nep-ent New Economics Papers
on Entrepreneurship
Issue of 2023‒10‒23
eleven papers chosen by
Marcus Dejardin, Université de Namur

  1. Patents, Innovation, and Market Entry By Dominik Jurek
  2. Startup success prediction and VC portfolio simulation using CrunchBase data By Mark Potanin; Andrey Chertok; Konstantin Zorin; Cyril Shtabtsovsky
  3. Reluctant Entrepreneurs: Evidence from China’s SOE Reform By Hanming Fang; Ming Li; Zenan Wu; Yapei Zhang
  4. AI Adoption in America: Who, What, and Where By Kristina McElheran; J. Frank Li; Erik Brynjolfsson; Zachary Krof; Emin Dinlersoz; Lucia Foster; Nikolas Zolas
  5. Financial Inclusion and Barriers to Funding Micro-Entrepreneurs in MENA Countries Prior and During the COVID-19 Pandemic By Imène Berguiga; Philippe Adair
  6. Transforming scandals into entrepreneurial opportunities: The case of the hospitality industry By Cynthia Assaf; Gilles Grolleau; Naoufel Mzoughi
  7. Does Income Inequality Affect Small Firms? By Sebastian Doerr; Thomas Drechsel; Donggyu Lee
  8. What is the social and solidarity economy? A review of concepts By OECD
  9. Empowering communities with platform cooperatives: A catalyst for local development By OECD
  10. Garantir la soutenabilité d’un business model tout en freinant sa croissance : entre la recherche de cohérence et paradoxe By Ilana Bouhafs; Marine Boyaval
  11. AI Adoption and Productivity of Japanese Firms: Spillover and innovation effects (Japanese) By IKEUCHI Kenta; INUI Tomohiko; KIM YoungGak

  1. By: Dominik Jurek
    Abstract: Do patents facilitate market entry and job creation? Using a 2014 Supreme Court decision that limited patent eligibility and natural language processing methods to identify invalid patents, I find that large treated firms reduce job creation and create fewer new establishments in response, with no effect on new firm entry. Moreover, companies shift toward innovation aimed at improving existing products consistent with the view that patents incentivize creative destruction.
    Keywords: intellectual property rights, creative destruction, entry, job creation, Alice decision, natural language processing
    Date: 2023–09
  2. By: Mark Potanin; Andrey Chertok; Konstantin Zorin; Cyril Shtabtsovsky
    Abstract: Predicting startup success presents a formidable challenge due to the inherently volatile landscape of the entrepreneurial ecosystem. The advent of extensive databases like Crunchbase jointly with available open data enables the application of machine learning and artificial intelligence for more accurate predictive analytics. This paper focuses on startups at their Series B and Series C investment stages, aiming to predict key success milestones such as achieving an Initial Public Offering (IPO), attaining unicorn status, or executing a successful Merger and Acquisition (M\&A). We introduce novel deep learning model for predicting startup success, integrating a variety of factors such as funding metrics, founder features, industry category. A distinctive feature of our research is the use of a comprehensive backtesting algorithm designed to simulate the venture capital investment process. This simulation allows for a robust evaluation of our model's performance against historical data, providing actionable insights into its practical utility in real-world investment contexts. Evaluating our model on Crunchbase's, we achieved a 14 times capital growth and successfully identified on B round high-potential startups including Revolut, DigitalOcean, Klarna, Github and others. Our empirical findings illuminate the importance of incorporating diverse feature sets in enhancing the model's predictive accuracy. In summary, our work demonstrates the considerable promise of deep learning models and alternative unstructured data in predicting startup success and sets the stage for future advancements in this research area.
    Date: 2023–09
  3. By: Hanming Fang; Ming Li; Zenan Wu; Yapei Zhang
    Abstract: We study the impact of state-owned enterprises (SOEs) on the quality of entrepreneurship in China. Using long series of firm registration and performance data, we document that the massive SOE downsizing in the late 1990s significantly improved the quality of entrepreneur- ship. Compared with entrepreneurs in other time periods, firms founded by the reluctant entrepreneurs induced by the SOE layoffs have better performances. To explain these results, we present a simple model of occupational choices where high-skilled individuals obtain a higher value than low-skilled individuals from the benefits offered by SOE jobs, leading them to select into the SOE sector in the pre SOE reform era. When the SOE sector was downsized, some high-skilled SOE employees were reluctantly unleashed into entrepreneurship. We also provide corroborating evidence for other implications of the model.
