nep-ent New Economics Papers
on Entrepreneurship
Issue of 2021‒08‒30
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Does Education Enhance Entrepreneurship? By Ahn, Kunwon; Winters, John V.
  2. The Importance of Capital in Closing the Entrepreneurial Gender Gap: A Longitudinal Study of Lottery Wins By Sarah Flèche; Anthony Lepinteur; Nattavudh Powdthavee
  3. Scaling up in Entrepreneurial Ecosystems: A comparative study of Entrepreneurial Ecosystems in Life Science By Alvedalen, Janna; Carlsson, Bo
  4. Comparative Analysis of Five Entrepreneurial Ecosystems in Life Sciences By Alvedalen, Janna; Carlsson, Bo
  5. Resilience after a large firm's closure: the role of place leadership, local resources, and social capital in the transformation of an Entrepreneurial Ecosystem By Alvedalen, Janna
  6. Start-ups, Gender Disparities, and the Fintech Revolution in Latin America By Batiz-Lazo, Bernardo; González-Correa, Ignacio
  7. Did US Business Dynamism Recover in the 2010s? By Asier Aguilera-Bravo; Miguel Casares; Hashmat Khan
  8. Incentives for Entrepreneurial Firms and Technical and Policy Appendices By Hackler, Darrene; Harpel, Ellen
  9. Financing Entrepreneurship and Innovation in China By Lin William Cong; Charles M. C. Lee; Yuanyu Qu; Tao Shen
  10. Female entrepreneurship in the wine sector: the role of identity in small and medium-sized wineries’ formation, growth and response to Covid-19 By Cinzia Colapinto; Vladi Finotto; Christine Mauracher
  11. The productivity puzzle in business services By Alexander S. Kritikos; Alexander Schiersch; Caroline Stiel
  12. Model-Selection Inference for Causal Impact of Clusters and Collaboration on MSMEs in India By Samarth Gupta
  13. Size and Age as Determinants of Employment Growth among Manufacturing Firms in Pakistan By Farrukh Iqbal; Aadil Nakhoda

  1. By: Ahn, Kunwon (Iowa State University); Winters, John V. (Iowa State University)
    Abstract: Formal education is correlated with entrepreneurial activity and success, but correlation does not indicate causation. Education and entrepreneurship are both influenced by other related factors. The current study estimates causal effects of formal education on entrepreneurship outcomes by instrumenting for an individual's years of schooling using cohort mean years of maternal schooling observed decades prior. We differentiate self-employment by industry employment growth and firm incorporation status. We have multiple important results. Formal schooling significantly increases the probability of self-employment in high-growth industries for both women and men. Education reduces the probability of male self-employment in shrinking industries. Education also increases incorporated self-employment for women and men and reduces unincorporated self-employment among men but not women. The overall probability of self-employment increases with education for women but is unaffected by education for men. The results suggest that formal education enhances entrepreneurship.
    Keywords: entrepreneurship, self-employment, education, human capital
    JEL: I20 J24 L26
    Date: 2021–08
  2. 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
  3. By: Alvedalen, Janna (CIRCLE, Lund University); Carlsson, Bo (Case Western Reserve University)
    Abstract: Scaling-up is still underexplored in the Entrepreneurial Ecosystem literature. This paper presents a comparative analysis of five Entrepreneurial Ecosystems in Life Sciences in Sweden and the US, based on own data collection. It examines the factors that support or impede the scale-up process of firms in different geographical contexts. The paper outlines firm-specific and firm-external factors important to high-growth firms in Life Science and shows these factors differentiate across distinct geographical contexts. The study sheds light on key enablers and barriers to scaling-up in Entrepreneurial Ecosystems and the roles of different actors including growth ambition, technological expertise, management competence, business model alteration, funding, global firms, human capital, support organizations, local growth culture, hospitals and universities.
    Keywords: Entrepreneurial Ecosystem; scale-up; high-growth firms; Life Sciences; Sweden; U.S.
    JEL: L26 M21 O33
    Date: 2021–08–20
  4. By: Alvedalen, Janna (CIRCLE, Lund University); Carlsson, Bo (Case Western Reserve University)
    Abstract: Entrepreneurial ecosystem (EE) is a popular concept in entrepreneurship studies that describes all actors and the interaction between actors in a specific geographical area. While studies have focused on a single case, this paper explores and compares the nature of five EEs in Life Sciences in Sweden and the US, based on own data collection in all five areas. The paper outlines commonalities and differences between how EEs operate and function in different territorial contexts. It also explores how national and local factors influence the rate and nature of entrepreneurship at the regional level. The paper shows how important it is to take a territorial perspective on EE, because EEs look different in distinct geographical and institutional contexts.
