nep-ent New Economics Papers
on Entrepreneurship
Issue of 2022‒08‒22
seven papers chosen by
Marcus Dejardin
Université de Namur

  1. The role of local embeddedness of transnational migrant start-ups in the COVID-19 crises: Examples from the Berlin start-up ecosystem By Terstriep, Judith; David, Alexandra; Ruthemeier, Alexander; Elo, Maria
  2. Government-backed venture capital investments and performance of companies: The role of networks By Köppl-Turyna, Monika; Köppl, Stefan; Christopulos, Dimitris
  3. IFAD Research Series 78: The Small and Medium Enterprises’ quiet revolution in the hidden middle of food systems in developing regions By Reardon, Thomas; Liverpool-Tasie, Saweda; Minten, Bart
  4. The interplay between product innovation, publishing, patenting and developing standards By Blind, Knut; Krieger, Bastian; Pellens, Maikel
  5. A proposal for measuring the structure of economic ecosystems: a mathematical and complex network analysis approach By M. S. Tedesco; M. A. Nunez-Ochoa; F. Ramos; O. Medrano; K Beuchot
  6. PATENTS, FAMILY, AND SIZE. EVIDENCE FROM ITALIAN MANUFACTURING FIRMS By Francesco Aiello; Paola Cardamone; Lidia mannarino; Valeria Pupo
  7. Conflicting fiduciary duties and fire sales of VC-backed start-ups By Bian, Bo; Li, Yingxiang; Nigro, Casimiro A.

