nep-ent New Economics Papers
on Entrepreneurship
Issue of 2021‒08‒09
twelve papers chosen by
Marcus Dejardin
Université de Namur

  1. TV and Entrepreneurship By Viktor Slavtchev; Michael Wyrwich
  2. Do capacity constraints trigger high growth for enterprises? By Coad, Alexander; Domnick, Clemens; Flachenecker, Florian; Harasztosi, Peter; Janiri, Mario Lorenzo; Pál, Rozália; Teruel Carrizosa, Mercedes
  3. Higher Dividend Taxes, No Problem! Evidence from Taxing Entrepreneurs in France By Adrien Matray; Charles Boissel
  4. Unraveling industry, firm and host-region effects on export behaviors of international new ventures and established exporters By Ine Paeleman; Shaker A. Zahra; Jonas W. B. Lang
  5. Preferential tax regimes for MSMEs operational aspects, impact evidence and policy implications By Marchese, Marco.
  6. Determinants of ICO Success and Post-ICO Performance By Aylin Aslan; Ahmet Sensoy; Levent Akdeniz
  7. Deflation and Declining Business Dynamism in a Cash-in-Advance Economy By FURUKAWA Yuichi; NIWA Sumiko
  8. Disintermediation: the Rise of the Personal Computer and the Internet in the Late Twentieth Century By Richard N. Langlois
  9. “An Elephants’ Graveyard”: the Deregulation of American Industry in the Late Twentieth Century By Richard N. Langlois
  10. Mission-Oriented Policies and the “Entrepreneurial State” at Work: An Agent-Based Exploration By Giovanni Dosi; Francesco Lamperti; Mariana Mazzucato; Mauro Napoletano; Andrea Roventini
  11. Tourism in Central America and the Dominican Republic in the face of digital technologies. Challenges and opportunities for MSMEs By Peralta, Leda
  12. Start-up-Controlling - Ein pragmatisches und praxisorientiertes Controlling-System für Start-up-Unternehmen By Becker, Marco; Benefo, Quincy; Gropp, Madeline; Ruhland, Jannis; Springhorn, Celina Marie; Weselmann, Niels; Winter, Juliane

  1. By: Viktor Slavtchev (Halle Institute for Economic Research (IWH)); Michael Wyrwich (University of Groningen, Faculty of Economics and Business)
    Abstract: This paper analyzes empirically whether individuals’ decisions to start an own business can be influenced via television (TV). To identify its effect, we utilize exogenous regional variation in the availability of TV that conveyed images conducive to entrepreneurship and the notion that self-reliance, self-determination and proactive behavior are desirable from individual and social point of view. We use both regional-level as well as geo-referenced individual level data and show that the entrepreneurship incidence is higher among the residents of regions that had TV signal than in regions without TV, indicating a first-order effect on the directly exposed individuals. We find that the effect would fade out if only directly treated individuals are more likely to become entrepreneurs and the last exposed cohort becomes ‘too old’. However, we also find that non-directly exposed successive cohorts and descendants of directly exposed individuals also wish to become entrepreneurs more often. We provide evidence that is consistent with second-order effects due to the intergenerational transmission of entrepreneurial mindset and suggests a formation of a self-sustaining entrepreneurial culture, which can cause long lasting differences between treated and non-treated population groups or regions.
    Keywords: Entrepreneurship, TV, Culture, Occupational choice
    JEL: L26 J24 M13 P20 P30 O30 D02 D03 Z10
    Date: 2021–07–25
  2. By: Coad, Alexander; Domnick, Clemens; Flachenecker, Florian; Harasztosi, Peter; Janiri, Mario Lorenzo; Pál, Rozália; Teruel Carrizosa, Mercedes
    Abstract: High-Growth Enterprises (HGEs) have a large economic impact, but are notoriously hard to predict. Previous research has linked high-growth episodes to the configuration of lumpy indivisible resources inside firms, such that high capacity utilisation levels might stimulate future growth. We theorize that firms reaching critically high capacity utilisation levels reach a 'trigger point' involving either broad-based investment in further growth, or shrinking back to previous levels. We analyse EIBIS survey data (matched to ORBIS) which features a question on time-varying capacity utilisation. Overcapacity is a transitory state. Firms enter into overcapacity after a period of rapid growth of sales and profits, and the years surrounding overcapacity have higher employment growth rates. Firms operating at overcapacity make incremental investments (e.g. capacity expansion, process improvements, and modern machinery) rather than investing in R&D and new product development. We find support for the 'fork in the road' hypothesis: for some firms, overcapacity is associated with launching into massive investments and subsequent sales growth, while for other firms, overcapacity is negatively related to both investments and sales growth.
