nep-ent New Economics Papers
on Entrepreneurship
Issue of 2022‒04‒11
ten papers chosen by
Marcus Dejardin
Université de Namur

  1. Do Startups Benefit from Their Investors’ Reputation? Evidence from a Randomized Field Experiment By Shai Bernstein; Kunal Mehta; Richard R. Townsend; Ting Xu
  2. Firm survival and gender of firm owner in times of COVID-19 Evidence from 10 European countries By Joachim Wagner
  3. Risk-Sharing and Entrepreneurship By Kilström, Matilda; Roth, Paula
  4. Digital Entrepreneurship Indicator (DEI): An Analysis of the Case of the Greater Paris Metropolitan Area By Dorine CORNET; Jean BONNET; Sébastien BOURDIN
  5. Entrepreneurship and Regulatory Voids: The Case of Ridesharing By Deerfield, Amanda; Elert, Niklas
  6. Serial Entrepreneurship in China By Loren Brandt; Ruochen Dai; Gueorgui Kambourov; Kjetil Storesletten; Xiaobo Zhang
  7. (R)evolution in Entrepreneurial Finance? The Relationship between Cryptocurrency and Venture Capital Markets By Kirill Shakhnov; Luana Zaccaria
  8. Government Procurement and Access to Credit: Firm Dynamics and Aggregate Implications By Julian di Giovanni; Manuel García-Santana; Priit Jeenas; Enrique Moral-Benito; Josep Pijoan-Mas
  9. Venture capital investments through the lens of network and functional data analysis By Christian Esposito; Marco Gortan; Lorenzo Testa; Francesca Chiaromonte; Giorgio Fagiolo; Andrea Mina; Giulio Rossetti
  10. Digitalisierung. Dekarbonisierung. Demografie. Wandel gestalten: Mittelstandsbericht Thüringen 2020 By Bickenbach, Frank; Bode, Eckhardt; Dohse, Dirk; Fehrenbacher, Sophia; Gold, Robert; Stolzenburg, Ulrich; Vehrke, Julian

  1. By: Shai Bernstein; Kunal Mehta; Richard R. Townsend; Ting Xu
    Abstract: We analyze a field experiment conducted on AngelList Talent, a large online search platform for startup jobs. In the experiment, AngelList randomly informed job seekers of whether a startup was funded by a top-tier investor and/or was funded recently. We find that the same startup receives significantly more interest when information about top-tier investors is provided. Information about recent funding has no effect. The effect of top-tier investors is not driven by low-quality candidates and is stronger for earlier-stage startups. The results show that venture capitalists can add value passively, simply by attaching their names to startups.
    JEL: C93 G24 J22 J24 L26
    Date: 2022–03
  2. By: Joachim Wagner (Leuphana Universität Lüneburg, Institut für Volkswirtschaftslehre)
    Abstract: This paper uses firm level data from the World Bank Enterprise surveys conducted in 2019 and from the COVID-19 follow-up surveys conducted in 2020 in ten European countries to investigate the link between the gender of the firm’s owner and firm survival until 2020.The estimated effect of female ownership is positive ceteris paribus after controlling for various firm characteristics that are known to be related to survival. Furthermore, the size of this estimated effect can be considered to be large on average. Having a female owner helped firms to survive.
    Keywords: Gender, female owned firms, firm survival, COVID-19, World Bank Enterprise Surveys
    JEL: D22 L20 L25 L29
    Date: 2022–03
  3. By: Kilström, Matilda (Stockholm School of Economics); Roth, Paula (Research Institute of Industrial Economics (IFN))
    Abstract: In this paper, we study the role of risk-sharing in entrepreneurship-driven innovation. Studying entrepreneurship and innovation entails modeling an occupational choice and an effort choice. Risk-sharing may increase the number of individuals who become entrepreneurs by limiting the downside risk. The effort of entrepreneurs may, however, be hampered by high risk-sharing if this limits the returns faced by successful entrepreneurs relative to unsuccessful entrepreneurs. We construct a simple theoretical model where risk-sharing may be either private or provided through the welfare state by means of taxation. We show that, in addition to the occupational and effort choice dimensions, the level of public risk-sharing also matters for the characteristics of entrepreneurs.
