nep-ent New Economics Papers
on Entrepreneurship
Issue of 2022‒09‒19
five papers chosen by
Marcus Dejardin
Université de Namur

  1. Enabling factors for the development of sustainable business models in a support programme By Sofia Lamperti; Sylvie Sammut; Jean-Marie Courrent
  2. Issues and Prospects of Women Street Merchants’: A Study in Davanagere District of Karnataka By H, Gopi
  3. SME Credit Conditions in the Pandemic Recovery By Durante, Elena; McGeever, Niall
  4. Excess Liquidity against Predation By Dai ZUSAI
  5. Podnikanie na Slovensku v dobe digitalizácie optikou generácií By Pilková, Anna; Holienka, Marian; Mikus, Juraj; Kovačičova, Zuzana; Rehák, Ján; Greguš, Michal; Gavalcová, Katarína; Chmelová, Michelle; Belušák, Lukáš; Uhnák, Mirka; Mobashar, Mubarik; Jiménez, Sonsoles

  1. By: Sofia Lamperti (Labex Entreprendre - UM - Université de Montpellier, MRM - Montpellier Research in Management - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier, UM - Université de Montpellier); Sylvie Sammut; Jean-Marie Courrent
    Abstract: Start-ups are important tools for promoting sustainable development through the creation of new ventures with a sustainable business model. However, to make a tangible contribution, start-ups need to embed and balance their sustainability impact in their business model from the very beginning. Incubators are a promising way to support them in this process. Despite the academic interest in incubators, few studies have focused on sustainable incubators in general, and even less on the sustainable business model development process. This study explores how a support programme delivered by an incubator with a sustainability profile can affect the sustainable business model development of start-ups. A case study approach based on a French incubator was used in combination with the resource-based view to understand the creation process of sustainability-oriented ventures and the resource needs of start-ups to achieve a sustainable impact. The results show that besides the classic support services for the development of a sustainable business model, there are additional interesting factors that come into play.
    Date: 2021–09–30
  2. By: H, Gopi
    Abstract: Predominance of informal employment has been one of the central features of the labor market scenario in India. While the sector contributes around half of the GDP of the county, its dominance in the employment front is such that more than 90% of the total workforce has been engaged in the informal economy. As per survey carried out by the National Sample Survey Organization in the year 2011-12, the total employment in both organized and unorganized sector in the country was of the order of 47 crores. Out of this, about 8 crores were in the organized sector and the balance of 39 crore in the unorganized sector. The workers in the unorganized sector constitute more than 90 percent of the total employment in the country. Women unorganized force has virtually shared the total labor force across the nation. Likewise, Karnataka is also has been running most of the women entrepreneurs in an unorganized sector. Davanagere is one of the emerging districts in Karnataka state which has major commercial places, due to lack of finance, advances, technical issues and exploitation from the dominance hands many of the women entrepreneurs do not ready to involve under organized sector. Nowadays, especially the street vendors appearing more than organized shop labor force. They do survival their businesses in an unorganized sector with many issues. Therefore, the study aims to analyze the problems and prospects of women street vendors’ of Davanagere district. The analysis considered both primary and secondary sources and with a systematic presentation which is going to analyzed by required statistical tools followed by the interpretation.
    Keywords: Street Vendor, GDP, Unorganized labor, Organized labor, Entrepreneur
    JEL: D11 D14 D18 D6 D8 J5
    Date: 2021–11–13
  3. By: Durante, Elena (Central Bank of Ireland); McGeever, Niall (Central Bank of Ireland)
    Abstract: We analyse the credit conditions facing Irish SMEs in the context of the pandemic recovery. SME trading performance has continued to improve, with turnover and profitability indicators rebounding significantly from pandemic lows. Government policy supports have been large and composed mainly of grants. These supports have provided extensive liquidity support to firms and mitigated debt overhang risks, while also likely weighing on demand in the formal credit market. New bank lending to SMEs has fallen moderately and this has been mainly driven by declines in lending to pandemic-affected sectors. SME demand for credit remains low. Credit supply indicators show little sign of stress, with loan application rejection rates remaining steady. The tapering of government supports to businesses may result in a rise in credit demand over the coming months.
    Date: 2022–04
  4. By: Dai ZUSAI
    Abstract: To investigate why a firm may hold excess liquidity, we examine a duopoly competition in which a shallow-pocket entrant needs the financial support of an outside investor to pay for input costs and launch a business. We allow the investor to terminate the entry if they find the incumbent react too aggressively to the entry plan. However, such an exit option creates a threat of predation by a deep-pocket competitor. To avoid predation, the entrant must raise precautionary liquidity by taking out a loan both larger and further in advance than is actually needed. An entrant with little start-up capital will be less aggressive if the incumbent fs capacity size is unverifiable, because the need to raise precautionary liquidity restricts the entrant's feasible capacity size.
