nep-ent New Economics Papers
on Entrepreneurship
Issue of 2022‒05‒16
ten papers chosen by
Marcus Dejardin
Université de Namur

  1. The Evolution of Owner-Entrepreneurs’ Taxation: Five Tax Regimes over a 160-Year Period By Elert, Niklas; Johansson, Dan; Stenkula, Mikael; Wykman, Niklas
  2. Asset Bubbles, Entrepreneurial Risks, and Economic Growth By Takeo Hori; Ryonghun Im
  3. A critical assessment of the National Entrepreneurship Context Index of the Global Entrepreneurship Monitor By Cornelius A. Rietveld; Pankaj C. Patel
  4. Are Entrepreneurs Aware of Covered Interest Parity and Dollar Shortage? By Nariman, Farhad; Heshmati, Almas
  5. Financial Access and Gender Gap in Entrepreneurship and Employment: Evidence from Rural India By Sandhya Garg; Samarth Gupta
  6. Assessment and analysis of accounting and finance apps in start-ups in Germany: an explorative study By Salvy Goel, Salvy; Berrones-Flemmig, Claudia Nelly
  7. The Role of Venture Capital and Governments in Clean Energy: Lessons from the First Cleantech Bubble By Matthias van den Heuvel; David Popp
  8. SME Related Provisions in Free Trade Agreements – An Analysis of India’s Strategic Focus By Tandon, Anjali
  9. Making FTAs more inclusive – A case for promoting SMEs in India By Tandon, Anjali
  10. ENTRE EMPLOI ATYPIQUE ET ENTREPRENEURIAT Le portage salarial comme « forme d'emploi de transition » ? By Jean-Yves Ottmann; Bernard Gazier; Dominique Mahut

  1. By: Elert, Niklas (Research Institute of Industrial Economics (IFN)); Johansson, Dan (Örebro University School of Business); Stenkula, Mikael (Research Institute of Industrial Economics (IFN)); Wykman, Niklas (Örebro University Schoolf of Business)
    Abstract: The institutional literature suggests that long-term tax incentives are crucial for entrepreneurs, but studies on this topic are hampered by theoretical and empirical problems related to how to define and measure entrepreneurial income. We resolve these problems by drawing on a theoretical definition of the entrepreneur as an owner, which enables us to identify entrepreneurship empirically by means of investments made by active owners of closely held firms. Using detailed Swedish tax data, we analyze the tax incentives for such owner-entrepreneur investments from 1862 to 2018, thereby highlighting the evolution of a general institutional phenomenon through a long-run, in-depth, country-specific analysis. We calculate the annual marginal effective tax rate (METR) on capital income for investments, distinguishing between average- and top-income entrepreneurs, and between three sources of finance. We identify five tax regimes that indicate substantial differences in institutional quality over time according to the magnitude of the METR and METR differences between average- and top-income entrepreneurs and across sources of finance. Increased taxation of owner-entrepreneurs helps explain the absence of new large entrepreneurial firms in Sweden after World War II, while improved incentives can be associated with Sweden’s recent entrepreneurial renaissance.
    Keywords: High-Impact Entrepreneurship; Institutional Quality; Marginal Effective Tax Rates; Tax Regimes; Tax Reforms
    JEL: H21 H31 H32 L25 L26 N44
    Date: 2022–05–06
  2. By: Takeo Hori (Department of Industrial Engineering and Economics, School of Engineering, Tokyo Institute of Technology); Ryonghun Im (School of Economics, Kwansei Gakuin University)
    Abstract: Entrepreneurs are exposed to large uninsured risks. The risks may discourage them from creating productive assets. This may generate a productive asset shortage and stimulate speculative demand for bubbles. We introduce within-period entrepreneurial risks into a textbook growth model with in finitely lived agents. In our model, entrepreneurs face no credit constraints. If the degree of entrepreneurial risks is in the middle range, bubbles are likely to emerge. If the degree of entrepreneurial risks is high, bubbles promote growth because of the wealth effect. Otherwise, bubbles lower growth. The effect of the collapse of bubbles also depends on the degree of the risks. Moreover, asset bubbles amplify fundamental shocks.
