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on Entrepreneurship |
| By: | Henrekson, Magnus (Research Institute of Industrial Economics (IFN),); Johansson, Dan (Örebro University School of Business) |
| Abstract: | The neo-Schumpeterian growth models, which appeared in the early 1990s, have ostensibly reintroduced the entrepreneur into mainstream growth theory. However, we show that by ignoring genuine uncertainty and by assuming that profits follow an objectively true and ex ante known probability distribution, the entrepreneur is made redundant. Thus, the theory fails to exhaustively explain innovation, the role of ownership competence, profits, the function of financial markets, wealth and income distribution, and, ultimately, economic growth. These shortcomings risk leading to erroneous or overly narrow policy conclusions by overestimating the importance of supporting R&D investments. Rather, the presence of genuine uncertainty forms a fundamental theoretical basis for the importance of new venture creation as a source of innovation-driven growth; entrepreneurs must establish and expand firms to capture the subjectively perceived profit opportunities. Therefore, tax policy is decisive for the commercialization and dissemination of innovations by providing incentives to uncertainty-bearing, not only for entrepreneurs, but also for intrapreneurs and financiers taking an active part in the governance and development of firms based on innovations characterized by genuine uncertainty. Furthermore, taxation can distort the evolutionary selection of innovations and firms, for instance, by taxing owners and firms differently. |
| Keywords: | creative destruction; economic growth; entrepreneur; entrepreneurship policy; innovation; judgment; Knightian uncertainty |
| JEL: | B40 O10 O30 |
| Date: | 2025–01–02 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:oruesi:2025_001 |
| By: | Marc Bourreau; Axel Gautier |
| Abstract: | In this paper, we consider two platforms that compete for the development of a new product to integrate into their ecosystems. The new product can be developed either inhouse by the platforms or by an independent startup active only in the technology market. The presence of the startup affects the platforms’ R&D efforts through an insurance effect, which reduces the cost of failure in innovation, and a competition effect, which diminishes the returns to innovation. The magnitude of these effects depends on the attitude of the competition authorities towards the acquisition of the startup by one of the platforms. We show that allowing acquisitions stimulates platform innovation, but at the cost of a more concentrated market structure. We also compare the funding of the startup by independent venture capitalists or by the platforms themselves, and investigate how the merger regime influences the direction of the startup’s innovation. |
| Keywords: | innovation, startup acquisitions, mergers, digital, big tech, competition policy |
| JEL: | D43 G34 K21 L40 L86 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11569 |
| By: | Pylak, Korneliusz; Mickiewicz, Tomasz; Kitsos, Tasos |
| Abstract: | Our study explores the factors influencing the creation and closure of firms in urban micro-spaces, highlighting the relationship between Knowledge-Intensive Business Services (KIBS) and non-KIBS sectors. Employing 2007-2019 firm-level data from Warsaw, the capital of Poland, we uncover overlooked micro-geographical and sectoral patterns. We reveal spatial and sectoral interdependencies, highlighting the cross-sectoral effects of density and age of incumbent firms on new firm creation and closure. Our findings highlight the potential of policies supporting KIBS to generate positive multiplier effects, cultivating entrepreneurial ecosystems while accounting for micro-geographical contexts. |
| Date: | 2024–12–03 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:emv45 |
| By: | Drydakis, Nick (Anglia Ruskin University) |
| Abstract: | In the contemporary business landscape, digital competencies have become a crucial factor for small enterprises to remain competitive and thrive. The present study examines how a business applications training, aiming to boost small enterprises' digital competencies, affects their financial performance. The business applications training took place in Greece, Cyprus, and the United Kingdom. Longitudinal data were collected between 2021 and 2023. The study revealed a positive association between digital competencies and the revenue growth rate of enterprises. Moreover, it was observed that following business applications training, the impact of digital competencies on the revenue growth rate strengthened compared to before the training. This pattern persisted across all three regions, underscoring the robustness of the estimated outcome. The study indicates that training that boosts enterprises' digital competencies could facilitate their ability to adapt to changing market conditions and stay competitive, contributing to increased financial performance. Small enterprises that develop and leverage digital competencies could be better positioned to seize growth opportunities, enhance efficiency, and adapt to the evolving business landscape. |