    Keywords: Innovation; Institutions; Growth risk-sharing; Inequality; Incentives
    JEL: D64 E02 O30 O33 O43 O47
    Date: 2021–02–16
  4. By: Dorine CORNET (Université Paris 1 Panthéon-Sorbonne, 106-112 bd de l'Hôpital, 75642 Paris Cedex 13); Jean BONNET (Normandie Univ, Unicaen, CNRS, CREM, Esplanade de la Paix, 14032 CAEN cedex 5); Sébastien BOURDIN (EM Normandie Business School, Métis Lab, 9 rue Claude Bloch, 14 000 Caen)
    Abstract: The DIGITAL ENTREPRENEURSHIP INDICATOR (DEI), which combines individual and institutional data, is designed to chart the vitality of metropolitan areas in terms of digital entrepreneurship on a suburban scale. In this study, we apply it to the case of the Greater Paris Metropolitan area. Using geographically weighted regression, we explore the spatial heterogeneity of the effect of digital entrepreneurial ecosystems on the location quotient of information and communication technology firms with fewer than 10 employees. The results highlight a positive link between the DEI and the location quotient of small ICT firms. In particular, the aspects of both ATTitudes and CAPacities (i.e., urbanization economies, Human Development Index, density of incubators, accounting and financial services, and fiber optic coverage) appear to have a significant effect on a suburban scale.
    Keywords: digital entrepreneurial ecosystem, urban area, innovation, spatial econometrics
    JEL: R12 L26 O31 P25
    Date: 2022–04
  5. By: Deerfield, Amanda (Economics Department); Elert, Niklas (Research Institute of Industrial Economics (IFN))
    Abstract: Formal institutions, e.g., regulations, are considered crucial determinants of entrepreneurship, but what enables regulatory change when there is a regulatory void, meaning entrepreneurship clashes with existing regulations? Drawing on public choice theory, we hypothesize that regulatory freedom facilitates the introduction of legislation to fill such voids. We test this hypothesis using unique data documenting the time for ridesharing to become legalized at the state level across the United States following its local (and often illegal) rollout. Results suggest states with greater regulatory freedom passed ridesharing legislation quicker, highlighting an underappreciated way that extant regulatory freedom facilitates the accommodation of entrepreneurship.
    Keywords: Entrepreneurship; Innovation; Regulation; Institutional change; Institutional voids; Institutional entrepreneurship; Sharing economy; Economic freedom; Survival analysis
    JEL: C21 O31 R49
    Date: 2022–03–24
  6. By: Loren Brandt; Ruochen Dai; Gueorgui Kambourov; Kjetil Storesletten; Xiaobo Zhang
    Abstract: This paper studies entrepreneurship and the creation of new firms in China through the lens of serial entrepreneurs, i.e. entrepreneurs who establish more than one firm, and their differences with non-serial entrepreneurs. Drawing on data on the universe of all firms in China, we document key facts about serial entrepreneurship in China since the early 1990s and develop a theoretical framework to rationalize the role of endowments, ability, and capital market frictions in their behavior. We also examine the key determinants of the sectoral choice for serial entrepreneurs' second firms. Quantitatively, serial entrepreneurs are more productive, raise more capital, and operate larger firms than non-serial entrepreneurs. Moreover, serial entrepreneurs with greater liquidity and whose firms have relatively similar productivity are more likely to operate these firms concurrently rather than sequentially. We also find that less productive serial entrepreneurs are more likely to switch sectors when establishing new firms, with the choice of sector influenced by considerations of risk diversification, upstream and downstream linkages, and sectoral complementarities.
    Keywords: Serial Entrepreneurship; Entrepreneurship; Capital Distortions; Sector Choice
    JEL: D22 D24 E22 E44 L25 L26 O11 O14 O16 O40 O53 P25 R12 D21
    Date: 2022–03–23
  7. By: Kirill Shakhnov (University of Surrey); Luana Zaccaria (EIEF)
    Abstract: We propose a model of entrepreneurial finance where start-ups raise capital via Initial Coin Offering (ICO) or traditional funding methods such as Venture Capital (VC). While token sales allow startups to leverage network effects, VC's value-adding services enhance product quality. We show that, even when projects have large potential network effects, ICOs may not be optimal if entrepreneurial ability is low. Moreover, despite the potential complementarity between network effects and value-adding services, entrepreneurs combine VC and ICO funding only in highly efficient VC markets and for projects with high network effects. Using data on funding rounds of blockchain startups, we empirically validate the main results of the model.
