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on Entrepreneurship |
| By: | Danisewicz, Piotr; Ongena, Steven |
| Abstract: | Can local government spending spur entrepreneurial activity? To answer this question we study Poland where municipalities with lower tax revenues receive direct monetary grants from the national budget that vary at multiple pre-determined and non-manipulable thresholds. Employing a fuzzy regression discontinuity design, we find a positive impact of fiscal transfers on the number of firms, especially sole proprietorships and small firms. The impact is stronger in municipalities where the opposition is more involved in the legislative process or more parties are represented in the municipal council, and in regions where historical legacies shaped a more positive attitude towards entrepreneurship. |
| Keywords: | "Fuzzy" Regression Disconti-nuity Design; entrepreneurship; Fiscal Transfers; Local government spending |
| JEL: | E62 H71 H72 L26 P16 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15384&r= |
| By: | Massimo Motta; Sandro Shelegia |
| Abstract: | An incumbent monopolist may prevent a firm which currently sells a complementary product from developing a substitute, by copying its product. Imitation reduces the potential rival's current profits, making it less likely for it to obtain funding in the financial market. The anticipation of the incumbent's aggressive behaviour may also create an "ex ante" effect, by inducing the rival not to challenge the incumbent with a substitute (that is, not to enter the "kill zone") and develop another complement instead. Further, in this case the incumbent will have an incentive not to copy, since a new complement will raise its rents. The possibility of being acquired by the incumbent tends to push the rival towards developing a substitute rather than a complement. By choosing the former, potential gains from the acquisition are created (in the form of suppression of competition): as long as the rival has some bargaining power in the determination of the takeover price, it will then benefit from entering the "kill zone". |
| Keywords: | innovation, copying, Platforms |
| JEL: | L12 L41 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1780&r= |
| By: | Martin Carree (Maastricht University [Maastricht]); Marcus Dejardin (UNamur - Université de Namur [Namur], UCL - Université Catholique de Louvain) |
| Abstract: | Firm entry and exit flows in the retailing and consumer services may be viewed as market equilibrating processes. Local markets with considerable market room and high unemployment may be thought of having high subsequent entry rates and possibly low exit rates. We examine this relationship and obtain empirical results for a range of industries in 563 Belgian municipalities. We show that, over a three-year period, (net) entry is positively affected by the presence of local 'market room'. We find a significant 'unemployment push' effect on entry in some industries, but also a significantly positive effect of unemployment on exit. This pattern possibly indicates a 'revolving door regime' in areas marked by unemployment where new entrants leave the market relatively soon after entry, or only crowd out local competitors without creating additional employment. |
| Keywords: | entry,exit,entrepreneurship,unemployment,local development |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-03220690&r= |
| By: | Ashraf, Quamrul H.; Galor, Oded; Klemp, Marc |
| Abstract: | This essay explores the deepest roots of economic development. It underscores the significance of evolutionary processes in shaping fundamental individual and cultural traits, such as time preference, risk and loss aversion, and predisposition towards child quality, that have contributed to technological progress, human-capital formation, and economic development. Moreover, it highlights the persistent mark of the exodus of Homo sapiens from Africa tens of thousands of years ago on the degree of interpersonal population diversity across the globe and examines the impact of this variation in diversity for comparative economic, cultural, and institutional development across countries, regions, and ethnic groups. |
| Keywords: | Comparative development; entrepreneurial spirit; human evolution; interpersonal diversity; loss aversion; natural selection; preference for child quality; the; Time Preference |
| JEL: | N10 N30 O11 Z10 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15345&r= |
| By: | Sergi Basco; John P. Tang |
| Abstract: | How does local credit supply affect economic dynamism? Using an exogenous bond shock in historical Japan and new genealogical firm-level data, we empirically examine the effects of credit availability on firm life cycles. Our main result shows that, consistent with our theoretical model, the lifespan of firms decreases with bank capital. Capital-abundant regions have more firm destruction. For manufacturing, we document that these regions have both increased firm creation and destruction. These results suggest that samurai bonds were conducive to the emergence of banking, which eased firms’ financial constraints and led to more economic dynamism. |
| Keywords: | credit supply, banks, liquidity constraints, firm dynamics, entrepreneurship |
| JEL: | E51 N15 O16 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:auu:hpaper:095&r= |
