nep-ent New Economics Papers
on Entrepreneurship
Issue of 2021‒07‒26
nine papers chosen by
Marcus Dejardin
Université de Namur

  1. Is Business Formation Driven by Sentiment or Fundamentals? By Kim Kaivanto; Peng Zhang
  2. The early development of new establishments: An evaluation of the role of spatial selection and agglomeration By Javier Changoluisa
  3. Innovation-Driven Entrepreneurship By Tristan L. Botelho; Daniel Fehder; Yael Hochberg
  4. Financing Structure, Micro and Small Enterprises’ Performance, and Woman Entrepreneurship in Indonesia By Zeinab Elbeltagy; Zenathan Hasannudin
  5. Crowdsourcing Artificial Intelligence in Africa: Findings from a Machine Learning Contest By Naudé, Wim; Bray, Amy; Lee, Celina
  6. Africa's female entrepreneurs: Towards funding success By Hanley, Aoife; Görg, Holger; Hornok, Cecília; Ackah, Charles Godfred
  7. The Importance of Capital in Closing the Entrepreneurial Gender Gap: A Longitudinal Study of Lottery Wins By Sarah Flèche; Anthony Lepinteur; Nattavudh Powdthavee
  8. Un-used Bank Capital Buffers and Credit Supply Shocks at SMEs during the Pandemic By Jose M. Berrospide; Arun Gupta; Matthew P. Seay
  9. Aux origines nietzschéennes des ambiguïtés du concept d'entrepreneur : Schumpeter lecteur de Nietzsche By Nathanaël Colin-Jaeger; Etienne Wiedemann

  1. By: Kim Kaivanto; Peng Zhang
    Abstract: The creation of a new business is an act of entrepreneurship. It is also a financial undertaking. Hence it is admissible to apply the apparatus of behavioral finance to study the determinants of business formation. Our results show that aggregate business formation, nationally and regionally, is jointly predicted by economic fundamentals and sentiment. There is evidence of both 'pull' and 'push' motives for entrepreneurship. Yet this simple structure does not survive decomposition by payroll propensity. High-payroll-propensity entrepreneurs respond primarily to pull-motive fundamentals, with sentiment accounting for a small fraction of explained variance. Low-payroll-propensity entrepreneurs, on the other hand, respond to both sentiment and fundamentals, representing both pull- and push-motives, with sentiment accounting for a large fraction of explained variance. Low-payroll-propensity business formation is twice as volatile as high-payroll propensity entrepreneurship, and similarly to noise-based decision making in behavioral finance, it is substantially driven by sentiment.
    Keywords: sentiment, entrepreneurship, business formation, push- and pull-motives, behavioral finance
    JEL: G40 D91 L26 G17
    Date: 2021
  2. By: Javier Changoluisa (ESAI Business School, Universidad Espiritu Santo, Guayaquil, Ecuador)
    Abstract: This paper analyzes the early development of new establishments evaluating the role of spatial selection and agglomeration. The analysis shows a clear and strong selection of more productive new establishments into larger regions, regardless of the foundation type. While at the end of the time-period analyzed new establishments located in larger regions still show higher productivity levels as compared to those located in smaller regions, the role of an agglomeration is very distinct depending on the foundation type. Spin-offs in larger regions tend to keep the higher productivity level shown in the first time period, but start-ups suffer negative agglomeration effects over time.
    Keywords: Entrepreneurship, agglomeration, firm selection, productivity
    JEL: L26 L25 R30 R12
    Date: 2021–07–22
  3. By: Tristan L. Botelho; Daniel Fehder; Yael Hochberg
    Abstract: Entrepreneurship is thought to be a key driver of economic growth. While there are myriad forms of entrepreneurship, ranging from self-employment to small and medium size enterprises to technology- and innovation-driven startups, recent research provides evidence that the relationship between entrepreneurship and economic growth is driven not by overall quantity of new firm entry, but rather by a small subset of high-growth startups that are primarily categorized as innovation-driven. This paper provides a survey of the growing literature on the economics of such innovation-driven entrepreneurship. We begin by distinguishing between the various forms of entrepreneurship, which are often confounded in both theory and empirical work. We lay out the current state of knowledge, and describe the challenges faced by researchers in the field, particularly around measurement, data and identification. We conclude with an overview of the major open questions and directions for future research in the area.
