nep-ent New Economics Papers
on Entrepreneurship
Issue of 2022‒01‒24
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Business Closures and (Re)Openings in Real Time Using Google Places By Thibaut Duprey; Daniel E. Rigobon; Philip Schnattinger; Artur Kotlicki; Soheil Baharian; T. R. Hurd
  2. How far Do gazelles run? Growth Patterns of Regular Firms, High Growth Firms and Startups By Ramy El-Dardiry; Benedikt Vogt
  3. A Procedural Perspective on Academic Spin-off Creation: The Changing Relevance of Academic and Commercial Logics By Cantner, Uwe; Doerr, Philip; Göthner, Maximilian; Huegel, Matthias; Kalthaus, Martin
  4. Procuring survival By Cappelletti, Matilde; Giuffrida, Leonardo M.
  5. COVID-19 and entrepreneurial processes in U.S. equity crowdfunding By Cumming, Douglas J.; Reardon, Robert S.
  6. FinTech loans, self-employment, and financial performance By Cumming, Douglas J.; Sewaid, Ahmed
  7. Financial constraints for R&D and innovation: New evidence from a survey experiment By Czarnitzki, Dirk; Giebel, Marek
  8. Historical Prevalence of Infectious Diseases and Entrepreneurship: the Role of Institutions in 125 Countries By Omang O. Messono; Simplice A. Asongu
  9. The Employment in Innovative Enterprises in Europe By Laureti, Lucio; Costantiello, Alberto; Matarrese, Marco Maria; Leogrande, Angelo
  10. The Design of R&D Tax Incentive Schemes and Firm Innovation By Koski, Heli; Fornaro, Paolo
  11. The Effects of Corporate Taxes on Small Firms By Jarkko Harju; Aliisa Koivisto; Tuomas Matikka
  12. Covid-19 pandemic, state aid and firm productivity By Bighelli, Tommaso; Lalinsky, Tibor; Vanhala, Juuso
  13. Unternehmensgründungen und Wirtschaftswachstum im internationalen Vergleich: Inwieweit dienen Gründungen und Venture Capital als Wachstumstreiber? By Röhl, Klaus-Heiner; Heuer, Leonie

  1. By: Thibaut Duprey; Daniel E. Rigobon; Philip Schnattinger; Artur Kotlicki; Soheil Baharian; T. R. Hurd
    Abstract: We present a new method to measure business opening and closure rates using real-time information from Google Places, the dataset behind the Google Maps service. Our Canadian application confirms the importance of temporary closures and reopenings during the COVID-19 pandemic. Over 50% of the temporarily closed food and retail businesses during the April 2021 lockdown reopened by the end of September. Our estimates align well with the timing of COVID-19 restrictions and are validated by a survey of recently opened businesses. Our framework provides policy-makers with a tool for the timely monitoring of business dynamics.
    Keywords: Firm dynamics; Recent economic and financial developments
    JEL: D22 E32 C55 C81
    Date: 2022–01
  2. By: Ramy El-Dardiry (CPB Netherlands Bureau for Economic Policy Analysis); Benedikt Vogt (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: High growth firms receive a lot attention from policy. In many countries, policies to stimulate economic growth target startups -- loosely defined as young firms that often rely on new technology to develop scaleable business models. Despite their prominence in policy, it turns out to be difficult to study these firms empirically as there is no clear way to isolate startups from the broader set of entrants in an economy. Recently, the toolkit to study startups has been extended as privately owned databases about innovative firms have become available. These databases offer a potentially rich and up to date source of information which complements data from national statistics agencies. However, evidence on how representative these type of databases are when it comes to HGFs or the startup landscape of a country is scarce. Little is known about how growth patterns of firms included in private startup databases actually compare to the residual firm population in a country. A more thorough understanding of the general validity of private startup databases is therefore much needed.