| By: | Alekseev, Georgij; Amer, Safaa; Gopal, Manasa; Kuchler, Theresa; Schneider, JW; Ströbel, Johannes; Wernerfelt, Nils |
| Abstract: | We analyze a large-scale survey of owners, managers, and employees of small businesses in the United States to understand the effects of the early stages of the COVID-19 pandemic on those businesses. The survey was fielded in late April 2020 among Facebook business page administrators, frequent sellers on Facebook's e-commerce platform Marketplace, and the general Facebook user population. We observe more than 66,000 responses covering most sectors of the economy, including many businesses that had stopped operating due to the pandemic. The survey asks 136 questions covering topics such as changes in business operations and employment, changes in financing patterns, and the interaction of household and business responsibilities. We characterize the adjustments implemented to survive the pandemic and explore the key challenges to continue operating or to re-open. We show how these patterns differ across industry, firm size, owner gender, and other firm characteristics. |
| Keywords: | COVID-19; Small business finance; small businesses; Working from Home |
| JEL: | L26 M13 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15290&r= |
| By: | Kalenkoski, Charlene Marie; Wulff Pabilonia, Sabrina |
| Abstract: | This study estimates random effects and difference-in-difference-in-differences models to examine the initial impacts of COVID-19 on the employment and hours of unincorporated selfemployed workers using monthly panel data from the Current Population Survey. For these workers, effects were visible in March as voluntary social distancing began, largest in April as complete shutdowns occurred, and slightly smaller in May as some restrictions were eased. We find differential effects by gender that favor men, by marital status and gender that favor married men over married women, and by gender, marital, and parental status that favor married fathers over married mothers. The evidence suggests that self-employed married mothers were forced out of the labor force to care for children as prescribed by gender norms and the division and specialization of labor within households. Remote work and working in an essential industry mitigated some of the negative effects on employment and hours. |
| Keywords: | COVID-19,hours worked,self-employment,entrepreneurship,gender,remote work |
| JEL: | D1 D13 J1 J16 J2 J23 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:843&r= |
| By: | Gourinchas, Pierre-Olivier; Kalemli-Ozcan, Sebnem; Penciakova, Veronika; Sander, Nick |
| Abstract: | We estimate the impact of the COVID-19 crisis on business failures among small and medium size enterprises (SMEs) in seventeen countries using a large representative firm-level database. We use a simple model of firm cost-minimization and measure each firm's liquidity shortfall during and after COVID-19. Our framework allows for a rich combination of sectoral and aggregate supply, productivity, and demand shocks. We estimate a large increase in the failure rate of SMEs under COVID-19 of nearly 9 percentage points, absent government support. Accommodation & Food Services, Arts, Entertainment & Recreation, Education, and Other Services are among the most affected sectors. The jobs at risk due to COVID-19 related SME business failures represent 3.1 percent of private sector employment. Despite the large impact on business failures and employment, we estimate only moderate effects on the financial sector: the share of Non Performing Loans on bank balance sheets would increase by up to 11 percentage points, representing 0.3 percent of banks' assets and resulting in a 0.75 percentage point decline in the common equity Tier-1 capital ratio. We evaluate the cost and effectiveness of various policy interventions. The fiscal cost of an intervention that narrowly targets at risk firms can be modest (0.54% of GDP). How- ever, at a similar level of effectiveness, non-targeted subsidies can be substantially more expensive (1.82% of GDP). Our results have important implications for the severity of the COVID-19 recession, the design of policies, and the speed of the recovery. |
| Keywords: | bankruptcy; business failure; COVID-19; SMEs |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15323&r= |
| By: | Alejandro Fernández-Cerezo (Banco de España); Beatriz González (Banco de España); Mario Izquierdo (Banco de España); Enrique Moral-Benito (Banco de España) |
| Abstract: | This paper explores the heterogeneity across firms within each sector and region in the impact of and response to the COVID-19 shock. It relies on a survey conducted by Banco de España to 4,004 companies in November 2020 matched to very rich balance-sheet information on firm characteristics. According to our results, the impact of the COVID-19 shock was larger in the case of small, young and less productive firms located in urban areas within each sector-region pair. Moreover, these firms resorted relatively more to public-guaranteed loans, tax deferrals, and furlough schemes (ERTEs). More indebted companies, which were not hit relatively harder by the shock, also perceived public-guaranteed loans as very useful. Firms consider that uncertainty represents a key hindrance to the recovery, but observable characteristics do not explain the variation in the perception of uncertainty once the impact of the shock is accounted for. Finally, we use the announcement of the Pfizer vaccine on November 9th 2020 as a natural experiment to provide evidence that the vaccine announcement increased significantly firms’ subjective recovery expectations. |