    Date: 2022–08
  5. By: Pilková, Anna; Holienka, Marian; Mikus, Juraj; Kovačičova, Zuzana; Rehák, Ján; Greguš, Michal; Gavalcová, Katarína; Chmelová, Michelle; Belušák, Lukáš; Uhnák, Mirka; Mobashar, Mubarik; Jiménez, Sonsoles
    Abstract: In line with the main objective of the scientific monograph, which is to provide, based on quantitative and qualitative research methods, characterization of intergenerational entrepreneurship in Slovakia and, at the same time, the state of digitalization and digital transformation from the perspective of the generations, the summary contains key findings related to the investigated areas. Characteristics of the state of youth and senior entrepreneurship in Slovakia, Europe, and the Slovak regions The key differences in the entrepreneurial characteristics, as well as the level of entrepreneurial activity of the youth and senior generations in Slovakia and in comparison with Europe, are as follows: Social attitudes towards entrepreneurship and entrepreneurial talent: • The ability to identify suitable entrepreneurial opportunities as well as the entrepreneurial career (entrepreneurship as a good career choice and the status of an entrepreneur) are spheres where Slovakia has been lagging behind Europe for a long time, for both generations, but this difference, logically due to historical development, is higher among seniors in our country than among the youth. The youth and seniors perceive the most opportunities for entrepreneurship in the Bratislava region and the least in the Banská Bystrica region. On the contrary, entrepreneurship is perceived worst in terms of social attitudes in the Bratislava region and best in the Trnava and Trenčín regions. • One of the important factors that influence the ability to identify entrepreneurial opportunities is entrepreneurial talent as an individual’s intrinsic/individual ability to be entrepreneurial. Research on this factor has shown that youth in Slovakia have a lower intrinsic ability to identify entrepreneurial opportunities and are less responsive to profitable opportunities than seniors. However, they are more confident in their high level of innovation and are also more likely to make decisions that are part of their long-term career plan. However, the comparison with Europe 18 again confirms the fact that both generations in Slovakia lag behind Europe in this kind of talent, i.e. in the intrinsic ability to identify opportunities, and are also less flexible in responding to profitable opportunities. On the other hand, they are better at making decisions that are part of their long-term career plan. However, this contradicts the finding that both generations have relatively high self-confidence in their own entrepreneurship-related knowledge, skills, and abilities and thus exceed the European average. • Youth in Slovakia have a significantly lower fear of failure than youth in Europe, but also seniors. However, seniors in Slovakia have a significantly higher fear of failure than European seniors. This complex of factors affects the entrepreneurial activity of both generations in different ways and intensities. • The entrepreneurial process is also influenced differently by other factors of social attitudes towards entrepreneurship, namely networking, which is better in Slovakia than in Europe, and youth exhibit a stronger position at it, and equality in living standards (egalitarianism), with youth in Slovakia preferring more equality than seniors. This trend in Slovakia is opposite to that in Europe. Intention to start a business and entrepreneurial activity • The intention to start a business in the next three years is twice as high among the youth generation than among seniors in Slovakia and is higher for both generations than in Europe. The highest intention to start a business among both youth and seniors is in the Bratislava region and the lowest in the Nitra and Banská Bystrica regions. This is further reflected in the level of entrepreneurial activity. • The total early-stage entrepreneurial activity (up to 42 months of business existence) is significantly higher in Slovakia than in Europe for both generations, mainly due to the higher growth rate of nascent entrepreneurs (up to 3 months). However, significantly more nascent entrepreneurs in Slovakia than in Europe exit their business within 3 months and do not move on to the next stage of start-up. While in Slovakia a higher percentage of seniors exit their business in this period than youth, the trend is reversed in Europe. Youth show the highest early-stage entrepreneurial activity in the Bratislava region and the lowest in the Banská Bystrica region. Seniors are most involved in early-stage entrepreneurial activity in the Prešov region and least involved in the Nitra region. • The rate of established entrepreneurship (over 42 months of business existence) in Slovakia is significantly higher among seniors than among the youth. Although the 19 trend is similar in Europe, the difference between the percentage of established youth entrepreneurs and established senior entrepreneurs is significantly smaller. Similarly, the business discontinuation rate for both cohorts is lower in Europe than in Slovakia. This suggests that the sustainability of entrepreneurship is worse in Slovakia compared to Europe. The highest rates of established entrepreneurship for both seniors and youth are in the Bratislava region and the lowest in the Trnava region. • The highest motive for starting a business for both generations, both in the early stage and for established entrepreneurs in Slovakia, is the need to earn a living because jobs are scarce. This motivation is particularly strong among seniors in Slovakia. An interesting finding is that only for youth early-stage entrepreneurs in Europe the main motivation is to build a large fortune or a very high income, and the second strongest reason is to change the world for the better, with earning a living only in the third place for this age cohort. The other groups of entrepreneurs surveyed (established youth, established