nep-ent New Economics Papers
on Entrepreneurship
Issue of 2022‒05‒02
eleven papers chosen by
Marcus Dejardin
Université de Namur

  1. Populist Discourse and Entrepreneurship: The Role of Political Ideology and Institutions By Daniel L. Bennett; Christopher J. Boudreaux; Boris N. Nikolaev
  2. The productive role of social policy By Rodríguez Torres, Omar
  3. The Emerging Quantum Technology Industry: capital cities, entrepreneurship, and policy By Saverio Romeo; Helen Lawton Smith; Erran Carmel; John Slater
  4. Mapping ethnic minority women entrepreneurs' support initiatives: Experiences from the UK By Helen Lawton Smith; Beldina Owalla
  5. Intangibles and industry concentration: supersize me By Bajgar, Matej; Criscuolo, Chiara; Timmis, Jonathan
  6. Investment expectations by vulnerable European firms: A difference-in-difference approach By Coad, Alexander; Amaral-Garcia, Sofia; Bauer, Peter; Domnick, Clemens; Harasztosi, Péter; Pál, Rozália; Teruel, Mercedes
  7. Firm Bankruptcies and Start-Up Activity in Switzerland During the Corona Crisis By Florian Eckert; Heiner Mikosch
  8. Rescue Policies for Small Businesses in the Covid-19 Recession By Alessandro Di Nola; Leo Kaas; Haomin Wang
  10. Household Debt: the Role of Income and Business Ownership in a Small Emerging Country By José Rivero; Graciela Sanroman
  11. Informal Micro, Small, and Medium-Sized Enterprises and Digitalization: Evidence from Surveys in Indonesia By Shinozaki, Shigehiro

  1. By: Daniel L. Bennett; Christopher J. Boudreaux; Boris N. Nikolaev
    Abstract: Using institutional economic theory as our guiding framework, we develop a model to describe how populist discourse by a nation's political leader influences entrepreneurship. We hypothesize that populist discourse reduces entrepreneurship by creating regime uncertainty concerning the future stability of the institutional environment, resulting in entrepreneurs anticipating higher future transaction costs. Our model highlights two important factors that moderate the relationship. First, is the strength of political checks and balances, which we hypothesize weakens the negative relationship between populist discourse and entrepreneurship by providing entrepreneurs with greater confidence that the actions of a populist will be constrained. Second, the political ideology of the leader moderates the relationship between populist discourse and entrepreneurship. The anti-capitalistic rhetoric of left-wing populism will create greater regime uncertainty than right-wing populism, which is often accompanied by rhetoric critical of free trade and foreigners but also supportive of business interests. The effect of centrist populism, which is accompanied by a mix of contradictory and often moderate ideas that make it difficult to discern future transaction costs, will have a weaker negative effect on entrepreneurship than either left-wing or right-wing populism. We empirically test our model using a multi-level design and a dataset comprised of more than 780,000 individuals in 33 countries over the period 2002-2016. Our analysis largely supports our theory regarding the moderating role of ideology. Still, surprisingly, our findings suggest that the negative effect of populism on entrepreneurship is greater in nations with stronger checks and balances.
    Date: 2022–03
  2. By: Rodríguez Torres, Omar (UNU-MERIT, Maastricht University)
    Abstract: This paper assesses the productive role of social policy. It analyses the effect that participating in social policy programmes has on business performance of enterprises in Cartagena, Colombia. To investigate these effects, we employ an instrumental variable analysis to account for the potential endogeneity of participation. Exploiting the existence of a partially complied eligibility rule for Participation in the poverty reduction programme we are able to identify the effect on several enterprise indicators. The paper contributes to the literature on entrepreneurship policies in developing countries from the social policy perspective. It sheds light on the effects and potential mechanisms that the participation on social policy schemes has on the entrepreneurial activity of household enterprises. The results show that complier participating entrepreneurs are more credit-oriented and work more hours per day. No statistically significant effect is found on profit measures.