| Keywords: | COVID-19, firms, sales, employment, uncertainty |
| JEL: | D22 L20 L25 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:2120&r= |
| By: | Dai, Ruochen; Mookherjee, Dilip; Quan, Yingyue; Zhang, Xiaobo |
| Abstract: | We examine how exposure of Chinese firms to the Covid-19 shock varied with a cluster index (measuring spatial agglomeration of firms in related industries) at the county level. Two data sources are used: entry flows of newly registered firms in the entire country, and an entrepreneur survey regarding operation of existing firms. Both show greater resilience in counties with a higher cluster index, after controlling for industry dummies and local infection rates, besides county and time dummies in the entry data. Reliance of clusters on informal entrepreneur hometown networks and closer proximity to suppliers and customers help explain these findings. |
| Keywords: | China; Clusters; COVID-19; firms; Social Networks |
| JEL: | D31 I3 J12 J16 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:15396&r= |
| By: | Čopková, Radka; Gróf, Marek; Zausinová, Jana; Siničáková, Marianna |
| Abstract: | Since 2006, entrepreneurship competence has been considered one of the eight key competences for lifelong learning, which are important for personal development, social inclusion, active citizenship, and employment. In 2015, the EntreComp framework was created. The framework structures partial entrepreneurship competences to support their development in European citizens. The presented paper aimed to develop a questionnaire based on the EntreComp framework, which would serve as a self-assessment tool for one's entrepreneurship competences. It would help identify educational needs in the field of entrepreneurship, based on the subjective perception of the individual. The result is a 60 - item questionnaire consisting of three factors and fifteen subfactors. After examination of the reliability and validity, we recommend using the tool on university students. The purpose is to adapt educational activities in formal and non-formal education and adjust them to the needs arising from the results to increase competitiveness and innovation potential of the country. In the future, we do not exclude its use in other age or social groups. |
| Keywords: | entrepreneurship,entrepreneurship competence,lifelong learning,questionnaire |
| JEL: | L26 A20 I25 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:234044&r= |
| By: | Hyunduk Suh (Inha University); Jin Young Yang (Zayed University) |
| Abstract: | We empirically investigate the effect of financial institution-targeted macroprudential policies on firms, using a comprehensive macroprudential policy dataset and corporate panel data across 29 countries. We find that the tightening of macroprudential measures persistently curbs the leverage growth of firms, while there is no indication that the loosening of the measures is related to the increase in leverage growth. We also find that this effect on leverage is heterogeneous across firms, as net macroprudential policy actions reduce the procyclicality of leverage more significantly for small firms and firms with high leverage. Also, we estimate the effect of macroprudential policies on firm value to evaluate potential policy trade-offs as the policies restrict the firms' access to credit during economic booms while protecting them from future financial crises. The effect of macroprudential policies on firm value is generally positive despite the policies' restrictive nature. Further, the effect on firm value is heterogeneous depending on firm characteristics: the positive effect becomes stronger as firms are less leveraged; but this positive effect is weaker for firms that grow faster, suggesting potential costs of macroprudential policies for these firms. |
| Keywords: | Macroprudential policy, Firm heterogeneity, Leverage, Tobin’s Q |
| JEL: | E51 E58 G18 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:inh:wpaper:2021-3&r= |
| By: | ALFAZEMA, ANTONIO |
| Abstract: | SMEs have a very important role towards society, being responsible for the production of a large part of the total goods and services, but also for stimulating competition, introducing innovative methods and for their importance in employability. In Mozambique, the credit capacity of SMEs is quite weak as the results point to the lack of organized accounting, insufficient collateral, reduced bargaining power, weak business management skills, and weaknesses in structuring business plans are challenges for SMEs to access bank financing. The main difficulty in applying for credit by companies is the existence of unattractive and uncompetitive rates and fees. The biggest problem related to accessing bank credit is the prohibitive collateral requirements and the problem of structural deficiencies, which cripple the economy. |
| Keywords: | Small and medium enterprises; Lending; Credit; Bank. |
| JEL: | M10 |
| Date: | 2021–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107516&r= |
| By: | Bernard Gazier (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-03221435&r= |