian Oliver; Murmann, Simona; Licht, Georg
    Abstract: COVID-19 placed a special role to fiscal policy in rescuing companies short of liquidity from insolvency. In the first months of the crisis, SMEs as the backbone of Europe's real economy benefited from large and mainly indiscriminate aid measures. Avoiding business failures in a whatever it takes fashion contrasts, however, with the cleansing mechanism of economic crises: a mechanism which forces unviable firms out of the market, thereby reallocating resources efficiently. By focusing on firms' pre-crisis financial standing, we estimate the extent to which the policy response induced an insolvency gap and analyze whether the gap is characterized by firms which had already struggled before the pandemic. With the policy measures being focused on smaller firms, we also examine whether this insolvency gap differs with respect to firm size. Based on credit rating and insolvency data for the near universe of actively rated German firms, our results suggest that the policy reponse to COVID-19 has triggered a backlog of insolvencies in Germany that is particularly pronounced among financially weak, small firms, having potential long term implications on economic recovery.
    Keywords: COVID-19 policy response,Corporate bankruptcy,Cleansing e ect,SMEs
    JEL: C83 G33 H12 O38
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:21018&r=all
  6. By: Alessandro Bitetto (University of Pavia); Paola Cerchiello (University of Pavia); Stefano Filomeni (University of Essex); Alessandra Tanda (University of Pavia); Barbara Tarantino (University of Pavia)
    Abstract: In this paper we assess credit risk of SMEs by testing and comparing a classic parametric approach fitting an ordered probit model with a non-parametric one calibrating a machine learning historical random forest (HRF) model. We do so by exploiting a unique and proprietary dataset comprising granular firm-level quarterly data collected from a large European bank and an international insurance company on a sample of 810 Italian small- and medium-sized enterprises (SMEs) over the time period 2015-2017. Our results provide novel evidence that a dynamic Historical Random Forest (HRF) approach outperforms the traditional ordered probit model, highlighting how advanced estimation methodologies that use machine learning techniques can be successfully implemented to predict SME credit risk. Moreover, by using Shapley values for the first time, we are able to assess the relevance of each variable in predicting SME credit risk. Traditionally, credit risk evaluation of informationally-opaque SMEs has relied on soft information-intensive relationship banking. However, the advent of large banking conglomerates and the limits to successfully "harden" and transmit soft information across large banking organizations, challenge the traditional role of relationship banking, urging the need to evaluate SME credit risk by implementing alternative methodologies mostly based on hard information.
    Keywords: Credit Rating, SME, Historical Random Forest, Machine Learning, Relationship Banking, Soft Information
    JEL: C52 C53 D82 D83 G21 G22
    Date: 2021–02
    URL: http://d.repec.org/n?u=RePEc:pav:demwpp:demwp0201&r=all
  7. By: Bernhardt, Dan (University of Illinois and University of Warwick); Koufopoulos, Kostas (University of York); Trigilia, Giulio (University of Rochester)
    Abstract: We provide theoretical foundations for positive lender profits in competitive credit markets with asymmetric information, where potential borrowers have scarce collateralizable assets. Strikingly, when some borrowers have negative net present value projects, an equilibrium always exists in which lenders make positive profits, despite their lack of `soft' information and free entry of competitors. We then establish that greater access to collateral for borrowers reduces lender profits, and we relate our findings to the empirical evidence on micro-credit, payday lending, and, more broadly, retail and small business financing. JEL Classification: D82 ; D86
    Keywords: Adverse selection ; positive profits ; collateral ; free entry ; market breakdown ; credit markets
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:wrk:warwec:1328&r=all
  8. By: Pushkar Maitra; Ananta Neelim
    Date: 2020–12
    URL: http://d.repec.org/n?u=RePEc:mos:moswps:2020-15&r=all
  9. By: Da Silva, Filipe; Núñez Reyes, Georgina
    Abstract: This study was conducted in the framework of the United Nations Development Account project “Global Initiative towards Post-COVID-19 Resurgence of the Micro-, Small and Medium Enterprises (MSME) Sector” (under the “Access to markets” cluster), which aims to analyse the actions of competition authorities in Latin America and the Caribbean to support small and medium-sized enterprises (SMEs) during the coronavirus (COVID-19) pandemic and facilitate their recovery. This document analyses the role of competition policy in the digital economy, with an emphasis on the relation between business strategies, technological innovation and market concentration; as well as the suitability of the current legal and institutional frameworks for competition in Latin American countries for facing the current challenges. It also describes some of the practices used by large technology firms and the way these strategies condition market access for SMEs. It aims to demonstrate need for compatibility between industrial and competition policies and for greater coordination among the agencies responsible for data protection and competition policy and among the different government agencies.
