nep-ent New Economics Papers
on Entrepreneurship
Issue of 2021‒05‒10
twelve papers chosen by
Marcus Dejardin
Université de Namur

  1. On Immigration and Native Entrepreneurship By Duleep, Harriet Orcutt; Jaeger, David A.; McHenry, Peter
  2. A Scientific Approach to Innovation Management: Evidence from Four Field Experiments By Camuffo, Arnaldo; Gambardella, Alfonso; Messinese, Danilo; Novelli, Elena; Paolucci, Emilio; Spina, Chiara
  3. Disability entrepreneurship research: review and critical reflection through the lens of individual-opportunity nexus By Te Klangboonkrong; Ning Baines
  4. The effects of publicly supported environmental innovations on firm growth in the European Union By Florian Flachenecker; Martin Kornejew; Mario Lorenzo Janiri
  5. Tax Progressivity and Self-employment Dynamics By Wiji Arulampalam; Andrea Papini
  6. Does Higher Education Make You More Entrepreneurial? Causal Evidence from China By Huang, Bin; Tani, Massimiliano; Zhu, Yu
  7. The Fetters of the Sib - An Experimental Study in Burkina Faso By Hadnes, Myriam; Kosfeld, Michael; Nilgen, Marco; Vollan, Björn
  8. Reparations and Persistent Racial Wealth Gaps By Boerma, Job; Karabarbounis, Loukas
  9. Firms, Kinship and Economic Growth in the Kyrgyz Republic By Castaneda Dower, Paul; Gerber, Theodore; Weber, Shlomo
  10. May AI Revolution Be Labour-Friendly? Some Micro Evidence from the Supply Side By Damioli, Giacomo; Van Roy, Vincent; Vertesy, Daniel; Vivarelli, Marco
  11. Resources or Capabilities: A Study of Startup Emergence within Applied Research Universities in India By Joshi, Kshitija; S, Krishna H; Loganathan, Muralidharan
  12. Growing through Competition: The Reduction of Entry Barriers among Chinese Manufacturing Firms By Jiang, Helu; Zheng, Yu; Zhu, Lijun

  1. By: Duleep, Harriet Orcutt; Jaeger, David A.; McHenry, Peter
    Abstract: We present a novel theory that immigrants facilitate innovation and entrepreneurship by being willing and able to invest in new skills. Immigrants whose human capital is not immediately transferable to the host country face lower opportunity costs of investing in new skills or methods and will be more flexible in their human capital investments than observationally equivalent natives. Areas with large numbers of immigrants may therefore lead to more entrepreneurship and innovation, even among natives. We provide empirical evidence from the United States that is consistent with the theory's predictions.
    Keywords: entrepreneurship; Human Capital; Immigration; Innovation
    JEL: J15 J24 J39 J61 L26
    Date: 2021–03
  2. By: Camuffo, Arnaldo; Gambardella, Alfonso; Messinese, Danilo; Novelli, Elena; Paolucci, Emilio; Spina, Chiara
    Abstract: Our model shows that managers and entrepreneurs make better decisions under uncertainty if they adopt a scientific approach in which they formulate and test theories. The model predicts that they are more likely to terminate projects with negative returns, commit to projects with positive returns, or pivot to projects with higher returns. We test these implications by combining the results of four Randomized Control Trials (RCTs) involving 754 start-ups and small-medium enterprises and 10,730 data points over time. The empirical analysis corroborates the predictions of the model.
    Keywords: field experiments; Management Practices; Scientific entrepreneurship; strategic decision-making; uncertainty
    JEL: L21 L26 M13 M21
    Date: 2021–03
  3. By: Te Klangboonkrong (Leicester Castle Business School, De Montfort University, UK); Ning Baines (Leicester Castle Business School, De Montfort University, UK)
    Date: 2021–04
  4. By: Florian Flachenecker (European Commission, Joint Research Centre, Brussels, Belgium); Martin Kornejew (University of Bonn, Bonn, Germany); Mario Lorenzo Janiri (European Commission, Joint Research Centre, Brussels, Belgium)
    Abstract: Enabling innovations with environmental benefits is considered crucial to align economic and environmental objectives. We estimate the economic effects of publicly supported environmental innovations for the business economy of 13 Member States of the European Union. Using an instrumental variable approach to address the inherent endogeneity problem, we find that the average publicly supported environmental innovation increases firm employment by 9%, turnover by 12% and market share by 12% over a two-year period. Notwithstanding country and sector heterogeneity, essentially all countries and sectors show positive effects. Moreover, the results are not driven by highly innovative firms but are based on small and medium-sized enterprises with limited innovation activity. Thus, this paper provides robust evidence that public financial support for environmental innovations can align economic and environmental objectives for a broad set of firms, sectors and countries. Public policy supporting environmental innovations might therefore facilitate the recovery and transition to a more sustainable economy.