    JEL: O0 O3
    Date: 2021–07
  4. By: Zeinab Elbeltagy (Intern, Macroeconomic and Financing for Development Division, UNESCAP); Zenathan Hasannudin (Macroeconomic Policy and Financing for Development Division, UNESCAP)
    Abstract: Access to finance has been found crucial in influencing firms’ real activities and economic performance.This paper investigates the relationship between the financing structure and firm performance by explor-ing a unique panel dataset of 59,968 Micro and Small Enterprises (MSEs) operating in the manufacturingsector in Indonesia over the 2010-2015 period. We collected a rich set of information about source ofloans to assess the firm performance using yearly total factor productivity (TFP) and labor productivityof each firm. We then examined whether more financing options available to women entrepreneurshipimproves firm performance. Our results show that financial factors are highly decisive to firms’ TFPand labor productivity. The MSEs which have access to external formal financing directly improvesproductivity at the firm level. Moreover, the study finds a significant underperformance of firms ownedby women entrepreneurs compared to those owned by men entrepreneurs. Nevertheless, we found thatwomen entrepreneurs who have access to formal financing improve their firm’s performance. The effectsof finance on productivity are also linked to the firm’s ownership, education, size and age. Our resultsare robust as demonstrated through the use of different approaches. These results provide support forpolicymakers to alleviate credit constraints to enhance productivity of micro and small enterprises andespecially woman entrepreneurship in Indonesia.
    Keywords: Total factor productivity, inclusive financing, woman entrepreneurship
    JEL: G21 J16 L25 L26 N65
    Date: 2020–09
  5. By: Naudé, Wim (University College Cork); Bray, Amy (Zindi); Lee, Celina (Zindi)
    Abstract: In this paper, we study the crowdsourcing of innovation in Africa through a data science contest on an intermediated digital platform. We ran a Machine Learning (ML) contest on the continent's largest data science contest platform, Zindi. Contestants were surveyed on their motivations to take part and their perceptions about AI in Africa. In total, 614 contestants submitted 15,832 entries, and 559 responded to the accompanying survey. From the findings, we answered several questions: who take part in these contests and why? Who is most likely to win? What are contestants' entrepreneurial aspirations in deploying AI? What are the obstacles they perceive to the greater diffusion of AI in Africa? We conclude that crowdsourcing of AI via data contest platforms offers a potential mechanism to alleviate some of the constraints in the adoption and diffusion of AI in Africa. Recommendations for further research are made.
    Keywords: crowdsourcing, innovation, data science, artificial intelligence, Africa
    JEL: O31 O33 O36 O55
    Date: 2021–07
  6. By: Hanley, Aoife; Görg, Holger; Hornok, Cecília; Ackah, Charles Godfred
    Abstract: Opportunities for well-paid employment for women are scarce in many African countries. Entrepreneurship is therefore one way in which women can earn a decent livelihood for themselves and their families. Despite the potential opportunities arising from entrepreneurship, the possibilities are often not fully exploited. Female entrepreneurs in the developing world are severely underperforming. In this PEGNet Policy Brief 'Africa's Female Entrepreneurs - Towards Funding Success' by Aoife Hanley, Holger Görg, Cecilia Hornok and Charles Ackah, the authors examine the scale of the gender productivity gap in African countries and how finance constraints underpin this gap.
