nep-ent New Economics Papers
on Entrepreneurship
Issue of 2022‒11‒21
fourteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Empirical Evidence on Firm Growth and Jobs in Developing Countries By Buba, Johanne; Franco Gonzalez, Alvaro; Rizvi, Anam
  2. To Be or Not to Be: The Entrepreneur in Neo-Schumpeterian Growth Theory By Henrekson, Magnus; Johansson, Dan; Karlsson, Johan
  3. Using Deep Learning to Find the Next Unicorn: A Practical Synthesis By Lele Cao; Vilhelm von Ehrenheim; Sebastian Krakowski; Xiaoxue Li; Alexandra Lutz
  4. Green Start-ups and the Role of Founder Personality By Chapman, Gary; Hottenrott, Hanna
  5. The Ossified Economy: The Case of Germany, 1870-2020 By Naudé, Wim; Nagler, Paula
  6. Measuring the Biases, Burdens, and Barriers Women Entrepreneurs Endure in Myanmar By Dall'Aglio,Chiara; Hayati,Fayavar; Lee,David James
  7. Basel III and SME bank finance in Germany By Marek, Philipp; Stein, Ingrid
  8. How do firms innovate in Latin America? By Vargas, Fernando
  9. Improving Workers’ Performance in Small Firms : A Randomized Experiment on Goal Setting in Ghana By Cettolin, Elena; Cole, Kym; Dalton, Patricio
  10. Using Experimental Evidence to Inform Firm Support Programs in Developing Countries By Grover,Arti Goswami; Imbruno,Michele
  11. Endogenous Innovation Scale and Patent Policy in a Monetary Schumpeterian Growth Model By Yu, Po-yang; Lai, Ching-Chong
  12. Small and Disadvantaged Business Enterprise (SB/DBE) Issues in Caltrans Contract and Bid Process By Tommelein, Iris D. PhD; Gazzaniga, Tyler
  13. Do Innovative Firms Pay Higher Wages ? Micro-Level Evidence from Brazil By Cirera,Xavier; Soares Martins Neto,Antonio
  14. Unlocking the potential of youth-led social enterprises By OECD

  1. By: Buba, Johanne; Franco Gonzalez, Alvaro; Rizvi, Anam
    Abstract: Economic growth does not contribute enough to job creation. As shown in Merotto, weber and Aterido (2018), a bit more than half of growth episodes contributed to reducing unemployment. A significant part of this relationship between growth and jobs is centered around firms. Firms are more likely to hire when growing. For that reason, any discussion on how to get more jobs needs to respond to questions about firm performance. This review discusses the barriers to firm growth and performance, namely limited access to finance, frictions on the labor market, lack of know-how, limited access to technology and the role of markets. It synthesizes the main lessons on firm growth from firm-level experiments that address these constraints and when possible, focuses on the impacts of these interventions on jobs. The objective is to provide evidence that can guide practitioners who seek to promote jobs in the context of private sector development programming. Empirical Evidence on Firm Growth and Jobs in Developing Countries
    Keywords: access to finance; access to financial service; empirical evidence; firm growth; data collection effort; Internally Displaced Person; labor market performance; privileges and immunity; business environment; private investor; employment impact; representative sample; firm-level survey; external financing; macroeconomic environment; paper issue; accurate assessment; retail firms; gender participation; annual sale; best practice; capacity utilization; several countries; target setting; sole responsibility; original work; commercial purpose; research need; copyright owner; policy option; market study; Market Studies; job growth; survey respondent; management experience
    Date: 2020–12–18
  2. By: Henrekson, Magnus (Research Institute of Industrial Economics); Johansson, Dan (Örebro University); Karlsson, Johan (Jönköping University, Sogang University)
    Abstract: Based on a review of 700+ peer-reviewed articles since 1990, identified using text mining methodology and supervised machine learning, we analyze how neo-Schumpeterian growth theorists relate to the entrepreneur-centered view of Schumpeter (1934) and the entrepreneurless framework of Schumpeter (1942). The literature leans heavily towards Schumpeter (1942); innovation returns are modeled as following an ex ante known probability distribution. By assuming that innovation outcomes are (probabilistically) deterministic, the entrepreneur becomes redundant. Abstracting from genuine uncertainty, implies that central issues regarding the economic function of the entrepreneur are overlooked such as the roles of proprietary resources, skills, and profits.
