nep-ent New Economics Papers
on Entrepreneurship
Issue of 2023‒08‒21
nine papers chosen by
Marcus Dejardin
Université de Namur

  1. Founder personality and start-up subsidies By Chapman, Gary; Hottenrott, Hanna
  2. The Local Origins of Business Formation By Emin Dinlersoz; Timothy Dunne; John Haltiwanger; Veronika Penciakova
  3. The Racial Wealth Gap: the Role of Entrepreneurship By Daniel Albuquerque; Tomer Ifergane
  4. Air Pollution and Entrepreneurship By Guo, Liwen; Cheng, Zhiming; Tani, Massimiliano; Cook, Sarah; Zhao, Jiaqi; Chen, Xi
  5. Explaining the Multifaceted Patterns of Migrant Entrepreneurship in the Global Economy: A Resource-Based Approach By Arrighetti, Alessandro; Canello, Jacopo
  6. The employment impact of AI technologies among AI innovators By Giacomo Damioli; Vincent Van Roy; Daniel Vertesy; Marco Vivarelli
  7. "Catalysing Entrepreneurial Growth: Unleashing the Potential of Venture Capital and Private Equity in Developing Nations" By Asuamah Yeboah, Samuel
  8. Investor responses to information updates on peer behavior and public investment policy: The case of green investments By Alt, Marius; Berger, Marius; Bersch, Johannes
  9. The effect of staged projekt management on product innovation: Evidence from a firm survey By Haneda, Shoko; Kurihara, Koki; Ono, Arito