    Keywords: High-Growth Enterprises (HGEs),firm growth,investment,capacity utilisation,trigger points
    JEL: L25
    Date: 2021
  3. By: Adrien Matray (Princeton University); Charles Boissel (HEC-Paris)
    Abstract: This paper investigates how the 2013 three-fold increase in the dividend tax rate in France affected firms’ investment and performance. Using administrative data covering the universe of firms over 2008–2017 and a quasi-experimental setting, we find that firms swiftly cut dividend payments. Firms use this tax-induced increase in liquidity to invest more, particularly when facing high demand and return on capital. For every euro of undistributed dividends, firms increase their investment by 0.3 euro, leading to higher sales growth. Heterogeneity analyses show that no group of firms cut their investment, thereby rejecting models in which higher dividend taxes increase the cost of capital. Overall, our results show that the tax-induced increase in liquidity relaxes credit constraints and can reduce capital misallocation.
    Keywords: France; Financing Policy; Business Taxes; Capital and Ownership Structure
    JEL: G11 G32 H25 O16
    Date: 2020–09
  4. By: Ine Paeleman (University of Antwerp, Antwerp, Belgium); Shaker A. Zahra (Carlson School of Management, University of Minnesota, Minneapolis, Minnesota, U.S.A.); Jonas W. B. Lang (Ghent University, Ghent, Belgium, 4 Business School, University of Exeter, UK)
    Abstract: While an extensive strategy literature seeks to explain differences in firm performance, little is known about how much firm, industry and host-regions matter in explaining heterogeneity in export behaviors. The international entrepreneurship literature has highlighted that firm-, industry- and hostregion-level factors shape export behaviors, yet more research is needed about their relative contribution. We decompose the variance of export behaviors of 4,982 Belgian SMEs during 2006‒2014. Results indicate that firm effects account for the largest part in the variation of export behaviors, followed by industry and host-region effects. However, host-region effects matter more for INVs whereas firm effects matter more for established exporters. There are no substantial differences in industry effects among either sample of firms. Our study contributes to the literatures on variance decomposition and international entrepreneurship.
    Keywords: : new ventures; host-region effects; firm effects; export; variance decomposition
    Date: 2021–07
  5. By: Marchese, Marco.
    Abstract: Drawing on a literature review, this paper looks at the role that preferential tax regimes (PTRs) for micro, small and medium enterprises (MSMEs) play in encouraging enterprise formalization and enterprise growth. The main focus is on emerging economies, notably from Latin America, where this policy has been more widely used and assessed. The first section of the paper introduces some general principles in small busi- ness income taxation which help set the context of PTRs for MSMEs. The second section explains the main reasons in favour and against PTRs for MSMEs. The third section introduces a typology of PTRs for MSMEs, focusing on the operational aspects of the two most relevant types in emerging economies: presumptive regimes and small business tax rates. The fourth section discusses the existing empirical evidence on the impact of presumptive regimes on enterprise formalization, enterprise growth and so-called “threshold ef- fects” (when companies avoid growing not to lose preferential taxation). The fifth section draws the main policy messages, while conclusions summarise and put forward some future research ideas.
    Date: 2021
  6. By: Aylin Aslan; Ahmet Sensoy; Levent Akdeniz
    Abstract: Initial coin offerings (ICOs) have emerged as an alternative way of raising funds for entrepreneurial ventures to develop a new project or product. In this study, a comprehensive analysis is conducted on the determinants of ICO success and aftermarket performance of ICOs. Our evidence suggests that ICOs with higher ratings, shorter planned token sale duration, smaller share for token sale, larger number of experts and more members in the developing team have a greater likelihood of success and raising more funds. We also show that offer price and market sentiment play a major role in explaining longer term post-ICO performance. Yet, key to a successful ICO and post-ICO performance differ between boom vs bust periods in the cryptocurrency markets.
    Keywords: Fundraising success, Initial coin offerings, Post-ICO performance, underpricing
    JEL: G24 L26 M13
    Date: 2021
  7. By: FURUKAWA Yuichi; NIWA Sumiko
    Abstract: This study considers the relationship between deflation and declining business dynamism. We do this by incorporating the empirical evidence that inflationary factors essentially affect all stages of an R&D firm's life cycle―entry, exit, and survival―into an R&D-based growth model. Our model has a new feature; namely, the entry, exit, and survival of R&D firms are all endogenous and subject to a cash-in-advance constraint. The core finding is that deflation can significantly affect the nature of business dynamism. Specifically, a decrease in the inflation rate potentially encourages or discourages innovation and survival investments; however, it necessarily discourages both if the entry cost is sufficiently high. In this case, deflation stifles business dynamism, leading to lower entry and exit rates and a maturity bias in the firm age distribution. Calibrating the model to the U.S. economy, we show that deflation causes declining business dynamism under realistic values of entry, exit, and growth rates. Then, we show that deflation also causes welfare loss if the natural rate of firm exit is higher.
