nep-ent New Economics Papers
on Entrepreneurship
Issue of 2022‒02‒14
nine papers chosen by
Marcus Dejardin
Université de Namur

  1. Positioning firms along the capabilities ladder By Coad, Alex; Mathew, Nanditha; Pugliese, Emanuele
  2. Mobile money adoption and entrepreneurs’ access to trade credit in the informal sector By Tetteh, Godsway Korku; Goedhuys, Micheline; Konte, Maty; Mohnen, Pierre
  3. An Integrative Framework for Formal and Informal Entrepreneurship Research in Africa By Richard Adu-Gyamfi; John Kuada; Simplice A. Asongu
  4. Merchants, proto-firms, and the German industrialization: the commercial determinants of nineteenth century town growth By Greif, Gavin
  5. The Merits of Project-Based Learning to Foster Entrepreneurship Education By Adri Du Toit
  6. Peaceful Entry: Entrepreneurship Dynamics During Colombia’s Peace Agreement By Bernal, C; Ortiz, M; Prem, M; Vargas, J. F
  7. International ownership and SMEs in Middle Eastern and African economies By Baliamoune-Lutz, Mina; Basuony, Mohamed A. K.; Lutz, Stefan; Mohamed, Ehab K. A.
  9. Unternehmensnachfolgen in Deutschland 2022 bis 2026 By Fels, Markus; Suprinoviéc, Olga; Schlömer-Laufen, Nadine; Kay, Rosemarie

  1. By: Coad, Alex (Waseda Business School); Mathew, Nanditha (UNU-MERIT, Maastricht University); Pugliese, Emanuele (European Commission, Joint Research Centre (JRC))
    Abstract: We develop and apply a novel methodology for quantifying the capability development of firms, and putting these capabilities (and hence also the firms) in a hierarchy, that we refer to as their position on the capabilities ladder. Our nestedness algorithm, inspired by biology and network science, defines a capability as complex if it is performed by only a few firms at the upper rungs of the ladder. We analyze balance sheet and innovation data of almost 40,000 Indian firms for the time period 1988-2015, and observe significant nestedness. Lower rungs of the capabilities ladder correspond to basic managerial and production capabilities. Mid-level rungs correspond to internationalization and acquiring absorptive capacity. Higher level rungs are more related to M&A and innovation. ICT capabilities have become more fundamental lower-level rungs on the capabilities ladder in recent years. We find that capability ranking can explain future growth patterns and survival probability of firms, summing up in one number their future potential trajectories.
    Keywords: Capabilities, Competences, Complexity, Balance sheet data, Resources
    JEL: L2 D2 O12
    Date: 2021–08–13
  2. By: Tetteh, Godsway Korku (UNU-MERIT, Maastricht University); Goedhuys, Micheline (UNU-MERIT, Maastricht University); Konte, Maty (UNU-MERIT, Maastricht University, and Barnard College, Columbia University); Mohnen, Pierre (UNU-MERIT, Maastricht University)
    Abstract: Despite the contribution of previous studies to unravel the implications of mobile money in the developing world, the effect of this innovation on an important source of external finance, trade credit, has not been properly accounted for particularly in the informal sector. Using the 2016 FinAccess Household Survey, we investigate the relationship between mobile money adoption and the probability to receive goods and services on credit from suppliers based on a sample of entrepreneurs who operate informal businesses. We further explore the effect of mobile money adoption on the likelihood to offer goods and services on credit to customers. Our estimations suggest that entrepreneurs with mobile money are more likely to receive goods and sesrvices on credit from suppliers. We also find a positive and significant relationship between mobile money adoption and the likelihood to offer goods and services on credit to customers. The evidence supports the promotion of mobile money adoption among entrepreneurs in the informal sector to facilitate access to credit.