    Keywords: Entrepreneurial Ecosystem; Life Sciences; Sweden; US
    JEL: L26 M21 O33
    Date: 2021–08–20
  5. By: Alvedalen, Janna (CIRCLE, Lund University)
    Abstract: Studies have argued for the pivotal role of large firms in Entrepreneurial Ecosystems (EE). The sudden closure of large firms can be expected to have a substantial negative impact on an EE. This paper investigates the resilience of an EE in the aftermath of a large firm exit in the Lund region. A qualitative case study shows how agency and resources turned the local EE into a dynamic center for Life Sciences. Factors that contributed to the resilience of the EE in Lund were entrepreneurial place leadership, local resources, and social capital. The study provides a framework to understand the transformation of an EE after a crisis.
    Keywords: entrepreneurial ecosystem; resilience; place leadership; social capital; entrepreneurship; closure of large firm
    JEL: L26 M21 O33
    Date: 2021–08–20
  6. By: Batiz-Lazo, Bernardo; González-Correa, Ignacio
    Abstract: This chapter considers the process of entrepreneurial activity to deploy financial technologies (fintech) through mandate-specific new companies in Latin America. We deal with important historical issues such as defining the term, establishing temporal and industrial activity boundaries, positioning this particular process within other organizational forms typical of the region, the role of women and other relevant issues such as the modernization of retail payments and personal lending. A central question is whether fintech start-ups have had a 'scissor' effect in the entrepreneurial process of Latin America: at the base of the pyramid (that is, reducing frictions to support overall entrepreneurial activity, increasing financial inclusion, etc.) and near the top (by creating new business leaders). As a result, this chapter provides an initial assessment of gender disparities and barriers enabling women entrepreneurs in the fintech ecosystem.
    Keywords: fintech, gender, women, entrepreneurship, startups, Latin America
    JEL: G2 J16 M13 N26
    Date: 2021–08
  7. By: Asier Aguilera-Bravo (Universidad de Navarra); Miguel Casares (Universidad Pública de Navarra & INARBE); Hashmat Khan (Carleton University)
    Abstract: We provide evidence that both firm and establishment entry rates in the US have been increasing over the past decade, seemingly ending the secular decline observed over previous decades. However, the job-size of new businesses relative to incumbents has decreased substantially. Controlling for these opposite trends reveals that the size-adjusted entry rate continues to decline.
    Date: 2021
  8. By: Hackler, Darrene; Harpel, Ellen
    Abstract: Many economic development organizations (EDOs) have embraced the mission to support entrepreneurial firms in their communities. EDOs engage in their entrepreneurial ecosystems, in part, by providing resources, sometimes in the form of business incentives. The purpose of this report is to provide practitioners and policymakers with insights regarding the use of these incentives and guidance for offering incentives to entrepreneurial firms. Researchers and policymakers use a wide range of definitions for “entrepreneurial firm” and “incentive,” making it difficult to categorize and describe the current state of entrepreneurial firm incentives. Multiple additional research challenges, including a lack of data on program outcomes, hinder the ability to draw definitive policy guidance from both program evaluations and academic research. This report strives to sort this tangle of material into a framework that is helpful for policymakers and economic development practitioners.
    Keywords: entrepreneurship, startups, small business, incentives, economic development, incubators, accelerators, equity
    JEL: L26 O1 O11 O12
    Date: 2021–08
  9. By: Lin William Cong; Charles M. C. Lee; Yuanyu Qu; Tao Shen
    Abstract: This study reports on the current state-of-affairs in the funding of entrepreneurship and innovations in China and provides a broad survey of academic findings on the subject. We also discuss the implications of these findings for public policies governing the Chinese financial system, particularly regulations governing the initial public offering (IPO) process. We also identify and discuss promising areas for future research.