| Keywords: | financial performance, business applications, small enterprises, digital competencies, revenue growth, immigrant entrepreneurship |
| JEL: | D25 O14 M53 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17516 |
| By: | Marc-Andreas Muendler; James E. Rauch; Sergio Mikio Koyama |
| Abstract: | New firms do not yet have employees who can aid recruiting by referrals, but entrepreneurs can recruit workers they know to their startups—in effect making their own referrals. We consider new firms in Brazil’s formal sector founded between 2002 and 2014, for which at least one founding owner can be traced to previous formal employment. We find that 35.1 percent of new firms with at least five employees hire one or more coworkers from a founding owner’s last employer in their first year of operation, and that 9.2 percent of first-year hires at new firms were coworkers at a founding owner’s last employer. The former coworkers most likely to join a founding owner’s new firm are those who, at their last employer, worked in the same plant as a founding owner, had long overlap with a founding owner, were classified in the same industry or occupation as a founding owner, and were hired at roughly the same time as a founding owner. Controlling for observable human capital and new firm fixed effects, former coworkers earn eight percent higher initial wages at new firms and are six percentage points less likely to separate before a new firm’s second year of operation. We find that the coworker wage premium diminishes with tenure by 0.5 percentage points per year and the coworker separation premium diminishes with tenure by 2.0 percentage points per year. |
| Keywords: | job referrals, business formation, entrepreneurship, employee spinoffs, firm performance |
| JEL: | J63 L26 J24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11520 |
| By: | Nataliia Kriuchkova; Vyacheslav Truba; Iryna Nyenno |
| Abstract: | Understanding how economic factors affect a business is essential to making smart decisions and leading a business. However, this starts with understanding the role of internal and external factors and how they play out in a business. A start-up is no exception, although it is hard to call it a full-fledged business; a start-up is a project of any kind that is just starting to develop in the market. For the successful implementation of a new project, a certain amount of start-up capital is required. No start-up can be implemented without appropriate financial injections, without attracting investments that are quite risky and require significant attention from the investor at the investment planning stage. Almost all start-up projects are financed by investors who are willing to invest their own capital in the development of a promising project. In general, any project begins with an idea that will form the basis of a new business. If an entrepreneur manages to offer consumers a high-quality product that has no analogues in the market but is in demand, his success will be guaranteed. But to achieve this, a good idea needs to be properly developed, involving specialised professionals and investors. Venture capital funds and investment companies that invest in innovative projects are engaged in the development of such ideas, and the state stimulates these processes through a system of mechanisms and levers of economic development of business. Given the significant importance of start-ups for the economic growth of the State, the purpose of the study is to determine the role of start-ups in stimulating innovative economic growth, taking into account the challenges and risks posed by the environment. To achieve this goal, the methods of statistical data analysis, generalisation of scientific sources, specification of opportunities and risks created by start-up projects for economic systems were used. In the process of developing the study, it was found that start-ups play an important role in ensuring economic growth opportunities for the entire state, since creating favourable conditions for the development of small businesses and stimulating investment activity in innovative projects can lead to a significant increase in tax revenues to budgets of various levels in the future, but an important aspect of stimulating start-up projects is risk assessment and prudent investment in such projects. |