    Date: 2021–07
  8. By: Richard N. Langlois (University of Connecticut)
    Abstract: This paper is an excerpt from a larger book project called The Corporation and the Twentieth Century, which chronicles and interprets the institutional and economic history – the life and times, if you will – of American business in the twentieth century. This excerpt details the history of the personal computer industry and the Internet. It highlights the process of entrepreneurship and decentralized learning in these industries, and it considers the role of industrial and trade polices (in both the U. S. and Japan) in semiconductors and the development of the Internet. The excerpt ends with a consideration of U. S. v. Microsoft at the close of the century.
    Keywords: Innovation; technological change; entrepreneurship; industrial policy; antitrust
    JEL: D23 F14 K21 L26 L4 L52 L63 N62 N82 O3 P12 P P16
    Date: 2021–07
  9. By: Richard N. Langlois (University of Connecticut)
    Abstract: This paper is an excerpt from a larger book project called The Corporation and the Twentieth Century, which chronicles and interprets the institutional and economic history – the life and times, if you will – of American business in the twentieth century. This excerpt examines the era of industrial deregulation of the late twentieth century. As had been the case with financial deregulation, it argues, industrial deregulation and the internationalization of trade were largely a manifestation of the misalignment of the postwar regulatory regime with the realities of economic growth. This misalignment created profit opportunities for entrepreneurs not only in the realm of technology but also, and perhaps more crucially, in the realm of institutions. In some cases, entrepreneurs would expend resources in order to foment political change. In other cases, technological and institutional innovation, aided at times by the depredations of the regulation itself, would so reduce the available rents of a regulatory regime that its supporting coalition would collapse
    Keywords: Deregulation; institutional innovation; technological change; antitrust
    JEL: D23 K21 L4 L51 L52 L6 L9 N42 N62 N72 N82 O3 P12 P P16
    Date: 2021–07
  10. By: Giovanni Dosi (Laboratory of Economics and Management); Francesco Lamperti (Université Panthéon-Sorbonne - Paris 1 (UP1)); Mariana Mazzucato; Mauro Napoletano (Observatoire français des conjonctures économiques); Andrea Roventini
    Abstract: We study the impact of alternative innovation policies on the short- and long-run performance of the economy, as well as on public finances, extending the Schumpeter meeting Keynes agent-based model (Dosi et al., 2010). In particular, we consider market-based innovation policies such as R&D subsidies to firms, tax discount on investment, and direct policies akin to the “Entrepreneurial State” (Mazzucato, 2013), involving the creation of public research oriented firms diffusing technologies along specific trajectories, and funding a Public Research Lab conducting basic research to achieve radical innovations that enlarge the technological opportunities of the economy. Simu- lation results show that all policies improve productivity and GDP growth, but the best outcomes are achieved by active discretionary State policies, which are also able to crowd-in private investment and have positive hysteresis effects on growth dynamics. For the same size of public resources allocated to market-based interventions, “Mission” innovation policies deliver significantly better aggregate performance if the government is patient enough and willing to bear the intrinsic risks related to innovative activities.
    Keywords: Innovation policy, mission-oriented R&D, entrepreneurial state, agent-based modelling
    JEL: O33 O38 O31 O40 C63
    Date: 2021
  11. By: Peralta, Leda
    Abstract: Tourism micro, small and medium-sized enterprises (MSMEs) recognize the importance of digital tools to attract tourists, showcase the company and sell products and services. However, they make basic use of these tools to communicate and promote the company, missing opportunities to improve their competitiveness, productivity and sustainability. This study analyses the state of the digital transformation of tourism MSMEs in the member States of the Central American Integration System (SICA), both their internal capacities and external conditions that affect their ability to innovate. The study follows a cross-cutting gender analysis and describes the innovation capacity of rural tourism companies.
    Date: 2021–07–15
  12. By: Becker, Marco; Benefo, Quincy; Gropp, Madeline; Ruhland, Jannis; Springhorn, Celina Marie; Weselmann, Niels; Winter, Juliane
    Abstract: Das Thema Controlling wird in vielen Start-up-Unternehmen vernachlässigt, obwohl eine konsequente Ausrichtung des Unternehmens an einem Controlling-System ein entscheidender Wettbewerbsvorteil sein kann. Aufgrund der Besonderheiten von Start-up-Unternehmen (im Vergleich zu etablierten Unternehmen) lassen sich klassische Controlling-Instrumente und Controlling-Strategien nicht 1:1 anwenden. Es wird vielmehr ein spezifisches Controlling-System benötigt, welches sich an den Besonderheiten und individuellen Bedürfnissen von Start-up-Unternehmen orientiert. Mit diesem Artikel soll ein pragmatisches und praxisorientiertes Controlling-System für Start-up-Unternehmen skizziert werden.
    Keywords: Start-up,Controlling-System
    JEL: M13
    Date: 2021

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