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on Entrepreneurship |
| By: | Perez-Alaniz, Mauricio; Lenihan, Helena; Doran, Justin; Rammer, Christian |
| Abstract: | Public financial support for firm-level Research and Innovation (R&I) can generate important socio-economic returns. This is especially true if firms use this support to develop radical innovation, defined as new-to-market goods and services. However, radical innovation is risky, and prone to failure. Therefore, subsidising radical innovation can also generate sub-optimal socio-economic returns (i.e. policy failure). Understanding how public funding for R&I can be allocated in a way that encourages radical innovation, while avoiding policy failure, is crucial. Our paper investigates, for thefirst time, whether public fundingfor R&I generates more radical innovation in firms seeking to innovate by engaging in knowledge areas that are new to them, versus firms seeking to exploit their existing knowledge base. We make this distinction by using a novel approach, based on the knowledge challenges that firms face when innovating. By merging firm-level survey data with administrative data on public funding for R&I in Ireland, we find that subsidising firms seeking to engage in new knowledge areas, can result in more radical innovation and turnover from radical innovation, compared to firms seeking to exploit their existing knowledge base. These are critical insights from theoretical and policymaking perspectives, regarding the allocation of public funding for R&I. |
| Keywords: | radical innovation, public financial support, knowledge base, policy failure, additionality |
| JEL: | D83 O31 O32 O33 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:283615&r=ent |
| By: | Füner, Lena; Berger, Marius; Bersch, Johannes; Hottenrott, Hanna |
| Abstract: | New business formation is a key driver of regional transformation and development. While we know that a region's attractiveness for new businesses depends on its resources, infrastructure, and human capital, we know little about the role of local business networks in promoting or impeding the birth of new firms. We construct local business networks connecting more than 350 million nodes consisting of managers, owners and firms using administrative data on all German businesses from 2002 to 2020. Differentiating between serial and de-novo entrepreneurs, we show a positive but decreasing relation between a region's connectedness and firm entry of serial entrepreneurs. Networks are, moreover, positively linked to firm survival. Relating our findings to a measure of ownership concentration, we show that networks provide additional explanations for regional variation in new business formations. These patterns are robust to synthetic instrumental variable estimations |
| Keywords: | New Firm Formation, Business Networks, Serial Entrepreneurship, RegionalDynamics, Ownership Concentration |
| JEL: | L14 L26 M13 O31 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:283589&r=ent |
| By: | Charlotte Bartels; Simon Jäger; Natalie Obergruber |
| Abstract: | What are the long-term economic effects of a more equal distribution of wealth? We investigate consequences of land inequality, exploiting variation in land inheritance rules that traverse political, linguistic, geological, and religious borders in Germany. In some German areas, inherited land was to be shared or divided equally among children, while in others land was ruled to be indivisible. Using a geographic regression discontinuity design, we first show a more equal land distribution in areas with equal division; other potential drivers of growth are smooth at the boundary and equal division areas were not historically more developed. Today, equal division areas feature higher average incomes and more entrepreneurship which goes in hand with a right-shifted skill, income, and wealth distribution. We show evidence consistent with the more even distribution of land leading to more innovative industrial by-employment during Germany’s transition from an agrarian to an industrial economy that, in the long-run, led to more entrepreneurship. |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10936&r=ent |
| By: | Mühle, Charlotte; Berrones-Flemmig, Claudia Nelly; Hattula, Cansu |
| Abstract: | This paper aims to provide a literature review in the area of Sustainability for start-ups. Even though corporate social responsibility has gained importance throughout recent years, it still needs to be implemented properly in the business world. In addition to that, the focus for sustainability practices still lies heavily on larger organizations. Considering that sustainability is relevant for organizations regardless their size or industry, it is important to investigate it in different contexts. Given that operating sustainable is often connected to higher costs, business models which focus on sustainability are usually designed for bigger companies, which makes it complex or even impossible for start-ups to implement them (Halberstadt & Johnson, 2014, p. 1-2). Throughout the past years, the concern about creating value for not only a business itself but also the people affected by it, society in general and the environment itself, has grown and it clearly shows that the traditional way of corporate reporting is not satisfactory anymore since the needs of several stakeholders are not included (Felber, Campos & Sanchis, 2019, p.1). The balance of the common good aims to visualize not only economic success in forms of the balance sheet total or financial results of a business but also the contributions of an organization to the public good (Butscher, Kasper, Koloo & Riedel, 2021, p. 5). Themain research question of this paper is: What value has the implementation of sustainability management for a start-up regarding their competitive advantage? The results of the literature review show that sustainability management and sustainability-promoting concepts are not only common but should be implemented by any company which plans to operate successfully long-term. The balance of the common good is a helpful tool to improve a firm's operations and convert to a more sustainable business model. Therefore, this literature review can be also helpful for start-ups, which are able to implement sustainability management practices in their businesses. |