    JEL: J08 J28 J68 L26
    Date: 2023–09
  4. By: Kristina McElheran; J. Frank Li; Erik Brynjolfsson; Zachary Krof; Emin Dinlersoz; Lucia Foster; Nikolas Zolas
    Abstract: We study the early adoption and diffusion of five AI-related technologies (automated-guided vehicles, machine learning, machine vision, natural language processing, and voice recognition) as documented in the 2018 Annual Business Survey of 850, 000 firms across the United States. We find that fewer than 6% of firms used any of the AI-related technologies we measure, though most very large firms reported at least some AI use. Weighted by employment, average adoption was just over 18%. Among dynamic young firms, AI use was highest alongside more-educated, more-experienced, and younger owners, including owners motivated by bringing new ideas to market or helping the community. AI adoption was also more common in startups displaying indicators of high-growth entrepreneurship, such as venture capital funding, recent innovation, and growth-oriented business strategies. Adoption was far from evenly spread across America: a handful of “superstar” cities and emerging technology hubs led startups’ use of AI. These patterns of early AI use foreshadow economic and social impacts far beyond its limited initial diffusion, with the possibility of a growing “AI divide” if early patterns persist.
    Date: 2023–09
  5. By: Imène Berguiga; Philippe Adair
    Date: 2023
  6. By: Cynthia Assaf (CERAG - Centre d'études et de recherches appliquées à la gestion - UGA [2016-2019] - Université Grenoble Alpes [2016-2019]); Gilles Grolleau (CEREN - Centre de Recherche sur l'ENtreprise [Dijon] - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Naoufel Mzoughi (ECODEVELOPPEMENT - Unité de recherche d'Écodéveloppement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Scandals are frequently considered as detrimental for involved businesses. When hotels serve as a backdrop and are collateral victims of scandals caused by high-profile individuals, we argue that entrepreneurially minded executives can envision scandals as an unexpected opportunity, likely to bring good news to the involved hotels. Tourism businesses offer supportive evidence. In a constructivist perspective, scandals and their consequences do not result from the transgression seriousness, but are socially constructed. Entrepreneurially minded individuals influence this social construction and seek to transform scandals into entrepreneurial opportunities. We analyse whether and how hospitality executives can channel the a priori destructive forces involved in a scandal eruption towards a direction aligned with their own interests. We identify three potential mechanisms by which hospitality executives can make the best of scandals, namely, by increasing exposure and attracting attention at a low cost, offering a basis for differentiation and innovation and generating useful marketing data. We identify some conditions that make this outcome more likely. Rather than just avoiding or containing the scandal consequences, we propose to equip hospitality executives with a scandal management plan that explicitly considers the bright side of scandals.
    Keywords: constructivism, hospitality, hotels, transgression, tourism, entrepreneurs, innovation
    Date: 2023–03–01
  7. By: Sebastian Doerr; Thomas Drechsel; Donggyu Lee
    Abstract: The share of income going to high-income households has increased significantly in the United States in recent decades. In 1980, the average income share of earners in the top 10 percent was around 30 percent. However, by 2015, it had surpassed 45 percent. The employment share of small firms has also declined, with a decrease of approximately 5 percentage points over the same period. In this post, we use variation across states to show a correlation between these two developments, with states having the greatest increase in the upper income share also tending to be those with the biggest job creation declines in small firms compared to large firms. One explanation for this correlation is that the increase in the income share of the highest income earners reduced deposits in small and medium-size banks from what they otherwise would have been. In doing so, this shift in income reduced the available credit for small firms, putting them at a disadvantage relative to large firms.
    Keywords: income inequality; job creation; small firms; business dynamism
    JEL: D31 G21
    Date: 2023–10–05
  8. By: OECD
    Abstract: Produced as part of the OECD Global Action on Promoting Social and Solidarity Economy Ecosystems, funded by the European Union’s Foreign Partnership Instrument, this paper provides a framework to clarify the core notions of the social and solidarity economy, along with social economy, social enterprise, social innovation and other related notions. The objective is to explain what they are and understand how these notions have evolved in recent decades. It also aims to capture and document the great diversity within social and solidarity economy organisations in terms of purposes, legal entities, business models and practices to help better characterise the “population” of social and solidarity economy entities.
