nep-ent New Economics Papers
on Entrepreneurship
Issue of 2023‒11‒06
eleven papers chosen by
Marcus Dejardin, Université de Namur

  1. Identifying Nascent High-Growth Firms Using Machine Learning By Stephanie Houle; Ryan Macdonald
  2. The self-employment trap? By Robert Blackburn; Stephen Machin; Maria Ventura
  3. Are Senior Entrepreneurs Happier than Who? The Role of Income and Health By Michael Fritsch; Alina Sorgner; Michael Wyrwich
  4. Destructive Digital Entrepreneurship By Naudé, Wim
  5. Are Immigrants Particularly Entrepreneurial? Policy Lessons from a Selective Immigration System By Green, David A.; Liu, Huju; Ostrovsky, Yuri; Picot, Garnett
  6. Unlock the Change. A Literature Review on Barriers Limiting SME Sustainable Transition. By Elisa Errico
  7. Credit Supply Shocks and Firm Dynamics: Evidence from Brazil By Samuel Bazzi; Marc-Andreas Muendler; Raquel F. Oliveira; James Rauch; James E. Rauch
  8. Unintended Consequences of Youth Entrepreneurship Programs: Experimental Evidence from Rwanda By Blimpo, Moussa P.; Pugatch, Todd
  9. Behavioral Intentions to use Artificial Intelligence Among Managers in Small and Medium Enterprises By Jameel, Alaa S.; Harjan, Sinan Abdullah; Ahmad, Abd Rahman
  10. Disparate Impacts of Broadband on Women and Minorities: The Case of Broadband in the U.S. By Jamison, Mark A.; Wang, Peter
  11. Understandings of the AI business ecosystem in South Korea: AI startups' perspective By Nam, Jinyoung; Kim, Junghwan; Jung, Yoonhyuk

  1. By: Stephanie Houle; Ryan Macdonald
    Abstract: Predicting which firms will grow quickly and why has been the subject of research studies for many decades. Firms that grow rapidly have the potential to usher in new innovations, products or processes (Kogan et al. 2017), become superstar firms (Haltiwanger et al. 2013) and impact the aggregate labour share (Autor et al. 2020; De Loecker et al. 2020). We explore the use of supervised machine learning techniques to identify a population of nascent high-growth firms using Canadian administrative firm-level data. We apply a suite of supervised machine learning algorithms (elastic net model, random forest and neural net) to determine whether a large set of variables on Canadian firm tax filing financial and employment data, state variables (e.g., industry, geography) and indicators of firm complexity (e.g., multiple industrial activities, foreign ownership) can predict which firms will be high-growth firms over the next three years. The results suggest that the machine learning classifiers can select a sub-population of nascent high-growth firms that includes the majority of actual high-growth firms plus a group of firms that shared similar attributes but failed to attain high-growth status.
    Keywords: Econometric and statistical methods; Firm dynamics
    JEL: C55 C81 L25
    Date: 2023–10
  2. By: Robert Blackburn; Stephen Machin; Maria Ventura
    Abstract: The seventh LSE-CEP survey of the self-employed was undertaken in June 2023. The results revealed that the self-employed are still in the doldrums and their incomes and activity have not resumed to pre-pandemic levels. The cost of living crisis has been exacerbated by the increase in interest rates, which has hit homeowner self-employed particularly hard. While many among them express willingness to move towards positions in salaried employment, they are often prevented to do so by the scarcity of suitable jobs or the lack of adequate skills or training. The hardships they are facing is also affecting their health, with one in three self-employed displaying "Moderate" to "Severe" mental health issues. Nevertheless, their discontent is likely to be reflected in the next general election outcomes, as many self-employed are turning from voting Conservative to Labour.
    Keywords: self-employed, regular employment, energy costs, post pandemic, cost of living crisis
    Date: 2023–09–25
  3. By: Michael Fritsch (Friedrich Schiller University Jena, Germany); Alina Sorgner (John Cabot University Rome, Italy, Institute of Labor Economics (IZA), and Kiel Institute for the World Economy (IfW Kiel)); Michael Wyrwich (University of Groningen, The Netherlands, and Friedrich Schiller University Jena, Germany)
    Abstract: We propose an extension of the standard occupational choice model to analyze the life satisfaction of senior entrepreneurs as compared to paid employees and particularly retirees in Germany. The analysis identifies income and health status as main factors that shape the relationship between occupational status and life satisfaction. Senior entrepreneurs enjoy higher levels of life satisfaction than retirees and senior paid employees. This higher life satisfaction is mainly due to their higher income. Physical and mental health play a crucial role in determining both an individual’s occupational status and their overall life satisfaction. We find that senior self-employed report to be healthier compared to other groups of elderly individuals. However, when controlling for health, retirees exhibit an even higher level of life satisfaction compared to their self-employed counterparts. Heterogeneity analysis of various types of senior entrepreneurs and senior paid employees confirms this general pattern. In addition, we find some evidence indicating that senior entrepreneurs may compromise their leisure time, a main asset of retired individuals. Implications for research, policy, and practitioners are discussed.