    Keywords: creative destruction, economic growth, entrepreneur, innovation, judgment, Knightian uncertainty
    JEL: B40 O10 O30
    Date: 2022–09
  3. By: Lele Cao; Vilhelm von Ehrenheim; Sebastian Krakowski; Xiaoxue Li; Alexandra Lutz
    Abstract: Startups often represent newly established business models associated with disruptive innovation and high scalability. They are commonly regarded as powerful engines for economic and social development. Meanwhile, startups are heavily constrained by many factors such as limited financial funding and human resources. Therefore the chance for a startup to eventually succeed is as rare as ``spotting a unicorn in the wild''. Venture Capital (VC) strives to identify and invest in unicorn startups during their early stages, hoping to gain a high return. To avoid entirely relying on human domain expertise and intuition, investors usually employ data-driven approaches to forecast the success probability of startups. Over the past two decades, the industry has gone through a paradigm shift moving from conventional statistical approaches towards becoming machine-learning (ML) based. Notably, the rapid growth of data volume and variety is quickly ushering in deep learning (DL), a subset of ML, as a potentially superior approach in terms capacity and expressivity. In this work, we carry out a literature review and synthesis on DL-based approaches, covering the entire DL life cycle. The objective is a) to obtain a thorough and in-depth understanding of the methodologies for startup evaluation using DL, and b) to distil valuable and actionable learning for practitioners. To the best of our knowledge, our work is the first of this kind.
    Date: 2022–10
  4. By: Chapman, Gary; Hottenrott, Hanna
    JEL: G24 L26 O25 O31
    Date: 2022
  5. By: Naudé, Wim (RWTH Aachen University); Nagler, Paula (Erasmus University Rotterdam)
    Abstract: We describe Germany's rise as an industrial power in the late 19th century through radical innovation and entrepreneurship, and contrast this with the post-World War II period. This latter period, although it contained the German economic miracle, was nevertheless a period during which innovation slowed down - a somewhat surprising conclusion, but consistent with the decline in business dynamism noted in a growing number of advanced economies. We document this decline using several innovation indicators, and offer four broad, interrelated explanations in a historical context: (i) the innovation system is locked into incremental innovation, (ii) the diffusion of technology is slowing down, (iii) the education system is subject to weaknesses, and (iv) entrepreneurship is stagnating. Implications for policy are noted. Our paper contributes to the literature on the decline in business dynamism and the "great stagnation", to the literature on the historical forces that determine innovation outcomes, and to the literature that seeks to identify what makes an entrepreneurial state.
    Keywords: innovation, Germany, entrepreneurship, technology
    JEL: N13 N14 O31 O33
    Date: 2022–09
  6. By: Dall'Aglio,Chiara; Hayati,Fayavar; Lee,David James
    Abstract: Entrepreneurs in Myanmar face many challenges to starting and operating a business. As is theexperience globally, women often experience these challenges to a greater extent and face additional socioculturalbarriers, limiting their equal participation in the economy. To develop a better understanding of the dynamics holdingback private sector development, especially for women, this paper uses data from the first-of-a-kind, firm-level data set available in Myanmar. The analysis explores the varianceof experience female-owned micro, small, and medium-size enterprises face compared with their male-ownedcounterparts. The paper assesses the barriers imposed on entrepreneurs and their businesses and identifies firm-levelcharacteristics leading to the use of good business practices. Further, the analysis investigates the adoptionof gender and family-friendly policies, as an outcome and as a determinant of business success. The purpose of the studyis to gain a better understanding of the barriers to gender-inclusive private sector development in Myanmar andprovide tangible recommendations to private- and government-level actors. Overall, the analysis finds themajor constraints for women entrepreneurs are access to finance and sociocultural factors, such as familyresponsibilities and household work.