    Keywords: conceptual framework, cooperative, local development, non profit, social and solidarity economy, social economy, social enterprise, social entrepreneurship, social innovation
    JEL: L33 L31
    Date: 2023–09–28
  9. By: OECD
    Abstract: This policy paper explores the contribution of platform cooperatives to local development as an alternative model to conventional digital platforms. It considers their role in reducing potential negative effects of the digital transition on local communities and places, as well as the new opportunities they present to provide greater quality of life for local residents. The paper introduces the main features of platform cooperatives, explores their contributions to local development and identifies the challenges to their emergence and expansion. It then provides policy orientations that could support the development of platform cooperatives and enhance their contributions to local development.This paper was produced as part of the OECD Global Action on Promoting Social and Solidarity Economy Ecosystems, funded by the European Union’s Foreign Partnership Instrument.
    Keywords: cooperative, local development, non-profit, social and solidarity economy, social economy, social enterprise, social entrepreneurship, social innovation
    JEL: L33 L31
    Date: 2023–10–04
  10. By: Ilana Bouhafs (LUMEN - Lille University Management Lab - ULR 4999 - Université de Lille); Marine Boyaval (University of Lille, LUMEN - Lille University Management Lab - ULR 4999 - Université de Lille)
    Abstract: The aims of this paper is to explore and understand the development models induced by alternative entrepreneurial projects, more specifically the paradoxes that arise from the opposition between the genesis of the entrepreneurial project oriented towards a non commercial goal and the unexpected development of it, leading entrepreneurs to constantly define and redefine the notion of growth of their entrepreneurial project, between sustainability, ethics, market interest and the desire to change things on a large scale. For this we have observed the mechanisms put in place by entrepreneurs to maintain sustainability within their project while supporting their growth-decay. We propose to deliver here the first results, focusing on the understanding of the modes of financing and development within the framework of social entrepreneurship in the textile sector.
    Abstract: Ce travail vise à explorer et comprendre les modèles de développement induits par des projets entrepreneuriaux dits alternatifs, plus spécifiquement les paradoxes éventuels entre genèse projet entrepreneurial relativement orienté vers un but non-lucratif et le développement parfois inattendu de celui-ci. Celles-ci amènent les entrepreneurs à constamment définir et redéfinir la notion de croissance de leur projet entrepreneuriaux, entre durabilité, éthique, dynamiques de marché et volonté de changement structurel de la société Nous proposons ici de délivrer les premiers résultats d'une étude de ces paradoxes. Nous avons à cette occasion observé les mécanismes mis en place par les entrepreneurs sociaux du secteur textile pour penser un mode de développement et des modes de financement compatibles avec la soutenabilité de leur business model.
    Keywords: Entrepreneuriat alternatif, Entrepreneuriat social, croissance, business model soutenable
    Date: 2022–11–17
  11. By: IKEUCHI Kenta; INUI Tomohiko; KIM YoungGak
    Abstract: The use of Artificial Intelligence (AI) in business has been expanding in recent years, and there is growing interest in the mechanisms and extent to which AI affects firm performance. In this study, we analyze the impact of firms’ introduction of AI on their performance using the "Basic Survey of Japanese Business Structure and Activities" of the Ministry of Economy, Trade and Industry (METI), Japan, TSR's business-to-business transaction data, press release data from NIKKEI, and IIP patent database 2020. In addition to the introduction of AI-related patents generated by a company's own R&D activity, we also try to analyze the impact of the introduction of AI within their trading partners (suppliers and customers). In addition to the efficiency gains in production processes (process innovation), the study analyzes the creation of new products and improvements in existing products (product innovation). The main results from the analyses are as follows. (1) AI-related patents positively correlate with firm productivity and have a stronger relationship with productivity than non-AI patents. (2) The relationship between AI-related patents and firm productivity strengthened even after 2009 when the number of patent applications began to decline. (3) AI-related patents mainly contribute to the productivity of firms with productivity in middle or higher status within the industry, while AI-related patents have a negative impact on the productivity of firms with low productivity. (4) We cannot confirm that the introduction of AI by a firm's business partner has a positive or negative spillover effect on the productivity of that firm. (5) AI-related patents are strongly related to product innovation, process innovation, and technological innovation of the firms, and especially high-quality AI-related patents have a mid-term and important impact on innovation.
    Date: 2023–09

This nep-ent issue is ©2023 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.