    JEL: L25 L26
    Date: 2022–01
  3. By: Cantner, Uwe (University of Jena); Doerr, Philip (University of Jena); Göthner, Maximilian (University of Jena); Huegel, Matthias (University of Jena); Kalthaus, Martin (University of Jena)
    Abstract: We analyze the influence of two contradicting settings on the success in the academic spin-off creation process. Scientists, who are embedded in the academic setting, have to reach out and adapt to the logics of the commercial setting to successfully found their firm. However, along this process, many scientists fail because they cannot overcome the contradictions between these logics. We provide the first empirical evidence on the relevance of these two contradicting logics along the spin-off creation process. Based on a phase-based conceptualization of the spin-off process, we hypothesize a decreasing relevance of the academic setting and an increasing relevance of the commercial setting for successful transitions between the process phases. We test these relationships with a representative sample of German scientists using dominance analysis to determine the relative importance of the two settings. Our findings show a decreasing relative importance of the academic setting along the spin-off creation process, in line with our hypotheses. The relevance of the commercial setting initially increases before it decreases in the latest stage of the process, contrary to our hypothesis. Additionally, we find that the commercial setting is generally more important than the academic setting, especially in the beginning of the process. Our results provide a deepened understanding of the academic spin-off creation process and extend existing theories. Furthermore, they provides intervention points for policy along the spin-off creation process.
    Keywords: academic entrepreneurship, transition process, phase model, dominance analysis
    JEL: L26 O31 O33
    Date: 2021–12
  4. By: Cappelletti, Matilde; Giuffrida, Leonardo M.
    Abstract: Public spending (i.e., 'G') enables governments to fulfill their fiscal policies. This paper takes a micro perspective and quantifies the impact of procurement spending - a specific component of G - on firm survival. We find that firms that receive public contracts survive longer, ceteris paribus, and that this effect accrues over time, reaching 20 percentage points after ten years. Our results are based on a novel dataset for Italy that combines balance sheet data on the universe of limited liability firms with administrative records on market entry and exit and quasi-universe of public contract data between 2008 and 2018. For construction auctions, we also rely on bid-level data to inform a regression discontinuity analysis. We find that the survival rate of winners relative to marginal losers is 70% higher after 36 months - or after two years and half of the median contract expiration. We explore several alternative channels that could rationalize our findings. We find that recipients do not become more productive, and their earnings become increasingly dependent on sales to public customers.
    Keywords: firm survival,firm dynamics,government demand,public procurement,demandshocks,productivity,auctions,regression discontinuity design
    JEL: D44 H32 H57
    Date: 2021
  5. By: Cumming, Douglas J.; Reardon, Robert S.
    Abstract: COVID-19 brought about a shift in entrepreneurial opportunities and in the United States. In this paper, we proxy entrepreneurial processes by examining housing prices in different regions of the United States. Housing prices capture the movement in people, tax dynamics, and behavioral preferences for equity ownership in different regions and over time, all of which were drastically impacted by COVID-19. We examine all U.S. equity crowdfunding offerings starting with the very first offerings in 2016 Q2 until 2021 Q1 based on data from the Securities and Exchange Commission. The data indicate that regional housing prices post-COVID-19 are a strong predictor of the number of equity crowdfunding campaigns and the amount of capital raised. The impact of housing price changes on crowdfunding is more pronounced among more prosperous regions. The housing price effect is robust to numerous controls and consideration of outliers.
    Keywords: Equity Crowdfunding,COVID-19,Regional Entrepreneurship
    JEL: G21 G28 G51
    Date: 2021
  6. By: Cumming, Douglas J.; Sewaid, Ahmed
    Abstract: Leveraging data from a leading FinTech peer-to-peer lending platform in the United States, allowing us to capture both individuals' successful and unsuccessful loan applications, we test the effect of FinTech loans on subsequent employment choice and future financial performance of serial borrowers, those repeatedly soliciting loans on the platform. An analysis of 198,984 loan requests made by 92,382 individuals shows that a failed loan application increases the probability of switching employment status. Self-employed individuals are 22% more likely to switch to becoming an employee following an unsuccessful loan application. This probability increases to 31% for those in the lowest income decile and decreases to 13% for those in the highest income decile. We document an improvement in monthly income and credit access following a successful loan application. However, this enhancement is asymmetric. Monthly income enhancement is 3.11 times larger for self-employed individuals in the lowest income decile relative to individuals in the highest income decile. Access to credit enhancement is 1.85 times larger for self-employed individuals in the lowest credit access decile relative to individuals in the second highest credit access decile.