    Keywords: Senior entrepreneurship, health conditions, well†being, life satisfaction, age
    JEL: L26 I31 J10 D91
    Date: 2023–10–20
  4. By: Naudé, Wim (RWTH Aachen University)
    Abstract: This paper provides a selective overview of destructive digital entrepreneurship. The concept is defined and elaborated in the context of the digital revolution post World War II. It is pointed out that the digital revolution was captured by the corporate sector: the incentives for unproductive and destructive entrepreneurship to subvert the digital revolution, was just too strong. Ten subsequent digital dystopias - adverse outcomes resulting from destructive digital entrepreneurship - are discussed. These are digital platform capitalism, tech exceptionalism, the surveillance state, the digital poorhouse, digital divides, the loss of sense-making, digital addiction, digital depression, cybercrime, and awful AI. The paper concludes by exploring how institutional and regulatory frameworks can best reduce the risks from destructive digital entrepreneurship.
    Keywords: digital entrepreneurship, digitalization, dystopia, institutions, surveillance state, digital platforms
    JEL: L26 L21 L53 O40
    Date: 2023–09
  5. By: Green, David A. (University of British Columbia, Vancouver); Liu, Huju (Statistics Canada); Ostrovsky, Yuri (Statistics Canada); Picot, Garnett (Institute for Research on Public Policy, and Research and Evaluation Branch, Immigration, Refugees and Citizenship Canada)
    Abstract: Firm ownership is a dening feature of immigrant adaptation: 41% of immigrants own a firm at some point in their first 10 years post-arrival. We use Canadian data linking immigrant arrival records with individual and firm tax data to examine the process of entering firm ownership for immigrants. Higher immigrant firm ownership rates are mainly due to nonincorporated firm ownership, which looks like a last resort. Human capital plays no role in the opening of preferable, incorporated firms. Immigrants are not more entrepreneurial in terms of opening incorporated firms with employees, and standard policy levers appear to have limited effects.
    Keywords: immigration, entrepreneurs, human capital
    JEL: J61
    Date: 2023–10
  6. By: Elisa Errico (Department of Social Sciences and Economics, Sapienza University of Rome)
    Abstract: Since the publication of the report Our Common Future of the World Commission on Environment and Development (Brundtland, 1987) governments around the world have started a reflection upon the social and environmental damages caused by a growth-oriented economic system which neglects our natural ecosystem's boundaries (Shaper, 2002; Chofreh et al., 2020; Goni et al., 2021). This has led also to the definition of sustainable development goals (SDGs) in the 2030 Agenda of United Nation, in which businesses are called to give their contribution towards sustainability (Cantele & Zardini, 2018) considering their environmental, social and economic impact (Elkington, 1998). In this scenario, Smes represent 99.8% of companies (European Commission, 2019; Neri et al., 2021) and because of their overall socio-economic and environmental impacts, play a fundamental role in order to achieve SDGs. Through a systematic literature review (SLR) on current studies, this study seeks to establish a comprehensive body of knowledge on the particular barriers to sustainability for SMEs. Thematic analysis method (TA) was used to identify key themes and classify them into four major types of barriers for SMEs (organizational constraints, individual features and beliefs, market conditions, and institutional environment). The last paragraph discusses these findings to identify under-investigated areas and proposes future paths of research, and draws the limitations of this study.
    Keywords: SME; barrier; sustainability transitions; systematic review; thematic analysis
    JEL: L25 M13 M14
    Date: 2023–05
  7. By: Samuel Bazzi; Marc-Andreas Muendler; Raquel F. Oliveira; James Rauch; James E. Rauch
    Abstract: We explore how financial constraints distort the entry decisions among otherwise productive entrepreneurs and limit growth of promising young firms. A model of liquidity-constrained entrepreneurs suggests that the easing of credit constraints can induce more entry of firms with greater long-run growth potential than the easing of conventional entry barriers would bring about. We explore this growth mechanism using a large-scale program to expand the supply of credit to small and medium enterprises in Brazil. Local credit supply shocks generate greater firm entry but also greater exit with no effect on short-run employment growth in the formal sector. However, credit expansions increase average capability among entering firms, which enter at larger size, survive longer, and grow faster. These firm dynamics are more pronounced in areas with weaker credit markets ex ante and consistent with local bank branches using cheap targeted credit lines to expand lending more broadly. Our findings provide new evidence on the general equilibrium effects of credit supply expansions.