    Keywords: Gender and Development,International Trade and Trade Rules,Educational Sciences,Financial Sector Policy,Technology Industry,Gender and Poverty,Gender and Economic Policy,Economics and Gender,Gender and Economics,Technology Innovation
    Date: 2020–10–26
  7. By: Marek, Philipp; Stein, Ingrid
    Abstract: This paper examines how Basel III capital reforms affected bank lending in Ger- many. We focus on the increase of minimum risk-based capital requirements and the introduction of the leverage ratio. The announcement of stricter risk-based capital regulation significantly affected low capitalized banks. The impact depends on a bank's credit risk model, i.e. whether a bank applies the standardized approach (SA) or an internal ratings-based approach (IRBA) to determine risk weights. Low capitalized SA banks significantly cut lending whereas IRBA banks did not ad- just lending volumes. By contrast, low capitalized IRBA banks significantly in- creased collateralization while low capitalized SA banks adjusted collateralization only marginally. Moreover, the impact on SMEs and large companies also differs. In terms of lending, SMEs were affected more strongly, whilst in terms of collateralization the impact on large companies was bigger. The announcement of the leverage ratio had, however, a rather limited impact. We find some evidence that low capitalized banks reduced lending. Furthermore, low capitalized banks somewhat tightened collateral requirements, especially for large companies.
    Keywords: Basel III,bank lending,nancial regulation,small and medium-sizedenterprises (SMEs)
    JEL: D22 E58 G21
    Date: 2022
  8. By: Vargas, Fernando
    Abstract: The study of innovation in Latin American firms has concentrated almost exclusively on the determinants and impacts of innovation investments and outputs. Less attention has been paid to how firms innovate. This study applies factor and cluster analysis to a unique dataset of harmonized innovation surveys from Argentina, Chile, Colombia, Ecuador, El Salvador, Paraguay, Peru, and Uruguay, to identify the main innovation practices and strategies performed by Latin American firms. Three of the four identified innovation strategies can be linked to results from similar studies using European firm-level data. However, none of these strategies resembles a strong science or research orientation. An approach to "open management" innovation emerges as idiosyncratic for Latin American firms. These innovation strategies are associated with differences in sales growth and labor productivity. The analysis also shows that firm resources and capabilities drive innovation strategy selection.
    JEL: L20 O12 O14 O30 O32 O33 O54
    Date: 2022–05–23
  9. By: Cettolin, Elena (Tilburg University, Center For Economic Research); Cole, Kym; Dalton, Patricio (Tilburg University, Center For Economic Research)
    Keywords: Behavioral Constraints; Goals setting; Management Practices; Small firms; Informal Businesses
    Date: 2022
  10. By: Grover,Arti Goswami; Imbruno,Michele
    Abstract: Countries design programs for supporting firms, with varying levels of success. Firmgrowth is constrained by several factors, such as low firm capabilities (e.g. management), availability of finance, andaccess to markets. Based on the available experimental evidence on firm support programs in developing countries,this paper makes three broad observations. First, there are huge knowledge gaps in understanding the success ofinstruments that alleviate firm constraints. Various instruments, such as early-stage equity finance, incubators,and accelerators, remain untested due to the lack of good design, results framework, or monitoring and evaluationsystems and so on. Second, since these interventions are expensive, policy makers expect such programs to be designedmore effectively to pursue their objectives. However, evidence provides little guidance on the criterion for firmselection because the existing evaluations of instruments reveal little information on the heterogeneous impact byfirm characteristics, such as the age, size, sector, and locationof firms. Third, most interventions seek to address only one of the broad constraints faced by firms. To thisend, the paper concludes with a novel proposal for a firm support program that attempts to sequentially addressmultiple constraints to firm growth. This program will be implemented in Malawi through the "Financial Inclusionand Entrepreneurship Scaling" project.