    Date: 2021–08
  10. By: Cinzia Colapinto (Dept. of Management, Università Ca' Foscari Venice); Vladi Finotto (Dept. of Management, Università Ca' Foscari Venice); Christine Mauracher (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The increasing interest in female entrepreneurship advanced our understanding of how psychological and personality traits and the contextual factors surrounding the decision of women to become founders influence their ways of establishing and managing organizations. Recent literature points to the fact that the differences among men and women as founders and leaders of organizations might exist also when major crises happen: in front of radical changes and events that abruptly disrupt the processes and operations of firms, women might manage situations in a peculiar way. From this perspective, Covid-19 represents a fruitful testbed. The onset of the pandemic had social and economic consequences at global level: the outbreak has caused major disruptions in supply chains and shifts in consumption patterns. Relevant current questions are how Covid-19 pandemic has been affecting female entrepreneurs and how resilient they were. The paper looks at women-owned wineries in the Northern part of Italy as an interesting case: indeed, the wine industry has been traditionally a male-dominated industry and it has been heavily impacted by the covid-19 pandemic. Through qualitative research we explore how female wineries were able to change their direction or implement new services. We find that women weigh strategic choices such as using e-commerce with the need to maintain extant relationships, make decisions influenced by the need to preserve communities and rely on peer-networks to provide mutual support.
    Keywords: wineries, digitalization, Covid-19 pandemic, female entrepreneurship, crisis management
    JEL: L26 L66 M19
    Date: 2021–08
  11. By: Alexander S. Kritikos (DIW Berlin, University of Potsdam, IZA Bonn, IAB Nuremberg); Alexander Schiersch (DIW Berlin); Caroline Stiel (DIW Berlin)
    Abstract: In Germany, the productivity of professional services, a sector dominated by micro and small firms, declined by 40 percent between 1995 and 2014. This productivity decline also holds true for professional services in other European countries. Using a German firm-level dataset of 700,000 observations between 2003 and 2017, we analyze this largely uncovered phenomenon among professional services, the 4th largest sector in the EU15 business economy, which provide important intermediate services for the rest of the economy. We show that changes in the value chain explain about half of the decline and the increase in part-time employment is a further minor part of the decline. In contrast to expectations, the entry of micro and small firms, despite their lower productivity levels, is not responsible for the decline. We also cannot confirm the conjecture that weakening competition allows unproductive firms to remain in the market.
    Keywords: business services, labor productivity, productivity slowdown
    JEL: L84 O47 D24 L11
    Date: 2021–08
  12. By: Samarth Gupta (National Council of Applied Economic Research)
    Abstract: Do agglomeration-based spillovers impact firms more than the technical know-how obtained through inter-firm collaboration? Quantifying the effect of these treatments on firm performance can be valuable for policy-makers as well as managers/entrepreneurs. I observe the universe of Indian MSMEs inside an industrial cluster but with no collaboration (Treatment Group 1), those in collaboration with other firms for technical know-how but outside a cluster (Treatment Group 2) and those outside cluster with no collaboration (Control Group). Selection of firms into these treatments and sub-sequent performance of the firm may be simultaneously driven by observable factors. To address selection bias and overcome model mis-specifcation, I use two data-driven, model-selection methods, developed in Belloni et al. (2013) and Chernozhukov et al.(2015), to estimate causal impact of the treatments on GVA of ?rms. The results suggest that ATE of cluster and collaboration is nearly equal at 30%. I conclude by offering policy implications of the results.
    Keywords: Entrepreneurship, Firm Performance, SME
    JEL: L25 L26
    Date: 2020–08
  13. By: Farrukh Iqbal (Center for Social Policy Research.); Aadil Nakhoda (Institute of Business Administration, Karachi.)
    Abstract: Size-based industrial policy is usually justified in developing countries on the basis of positive externalities arising from an assumed inverse relationship between size and firm dynamism, whereby smaller firms generate jobs faster than larger firms and thus absorb more labour. Theoretically, such a profile could arise from the stylized lifecycle of the typical firm which starts small and grows on the basis of economies of scale until a point where such economies are fully exploited. A similar profile could also be generated by the rising age of the firm. In this case, the firm grows faster when young, driven by the effort, ideas and risk-taking of young owners and managers, but grows slower as they mature and become more risk averse and more cognizant of their firm’s capabilities. In recent decades, empirical support has been found for both size and age effects on employment growth in some developed and developing countries. For Pakistan, the joint effects of size and age on employment growth have not been studied at the national level, even though size-based industrial policies have long been applied and age-based policies are growing in popularity. We address this gap in this paper and report three key findings: (i) size is inversely related to employment growth among manufacturing firms in Pakistan; (ii) the effects appear to be concentrated among firms having 50 workers or less; and (iii) age is not a statistically significant determinant of employment growth when all manufacturing sub-sectors are considered in the aggregate.
    Keywords: Firm Size; Firm Age; Employment Growth; Manufacturing; Pakistan; Industrial Policy
    JEL: L25 O14
    Date: 2020

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