    Keywords: PEQUEÑAS EMPRESAS, EMPRESAS MEDIANAS, COMPETITIVIDAD, COVID-19, VIRUS, EPIDEMIAS, ASPECTOS ECONOMICOS, DESARROLLO INDUSTRIAL, TECNOLOGIA DIGITAL, MERCADOS, INNOVACIONES TECNOLOGICAS, POLITICA INDUSTRIAL, ESTRATEGIA EMPRESARIAL, MONOPOLIOS, PROTECCION DE DATOS, SMALL ENTERPRISES, MEDIUM ENTERPRISES, COMPETITIVENESS, COVID-19, VIRUSES, EPIDEMICS, ECONOMIC ASPECTS, INDUSTRIAL DEVELOPMENT, DIGITAL TECHNOLOGY, MARKETS, TECHNOLOGICAL INNOVATIONS, INDUSTRIAL POLICY, CORPORATE STRATEGIES, MONOPOLIES, DATA PROTECTION
    Date: 2021–02–22
    URL: http://d.repec.org/n?u=RePEc:ecr:col022:46661&r=all
  10. By: Paolo Falco; Henrik Hansen; John Rand; Finn Tarp; Neda Trifkovi?
    Abstract: We look into the relationship between business practices and enterprise productivity using panel data with matched employer and employee information from Myanmar. The data show that micro, small, and medium-size enterprises in Myanmar typically do only a few modern business practices. Even so, through estimates of value-added functions and labour demand relations we find a positive and economically important association between business practices and productivity. The results are confirmed when we utilize employer-employee information to estimate Mincer-type wage regressions.
    Keywords: Business, Management, Productivity, Myanmar, Small and medium enterprises, Firm behaviour, Manufacturing firms
    Date: 2021
    URL: http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2021-45&r=all
  11. By: Célestin Mayoukou (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université)
    Abstract: Microfinance industry is changing progressively during this last thirty years. The depth of is intermediation is growing. Serving at the beginning of the informal customers ; he serves since several years yet, small and medium enterprise (SME). Multinational banks and international funds had also entering the microfinance industry by granting loans to microfinance institutions. The digital innovation had disrupted the sector who become adult.
    Abstract: L'industrie de la microfinance connait depuis 30 ans une mutation perpétuelle. L'échelle de son intermédiation s'est progressivement élargie. Centrée à ses débuts sur des acteurs du secteur informel ; cette activité touche désormais une large clientèle englobant même des PME exportatrices. Son mode de refinancement s'étend désormais au marché international des capitaux, puisque des Fonds d'investissement et des Banques multinationales alimentent les IMF en capitaux. La digitalisation et les plateformes de crédits en ligne ont aussi fait leur entrée dans la microfinance. Cette industrie n'est plus désormais une industrie dans l'enfance
    Keywords: Microfinance,intermediation,microfinance industry,intermadiation,industrie microfinancière
    Date: 2019–05–09
    URL: http://d.repec.org/n?u=RePEc:hal:journl:hal-02489308&r=all
  12. Researchers have long identified both FDI and entrepreneurship as potentially important determinants of economic development. Accordingly, a literature has grown to investigate whether FDI stimulates entrepreneurial activity in host countries. It is difficult to synthesize these empirical findings because many of the studies use different definitions of FDI and entrepreneurship, study different time periods and countries, and apply different estimation procedures to generate their results. In order to better understand this literature, we collect 675 estimates from 47 studies that estimate the relationship between FDI and entrepreneurial activity using country-level data. We use meta-analysis to address two questions: (1) What is the overall, mean effect of FDI on entrepreneurship?, and (2) What factors account for differences in estimated effects across studies? An innovation of our study is that it develops a nested testing framework to select among a number of competing meta-analytic models. It also extends the new Andrews-Kasy meta-analytic estimators to allow for explanatory variables. We find that the overall, mean effect of FDI on entrepreneurial activity is close to zero and statistically insignificant. While FDI and entrepreneurial activity may each play an important role in economic development, our results indicate that FDI does not generally stimulate entrepreneurship. This suggests that public policy efforts to encourage entrepreneurship through FDI are unlikely to be successful. All the files necessary to reproduce the results in this paper are available online at Harvard Dataverse.
    By: Sanghyun Hong (University of Canterbury); W. Robert Reed (University of Canterbury); Bifei Tian; Tingting Wu; Gen Chen
    Keywords: Meta-analysis, FDI, Entrepreneurship
    JEL: L26 F21 C10
    Date: 2021–02–01
    URL: http://d.repec.org/n?u=RePEc:cbt:econwp:21/03&r=all
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