    Keywords: asset bubbles, idiosyncratic risks, amplification, growth effect, welfare analysis
    JEL: E21 E23 E44 G01 G11
    Date: 2022–04
  3. By: Cornelius A. Rietveld; Pankaj C. Patel
    Abstract: Data collected through the National Expert Survey (NES) of the Global Entrepreneurship Monitor (GEM) are widely used to assess the quality and impact of national entrepreneurial ecosystems. By focusing on the measurement of the National Entrepreneurship Context Index (NECI), we argue and show that the subjective nature of the responses of the national experts precludes meaningful cross-country analyses and cross-country rankings. Moreover, we show that the limited precision of the NECI severely constraints the longitudinal assessment of within-country trends. We provide recommendations for the current use of NECI data and suggestions for future NES data collections.
    Date: 2022–04
  4. By: Nariman, Farhad (affiliation not available); Heshmati, Almas (Jönköping University, Sogang University)
    Abstract: The purpose of this study is demonstrating why entrepreneurs should monitor the broad dollar index. This paper explains the reason why the broad dollar index has become a risk (leverage) gauge since 2008 using the Covered Interest Parity (CIP). CIP can be viewed as a reflection of the shadow price of a bank’s balance sheet, which reflects how risky the situation is for a certain entrepreneur attempting to start a new venture. The importance of the link between banks and entrepreneurs has long been recognized. When the banking system is constrained, an entrepreneur should be informed. Entrepreneurs will be able to understand the circumstances in which they want to succeed more correctly if they are aware of the state of the banking system. Overall, the risk appetite of the banking system is critical for both traditional and export-oriented businesses. The VIX index (Chicago Board Options Exchange market volatility index) was once employed as a barometer of the banking system’s risk appetite, but things have changed since the great financial crisis and the index has been supplanted by the broad dollar index. Since 2008, the broad dollar index has been used as an indicator of a bank’s risk appetite. This paper provides entrepreneurs a handy index for assessing the economic conditions in which they choose to be entrepreneurs more accurately.
    Keywords: dollar shortage, entrepreneurship, balance sheet capacity, dollar index, covered interest parity
    JEL: F31 F34 F41 G02 G21
    Date: 2022–04
  5. By: Sandhya Garg; Samarth Gupta (Institute of Economic Growth, Delhi)
    Abstract: Can expansion of bank branch network reduce gender-gap in economic activity at the village level? To explore this issue, we construct a novel village-level panel data where we observe the financial access of each unbanked village in India defined as its distance to the nearest village/town with bank branch from 1951-2019; and village-level enterprise data of four economic census rounds of 1990, 1998, 2005 and 2013. To account for endogeneity in placement of bank branches, we use a difference-indifference methodology. We find that the presence of a bank branch within 5km of an un-banked village between 2005 and 2013 (Treatment Group) mitigated the gender gap in entrepreneurship, and employment. The increase in number of female enterprises and in the size of female employment occurs fully driven by non-agricultural sector, whereas a shift is observed in male entrepreneurship from agricultural to nonagricultural sector. We also find evidence that this transition may be a consequence of credit uptake by enterprises from non-institutional sources as proximity to a bankedcenter improves. Our results are robust to unobservable village and year effects, and presence of alternative village-level infrastructure.
    Keywords: Credit, Banking, Branch Expansion, Gender Gap, Entrepreneurship, Enterprise and Development
    JEL: G21 G28 O12
    Date: 2021–09
  6. By: Salvy Goel, Salvy; Berrones-Flemmig, Claudia Nelly
    Abstract: Small and medium-sized enterprises face several challenges mainly related with lack of access to Finance frequently due to a lack of formal Accounting system and financial management, which leads to weaknesses in their internal financial capabilities. Moreover, from the supply side traditional financial institutions have failed to fulfil the needs of SMEs and presently FinTechs have developed innovative ways to increase the financial literacy in SMEs and to facilitate financing for SMEs (Imanbaeva et al., 2017). This study aims to assess and analyze one of these innovative financial instruments in an explorative way: some relevant Accounting and Finance applications present in the market, based on criteria decided by exploring the scientific literature and evaluating it by interviewing Accounting professionals working in start-ups in Germany. The results show that Zoho Books and Xero turned out to be better than the others in the services provided by them and they received the best ratings and feedback. Their best features are their user friendliness, the integrations offered by them, the diversity of the financial reports that they offer and amount of automation they offer to perform the everyday tasks. The most important factor when choosing an Accounting system is assessing the needs and requirements of the business and then to select the software that best suits the needs. Therefore, this research can be also helpful for small and medium business owners who do not have much idea about the financial aspects and need help with choosing the right accounting software for their business, based on the experience and perspectives of the interviewing Accounting professionals. It can act as a guide for them to understand which factors they should take into account while making their decision and the feedback from the participants can help them while choosing among the five software analysed during this research.