    Date: 2021
  7. By: Czarnitzki, Dirk; Giebel, Marek
    Abstract: We utilize a new survey experiment to evaluate the existence and degree of financial constraints for R&D in the economy. The experiment does not only allow to deduct the presence of financial constraints, but also to evaluate their economic significance. Using data on German companies, we find that financial constraints for R&D exist but that their relevance might have been overestimated in the literature. Most R&D projects that have not been implemented because of financial constraints turn out to have low expected marginal rates of return. While this findings stands in some contrast to other studies, we also find several results that are in line with the literature: young firms are most constrained and the constraints occur at the intensive margin, i.e. our results do not suggest that non-innovative companies are deterred from innovation. Instead, highly innovative companies are restricted by the capital market.
    Keywords: Innovation,Financial Constraints,Survey Experiment
    JEL: G30 O30 O31 O32 L21
    Date: 2021
  8. By: Omang O. Messono (University of Douala, Douala, Cameroon); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study examines the effects of the historical prevalence of infectious diseases on contemporary entrepreneurship. Previous studies reveal the persistence of the effects of historical diseases on innovation, through the channel of culture. Drawing on the epidemiological origin of institutions, we propose a framework which argues that the impact of infectious disease prevalence on contemporary entrepreneurship is mediated by property rights. The central hypothesis posits that a guarantee of property rights reduces the effect of past diseases on entrepreneurship. Using data from 125 countries, we find strong and robust evidence on the proposed hypothesis and other results. Property rights are higher in countries where the prevalence of diseases was low, which leads to good entrepreneurship scores. In contrast, countries with high disease prevalence did not have time to develop strong institutions to secure property rights. This explains their low level of entrepreneurship today. These results are robust to alternative methods and measures of property rights. Furthermore, our results also confirm the level of development, culture and the digitalization of economies as transmission channels between past diseases and the current level of entrepreneurship.
    Keywords: entrepreneurship; institutions; diseases; property rights
    JEL: I0 J24 I21 I31
    Date: 2021–09
  9. By: Laureti, Lucio; Costantiello, Alberto; Matarrese, Marco Maria; Leogrande, Angelo
    Abstract: In this article we evaluate the determinants of the Employment in Innovative Enterprises in Europe. We use data from the European Innovation Scoreboard of the European Commission for 36 countries in the period 2000-2019 with Panel Data with Fixed Effects, Panel Data with Random Effects, Dynamic Panel, WLS and Pooled OLS. We found that the “Employment in Innovative Enterprises in Europe” is positively associated with “Broadband Penetration in Europe”, “Foreign Controlled Enterprises Share of Value Added”, “Innovation Index”, “Medium and High-Tech Product Exports” and negatively associated to “Basic School Entrepreneurial Education and Training”, “International Co-Publications”, and “Marketing or Organizational Innovators”. Secondly, we perform a cluster analysis with the k-Means algorithm optimized with the Silhouette Coefficient and we found the presence of four different clusters. Finally, we perform a comparison among eight different machine learning algorithms to predict the level of “Employment in Innovative Enterprises” in Europe and we found that the Linear Regression is the best predictor.
    Keywords: Innovation and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Technological Change: Choices and Consequences • Diffusion Processes; Intellectual Property and Intellectual Capital.