| Keywords: | Sustainability, Balance of the common good, Common good economy, start-ups, Germany |
| JEL: | M Q |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iubhbm:284392&r=ent |
| By: | Emiliano Alzate (University of Barcelona,); Oscar Claveria (AQR-IREA, University of Barcelona) |
| Abstract: | We propose a new approach for the visual inspection of the dynamic interplay between several determinants of entrepreneurship and other socioeconomic variables. We focused on the evolution of these variables in 23 countries from 2010 to 2020. First, we ranked the countries according to their growth during the sample period. Second, we clustered the different states by means of a dimensionality-reduction technique that enabled synthesising the ordinal information of the rankings into two dimensions. Finally, countries were projected into a perceptual map according to their scores in both dimensions. We replicated the analysis both for 2020 and for the growth observed during the decade. In both cases, we observed two clusters of countries that roughly correspond to European and Latin American economies. Angola obtained top scores in the two dimensions both in 2020 and during the decade. Regarding the interactions among variables, for 2020 we observed that earlystage entrepreneurship shows a negative association with access to financing and human development. During the decade, we observed a positive link between early-stage entrepreneurship and market dynamism, which in turn showed no connection with human development. These findings somehow suggest that the relative importance of the determinants of entrepreneurship evolved throughout the decade. |
| Keywords: | Entrepreneurship; National-level determinants; Institutional environment; Human development; Inequality; Multivariate analysis JEL classification: L26; L53; O43; C38 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:202309&r=ent |
| By: | Jeong Lee, So; Jin Seo, Su |
| Abstract: | The rapid evolution of digital technologies has reshaped global business, forcing not only large but also small and medium-sized enterprises (SMEs) to embrace digital trade. Nevertheless, many SMEs are struggling to fully implement digital technologies. Against this backdrop, the Republic of Korea has bolstered its support for SMEs, with a focus on human capital development, financing, and research and development. Furthermore, the country has revised its trade regulations and frameworks, placing significant emphasis on digital capacity-building and the alignment of regulations with international standards. Despite the disparities in digital infrastructure and skills, the experience of the Republic of Korea is a useful model for Latin America and the Caribbean, offering invaluable insights for policymakers, businesses and stakeholders seeking to navigate the evolving digital landscape and facilitate SME growth and internationalization. In addition, deeper collaboration could be pursued between the Republic of Korea and the region, in particular in the realms of expanding and enhancing access to information and communications technologies (ICTs), upskilling the workforce, strengthening data protection and broadening the scope of trade to include digital services. |
| Date: | 2024–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col022:68876&r=ent |
| By: | Bartlett, Robert P. (Stanford U) |
| Abstract: | This study examines the standardization of venture capital (VC) contracts since the release of the National Venture Capital Association (NVCA) model charter in 2003. Using nearly 5, 000 charters issued in connection with a startup's Series A financing, the paper finds a significant increase in the model's adoption from less than 3% of charters in 2004 to nearly 85% by 2022. Adoption of the Delaware-oriented charter has also been accompanied by the growing dominance of Delaware incorporation, with Delaware charters growing from 54% of sample charters in 2004 to 100% in 2022. High adoption rates among the six most active law firms servicing U.S. startups largely explain the success of the standardization project. While cosine similarity analysis reveals charters are overall more similar in 2022 than in 2004, the capital structures of Series A startups have also become substantially more complex. Series A charters authorizing only a single class of common stock and a single series of "Series A" preferred stock constituted 86% of charters in 2004 but constituted just 5% of 2022 charters, while 30% of 2022 charters had either 2 classes of common stock or 3 or more series of preferred stock. The additional complexity arises almost entirely from multiple securities reflecting prior seed stage financing. In contrast, efforts to add founder-friendly capital securities--such as dual class common stock and founder preferred stock--have made only modest inroads. Overall, the story of VC contracting over the past two decades is largely one of standardization, albeit with growing complexity around startup capital structures due to the increasing importance of seed stage capital and changing expectations regarding what constitutes a "Series A" startup. |
| JEL: | G24 G32 K22 M13 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:4124&r=ent |
| By: | Adair Morse |