    Keywords: eco-innovation; environmental innovation; competitiveness; firm growth; European Union
    JEL: C26 O31 O44 Q32 Q56
    Date: 2021–06
  5. By: Wiji Arulampalam; Andrea Papini (European Commission - JRC)
    Abstract: Analysis of the relationship between taxes and self-employment should account for the interplay between responses in self-employment and wage employment. To this end, we estimate a two-state multi-spell duration model which accounts for both observed and unobserved heterogeneity using a large longitudinal administrative dataset for Norway for 1993 to 2011. Our findings confirm theoretical predictions, and are robust to various changes to definitions and sample selections. A policy experiment simulating a flatter tax schedule in the year 2000 is found to encourage self-employment, delivering a net increase of predicted inflow into self-employment from 2.8% to 5.3%.
    Keywords: Tax progressivity; Income tax; Self-employment; Duration analysis.
    JEL: H24 H25 J24 C41
    Date: 2021–05
  6. By: Huang, Bin (Nanjing University of Finance and Economics); Tani, Massimiliano (University of New South Wales); Zhu, Yu (University of Dundee)
    Abstract: Using the 2017 China Household Finance Survey (CHFS), we estimate the effect of higher education on entrepreneurship for prime-aged males. We distinguish between own-account workers and employers of small and large businesses, respectively, and use the higher education expansion in China starting in 1999 and instruments of pre-school hukou status to help identify causal effects. While our Inverse Probability Weighted Regression Adjustment estimates show that people with more education are less likely to enter entrepreneurship in general, obtaining any qualification beyond the baseline of compulsory schooling significant increases large business ownership later in life, with the maximum effect corresponding to a 3-fold increase found for university graduates. We attribute this effect to graduates taking full advantage of the opportunities presented by access to education earlier on in their lives.
    Keywords: higher education, entrepreneurship, higher education expansion, China, Inverse Probability Weighted Regression Adjustment (IPWRA)
    JEL: I25 J24 L26
    Date: 2021–04
  7. By: Hadnes, Myriam; Kosfeld, Michael; Nilgen, Marco; Vollan, Björn
    Abstract: We conducted a field experiment in Burkina Faso to investigate the impact of sharing obligations within kin networks on entrepreneurial effort. The overall treatment effect we find is insignificant and goes in the opposite direction than previous literature suggests. Ex-post explorative analysis reveals that entrepreneurs in the two experimental groups reacted differently in their production process, with some entrepreneurs in the treatment group being able to utilize their kin network to their joint advantage.
    Keywords: Burkina Faso; Business Development; field experiment; Redristributive pressure; Sharing norms; Social norms
    JEL: C93 D13 H24 H26 O12
    Date: 2021–03
  8. By: Boerma, Job; Karabarbounis, Loukas
    Abstract: Reparations is a policy proposal aiming to address the wealth gap between Black and White households. We provide a first formal analysis of the economics of reparations using a long-run model of heterogeneous dynasties with an occupational choice and bequests. Our innovation is to introduce endogenous dispersion of beliefs about risky returns, reflecting differences in dynasties' experiences with entrepreneurship over time. Feeding the exclusion of Black dynasties from labor and capital markets as driving force, the model quantitatively reproduces current and historical racial gaps in wealth, income, entrepreneurship, mobility, and beliefs about risky returns. We use the model to evaluate reparations and find that transfers eliminating the racial gap in average wealth today do not lead to wealth convergence in the long run. The logic is that century-long exclusions lead Black dynasties to enter into reparations with pessimistic beliefs about risky returns and to forego investment opportunities. We conclude by showing that entrepreneurial subsidies are more effective than wealth transfers in achieving racial wealth convergence in the long run.