    Date: 2021
  7. By: Sarah Flèche (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEP - LSE - Centre for Economic Performance - LSE - London School of Economics and Political Science); Anthony Lepinteur (Department of Behavioural and Cognitive Sciences); Nattavudh Powdthavee (WBS - Warwick Business School - University of Warwick [Coventry], IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics)
    Abstract: Would improving women's access to capital reduce the gender entrepreneurial gap? We study this issue by exploiting longitudinal data on lottery winners. Comparing between large to small winners, we find that an increase in lottery win in period t-1 significantly increases the likelihood of becoming self-employed in period t. This windfall effect is statistically the same in magnitude for men and women; the top 25% winners (an average win = £831.16) in year t-1 report a significant increase in the probability of self-employment in year t by approximately 2 percentage points, which is approximately 20-30% of the gender entrepreneurial gap. These results suggest that we can causally reduce the gender entrepreneurial gap by improving women's access to capital that might not be as readily available to the aspiring female entrepreneurs as it is to male entrepreneurs
    Keywords: gender inequality,self-employment,lottery wins,BHPS
    Date: 2021–05
  8. By: Jose M. Berrospide; Arun Gupta; Matthew P. Seay
    Abstract: Did banks curb lending to creditworthy small and mid-sized enterprises (SME) during the COVID-19 pandemic? Sitting on top of minimum capital requirements, regulatory capital buffers introduced after the 2008 global financial crisis (GFC) are costly regions of “rainy day†equity capital designed to absorb losses and provide lending capacity in a downturn. Using a novel set of confidential loan level data that includes private SME firms, we show that “buffer-constrained†banks (those entering the pandemic with capital ratios close to this regulatory buffer region) reduced loan commitments to SME firms by an average of 1.4 percent more (quarterly) and were 4 percent more likely to end pre-existing lending relationships during the pandemic as compared to “buffer-unconstrained†banks (those entering the pandemic with capital ratios far from the regulatory capital buffer region). We further find heterogenous effects across firms, as buffer-constrained banks disproportionately curtailed credit to three types of borrowers: (1) private, bank-dependent SME firms, (2) firms whose lending relationships were relatively young, and (3) firms whose pre-pandemic credit lines contractually matured at the start of the pandemic (and thus were up for renegotiation). While the post-2008 period saw the rise of banking system capital to historically high levels, these capital buffers went effectively unused during the pandemic. To the best of our knowledge, our study is the first to: (1) empirically test the usability of these Basel III regulatory buffers in a downturn, and (2) contribute a bank capital-based transmission channel to the literature studying the effects of the pandemic on SME firms.
    Keywords: Financial institutions; Capital regulation; Procyclicality; COVID-19
    JEL: G20 G21 G28
    Date: 2021–07–15
  9. By: Nathanaël Colin-Jaeger (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - CNRS - Centre National de la Recherche Scientifique); Etienne Wiedemann
    Abstract: La figure de l'entrepreneur est aujourd'hui utilisée dans une grande variété de discours publics. Ce travail cherche à remonter à l'une des sources théoriques de la constitution de cette figure : la théorie de l'entrepreneur de Schumpeter en 1911. Ce retour montre que Schumpeter, dans son contexte intellectuel et théorique, est amené à importer une anthropologie philosophique en économie, celle de Nietzsche, auteur largement lu dans l'Autriche du début du XXème siècle. En transposant, à l'intérieur de sa théorie économique, certaines caractéristiques majeures du grand homme créatif nietzschéen dans la figure de l'entrepreneur, Schumpeter développe une explication originale de la nature dynamique du marché et de l'évolution économique. Néanmoins il importe aussi de Nietzsche une série d'ambiguïtés, notamment en ce qui concerne l'origine de l'exceptionnalité individuelle de l'entrepreneur, et plus particulièrement de sa puissance créatrice. Une seconde ambiguïté est très largement héritée, qui concerne l'extension du modèle de l'individu entrepreneur : constitue-t-il une théorie de l'action valable pour tous les individus ou uniquement pour un type d'individus particuliers ? Comment concilier exceptionnalité de l'entrepreneur et norme d'un entreprenariat pour tous ? La dernière partie de ce travail s'attache ainsi à explorer ces ambiguïtés, qui apparaissent chez Schumpeter et ses successeurs, notamment Israël Kirzner.
    Keywords: Nietzsche,Schumpeter,Kirzner,Entrepreneur,Néolibéralisme
    Date: 2021–12–01

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