    Keywords: Financial Sector Policy,Skills Development and Labor Force Training,Private Sector Economics,Private Sector Development Law,Marketing,Labor Markets
    Date: 2020–10–28
  11. By: Yu, Po-yang; Lai, Ching-Chong
    Abstract: This paper develops a monetary R&D-driven endogenous growth model featuring endogenous innovation scales and the price-marginal cost markup. To endogenize the step size of quality improvement, we propose a trade-off mechanism between the risk of innovation failure and the benefit of innovation success in R&D firms. Several findings emerge from the analysis. First, a rise in the nominal interest rate decreases economic growth; however, its relationship with social welfare is ambiguous. Second, either strengthening patent protection or raising the professional knowledge of R&D firms leads to an ambiguous effect on economic growth. Third, the Friedman rule of a zero nominal interest rate fails to be optimal in view of the social welfare maximum. Finally, our numerical analysis indicates that the extent of patent protection and the level of an R&D firm’s professional knowledge play a crucial role in determining the optimal interest rate.
    Keywords: Intellectual property rights; Economic growth; Endogenous innovation scales; Endogenous markups; Inflation
    JEL: E41 L11 O30 O40
    Date: 2022–10–17
  12. By: Tommelein, Iris D. PhD; Gazzaniga, Tyler
    Abstract: This Preliminary Investigation document, on one hand, outlines challenges encountered by SB/DBEs in the process of getting certified, entering into a contract, executing on projects or delivering services, and sustaining or growing their business. On the other hand, it summarizes OCR’s current ongoing efforts that are aiming to expand contracting with SB/DBEs. Along the way it identifies opportunities that warrant more in-depth investigation for OCR to target its programming and resource allocation as it aims to reduce obstacles or otherwise improve the ability of SBs/DBEs to successfully contract with Caltrans.
    Keywords: Engineering
    Date: 2022–09–01
  13. By: Cirera,Xavier; Soares Martins Neto,Antonio
    Abstract: Several studies have documented a positive and causal relationship product or process innovation -- and labor productivity. Given the links between labor productivity and wages, a likely implication of this positive relationship is that innovation is associated with higher wages of more productive firms. This paper explores the relationship between innovation and wages using Brazil's employer-employee census and a novel measure of innovation derived from the share of technical and scientific occupations of workers in the firm. The results show a robust and positive wage premium associated with innovative firms. The decomposition of this innovation-related wage premium suggests a series of important stylized facts: (i) the innovation wage premium is larger for manufacturing but also positive and significant for agriculture and services; (ii) it is larger for large firms, but also positive and significant for all firm size categories including micro firms; and (iii) it is larger for medium- and low-skill occupations, although this depends on the use of firm fixed effects. More importantly, the paper explores the causality between innovation and wages and finds empirical support for the ideas that “self-selection†—firms that innovate already pay higher wages before becoming innovators -- and increases in wages associated with starting innovation activity, which are persistent for three years after firms start innovating.
    Keywords: Labor Markets,Food&Beverage Industry,Plastics&Rubber Industry,Business Cycles and Stabilization Policies,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Common Carriers Industry,Construction Industry,General Manufacturing,Skills Development and Labor Force Training,Food Security
    Date: 2020–10–19
  14. By: OECD
    Abstract: Young people increasingly prioritise pursuing careers with positive social and environmental impacts. Social enterprises can help them fulfil this ambition. Youth-led social enterprises can address pressing social and environmental issues while providing young people with opportunities in the labour market. Despite these benefits, these entities often struggle due to the age of their founders and the specificities of their businesses. This paper analyses the drivers and potential benefits of youth-led social enterprises (section 1), assesses the challenges they face (section 2) and provides policy guidance to address them through tailored support programmes based on best practice examples and experiences from OECD countries and beyond (section 3).
    Keywords: Employment, Skills, Social and Solidarity Economy, Social enterprises, Youth
    JEL: J62 L31 L38 O35
    Date: 2022–11–09

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