    Keywords: SME Finance,Fintech,Accounting and Finance apps,innovative financial instruments,start-ups,Germany
    JEL: M O
    Date: 2022
  7. By: Matthias van den Heuvel; David Popp
    Abstract: After a boom and bust cycle in the early 2010s, venture capital (VC) investments are, once again, flowing towards green businesses. In this paper, we use Crunchbase data on 150,000 US startups founded between 2000 and 2020 to better understand why VC initially did not prove successful in funding new clean energy technologies. Both lackluster demand and a lower potential for outsized returns make clean energy firms less attractive to VC than startups in ICT or biotech. However, we find no clear evidence that characteristics such as high-capital intensity or long development timeframe are behind the lack of success of VC in clean energy. In addition, our results show that while public sector investments can help attract VC investment, the ultimate success rate of firms receiving public funding remains small. Thus, stimulating demand will have a greater impact on clean energy innovation than investing in startups that will then struggle through the “valley of death”. Only with demand-side policies in place should governments try to plug funding gaps by targeting clean energy startups with low potential for outsized returns that will continue to find it hard to attract private capital.
    Keywords: venture capital, renewable energy, start-up firms
    JEL: G24 Q40 Q48 Q55
    Date: 2022
  8. By: Tandon, Anjali
    Abstract: In the backdrop of the increasing government emphasis on strengthening the domestic and international participation of the small and medium enterprises (SMEs), this paper presents a review of the SME related provisions that have been incorporated into the free trade agreements (FTAs) signed by countries, including India. A comparative approach has been used to bring out the difference in strategic focus adopted by India vis-à-vis other countries. The review of the trade agreements informs that the SME related provisions are not very prevalent, more so in the Indian context. Only about half of the 60 plus trade agreements reviewed are observed to include SME specific arrangements. These provisions are mostly non-binding and of an endeavouring nature, putting the onus on the host country to initiate and benefit from the stated activities of cooperation and similar mechanisms for better opportunities for the SMEs. By comparison with other countries, most FTAs signed by India are either silent on SMEs or lack aggression. India’s emphasis on transparency is minimal in comparison to the inclusion of a cooperation clause in the text of the agreements. The absence of an SME focus in trade agreements indicates that smaller enterprises have been considered at par with other businesses, thus ignoring their exceptional needs and the handholding that might be required for their greater and faster internationalisation. Although it can be argued that the mere existence of an SME related provision may not necessarily result in better opportunities, it is important to highlight the emphasis on SMEs in the text of the agreements, as pursued by other countries.
    Keywords: small and medium enterprises; SMEs; free trade agreements; FTAs; international trade; India.
    JEL: F1
    Date: 2021–10
  9. By: Tandon, Anjali
    Abstract: A dedicated support for SMEs through imparting information as well as addressing their concerns will not only improve prospects for SMEs, but will also contribute to greater utilization of the FTAs. While integrating into GVCs, standard compliance does not come easy due to lack of information and the additional costs imposed. The participation of SMEs in trade needs to be improved and strengthened through focussed interventions. With this view, a detailed review of the related provisions in the existing agreements provides useful leads through the mechanisms used. Although some FTAs with India as partner have SME related provisions, most others are silent on SMEs. In some cases, this is in sharp contrast to the presence of thorough provisions in the FTAs negotiated between (India’s) partner country and a third country. With forethought for bringing domestic SMEs in close contact with partner governments and business, recommendations are made for consideration while negotiating future FTAs.
    Keywords: paperless trade; information asymmetry; small and medium enterprises
    JEL: F13 F15 L15
    Date: 2020–09
  10. By: Jean-Yves Ottmann (Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Bernard Gazier (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Dominique Mahut (IRISSO - Institut de Recherche Interdisciplinaire en Sciences Sociales - INRA - Institut National de la Recherche Agronomique - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres)
    Abstract: Le portage salarial est un statut qui questionne les nouvelles formes d'emploi. Cet article se propose de préciser son positionnement par la mise en évidence et l'analyse des différentes trajectoires possibles au sein de ce statut juridique. L'analyse longitudinale d'un échantillon de plus de 4800 individus identifie cinq trajectoires différentes et montre que le portage salarial est un statut juridique entre nouvelle forme d'emploi, salariat et entrepreneuriat classiques
    Date: 2021

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