    Keywords: Entrepreneurship, Financial Innovation, Mobile Money, Trade Credit
    JEL: D14 G21 L26 O16 O33
    Date: 2021–11–17
  3. By: Richard Adu-Gyamfi (Research Africa Network, Botswana); John Kuada (Aalborg University, Denmark); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: It is a well-established practice of many Sub-Sahara African (SSA) governments to aid entrepreneurs within both the formal and informal sectors in order to enhance their performance and growth. Unfortunately, there is no agreed method by which governments can differentiate between entrepreneurs and target them with the appropriate promotion policies. Thus, despite the good intentions, entrepreneurship policy initiatives have been incorrectly targeted, poorly implemented and without the desired results, since different entrepreneurs may require different forms of assistance. Some scholars have suggested that without a context-specific classificatory guide, policymakers are unlikely to be accurate in their assessment of the growth capabilities of prospective candidates for specific promotion initiatives and this can explain some of the policy failures. This observation has motivated the present paper. Our objective is to provide a framework that helps identify the different contextual dimensions influencing formal and informal enterprise creation processes in SSA.
    Keywords: entrepreneurship; formal; informal; Africa
    Date: 2022–01
  4. By: Greif, Gavin
    Abstract: The role of merchants in shaping the German industrialization is often acknowledged, yet scarcely researched. A small number of case-studies of merchant families and individual towns have shown the significance of merchants as capital providers, industrial entrepreneurs, and political actors, yet no supra-local study into the wider significance of this social group for the German economy exists. This dissertation introduces a new source, a business directory from 1798, to construct micro-data on 6099 individual merchant and manufacturing enterprises across 56 towns in Germany. The resulting dataset is the earliest supraregional evidence on the spatial variation of urban merchant communities in Germany to date. Furthermore, this paper provides a detailed overview of the types of eighteenth-century merchants and analyses under what exact circumstances merchants became industrial entrepreneurs. Using multivariate OLS regressions, it finds a strong association between a greater share of proto-firms in a town in 1798 and its growth rates across the nineteenth century. The findings point to a hitherto overlooked link between the qualitative structure of late eighteenth century merchant activity, the elasticity of supply of early industrial entrepreneurship, and the spatial variation of urban growth experiences in nineteenth century Germany
    JEL: N14
    Date: 2022–01
  5. By: Adri Du Toit (North-West University, South Africa)
    Abstract: Entrepreneurship education affords valuable learning to prepare learners for the world of work, including the potential to reduce youth unemployment. South Africa has one of the highest youth unemployment rates globally, making it imperative to develop and expand entrepreneurship education in its school curriculum. The problem that needed investigation, was how such entrepreneurship education needed to be constructed in projects to benefit learners optimally. Literature indicates that education through entrepreneurship — often scaffolded using project-based learning — is preferred above other approaches. Consumer Studies was identified as the only subject in the South African school curriculum that included significant entrepreneurship education, in the form of an entrepreneurship project. The purpose of the current study was therefore to analyze and evaluate that project for its inclusion of project-based learning principles, to determine its strengths and areas for improvement. The intended aim for the research was to develop recommendations to improve the scaffolding of the project to enhance its focus of education through entrepreneurship. The findings of this research contribute to a better understanding of how entrepreneurship education should be scaffolded and implemented into existing subjects. The significance of the research includes that these findings can be used to inform the development of similar projects in other South African school subjects, consequently contributing to expanding effective entrepreneurship education. In the long term, more learners will then be able to benefit from the valuable learning associated with entrepreneurship education, which includes the potential to reduce youth unemployment in this country.
    Keywords: entrepreneurship education, principles, project-based learning, school curriculum, youth unemployment
    Date: 2021–06
  6. By: Bernal, C; Ortiz, M; Prem, M; Vargas, J. F
    Abstract: While there is a large literature on how conflict affects entrepreneurship and private investment, much less is known about how the end of a conflict affects businesses and firms’ creation. A priory, the direction of the effect is not obvious, as conflicts bequest poverty traps and inequality that reduce the returns of investment, and the territorial vacuum of power that is inherent to most post-conflict situations may trigger new violent cycles. Studying Colombia’s recent peace agreement and using a difference-in-differences empirical strategy, we document that dynamics of entrepreneurship in traditionally violent areas closely mapped the politics that surrounded the peace agreement. When the agreement was imminent after a 5-decade conflict and violence had plummeted, local investors from all economic sectors established new firms and created more jobs. Instead, when the agreement was rejected by a tiny vote margin in a referendum and the party that promoted this rejection raised to power, the rate of firms’ creation rapidly reversed.