  1. By: Chapman, Gary; Hottenrott, Hanna
    Abstract: Start-up subsidies play an important role in supporting start-up innovation and performance. However, what characteristics help and hinder start-ups to seek start-up subsidies remains unclear. We study whether and how founder personality, as captured by the big five personality traits and entrepreneurial orientation, impacts entrepreneurs' seeking of start-up subsidies. We argue that greater founder openness, extraversion and entrepreneurial orientation enhance seeking of start-up subsidies, while greater founder agreeableness, conscientiousness, and neuroticism inhibits it. Additionally, we argue that entrepreneurial orientation plays a mediating role in the relationship between big five personality traits and start-up subsidies. Drawing on a large multi-sector sample of German start-ups, we find strong evidence for a positive role of founder entrepreneurial orientation. While we find little evidence for a direct effect of a founder's big five personality, we find evidence of an indirect effect through its influence on entrepreneurial orientation.
    Keywords: Start-up subsidies, start-up financing, entrepreneurship policy, entrepreneurial orientation, big five personality traits, venture capital
    JEL: G24 L26 O25 O31
    Date: 2023
  2. By: Emin Dinlersoz; Timothy Dunne; John Haltiwanger; Veronika Penciakova
    Abstract: What locations generate more business ideas, and where are ideas more likely to turn into businesses? Using comprehensive administrative data on business applications, we analyze the spatial disparity in the creation of business ideas and the formation of new employer startups from these ideas. Startups per capita exhibit enormous variation across granular units of geography. We decompose this variation into variation in ideas per capita and in their rate of transition to startups, and find that both components matter. Observable local demographic, economic, financial, and business conditions accounts for a significant fraction of the variation in startups per capita, and more so for the variation in ideas per capita than in transition rate. Income, education, age, and foreign-born share are generally strong positive correlates of both idea generation and transition. Overall, the relationship of local conditions with ideas differs from that with transition rate in magnitude, and sometimes, in sign: certain conditions (notably, the African-American share of the population) are positively associated with ideas, but negatively with transition rates. We also find a close correspondence between the actual rank of locations in terms of startups per capita and the predicted rank based only on observable local conditions – a result useful for characterizing locations with high startup activity.
    Date: 2023–07
  3. By: Daniel Albuquerque (Bank of England); Tomer Ifergane (London School of Economics (LSE); Centre for Macroeconomics (CFM); Ben-Gurion University)
    Abstract: The racial wealth gap is one of the most striking and persistent disparities between Black and White households in the US. We study the determinants of this gap using a general equilibrium incomplete market model featuring dynamic discrete entrepreneurship choice and an empirically estimated income process. In the model, Black households face: (i) higher capital costs as entrepreneurs; (ii) a labour-income gap; and (iii) greater non-employment risk. We find that access to capital for Black entrepreneurs accounts for most of the racial wealth gap. Our model demonstrates that wealth transfers without social change cannot permanently address this gap and points towards addressing barriers faced by Black entrepreneurs as a key margin of intervention.
    Keywords: Racial wealth gap, entrepreneurship, incomplete markets, wealth accumulation, financial frictions, wealth inequality
    JEL: E21 J15 D31 D52
    Date: 2023–03
  4. By: Guo, Liwen (University of New South Wales); Cheng, Zhiming (University of New South Wales); Tani, Massimiliano (University of New South Wales); Cook, Sarah (University of Nottingham); Zhao, Jiaqi (Peking University); Chen, Xi (Yale University)
    Abstract: We investigate the effect of exposure to air pollution on an individual's likelihood towards entrepreneurship using panel data in China. To address omitted variable bias and endogeneity arising from self-selection into entrepreneurship and location choice, we employ an individual fixed effects model with an instrumental variable approach. Our findings show that individuals exposed to higher levels of air pollution are less likely to become entrepreneurs or diversify their entrepreneurial activities. Specifically, a one standard deviation increase in air pollution leads to a 21 percentage points decrease in the propensity for entrepreneurship and a 34 percentage points decrease in the likelihood of entrepreneurial diversification. Our study identifies potential channels through which air pollution impacts entrepreneurship. In addition, our findings reveal that air pollution has a more significant negative impact for older individuals, people residing in less populated areas, and those with lower education levels compared to their counterparts.
    Keywords: air pollution, entrepreneurship, China
    JEL: J24 L26 Q53
    Date: 2023–07
  5. By: Arrighetti, Alessandro; Canello, Jacopo
    Abstract: This article aims to propose a novel theoretical framework to interpret the recent patterns of migrant entrepreneurship in the global economy. Our theoretical framework builds on the resource-based view and highlights the role of the migrant enterprise as a collective entity endowed with peculiar tangible and intangible resources. The specific endowment of each migrant firm determines its competitive advantages and disadvantages, as well as its ability to acquire and process knowledge over time and internationalize. Such an approach allows to categorize the migrant enterprise as an autonomous entity, providing a reliable explanation of the heterogeneous features and performances displayed by these firms in the global economy. Indeed, even when migrant firms operate in the same host environment and are managed by entrepreneurs of the same ethnic background, their performances tend to be significantly different. Using a resource-based approach, the peculiar features of the migrant enterprise can be disentangled and explained more effectively.
    Keywords: Migrant entrepreneurship, Resorce-based View, Heterogeneity, Host Environment
    Date: 2023
  6. By: Giacomo Damioli; Vincent Van Roy; Daniel Vertesy; Marco Vivarelli
    Abstract: This study supports the labour-friendly nature of product innovation among developers of artificial intelligence (AI) technologies. GMM-SYS estimates on a worldwide longitudinal dataset covering 3, 500 companies that patented inventions related to AI technologies over the period 2000-2016 show a positive and significant impact of AI patent families on employment. The effect is small in magnitude and limited to service sectors and younger firms, which are front-runners of the AI revolution. We also detect some evidence of increasing returns suggesting that innovative companies more focused on AI technologies are those obtaining larger impacts in terms of job creation.
    Keywords: Innovation, technological change, artificial intelligence, patents, employment, job-creation
    Date: 2023–07–12
  7. By: Asuamah Yeboah, Samuel
    Abstract: This systematic review examines the importance, role, and challenges of venture capital (VC) and private equity (PE) in driving entrepreneurial activities in developing nations. The review synthesizes existing literature and identifies key findings related to the impact of VC and PE on entrepreneurial growth and economic development. It explores barriers to accessing VC and PE, regulatory and legal challenges, as well as cultural and institutional factors that shape the VC and PE landscape in developing nations. The review also provides policy recommendations and highlights areas for further research, emphasizing the potential impact of VC and PE in driving entrepreneurial activities and fostering sustainable economic development in developing nations.
    Keywords: Venture capital, private equity, entrepreneurship, economic development, developing nations, access to capital, regulatory framework, institutional factors
    JEL: G24 L26 O16
    Date: 2023–06–12
  8. By: Alt, Marius; Berger, Marius; Bersch, Johannes
    Abstract: Green startups are a major driver of eco-innovation and as such a major contributor to climate change mitigation and green growth. However, they often lack sufficient funding from investors. Our study focuses on the factors that determine venture capital investors to invest in green startups. In particular, we analyze how information about i) the investments into green startups of other investors and ii) investment provision by public institutions affect the willingness of investors to act accordingly. We combine data from an online survey with angel investors comprising a discrete choice experiment and data from the Mannheim Enterprise Panel. Our findings show that the expectation of future demand for green products and the environmental attitudes of investors can explain whether investors engage in the energy industry. Regarding the effect of information provision, we find that investors strongly respond to information on both investments in green startups by other investors and public investment in green startups. However, in both cases, investors reduce their investments in green startups after receiving the information. We show that this is due to investors largely overestimating the share of investments in green startups by others and due to a crowding out of private investment by investments of public institutions.
    Keywords: Sustainable investments, Venture capital, Belief updating, Discrete choice experiment, Panel data
    JEL: G11 Q56 M14 G02 A13 C25
    Date: 2023
  9. By: Haneda, Shoko; Kurihara, Koki; Ono, Arito
    Abstract: This study examines whether staged project management is beneficial or harmful for making product innovations. Using a unique firm urvey for Japan, we find that firms that employed staged project management had a higher likelihood of introducing new products to the market. Additional estimations show that the positive effect of staged project management on product innovation is stronger when firms provided feedback at the interim stages. In contrast, whether and how firms set milestones was not associated with the likelihood of product innovation. The marginal effect of feedback was larger for new-to-market product innovation than for new-to-firm product innovation, and the feedback from non-R&D organizations within the firm in the initial stages was particularly beneficial for the introduction of new-to-market products. Our findings suggest that staged project management is beneficial for product innovation, but its effectiveness depends on how firms set milestones and feedback as well as the nature of innovation.
    Keywords: staged project management, product innovation, milestones, feedback, exploration, exploitation
    JEL: D22 G32 M11 O31
    Date: 2023

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