nep-ent New Economics Papers
on Entrepreneurship
Issue of 2023‒05‒01
seven papers chosen by
Marcus Dejardin
Université de Namur

  1. Founder's Human Capital and the Entrepreneurial Process Duration By Shahid, Pirzada Syed Rizwan
  2. Helping Small Businesses become more Data-Driven: A Field Experiment on eBay By Sagit Bar-Gill; Erik Brynjolfsson; Nir Hak
  3. Was Robert Gibrat right? A test based on the graphical model methodology By Marco Guerzoni; Luigi Riso; Marco Vivarelli
  4. Distributed VC Firms: The Next Iteration of Venture Capital By Mohib Jafri; Andy Wu
  5. The effects of business experience and gender on academic entrepreneurial intention By Vuong, Quan-Hoang; Quang-Loc, Nguyen; Jin, Ruining; Nguyen, Minh_Hieu Thi Dr; Nguyen, Minh-Hoang; Le, Tam-Tri
  6. Firm Size and Financing Behavior during the COVID-19 Pandemic: Evidence from SMEs in Istanbul By Gur Nurullah; Babacan Mehmet; Ahmet Faruk Aysan; Suleyman Selim
  7. Resource Reallocation across Firms during the COVID-19 Pandemic: Analysis of productivity dynamics using firm-level micro data (Japanese) By IKEUCHI Kenta; KIM Young Gak; KWON Hyeog Ug; FUKAO Kyoji