    Keywords: Firm entry, Conflict, Peace agreement, Colombia
    JEL: D74 D22
    Date: 2022–01–20
  7. By: Baliamoune-Lutz, Mina; Basuony, Mohamed A. K.; Lutz, Stefan; Mohamed, Ehab K. A.
    Abstract: Empirical evidence suggests that international ownership of local firms supports firm performance and growth through various channels such as financing, technology transfer, and improved access to international markets. This is particularly true for small and medium-sized enterprises (SMEs) that otherwise may lack access to a variety of vital resources. At the same time small and medium-sized enterprise (SME) formation may promote economic development. The relationship between firm performance and international ownership has been well explored for firms in developed economies but this is not the case for firms - including SMEs - in Africa and the Middle East. Largely due to lack of relevant cross-country financial data, existing literature on African and Middle-Eastern firms has presented survey-based evidence on firm performance while evidence based on detailed financial information remains lacking. The present paper aims at filling this research gap. We identify African and Middle-Eastern SMEs operating in the formal sector and examine the impact of ownership structure on firm performance. We use cross-sectional financial data covering about 25,500 companies - including about 30% SMEs - in 69 African and Middle-Eastern countries for the years 2006 to 2015. Our results indicate that international ownership has significant positive association with firm performance. For internationally-owned SMEs this appears to be true despite lower levels of equity and debt capital, implying that internationally-owned firms use international resources - other than capital - more efficiently!
    Date: 2022
  8. By: Priit Vahter; Maaja Vadi
    Abstract: This paper explores the dynamic nature of complementarities between technological and organizational innovation at firms. Using Spanish firm level panel data (PITEC) over period 2008-2016, it investigates how the formation, keeping and ending of the joint adoption of these two core types of innovation is associated with firm performance. In the case of the general static test of complementarities we find no evidence of complementarities. However, once we focus on the analysis of within-firm changes in the complementarity bundle of innovation types, we observe clear evidence that some sequential as well as simultaneous strategy switches towards combining technological and organizational novelties are associated with significant performance premia at firms. Our findings point out the key role of technological innovation in these complementarities. We find evidence of sequential complementarity only when organizational innovation is added to the already existing technological innovation at the firm, not when organizational innovation is added as first component before technological innovation. In the case of dissolving the complementarity bundle of innovation types, the key disadvantage for the firm is related to dropping the technological innovation. Giving up only organizational innovation while keeping the technological innovation appears to have no negative effect, on average, on firm performance.
    Keywords: technological innovation, organizational innovation, complementarities, sequential complementarity
    Date: 2022
  9. By: Fels, Markus; Suprinoviéc, Olga; Schlömer-Laufen, Nadine; Kay, Rosemarie
    Abstract: Wegen fehlender amtlicher Statistiken schätzt das IfM Bonn seit Mitte der 1990er Jahre die Anzahl der Unternehmen in Deutschland, die vor der Übergabe stehen. Die vorliegende Schätzung kommt zum Ergebnis, dass im Zeitraum 2022 bis 2026 etwa 190.000 Unternehmen zur Übergabe anstehen. Die höchste Anzahl an Übergaben findet sich in der Branche der Unternehmensbezogenen Dienstleistungen sowie unter den Unternehmen der Größenklasse 500.000 bis 1 Mio. Euro Jahresumsatz. Überdurchschnittlich viele Übergaben (gemessen am Unternehmensbestand) werden für Bremen und Niedersachsen vorausberechnet. Von der Corona-Pandemie erwarten wir nach derzeitigem Stand keine starken Auswirkungen auf die Zahl der Unternehmensnachfolgen. Von besonderer Bedeutung für das Nachfolgegeschehen ist hingegen der demografische Wandel.
    Keywords: Unternehmensübertragungen,Familienunternehmen,Deutschland,Business transfers,family businesses,Germany
    JEL: L19 M19 M29
    Date: 2021

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