seniors, starting seniors) in Europe express earning a living as the main motive for starting a business. This suggests that the predominant group of entrepreneurs in the surveyed cohorts in Slovakia and Europe will not be explicitly innovative, but will see entrepreneurship as a substitute for employment, which is clearly reflected in their contribution to innovation and creative change. From the analysis of the GEM special questions focusing on digital and intergenerational entrepreneurship from the perspective of early-stage and established entrepreneurs, the most important findings are: • The role of digitalisation in entrepreneurship does not differ significantly between early-stage and established entrepreneurs. Nevertheless, early-stage entrepreneurs attribute a more significant role to digital processes, products, and business models in their business than established entrepreneurs. • We also analysed the importance of digitalisation in entrepreneurship through the share of revenue generated from the sale of products and/or services online. The results showed that more than 4 out of 10 early-stage entrepreneurs do not use online sales, while for established entrepreneurs this figure rises to almost 65%. Thus, early-stage entrepreneurs rely more on online sales, with more than 22% declaring that online sales will account for more than 75%. For established entrepreneurs, it’s only nearly 10% of them. • Early-stage and established entrepreneurs perceive the greatest contribution to digitalisation to be knowledge of the internet and media, including social media. 20 • Almost the same, relatively high proportion of early-stage and established entrepreneurs do not foresee the involvement of the older generation in their business (about 74%). Early-stage entrepreneurs make more use of people from the older generation who are investors intervening in the business management, but also of those who do not intervene in the business management. They also use senior persons to a greater extent as mentors of their business. Conversely, established entrepreneurs have persons from the older generation as their co-owners or employees. • The contribution of a person from the older generation to the business is perceived by early-stage entrepreneurs mainly in access to the necessary resources, furthermore, it is due to the knowledge of the subject of the business, the industry, and/or the market. Established entrepreneurs perceive the contribution of the older generation mainly in access to a network of contacts and then to the necessary resources. Based on the special questions in the GUESSS project focusing on digital and intergenerational entrepreneurship from the perspective of starting and active student entrepreneurs, the most important findings are: • The role of digitalisation in entrepreneurship does not differ significantly between starting and active student entrepreneurs. Digital processes play an important or key role in the business of about 4 out of 10 starting and active student entrepreneurs. It is similar for digital products in entrepreneurship, but digital products are slightly more prominent for active entrepreneurs. Finally, digital business models are important to key for slightly more than 4 in 10 both starting and active student entrepreneurs, while in contrast, they play no or a minor role in slightly more than a third of student businesses at both stages surveyed. • Almost a third of active student entrepreneurs do not use online sales, about a quarter of them report online sales as a share of sales between 25% and 75%, and for another quarter online sales account for more than 75% of sales. Slightly more ambitious in their anticipated use of online sales are starting student entrepreneurs. • Only about half of the student entrepreneurs, both starting and active, reported that a person from the older generation is not involved in their business. This means that up to half of student entrepreneurs also involve a person from an older generation in their business. Most often such a person acts as a mentor or advisor. • The contribution of a person from the older generation to entrepreneurship is seen by both starting and active student entrepreneurs mainly in their knowledge of the 21 market or business. The next most strongly perceived contribution of persons from the older generation is their possession of the personal characteristics necessary for entrepreneurship. Conversely, the least frequent starting and active student entrepreneurs see a benefit in the form of access to the resources needed for entrepreneurship. Digital transformation in the context of intergenerational entrepreneurship in Slovakia From the systematic processing of the responses from the phenomenological qualitative survey, three aggregated dimensions emerged, which are a) Digitalisation status, impact, and barriers to digitalization; b) Generations and intergenerational aspects; c) Processes and practices in the process of digitalization and intergenerational collaboration. Digitalisation status, impact, and barriers to digitalization Responses within the first aggregate dimension culminated around the following themes: • Digitalisation status - respondents declared that digitalisation and digital transformation are part of their business to varying degrees. The results showed three different modes exhibited by the entrepreneurs namely 1.) Basic use of digitalization; 2.) Digitalization for commercial purposes; 3.) Digital transformation and development of advanced processes. The interviews further revealed that SMEs do not necessarily belong to only one mode but can operate independently in different modes. • Factors of digitalisation – they serve as a catalyst for change within companies and strongly influence the status of digitalisation. The SMEs surveyed identified technology, firm-level triggers, external and regulatory framework, and the digitalisation of supply chains and business models as the most important drivers of digitalisation. • Benefits of digitalisation - are manifold, but mainly relate to four