nep-ent New Economics Papers
on Entrepreneurship
Issue of 2023‒04‒24
seven papers chosen by
Marcus Dejardin
Université de Namur

  1. Strapped for Cash: The Role of Financial Constraints for Innovating Firms By Esther Ann Bøler; Andreas Moxnes; Karen Helene Ulltveit-Moe
  2. The determinants of Public Grants and Venture Capital financing: Evidence from Europe By Andrea Bellucci; Gianluca Gucciardi; Daniel Nepelski
  3. Startup Village Conceptualisation By GOODWIN-HAWKINS Bryonny; GUZZO Fabrizio; MERIDA MARTIN Fernando; SASSO Simone
  4. Digital divides among microsized firms: Evidence from Sub-Saharan Africa By Damien GIROLLET
  5. Israel: El milagro de Desarrollo Económico basado en el modelo de start-ups By Tomás Pablo Faintich; Santiago Gómez Palma; Augusto Mamone
  6. Formalisation et accès au crédit des petites et moyennes entreprises : cas du Togo By KOTOKLO, Edoh; TOGBENU, Fo-kossi edem
  7. The Effects of Subsidies for SMEs in Japan: Concerns about self-reported data and repeat applications (Japanese) By INOUE Toshikatsu; HASHIMOTO Yuki; SAKASHITA Fumiyuki; SAKASHITA Fumiyuki