| Abstract: | The provision of venture debt financing to growth-oriented startups which are backed by venture capital (VC) equity has been a bit of a puzzle given the lack of positive cash flows or traditional collateral of such startups. This short paper lays out the hurdles for debt to overcome to be a viable source of finance and casts the three types of venture debt – patent loans, venture leverage, and bridge loans – as solutions to such hurdles, casting the literature in terms of financial innovation. Finally, the paper addresses the risks implied by venture debt and discusses whether the demise of Silicon Valley Bank speaks to whether innovation ecosystem risk transmutes to the financial system through debt and the extent to which innovation ecosystem risk remains unstudied. |
| JEL: | G24 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32183&r=ent |
| By: | Paul Beaumont; Huan Tang; Éric Vansteenberghe |
| Abstract: | This paper investigates the impact of introducing junior unsecured loans via FinTech crowdlending platforms in the small business lending market. Using French administrative data, we find that FinTech borrowers experience a 20% increase in bank credit following FinTech loan origination. We establish causality using a shift-share instrument exploiting firms’ differential exposure to banks’ collateral requirements. The credit expansion only occurs when FinTech borrowers invest in new assets, and Fintech borrowers are subsequently more likely to pledge collateral to banks. This suggests that firms use FinTech loans to acquire assets that they then pledge to banks, thereby increasing their total borrowing capacity. <p> Cet article examine l'impact de l'introduction de prêts non garantis juniors via les plateforme FinTech de crowdlending sur le marché du prêt aux petites entreprises. En utilisant des données administratives françaises, nous constatons que les emprunteurs FinTech connaissent une augmentation de 20% de leur crédit bancaire suite à l'origination du prêt FinTech. Nous établissons la causalité en utilisant un instrument dit shiftshare qui exploite l'exposition différentielle des entreprises aux exigences de garantie des banques. L'expansion du crédit ne se produit que lorsque les emprunteurs FinTech investissent dans de nouveaux actifs, et ces emprunteurs FinTech sont par la suite plus susceptibles de mettre en gage des garanties aux banques. Cela suggère que les entreprises utilisent les prêts FinTech pour acquérir des actifs qu'elles mettent ensuite en gage aux banques, augmentant ainsi leur capacité d'emprunt totale. |
| Keywords: | FinTech, SMEs, small business lending; FinTech, PMEs, prêts aux petites entreprises |
| JEL: | G21 G23 G33 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:decfin:42&r=ent |
| By: | Gilad Sorek |
| Abstract: | I study Schumpeterian growth under Variable Demand Elasticity preferences in a canonical Two-R&D-sector model with both vertical and horizontal innovation. Within this framework, I show how the departure from the traditional CES specification alters both the positive and normative characteristics of the Schumpeterian growth dynamics: (a) for a sufficiently high population growth rate relative to the innovation opportunity, there is a balanced growth path -"BGP"- of drastic innovation where the innovation size is determined by the population growth rate, that is growth is semi-endogenous. However, for a sufficiently low population growth rate, the model economy converges to the limit values of demand elasticity and to fully endogenous growth (b) Along the BGP with innovation size equal to the population growth rate, welfare is maximized with a higher ratio of product varieties per consumer and a lower per-variety output. |
| Keywords: | Schumpeterian Growth; Variable Demand Elasticity; Population Growth and Technological Progress |
| JEL: | O30 O40 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:abn:wpaper:auwp2024-04&r=ent |
| By: | Eren Gürer (Department of Economics, Middle East Technical University, Ankara, Turkey); Pınar Derin Güre (Department of Economics, Middle East Technical University, Ankara, Turkey) |
| Abstract: | In this study, we aim to estimate the labor markups along with the evolution of labor and profit shares in the manufacturing industry of Turkiye over 2007-2021 via an administrative firm-level dataset, Entrepreneurship Information System (EIS), covering the universe of firms and containing detailed balance sheet information. We employ the recently popularized technique, the production function approach developed by De Loecker and Warzynski (2012), to estimate markups. Until 2016, there is a general decline in the level of markups. Concurrently, the gross profit rate slightly increases, and labor share in value added remains relatively stable. However, since 2016, which corresponds to the era of high inflation, there has been a notable surge in gross profit rates alongside a significant decrease in the labor share. The primary catalyst for these post-2016 shifts is attributed to firms positioned in the upper percentiles of the markup distribution, which successfully increased their markups and their share in total value-added during this period. As such, it may be fruitful for the competition policy to delve deeper into the root causes of the post-2016 surge in the markups of the high markup firms as well as the changing market composition. |
| Keywords: | markup, market power. profits |
| JEL: | D22 D43 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:met:wpaper:2401&r=ent |
| By: | Ali-Yrkkö, Jyrki; Kuosmanen, Natalia; Pajarinen, Mika; Ylhäinen, Ilkka |
| Abstract: | Abstract This report examines the resilience of firms during crises from two perspectives: their ability to resist crises and their capacity to recover. The findings reveal that innovative firms are less likely to cease operations than other firms and are more likely to recover faster. The study further supports the notion that a high level of solvency and a strong ability to make interest payments (interest coverage ratio) reduce the risk of a firm exiting the market or experiencing an exceptionally large decline in revenue. |
| Keywords: | Resilience, Crisis, Firms |
| JEL: | F14 L8 |
| Date: | 2024–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:rif:report:146&r=ent |