  1. By: Terstriep, Judith; David, Alexandra; Ruthemeier, Alexander; Elo, Maria
    Abstract: The COVID-19 pandemic has led to a changing environment for transnational migrant start-ups. These changes have posed many challenges concerning altering strategic behaviour and approaches to driving business. We explored transnational migrant start-ups' embeddedness in translocal entrepreneurial ecosystems by analysing data from 14 semi-structured interviews with start-ups from Berlin's knowledgeintensive business services sector. We argue that the success of transnational migrant start-ups during crises is largely dependent on embeddedness in the local entrepreneurial ecosystem. Thus, we expect entrepreneurs to utilise local networks, infrastructures and interactions to help them cope with the challenges at hand and to pave the way for translocal business activities. Our results indicate that structural embedding in local entrepreneurial ecosystems and a sense of belonging, especially during the business formation phase, play a vital role for transnational migrant start-ups.
    Keywords: migrant entrepreneurship,migrant start-ups transnationalism,translocal embeddedness,COVID-19,crisis,entrepreneurial ecosystem
    JEL: F63 O12 L26
    Date: 2022
  2. By: Köppl-Turyna, Monika; Köppl, Stefan; Christopulos, Dimitris
    Abstract: In this paper we analyze how different types of venture capital investments - private, public and indirect public - affect performance of portfolio companies. We use data on more than 20,000 VC deals in Europe between 2000 and 2018 and we hand collected a unique dataset on the institutional setting (public/indirect/private) of almost 5000 investors. We find that public VC investors perform consistently worse than purely private ones, while indirect public investments (such as the "Juncker Plan" or InvestEU investments) perform consistently better. We link these findings to the fact that public funds do not enter the best performing cliques of investments. On the other hand, indirect funds invest in the VC funds with the best network characteristics, which raises a question of whether indirect VC investments are associated with a high level of windfall gain, and not necessarily improve the value added by the VC funds. We confirm the main conclusions using instrumental variables' specifications.
    Keywords: venture capital,network analysis,governmental venture capital,European Investment Fund,syndication,public policy
    JEL: G24 G28 H81 L26 D73
    Date: 2022
  3. By: Reardon, Thomas; Liverpool-Tasie, Saweda; Minten, Bart
    Abstract: Food systems are made up of a cluster of different value chains, including output, lateral, and research and development. This paper explores the rise of SMEs in transforming food systems—from traditional, to transitional, to modern. It discusses SMEs roles in the evolution, structure, and conduct of each segment of the midstream. It examines the impacts of the rise of midstream SMEs on employment, small farms, the environment and consumers.
    Keywords: Agricultural and Food Policy, Community/Rural/Urban Development, Production Economics
    Date: 2022–05–01
  4. By: Blind, Knut; Krieger, Bastian; Pellens, Maikel
    Abstract: Firms use a variety of practices to disclose the knowledge generated by their R&D activities, including, but not limited to, publishing findings in scientific journals, patenting new technologies, and contributing to developing standards. While the individual effects of engaging in the listed practices on firm innovation are well-understood, the existing literature has not considered their interrelation. Therefore, our study examines if the three practices are complements, substitutes, or unrelated in terms of firms' performance with product innovations new to the market. Our analysis builds on a sample of innovation-active firms from the German Community Innovation Survey, which includes information on the development of standards, enhanced with information on firms' engagement in patenting and publishing. We find that 26% of innovation-active firms engage in at least one of the three practices, and 22% of engaging firms combine them. Using supermodularity tests, we show that publishing and patenting as well as patenting and developing standards are substitutes. Publishing and developing standards are not significantly linked. Based on our findings, we derive implications for innovation management and policy.
    Keywords: Standardization,patents,scientific publications,product innovation
    JEL: O31 O32 O34
    Date: 2022
  5. By: M. S. Tedesco; M. A. Nunez-Ochoa; F. Ramos; O. Medrano; K Beuchot
    Abstract: The benefits of using complex network analysis (CNA) to study complex systems, such as an economy, have become increasingly evident in recent years. However, the lack of a single comparative index that encompasses the overall wellness of a structure can hinder the simultaneous analysis of multiple ecosystems. A formula to evaluate the structure of an economic ecosystem is proposed here, implementing a mathematical approach based on CNA metrics to construct a comparative measure that reflects the collaboration dynamics and its resultant structure. This measure provides the relevant actors with an enhanced sense of the social dynamics of an economic ecosystem, whether related to business, innovation, or entrepreneurship. Available graph metrics were analysed, and 14 different formulas were developed. The efficiency of these formulas was evaluated on real networks from 11 different innovation-driven entrepreneurial economic ecosystems in six countries from Latin America and Europe and on 800 random graphs simulating similarly constructed networks.
    Date: 2022–07
  6. By: Francesco Aiello (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy)); Paola Cardamone (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy)); Lidia mannarino (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy)); Valeria Pupo (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy))
    Abstract: This study explores whether the probability to patent differ between family and non-family firms, and whether any potential difference between firm-type is moderated by size. The analysis is based on a large archive of patenting activities (Orbis–PATSTAT dataset) carried out by around 3700 Italian manufacturing firms over the 2010–2017 period. The results from a probability model show that, on average, family firms patent less than non-family firms (the estimated average marginal effect is -0.0325). Firm size matters, as its average marginal effect is 0.0212, suggesting that the probability of patenting increases with size, no matter the firm ownership. The size effect differs, however, between family and non-family firms. It is demonstrated not only that family firms remain less likely to patent than non-family firms, but also that their disadvantages increase as they grow in size: in large firms, the probability of patenting is 0.22 for family firms and 0.39 for non-family firms. Importantly, the results hold when considering patent counts, citations and a number of additional sensitivity tests.
    Keywords: Family firms, Patenting activities, Firm size
    JEL: D22 L25 L60 O30
    Date: 2022–07
  7. By: Bian, Bo; Li, Yingxiang; Nigro, Casimiro A.
    Abstract: This paper studies the interactions between corporate law and VC exits by acquisitions, an increasingly common source of VC-related litigation. We find that transactions by VC funds under liquidity pressure are characterized by (i) a substantially lower sale price; (ii) a greater probability of industry outsiders as acquirers; (iii) a positive abnormal return for acquirers. These features indicate the existence of fire sales, which satisfy VCs' liquidation preferences but hurt common shareholders, leaving board members with conflicting fiduciary duties and litigation risks. Exploiting an important court ruling that establishes the board's fiduciary duties to common shareholders as a priority, we find that after the ruling maturing VCs become less likely to exit by fire sales and they distribute cash to their investors less timely. However, VCs experience more difficult fundraising ex-ante, highlighting the potential cost of a common-favoring regime. Overall the evidence has important implications for optimal fiduciary duty design in VC-backed start-ups.
    Keywords: Acquisitions,Corporate Governance,Fiduciary Duties,Fire Sales,Liquidation Preferences,Trados,Venture Capital
    JEL: G24 G33 G34 K20 K22 K40 M13
    Date: 2022

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