| Keywords: | barriers to market entry, innovation ecosystem, scaling strategies, technology commercialisation, venture funding |
| Date: | 2025–01–06 |
| URL: | https://d.repec.org/n?u=RePEc:ete:msiper:756676 |
| By: | Audrey Guo (Santa Clara University); Melanie Wallskog (Duke University) |
| Abstract: | How costly are taxes for young firms? In this paper, we demonstrate that even small payroll taxes significantly distort entry, growth, and hiring decisions. First, leveraging cross-sectional variation in the taxes faced by new employers, we find that higher taxes discourage new firms from hiring their first workers, with an elasticity of the number of new employers to taxes of -0.1. Second, studying changes in taxes after entry, we find that higher taxes lead more firms to exit, while also reducing employment for those who survive and leading some firms to avoid taxes by using non-taxable contract labor. |
| Keywords: | firm entry, young firms, labor costs, unemployment insurance |
| JEL: | H25 H71 L26 M13 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:upj:weupjo:24-410 |
| By: | Domenico Delli Gatti; Roberta Terranova; Enrico Maria Turco |
| Abstract: | Can standard measures of industrial policy such as R&D subsidies or financial support for machine replacement be effective tools to reverse the current pattern of increasing market power and declining business dynamism? To answer this question we explore the effects of various industrial policy instruments in a macroeconomic agent-based model calibrated to reproduce the decline in US business dynamism over the last half-century. Our results indicate that R&D subsidies alone are insufficient to address the underlying causes of declining dynamism. They become effective, however, when combined in a policy mix with knowledge diffusion policies, particularly those favoring advanced technology adoption by small firms. In this case, industrial policy fosters growth by closing the productivity gap between leaders and laggards, and thereby curbing market power. These findings suggests a two-pronged approach to the design of industrial policy, integrating firm-level subsidies with knowledge diffusion measures and therefore ensuring that innovation and competition policies advance together. |
| Keywords: | macroeconomic dynamics, innovation, knowledge diffusion, market power, industrial policy, agent-based model |
| JEL: | C63 E32 L10 L52 O31 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11544 |
| By: | Brown, J. David (U.S. Census Bureau); Davis, Steven J. (Hoover Institution); Foster, Lucia (U.S. Census Bureau); Haltiwanger, John C. (University of Maryland); Sabelhaus, John (Brookings Institution) |
| Abstract: | The Census Bureau's Longitudinal Business Database (LBD) underpins many studies of firm-level behavior. It tracks longitudinally all employers in the nonfarm private sector but lacks information about business financing and owner characteristics. We address this shortcoming by linking LBD observations to firm-level data drawn from several large Census Bureau surveys. The resulting Longitudinal Employer, Owner, and Financing (LEOF) database contains more than 3 million observations at the firm-year level with information about start-up financing, current financing, owner demographics, ownership structure, profitability, and owner aspirations – all linked to annual firm-level employment data since the firm hired its first employee. Using the LEOF database, we document trends in owner demographics and financing patterns and investigate how these business characteristics relate to firm-level employment outcomes. |
| Keywords: | longitudinal business database, employment outcomes, profitability, owner characteristics, financing sources |
| JEL: | D22 G32 L26 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17517 |
| By: | Challoumis, Constantinos |
| Abstract: | Startups in artificial intelligence are transforming the landscape of the global economy, serving as laboratories of innovation and productivity. These enterprises are not merely creating new technologies; they are reimagining entire industries, driving efficiency, and enhancing human capabilities. In the 21st century, AI startups have emerged as pivotal players in bolstering economic growth, shaping labor markets, and influencing societal progress. This post explores into the remarkable impact of AI startups, exploring their role as catalysts for change and their implications for the future of economic development. |
| Keywords: | AI startups, economy, 21st Century, Economocracy, Cycle of Money |
| JEL: | B00 D00 D30 Z1 Z10 Z13 Z18 |
| Date: | 2024–12–09 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122923 |
| By: | Batabyal, Amitrajeet; Kourtit, Karima; Nijkamp, Peter |