    Keywords: credit constraints, entry barriers, growth barriers, startups
    JEL: D21 D22 D92 L25 L26 M13 O12
    Date: 2023
  8. By: Blimpo, Moussa P.; Pugatch, Todd
    Abstract: The persistently high employment share of the informal sector makes entrepreneurship a necessity for youth in many developing countries. We exploit exogenous variation in the implementation of Rwanda's entrepreneurship education reform in secondary schools to evaluate its effect on student economic outcomes up to three years after graduation. Using a randomized controlled trial, we evaluated a three-year intensive training for entrepreneurship teachers, finding pedagogical changes as intended and increased entrepreneurial activity among students. In this paper, we tracked students following graduation and found that increased entrepreneurship persisted one year later, in 2019. Students from treated schools were six percentage points more likely to be entrepreneurs, an increase of 19 percent over the control mean. However, gains in entrepreneurship faded after three years, in 2021. Employment was six percentage points lower in the treatment group. By some measures, income and profits were lower in the treatment group, with no robust differences in these outcomes overall. Lower incomes and profits were concentrated among marginal students induced into entrepreneurship by the program. Youth entrepreneurship programs may therefore steer some participants away from their comparative advantage. Nonetheless, the program increased university enrollment, suggesting the potential for higher long run returns.
    Keywords: entrepreneurship education, youth employment, secondary school, pedagogy, randomized controlled trials, Rwanda
    JEL: I25 I26 I28 J24 O12 O15
    Date: 2023
  9. By: Jameel, Alaa S. (Cihan University-Erbil); Harjan, Sinan Abdullah; Ahmad, Abd Rahman
    Abstract: The purpose of this study is to examine the measure the Behavioral intentions (BI) to use artificial intelligence (AI) among managers in small and medium enterprises. the targets population of this study was the SMEs managers in Baghdad City after ensuring that the managers were using some form of AI. 184 valid questionnaires have been analyzed by Smart-PLS. The results indicated that performance expectancy (PE), Social influence (SI), Facilitating Conditions (FC), and Top management support (TMS) have a positive and significant impact on behavioral intention to use AI among the managers in SMEs; on the other hand, the effort expectancy (EE) has an insignificant impact on behavioral intention to use AI among the managers.
    Date: 2023–07–10
  10. By: Jamison, Mark A.; Wang, Peter
    Abstract: We examine broadband's impacts on entrepreneurship, income, and employment in general and separately by gender and for whites versus minorities in the U.S. for 2000 - 2019. Using Current Population Surveys and matching, we find that broadband access significantly impacted the decision to be self-employed until at least 2012. Broadband access also reduced unemployment and increased earnings. It generally benefitted women and minorities more than men and whites, but not always. Broadband was particularly effective for minority males and females during the years up to and immediately following the Great Recession. These findings are consistent with the idea that broadband may dampen gender and racial bias. The effects of broadband generally diminish as adoption increases, consistent with the belief that late adopters benefit less than early adopters.
    Keywords: broadband, entrepreneurship, discrimination, income, unemployment
    JEL: L86 L26 J71 L53
    Date: 2023
  11. By: Nam, Jinyoung; Kim, Junghwan; Jung, Yoonhyuk
    Abstract: Artificial intelligence (AI) startups are utilizing artificial intelligence technology to produce novel solutions across a multitude of sectors, becoming key players in the AI business ecosystem, signifying AI business networks consisting of technology, business applications, and various industry sectors. Particularly noteworthy is the substantial surge in the initiation and investment in AI startups within South Korea. To gain insight into the AI business ecosystem, this study explores how the ecosystem is collectively understood from AI startups' perspectives in South Korea. We conducted semi-structured interviews with 16 CEOs and managers in AI startups in South Korea. This study conducted a core-periphery analysis of the social representation of the AI business ecosystem. By doing so, it bridges an existing knowledge gap and enriches the body of research related to the AI business ecosystem, as well as the current opportunities and challenges it faces. Our findings not only inform and guide practitioners, governments, and businesses alike, but also suggest that continuous discussion among government agencies, large tech companies, and AI startups is crucial for establishing a more sustainable AI business ecosystem.
    Keywords: Artificial intelligence (AI), AI startups, AI business ecosystem, Social representations theory
    Date: 2023

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