key areas, which are efficiency, customers, flexibility, and general improvements in business management. • Key barriers to digitalisation - respondents identified key barriers to digitalisation that arose from their views and experiences in the digitalisation process and were 22 based on the external environment of the organisation. These include the national policy on digitalisation and digital transformation and industry specifics. • Options to overcome key barriers to digitalisation - building on the previous theme, the research focused on different options for overcoming the identified key barriers to digitalisation. The main options that emerged from the respondents’ views were support from the state, adjustments to legislation in the area of a family business, outreach and awareness raising, upbringing and education, and financing. Generations and intergenerational aspects Roles of generations were explored as one of the main themes from three perspectives. • The younger generation usually has good ICT competences and the ability to learn new knowledge quickly. They are also more proactive, often take a leadership role, and have a greater drive and motivation for digitalisation. It is clear that technological progress is very fast and therefore it is also very difficult for the younger generation to keep up with this progress. Knowledge of foreign languages is crucial in this process. For this reason, offspring in family businesses have an indispensable role in bringing new stimuli and ideas for digitalisation. • The older generation has its own role and contribution to make in the digitalisation process. They are able to think in a broader context, taking into account their lifelong professional and managerial experience. In the digitalisation of enterprises, success requires the older generation to pass on their professional and managerial experience and knowledge to the younger generation, but also to delegate competences to them. However, it is not enough to delegate competences and pass on knowledge and experience, but the older generation must also show a certain degree of flexibility. Even if they are rarely the leaders of digitalisation in their companies, they must at least try to understand and embrace digitalisation as an inevitable trend for the current and future success of the company. • In terms of intergenerational cooperation, competence and experience are the most important aspects, regardless of age and generation. Equally important is the intergenerational transfer of knowledge and experience. In addition, respondents indicated that different generations have complementary skills that are essential for successful digitalisation within companies. 23 Processes and practices in the process of digitalisation and intergenerational cooperation In general, processes and practices can be divided into two groups. • Formal processes and practices are defined by internal or external institutions. Within this category, key areas have been identified that are essential for successful digital transformation. These include project management, existing norms and standards, training and coaching. • Informal processes and practices include senior management support and awareness raising, which have been identified as key in the process, forming structurally wellbalanced teams with prior knowledge of digitalisation or at least good experience of collaboration and cooperation. On the one hand, following best practices is a source of inspiration, motivation, but also a guide on how to effectively lead the digitalisation and digital transformation process and what to avoid in the process. Respondents also consider external help to be important. Another popular view was not to introduce robust binding and therefore inflexible digital solutions so that companies proceed gradually and do not undergo major changes in a short time. The systematic analysis of the respondents’ views presented in the phenomenological study and the subsequent synthesis and categorisation resulted in the design of a complex model of digitalisation and digital transformation of SMEs with respect to intergenerational collaboration (Chapter 6.4). An overview of policies aimed at promoting intergenerational entrepreneurship and digital transformation in Europe and Slovakia is systematically elaborated in chapters 7.1 and 7.2. Key stakeholders of intergenerational entrepreneurship and digital transformation in entrepreneurship • The draft conceptual framework of stakeholders in the digitalisation and/or digital transformation of business organisations includes the following actors: a) Policymakers and regulators; b) Technology suppliers; c) Digital infrastructure providers; 24 d) Education and training providers; e) Funding providers; f) Providers of professional and advisory services; g) Support providers; h) The business sector and cross-sectoral organisations. • The lower social, professional, and political interest in the area of intergenerational entrepreneurship and cooperation is also confirmed by the results of our mapping, which indicate a significantly lower number of stakeholders in all elementary components of the entrepreneurial ecosystem. Examples of good practice in supporting intergenerational entrepreneurship considering digital transformation • Examples from abroad show how changes can be made at the level of individual policies, initiatives, and businesses themselves. • A good example for Slovakia is the Federation of Finnish Enterprises - FFP (SME United, 2019) or the establishment of the Digitalisation Support Agency in Austria (Boog, 2019). • Supporting the digital transformation of businesses is also facilitated by so-called online diagnostic tools, which are cheap, accessible, and allow policy makers to reach a wider group of entrepreneurs. • An example of combining digitalisation and intergenerational cooperation at the level of individual companies can be seen in Bosch.
    Keywords: digitalizácie, digitalization
    JEL: M15 O3
    Date: 2021–02–01

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