    JEL: O30 O31 O32 O33 O34
    Date: 2022–01–01
  10. By: Koski, Heli; Fornaro, Paolo
    Abstract: Abstract Research and development (R&D) tax credits are widely employed among the OECD countries to promote business sector investments in innovation. The implementation of R&D tax credit schemes, however, varies across countries. The empirical research on the effectiveness of R&D tax incentives suggests that the strength of company responses (in R&D expenditures) to more generous tax incentives substantially differ across countries. We use data from 25 OECD countries, collected from 2010 to 2018, to explore the relationship between a set of R&D tax scheme features and innovation performance. Our estimation results show that the business sector R&D expenditure is higher among those countries that have implemented either an R&D tax credit scheme with an incremental deduction basis or a hybrid scheme with both volume-based and incremental tax relief components. The input additionality is highest when the R&D tax incentives are based on the incremental deduction. Further, the hybrid tax credit scheme positively relates to innovation output. The business sector R&D investment are higher in the countries with an R&D tax credit scheme that provides favorable treatment for SMEs or option to carry forward unclaimed R&D tax credits.
    Keywords: R&D tax incentives, R&D investments, Innovation policy, Patents
    JEL: K34 L5 O3 O31
    Date: 2022–01–19
  11. By: Jarkko Harju; Aliisa Koivisto; Tuomas Matikka
    Abstract: We study the impact of corporate taxes on firm-level investments and business activity by exploiting a 6 percentage-point reduction in the corporate tax rate during 2012–2014 in Finland. We use detailed administrative data and a difference-in-differences method comparing small corporations (tax rate cuts) to similar partnerships (no change in taxes). We find no significant average investment responses but do observe an average increase in annual sales and variable costs. These effects are driven by more cash-constrained firms and firms where the main owner actively works in the firm.
    JEL: G31 G38 H21 H25
    Date: 2022–01
  12. By: Bighelli, Tommaso; Lalinsky, Tibor; Vanhala, Juuso
    Abstract: We study the consequences of the COVID-19 pandemic on productivity by matching firm performance outcomes with corresponding firm-level information on government support. Our cross-country evidence for five EU countries shows that the pandemic led to a significant short-term decline in productivity predominantly driven by the within-firm growth component. A thorough comparative analysis of the distribution of employment and overall direct subsidies, considering separately also relative firm-level support and the probability of being supported, reveals several common characteristics. In general, the pandemic support was distributed rather efficiently, i.e. towards “deserving” firms and only marginally towards “zombie” and non-viable firms. However, government subsidies appear to have had a limited effect on aggregate productivity developments.
    JEL: D22 H25 J38 L29
    Date: 2022–01–14
  13. By: Röhl, Klaus-Heiner; Heuer, Leonie
    Abstract: Das Potenzialwachstum ist in den hochentwickelten Ländern in den letzten Jahren deutlich zurückgegangen. Ein wesentlicher Grund ist das rückläufige Wachstum der Produktivität, das aus dem technischen Fortschritt und dem Einsatz von Humankapital resultiert. Wichtig zur Aufrechterhaltung des Produktivitätswachstums sind wirtschaftliche Neuerungen, die von innovativen Gründungen ausgehen. Unternehmensgründungen können Innovationen oft schneller zum Durchbruch verhelfen und Humankapital produktiver einsetzen als es in etablierten Unternehmen der Fall ist, doch möglich ist ebenso ein Drehtüreffekt, bei dem neue Unternehmen vorhandene Firmen aus dem Markt drängen. Als besonders wichtig für disruptive Neuerungen und die Durchsetzung produktiver digitaler Technologien gelten Start-ups, die oft durch Venture Capital finanziert werden. Bisherige empirische Studien zur Wachstumswirkung von Gründungen liefern nicht ganz eindeutige, aber vorwiegend positive Zusammenhänge. Dieser IW-Report präsentiert nach einer Darstellung der wirtschaftstheoretischen Zusammenhänge und einem Literaturüberblick die Ergebnisse einerinternationalen Panelstudie, die die Wirkung von Gründungen und Venture Capital auf das Wachstum enthält. Es zeigt sich für die hoch entwickelten Länder eine positive Wachstumswirkung beider Variablen, die in Abhängigkeit von der gewählten Modellspezifikation überwiegend signifikant bis hoch signifikant ausfällt. Die in vielen Ländern praktizierte Förderpolitik für Gründungen und Start-ups erscheint daher auch aus empirischer Sicht gut begründet zu sein.
    JEL: C33 L26 O4 O47
    Date: 2021

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