    Keywords: beliefs; entrepreneurship; Race Gaps; reparations; wealth
    JEL: D31 E21 J15
    Date: 2021–02
  9. By: Castaneda Dower, Paul; Gerber, Theodore; Weber, Shlomo
    Abstract: This paper addresses whether kinship networks promote or impede entrepreneurship in the Kyrgyz Republic. We conducted a survey of firm managers/entrepreneurs about their business networks, resources they receive from and provide to their contacts, their firm's performance, and the business environment they face. Our data indicate that receiving help from kin connections increases profitability, while providing help to kin decreases it. While kin-reliant firms grow slower than firms with a lower degree of kin assistance, the former grow faster than firms that do not have access to business networks. In addition, kin connections and firm performance are unrelated for firms that have adopted best business practices. Our results demonstrate that directly measuring both receipt and provision of help from/to kin helps resolve the ambiguity of findings in the broader literature regarding the net effects of kin networks on firm performance: the two forms of network use are positively correlated, yet have opposite effects.
    Keywords: firm performance; Kinship networks; Kyrgyz Republic
    JEL: O12 O14 O17 P23 Z13
    Date: 2021–02
  10. By: Damioli, Giacomo (ISER, University of Essex); Van Roy, Vincent (European Commission, Joint Research Centre); Vertesy, Daniel (European Commission, Joint Research Centre); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: This study investigates the possible job-creation impact of AI technologies, focusing on the supply side, namely the providers of the new knowledge base. The empirical analysis is based on a worldwide longitudinal dataset of 3,500 front-runner companies that patented the relevant technologies over the period 2000-2016. Obtained from GMM-SYS estimates, our results show a positive and significant impact of AI patent families on employment, supporting the labour-friendly nature of product innovation in the AI supply industries. However, this effect is small in magnitude and limited to service sectors and younger firms, which are the leading actors of the AI revolution. Finally, some evidence of increasing returns seems to emerge; indeed, the innovative companies which are more focused on AI technologies are those obtaining the larger impacts in terms of job creation.
    Keywords: innovation, technological change, patents, employment, job-creation
    JEL: O33
    Date: 2021–04
  11. By: Joshi, Kshitija; S, Krishna H; Loganathan, Muralidharan (Target Corporation)
    Abstract: Over the past decade, the Indian entrepreneurial ecosystem has witnessed a steep growth in the number of incubators within academic environments. While most of these have focused on provision of tangible and intangible resources, the understanding about processes and routines that transform these resources into capabilities, which ultimately translate into successful start-up emergence has been lacking. Based on the resource-based view and the dynamic capabilities approach and using the cases of two academic incubators in India (Indian Institute of Technology, Madras and National Chemical Laboratory, Pune), this paper analyses the pre-incubation level processes that have resulted in their enhanced opportunity recognition potential. This study adds to the literature in the area of dynamic capabilities in the context of academic incubation. The study has important implications for both incubation setups as well as policy makers.
    Date: 2021–04–28
  12. By: Jiang, Helu; Zheng, Yu; Zhu, Lijun
    Abstract: Exploiting the gradualism of the Chinese economic reforms and cross-sectional variations in entry rates, we show empirical evidence from firm-level data that industries with higher entry rates achieve higher growth and a more competitive market structure in subsequent years. We then embed firm entry into a model of endogenous productivity and market structure with heterogeneous firms and sectors, and calibrate it to the Chinese manufacturing sector in 2004-7. We find the positive impact of entry on growth is achieved primarily through a pro-competitive effect, whereby entry induces endogenously a larger fraction of industries to be more competitive in the economy. We quantify the contribution on growth from the reduction of entry barriers associated with the state-owned enterprise reforms in the late 1990s and early 2000s and find it explains 20% of the aggregate growth of the manufacturing sector from 2004-7. More generally, we highlight the critical role of reducing entry barriers in promoting competition and growth in developing countries.
    Keywords: Endogenous Growth; Entry Barriers; Firm Dynamics; Firm entry
    JEL: D22 D43 O11 O30 O47
    Date: 2021–02

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