    Keywords: Social policy, poverty reduction, entrepreneurship, public policy, enterprise policy
    JEL: I31 I32 L26 J48 L53 O15 O35
    Date: 2022–03–18
  3. By: Saverio Romeo (Center for Innovation Management, Birkbeck University of London, UK); Helen Lawton Smith (Department of Management, Birkbeck University of London, UK); Erran Carmel (ogod School of Business, American University, Washington DC); John Slater
    Date: 2021–04
  4. By: Helen Lawton Smith (Department of Management, Birkbeck University of London); Beldina Owalla (Portsmouth Business School, Portsmouth University)
    Date: 2021–08
  5. By: Bajgar, Matej; Criscuolo, Chiara; Timmis, Jonathan
    Abstract: This paper presents new evidence on the growing scale of big businesses in the United States, Japan and 11 European countries. It documents a broad increase in industry concentration across the majority of countries and sectors over the period 2002 to 2014. The rising concentration is strongly associated with intensive investment in intangibles, particularly innovative assets, software and data, and this relationship is magnified in more globalized and digital-intensive industries. The results are consistent with intangibles disproportionately benefiting large firms and enabling them to scale up and raise their market shares, increasingly over time.
    Keywords: competition; industry and entrepreneurship; innovation
    JEL: E22 L10 L25
    Date: 2021–10–28
  6. By: Coad, Alexander; Amaral-Garcia, Sofia; Bauer, Peter; Domnick, Clemens; Harasztosi, Péter; Pál, Rozália; Teruel, Mercedes
    Abstract: The effect of the COVID shock on European economies has been severe and also unequal, with some firms being affected much more strongly than others. To improve the effectiveness of policy interventions, policymakers need to understand which types of vulnerable firms have been suddenly pushed into dire circumstances. We seek to fill this important gap in our knowledge by providing evidence from the EIBIS (European Investment Bank Investment Survey, 2016-2020) on how the COVID shock has affected the investment activity and investment-related framework conditions of vulnerable firms. While data on actual investment activity post-COVID is not yet available to us, we focus on investment expectations. We exploit the fact that the same questions relating to investment expectations have been asked in several previous survey waves, which enables a difference-indifferences approach to investigate how investment expectations might have suddenly changed, for vulnerable groups of firms, immediately after the onset of the COVID crisis. We focus on 4 groups of vulnerable firms: High-Growth Enterprises (HGEs), young and small firms, R&D investors and nonsubsidiary firms. R&D investors are more likely to be pessimistic about investment plans as a consequence of the COVID shock, and (similarly) HGEs are less likely to be optimistic about investment plans. R&D investors are less likely to be optimistic about the availability of internal finance, while HGEs and R&D investors are more likely to be pessimistic about the availability of external finance. Subsidiary firms, interestingly, are more likely to report a decrease in expected investment, although this could be part of a conservative group-level strategy and coordinated group-level reduction in investment, however that is not caused by any detectable lack of access to (internal or external) finance. Event study graphs generally confirm our regression results.
    Date: 2022
  7. By: Florian Eckert (ETH Zurich, Switzerland); Heiner Mikosch (ETH Zurich, Switzerland)
    Abstract: This paper examines the incidence of rm bankruptcies and start-ups in Switzerland based on unique register data. We propose to assess the frequency of bankruptcies over time using the concept of excess mortality. During the Corona crisis in 2020 and the rst half of 2021, bankruptcy rates were substantially lower and the number of new rm formations was substantially higher as compared to the pre-crisis period. This holds across most industries and regions. The Great Recession and the Swiss Franc Shock showed reverse patterns. Bankruptcies dropped more in industries and cantons, in which the share of rms who received a Covid-19 loan is comparatively high. The strong start-up activity is driven by industries where the pandemic induced structural adjustments.
    Keywords: Firm Bankruptcies, Insolvencies, Excess Mortality, Firm Formations, Start-Ups, Switzerland, Corona Crisis, Industry-Level, Canton-Level
    JEL: E32 G33 M13
    Date: 2021–11
  8. By: Alessandro Di Nola; Leo Kaas; Haomin Wang
    Abstract: While the COVID-19 pandemic had a large and asymmetric impact on firms, many countries quickly enacted massive business rescue programs which are specifically targeted to smaller firms. Little is known about the effects of such policies on business entry and exit, factor reallocation, and macroeconomic outcomes. This paper builds a general equilibrium model with heterogeneous and financially constrained firms in order to evaluate the short- and long-term consequences of small firm rescue programs in a pandemic recession. We calibrate the stationary equilibrium and the pandemic shock to the U.S. economy, taking into account the factual Paycheck Protection Program (PPP) as a specific grant policy. We find that the policy has only a small impact on aggregate employment because (i) jobs are saved predominately in less productive firms that account for a small share of employment and (ii) the grant induces a reallocation of resources away from larger and less impacted firms. Much of this reallocation happens in the aftermath of the pandemic episode. While a universal grant reduces the firm exit rate substantially, a targeted policy is not only more cost-effective, it also largely prevents the creation of “zombie firms” whose survival is socially inefficient.