    Date: 2022
  8. By: Julian di Giovanni; Manuel García-Santana; Priit Jeenas; Enrique Moral-Benito; Josep Pijoan-Mas
    Abstract: We provide a framework to study how different allocation systems of public procurement contracts affect firm dynamics and long-run macroeconomic outcomes. We start by using a newly created panel data set of administrative data that merges Spanish credit register loan data, quasi-census firm-level data, and public procurement projects to study firm selection into procurement and the effects of procurement on credit growth and firm growth. We show evidence consistent with the hypotheses that there is selection of large firms into procurement, that procurement contracts provide useful collateral for firms more so than sales to the private sector and that procurement contracts facilitate firm growth beyond the contract duration. We next build a model of firm dynamics with both asset-based and earnings-based borrowing constraints and a government that buys goods and services from private sector firms. We use the calibrated model to quantify the long-run macroeconomic consequences of alternative procurement allocation systems. We find that granting procurement contracts to small firms, either by directly targeting them or by slicing large contracts into smaller ones, helps these firms grow and overcome financial constraints in the long run. However, we also find that reducing the average size of contracts or making it less likely for large firms to access them removes saving incentives for large firms, whose negative effects on capital accumulation can overcome the expansionary consequences for small firms and hence generate a drop in aggregate output.
    Keywords: government procurement; financial frictions; capital accumulation; aggregate productivity
    JEL: E22 E23 E62 G32
    Date: 2022–02–01
  9. By: Christian Esposito; Marco Gortan; Lorenzo Testa; Francesca Chiaromonte; Giorgio Fagiolo; Andrea Mina; Giulio Rossetti
    Abstract: In this paper we characterize the performance of venture capital- backed firms based on their ability to attract investment. The aim of the study is to identify relevant predictors of success built from the network structure of firms' and investors' relations. Focusing on deal-level data for the health sector, we first create a bipartite network among firms and investors, and then apply functional data analysis (FDA) to derive progressively more refined indicators of success captured by a binary, a scalar and a functional outcome. More specifically, we use different network centrality measures to capture the role of early investments for the success of the firm. Our results, which are robust to different specifications, suggest that success has a strong positive association with centrality measures of the firm and of its large in- vestors, and a weaker but still detectable association with centrality measures of small investors and features describing firms as knowl- edge bridges. Finally, based on our analyses, success is not associated with firms' and investors' spreading power (harmonic centrality), nor with the tightness of investors' community (clustering coefficient) and spreading ability (VoteRank).
    Keywords: Network analysis; functional data analysis; venture capital; investment trajectory.
    Date: 2022–02–28
  10. By: Bickenbach, Frank; Bode, Eckhardt; Dohse, Dirk; Fehrenbacher, Sophia; Gold, Robert; Stolzenburg, Ulrich; Vehrke, Julian
    Abstract: Im Rahmen ihres Mittelstandsberichts Thüringen stellen die Autoren fest, dass sich das Bruttoinlandsprodukt Thüringens seit dem Jahr 2015 ungünstiger entwickelt hat als das BIP in Deutschland insgesamt, während die Arbeitslosenquote in Thüringen stark zurückging und im Jahr 2021 unter dem Bundesdurchschnitt lag. Anlass zur Sorge bereitet aus ihrer Sicht die geringe Gründungsdynamik. Als Herausforderungen für die mittelständische Wirtschaft sehen sie vor allem den Rückgang der Erwerbsbevölkerung und den Fachkräftemangel, den digitalen Wandel, die Notwendigkeit der Dekarbonisierung sowie die Bewältigung der Corona-Pandemie an. Zur Bewältigung des Fachkräftemangels empfehlen sie, die Attraktivität des Wirtschaftsstandortes Thüringens für Fachkräfte und Hochqualifizierte zu erhöhen. Auch bedarf es nach Ansicht der Autoren einer stärkeren Priorisierung in der Förderpolitik. Vornehmlich gefördert werden sollten Investitionen, die den Strukturwandel voranbringen und zu einer nachhaltigen Steigerung der Produktivität der Unternehmen beitragen, etwa durch arbeitssparende (digitale) Technologien.
    Keywords: Mittelstand,Wirtschaftspolitik,Demografie,Digitalisierung,Dekarbonisierung,Ostdeutschland,small business sector,economic policy,demography,digitalization,decarbonization,East Germany
    Date: 2022

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