  1. By: Esther Ann Bøler; Andreas Moxnes; Karen Helene Ulltveit-Moe
    Abstract: This paper makes use of a reform that allowed firms to use patents as stand-alone collateral, to estimate the magnitude of collateral constraints and to quantify the aggregate impact of these constraints on misallocation and productivity. Using matched firm-bank data for Norway, we find that bank borrowing increased for firms affected by the reform relative to the control group. We also find an increase in the capital stock, employment and innovation as well as equity funding. We interpret the results through the lens of a model of monopolistic competition with potentially collateral constrained heterogeneous firms. Parameterizing the model using well-identified moments from the reduced form exercise, we find quantitatively large gains in output per worker in the sectors in the economy dominated by constrained (and intangible-intensive) firms. The gains are primarily driven by capital deepening, whereas within-industry misallocation plays a smaller role.
    Keywords: intangible capital, patents, credit constraints, misallocation, productivity
    JEL: D25 G32 L25 L26 O34 O47
    Date: 2023
  2. By: Andrea Bellucci (University of Insubria, Department of Economics); Gianluca Gucciardi (UniCredit and University of Milan); Daniel Nepelski (European Commission - JRC)
    Abstract: This analysis compares the characteristics of firms supported by public and private sources in early-stage financing to investigate funding patterns for innovative companies. It examines whether the two sources of funding target similar firms in the period 2008-2017 using a portfolio approach on EU-based firms raising either Venture Capital financing, public grants under the Horizon 2020 ‘SME Instrument’ scheme, or both. The findings show that venture capitalists finance more innovative and younger firms, whereas public investors focus on smaller companies. This pattern is supported by robustness checks and expansions that address multiple dimensions of heterogeneity behaviours in the interaction of private and public funding.
    Keywords: Venture Capital, Investment, Public Grants, Horizon 2020, SME Instrument, Entrepreneurial Finance
    JEL: O30 O38 L20 L53 G20
    Date: 2023–02
  3. By: GOODWIN-HAWKINS Bryonny; GUZZO Fabrizio (European Commission - JRC); MERIDA MARTIN Fernando (European Commission - JRC); SASSO Simone (European Commission - JRC)
    Abstract: The European Commission’s long-term vision for the EU’s rural areas identifies several areas of action towards stronger, connected, resilient and prosperous rural areas and communities by 2040. A flagship action on research and innovation aims to help tackle the challenges towards fulfilling rural potential. An annual Startup Village Forum is part of this action. The Forum intends to promote knowledge exchange and cooperation activities and to work as an open and inclusive space where institutions and stakeholders can meet, discuss and shape actions for startup-driven innovation in rural areas. Drawing upon the scientific literature, in this report we develop the Startup Village concept and define it as "A place (or a network of small places) that embraces innovation and ambitious entrepreneurship as a way to unlock development potential and support wellbeing in rural areas". Next, we explore the key enabling factors of Startup Villages- discussing in particular the pivotal role played by the ecosystem in enabling innovation and entrepreneurship - and outline the Startup Village Forum’s facilitating role.
    Keywords: rural innovative entrepreneurship, rural innovation, rural entrepreneurship, rural development, rural areas, growth, startups, SMEs, innovation ecosystem, RDI, Research, Technology and Innovation
    Date: 2023–02
  4. By: Damien GIROLLET
    Abstract: TThis paper explores digital inequalities in access and usage among 3, 300 firms and entrepreneurs from eight sub-Saharan African countries. To account for informal firms’ heterogeneity, we identify three segments: an upper tier of top performers, a lower tier of survivalists, and an intermediate segment composed of constrained gazelles. Although digital technologies are already used by most of the informal entrepreneurs in Sub-Saharan Africa, our findings suggest that the diffusion of these new technologies is uneven across informal firms, digital inequalities being rooted in the already existing socioeconomic inequalities. Indeed, digital inequalities align with the hierarchy of informal sectors in each country and are associated with entrepreneurs’ and firms’ characteristics. Using multivariate analysis, we find that gender and rural/urban digital divides persist in the productive sphere. At the same time, firms with a high level of informality, low profits, precarious operating conditions, and no access to financial services are less likely to use digital technologies.
    Keywords: Digital technology, ICT, digital divide, informality, Africa.
    JEL: D22 O17 O33 O55
    Date: 2023
  5. By: Tomás Pablo Faintich; Santiago Gómez Palma; Augusto Mamone
    Abstract: El presente trabajo evalúa la forma en que Israel se convierte en una Start-up Nation. Dentro del mismo se explicitan los factores económicos y no económicos que conllevaron a que el país pueda desarrollarse dentro de un entorno hostil. A su vez, se explican las diferentes políticas públicas que contribuyeron al desarrollo del país. También se utiliza como contraejemplo a la Argentina para comprender el porqué del desarrollo de Israel. Finalmente, se llega a la conclusión de que el país se desarrolla de tal forma por los amplios incentivos a la I+D, la necesidad y mayormente por el carácter innovador.
    Keywords: Israel, Desarrollo, Start-Ups, Eficiencia, Crecimiento
    JEL: O53 O41 O22 O23
    Date: 2023–03
  6. By: KOTOKLO, Edoh; TOGBENU, Fo-kossi edem
    Abstract: The purpose of this paper is to analyze the effect of formalization on access to credit by taking the example of Togolese (small and medium) enterprises. To achieve this objective, we test the hypothesis that the formalization of firms has a significant effect on access to credit. To do so, a Probit regression and the special regressor method were used on data from 65, 725 firms extracted from the 2019 General Census of Enterprises database piloted by the Institut Nationale de la Statistique et des Etudes Economiques et Démographiques (INSEED). The results show that the variable "Formalization of enterprises (small and medium)" has a significant influence at the 1% level on the probability of access to credit. In addition, the control variables such as guarantees, cost of credit, access to the public market, gender and level of education also explain access to credit at the 1%, 1%, 5% and 10% thresholds respectively. Our results show the importance of training and capacity building for informal enterprises to formalize. Also, they will allow regulatory bodies to develop policies that can reframe the informal sector in order to contribute to the GDP and absorb more young people seeking employment.
    Keywords: Keywords: Formalization, SMEs, Access to Credit, Probit and Special Regressor
    JEL: D22
    Date: 2023–03–17
  7. By: INOUE Toshikatsu; HASHIMOTO Yuki; SAKASHITA Fumiyuki; SAKASHITA Fumiyuki
    Abstract: This study analyzes the effects of subsidies for SMEs in Japan (Monozukuri Subsidy), taking into account self-reporting bias and repeat applications. We find that data reported by subsidy recipients to the funding agency are contaminated with errors (due to, e.g., incorrect digits) and that these incorrect, self-reported data significantly distort outcome values. In addition, the estimation results using a fuzzy regression discontinuity design do not robustly find significant differences in the sales and the sales per capita between recipients and non-recipients of subsidies. We also find that firms that are not accepted for the Monozukuri Subsidy in FY2015 are more likely to apply in the subsequent rounds. Neither self-reporting bias nor repeated applications have been addressed in previous analyses of the Monozukuri Subsidy. Further development is needed both theoretically and empirically in terms of reliable data collection and bias correction for repeated applications.
    Date: 2023–03

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