    Keywords: Covid-19, heterogeneous firms, business subsidies, Paycheck Protection Program
    JEL: E22 E65 G38 H25
    Date: 2022
  9. By: Nurhasanah, Dian Tiara; Mohammad, Wily; Maulidiyah, Nabilla Ryca (PT Chishiki NoHikari Indonesia)
    Abstract: The purpose of this research is to look at strategic management at the startup, to look at the problems that students face as administrators as they set up the company, and to offer solutions based on those problems. This research relies on primary data gathered through observation, interviews, and documentation. Field research with a qualitative descriptive approach is the type of research. Data reduction, data display, and determining conclusions are the techniques used to analyze the data. Data analysis methods based on strategic management techniques, including Strategic Posture, Business Model Canvas, Financial Report Analysis, PESTEL (Political, Economic, Social, Technological, Legal and Environmental factors), PORTER 5 Forces, VRIO (Valuable, Rare, Inimitable, Organized), SWOT and TOWS (Strength, Weakness, Opportunity, Threat), IFAS (Internal Factor Analysis Strategy), EFAS (External Factor Analysis Strategy), and SFAS (Strategic Factor Analysis Summary). The findings of the research reveal that there are two types of problems with high SFAS scores: “work ethic” issues and “product” issues. Lack of motivation in entrepreneurship, a lack of desire and interest in entrepreneurship, a lack of loyalty from team members, and a lack of harmony between team members are all factors that contribute to “work ethic” issues. Meanwhile, overlong platform development, unprofessional outsourcing staff, a lack of core team members who understand IT technicalities, and a long wait for the platform to be perfected for users are all contributing to “product” issues. This research contribution is useful for students who want to start new businesses in the IT field, as it adds to the study of literature for future research.
    Date: 2022–03–31
  10. By: José Rivero (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Graciela Sanroman (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: We analyze the debt side of household balance sheets in a small economy with underdeveloped financial markets. Our main focus is on the influence of income on the intensive margin of debt holdings and how business ownership affects that relationship. Using data from a novel Uruguayan dataset, we estimate selectioncorrected Conditional Quantile Regressions (CQR). The motivation for using CQR stems from the fact that the conditional distribution of debt holdings is highly asymmetric. This makes it worthwhile to take the analysis beyond the mean. In addition, understanding the effects of income and entrepreneurship for the most indebted households is a policy relevant question. We find that income does not affect the probability of being indebted but it has a significant impact on the intensive margin of debt holdings. The income elasticity of debt stocks is positive and varies substantially across types of households, being those who own formal businesses the most sensitive to income variations.
    Keywords: Household finance, Household debt, Conditional Quantile Regression
    JEL: C21 C24 D14 G0
    Date: 2020–11
  11. By: Shinozaki, Shigehiro (Asian Development Bank Institute)
    Abstract: Most micro, small, and medium-sized enterprises (MSMEs) operate informally. While informal sectors are thought to contribute less to national economic development, MSMEs are a driving force behind national economic growth. Thus, formalizing informal MSMEs is critical to boosting national productivity, creating quality jobs, and promoting inclusive growth. We examine the coronavirus disease (COVID-19) impact on informal MSMEs in Indonesia by using a linear probability model regression and descriptive analysis based on evidence obtained through year-long surveys from March 2020 to May 2021. We also assess the extent of the digital transformation and challenges brought on by the pandemic and derive policy implications. The estimates found two streams of business clusters among informal MSMEs—contracting firm groups that suffered through the pandemic and those that benefited. The COVID-19 crisis and mobility restrictions led many informal MSMEs to accelerate digitalization. But digitally operated firms could not always operate successfully during the pandemic, splitting businesses into those profitable or less profitable.
    Keywords: COVID-19; informality; shadow economy; MSMEs; digitalization; SME development; access to finance; SME policy; Indonesia
    JEL: D22 G20 L20 L50
    Date: 2022–03

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