  1. By: Shahid, Pirzada Syed Rizwan
    Abstract: This thesis presents three quantitative empirical studies, utilising two US cohorts from the harmonised Panel Study of Entrepreneurial Dynamics (PSED), to advance our understanding of the relationship between nascent entrepreneurs’ human capital and duration to different entrepreneurial outcomes. Each chapter provides a distinct perspective across three dimensions: (1) human capital, age and sector impact duration to a profitable outcome, (2) the association of human capital and age with the founder’s exit; and finally, (3) human capital impact on the duration to a profitable outcome with a different spatial scope of sales. Following the introductory chapter, in chapter 2, the human capital perspective is used to investigate how the level of human capital and the founder’s age influence the likelihood of profitable venture creation in a shorter duration. This chapter extends research in nascent entrepreneurship that hitherto has largely overlooked the duration perspective to an entrepreneurial process outcome. This chapter stresses that hi-tech start-up particularly benefits from the nascent entrepreneur’s higher educational attainment in terms of shorter duration until the profitable outcome, and find that age has a non-linear relationship with the speed of the profitable venture outcome. Chapter 3 examines how a founder’s human capital factors and age influence the likelihood of a founder’s exit, and duration to an exit, from the entrepreneurial process. This chapter also extends its focus to human capital interactions to establish which combinations are more likely to reduce an earlier prospect of a founder’s disengagement from the entrepreneurial process. The chapter, also adds to the literature on how founders, with higher human capital, learn quickly and make intelligent choices to disengage without incurring heavy personal and societal costs. A non-linear relationship is found between the founder’s age and the duration to disengagement. Finally, chapter 4, seeks to understand how a founder’s human capital affects the profitable outcome, and the duration to such an outcome, at the different spatial scopes of sales. This paper takes a new approach and adds to the international entrepreneurship literature by clarifying how the founder’s human capital factors impact rapid (born global) and incremental (international new ventures) spatial scope strategies differently. Among the general human capital, a university degree is valuable across all types of spatial scopes of sales in terms of profitable venture creation in a shorter duration. However, start-up experience (specific human capital) only tends to be vital for international scope in terms of the shorter duration to create a profitable new venture. Altogether, the thesis advances our understanding of the important role of the founder’s human capital dimensions in nascent entrepreneurship, in the duration either to a profitable venture creation or to exit, which is underdeveloped in the existing literature. The thesis paves the way for future, both theoretical and empirical research, into nascent entrepreneurship process duration by analysing the direct effects of various aspects of social capital.
    Date: 2023–03–25
  2. By: Sagit Bar-Gill; Erik Brynjolfsson; Nir Hak
    Abstract: As more and more activities in the economy become digitized, analytics and data-driven decision-making (DDD) are becoming increasingly important. The adoption of analytics and DDD has been slower in small-to-medium enterprises (SMEs) compared to large firms, and reliable causal estimates of the impacts of analytics tools for small businesses have been lacking. We derive experiment-based estimates of the effect of an analytics tool on SME outcomes, analyzing the randomized introduction of eBay’s Seller Hub (SH), a data-rich seller dashboard. We find that SH adoption is associated with increased DDD, and that access to SH increases e-retailers’ revenues by 3.6% on average, as more items are transacted and service quality increases, without increases in average prices. Our results suggest that analytics and DDD help SMEs establish a competitive advantage. Managerial practices play an important role in reaping the benefits from the analytics dashboard, as over a third of the SH impact is driven by active performance monitoring. This suggests that digital platforms could increase revenues by supporting the adoption of analytics tools by SMEs. Furthermore, policies supporting small businesses' transition to the data era could address gaps in analytics and data-driven decision-making (DDD) by providing access to tools such as SH, as well as offering appropriate managerial training.
    JEL: L1 L86 M15 M3 O3 O30
    Date: 2023–03
  3. By: Marco Guerzoni (DEMS, Università di Milano-Bicocca, Milano, Italy - BETA, University of Strasbourg, France); Luigi Riso (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy); Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany)
    Abstract: Using both regression analysis and an unsupervised graphical model approach (never applied before to this issue), we confirm the rejection of the Gibrat’s law when our firm-level data are considered over the entire investigated period, while the opposite is true when we allow for market selection. Indeed, the growth behavior of the re-shaped (smaller) population of the survived most efficient firms is in line with the Law of Proportionate Effect; this evidence reconciles early and current literature testing Gibrat’s law and may have interesting implications in terms of both applied and theoretical research.
    Keywords: Gibrat’s Law, firm survival, market selection, firm growth
    JEL: L11
    Date: 2023–03
  4. By: Mohib Jafri; Andy Wu
    Abstract: Using a combination of incentive modeling and empirical meta-analyses, this paper provides a pointed critique at the incentive systems that drive venture capital firms to optimize their practices towards activities that increase General Partner utility yet are disjoint from improving the underlying asset of startup equity. We propose a "distributed venture firm" powered by software automations and governed by a set of functional teams called "Pods" that carry out specific tasks with immediate and long-term payouts given on a deal-by-deal basis. Avenues are provided for further research to validate this model and discover likely paths to implementation.
    Date: 2023–04
  5. By: Vuong, Quan-Hoang; Quang-Loc, Nguyen; Jin, Ruining; Nguyen, Minh_Hieu Thi Dr; Nguyen, Minh-Hoang; Le, Tam-Tri
    Abstract: Academic entrepreneurship is crucial in the development of human society. Considering the current landscape of academia and business, academic entrepreneurial attempts can be risky, especially for female scientists. Prior knowledge from business experience can be a valuable input in the information process of entrepreneurial intention. Using the information-processing-based Bayesian Mindsponge Framework (BMF), we conducted Bayesian analysis on a dataset of 1027 scientists in Chile. The results show that male scientists likely have higher entrepreneurial intentions than female scientists. In general, experiences of company creation enhances the likelihood of academic entrepreneurial intention, whereas experiences of company failure have no clear effect. However, when considering the interaction with the gender factor, it was found that males have a stronger positive effect from experiences of company creation, and experiences of company failure have a positive effect on entrepreneurial intention in males. The gender differences may be due to inequalities in academia and entrepreneurship, as well as a higher tendency of risk aversion in females. In the modern world where technology is rapidly advancing, more opportunities for academic entrepreneurs are opening up, and at the same time, female scientists can be better empowered, especially in low- and middle-income countries.
    Date: 2023–03–26
  6. By: Gur Nurullah (Istanbul Medipol University); Babacan Mehmet (Istanbul Medipol University); Ahmet Faruk Aysan (HBKU - Hamad Bin Khalifa University); Suleyman Selim (Istanbul Chamber of Commerce)
    Abstract: This paper examines how small and medium-size enterprises (SMEs) in Istanbul managed their financial needs during the COVID-19 pandemic. A unique survey was conducted in May-June 2021 to analyze the effect of the pandemic on financial conditions and access to finance. The paper maps the differences between firms in terms of their financing conditions and behavior based on their size during the pandemic. The novel data set helps to conceptualize the impact of the COVID-19 pandemic on SMEs. The paper makes a contribution to the literature through using a large number of variables related to firms' financial conditions and opportunities (e.g., credit restructuring, debt postponing, capital injection). The paper hypothesizes that SMEs are less likely than large firms to access formal finance opportunities, but they tend to rely more on informal financing. The empirical findings suggest that, during the pandemic, micro and small firms tend to borrow more from their acquaintances, such as relatives and friends. Micro firms are less likely to restructure their outstanding loans, borrow from banks, or inject capital. Furthermore, micro firms tend to cut their costs more to avoid further difficulty in their financial positions. Micro and small firms tend to apply for bank loans less than large firms, while medium-size firms are more likely to apply. Micro and small firms are more inclined to report difficulty in accessing credit.
    Keywords: COVID-19 emerging markets finance small and medium-size enterprises (SMEs) JEL Classifications: D22 G21 H81 COVID-19 emerging markets finance small and medium-size enterprises (SMEs) JEL Classifications: D22 G21 H81, COVID-19, emerging markets, finance, small and medium-size enterprises (SMEs) JEL Classifications: D22, G21, H81 COVID-19, H81
    Date: 2023–02–12
  7. By: IKEUCHI Kenta; KIM Young Gak; KWON Hyeog Ug; FUKAO Kyoji
    Abstract: During the COVID-19 pandemic, a substantial shift in demand occurred in the economy, including a decrease in demand for some non-manufacturing industries such as retail, transportation, and restaurants and accommodation services, a downturn in international trade due to the global spread of infections, and an increase in demand for information and communication services due to remote working and other factors. In countries with high labor mobility, such as the United States, active reallocation of resources across industries and firms during and after the pandemic could be observed. On the other hand, in Japan, the reallocation of resources across firms in response to demand shifts may have been sluggish due to the difficulty of laying off regular employees (especially in large firms) and the government’s efforts to maintain employment and prevent bankruptcies through employment adjustment subsidies and special COVID-19 loans. Using firm-level financial data from Tokyo Shoko Research, we examine the reallocation of resources across firms during the COVID-19 pandemic in private-sector production activities in Japan by focusing on developments in productivity dynamics and the share of zombie firms. Our analysis of total factor productivity (TFP) dynamics shows that in 2018–2021, probably due to rigid employment practices, there was a large negative within-firm effect among large firms, and especially large firms operating in the non-manufacturing sector saw a substantial decline in TFP. In contrast, small and medium-sized enterprises (SMEs) experienced increases in TFP during this period due to positive reallocation effects. Especially SMEs engaged in manufacturing saw an acceleration in TFP growth. This suggests that the market selection mechanism functioned mainly for SMEs. Meanwhile, the share of zombie firms, defined as firms with an interest coverage ratio of less than 1 for several years, peaked in 2011 and then gradually declined. Although there has been a small increase since the start of the pandemic in 2020, the increase in 2020–2021 was not particularly pronounced compared to the rapid increase from 2009 to 2011.
    Date: 2023–04

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