| Abstract: | This paper introduces a model of political competition under distinct institutional regimes to trace the economic performance of what we call “techno-creative places.” Specifically, we analyze how political competition in high-tech places that are creative in the sense of Richard Florida affects fiscal (tax) policy and consequent economic outcomes. There are three stylized groups of actors in our analysis: laborers or workers, techno-creative class members or entrepreneurs, and the elites who make the political decisions. We study two broad institutional-economic scenarios. In the first (second) scenario, the likelihood of political power shifting permanently from the elites to entrepreneurs is an increasing (decreasing) function of the net income of a representative techno-creative entrepreneur. Our study addresses the institutional implications of both scenarios and then comments on the implications of these two scenarios for the welfare of the elites and the techno-creative entrepreneurs. |
| Keywords: | Techno-Creative Class, Elite, Entrepreneur, Political Competition, Tax Policy |
| JEL: | H21 R11 |
| Date: | 2024–07–23 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122778 |
| By: | Wided Mattoussi (University of Tunis); Ameny Ben Sayari (University of Tunis); Younes Ben Zaied (EDC Paris Business School, Paris) |
| Abstract: | The COVID-19 pandemic has had a substantial impact on the global economy, particularly small and medium-sized enterprises (SMEs). This empirical study examines the effects of the pandemic on credit rationing for SMEs in Tunisia using a panel firm-level dataset spanning from 2014 to 2020. To analyze these effects, we employ the conditional difference-indifferences (CDiD) approach, which extends the commonly used difference-in-differences evaluation method. Our findings indicate that despite government support measures for SMEs, the COVID-19 pandemic has led to increased rates of credit rationing. We further explore heterogeneity in these effects based on criteria like corporate indebtedness and investment levels, identifying the most affected categories. Our results highlight that SMEs heavily reliant on suppliers, those with significant reliance on the banking system, and low financial resilience encounter more severe credit rationing compared to other groups. Additionally, credit rationing is more pronounced in the secondary sector compared to the tertiary sector. |
| Date: | 2024–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1716 |
| By: | Gries, Christin-Isabel; Tenbrock, Sebastian; Strube Martins, Sonia; Wernick, Christian |
| Abstract: | Bei der Nutzung digitaler Anwendungen ist ein deutlicher Nachholbedarf des Mittelstands gegenüber Großunternehmen feststellbar, der innerhalb des heterogenen KMUSegments und in verschiedenen Anwendungsclustern wiederum unterschiedlich stark ausgeprägt ist. Vor diesem Hintergrund werden in der vorliegenden Studie über die WIK KMU Nachfragesegmentierung branchenübergreifend Unternehmen nach ihrem IKTNutzungsverhalten in unterschiedliche Nutzersegmente eingeteilt und ihre Anforderungen an die Konnektivität abgeleitet. Als relevante Nutzersegmente werden "Digitale Einsteiger", "Digitale Chancennutzer", "Lieferkettengetriebene Digitalisierer", "Digitale Experten" und "Digitale Industrie-Champions" identifiziert. "Digitale Einsteiger" bilden heute die mit Abstand größte Nutzergruppe. Diese nutzen insbesondere Basisanwendungen im Bereich Web- und App-Technologien. "Digitale Chancennutzer" haben das Potential digitaler Anwendungen zur Stärkung ihrer Wettbewerbsfähigkeit erkannt und setzen diese gezielt und proaktiv ein. Auch "Lieferkettengetriebene Digitalisierer" nutzen intensiv IKT-Anwendungen, agieren dabei jedoch eher reaktiv auf die Vorgaben ihrer vor- und nachgelagerten Geschäfts-partner. Eine intensive Nutzung über alle Anwendungscluster hinweg weisen die eher kleinen Nutzersegmente der "Digitalen Experten" und "Digitalen Industrie-Champions" auf. Während letztere größtenteils mehr als 50 Mitarbeiter im produzierenden Gewerbe beschäftigen, umfasst das Segment der "Digitalen Experten" insbesondere Start-ups und Unternehmen, bei denen IKT den Kern des jeweiligen Geschäftsmodells bildet. Da die Nachfrage nach digitalen Anwendungen von vielfältigen und teils unsicheren Einflussfaktoren abhängt, sind bis zum Jahr 2030 verschiedene Verschiebungen zwischen den Nutzersegmenten denkbar. Bei einer Fortschreibung der absehbaren Trends und Umsetzung bestehender Planungen ("Trendszenario") vollzieht sich die digitale Transformation im Mittelstand schrittweise. "Digitale Einsteiger" werden graduell in die stärker digitalisierten Nutzersegmente hineinwachsen. Ein "optimistisches Szenario" könnte insbesondere entstehen, falls unerwartete Fortschritte bei der Integration neuer Technologien in bedarfsgerechte und wettbewerbsfähige IKT-Dienste erzielt werden können, die idealerweise noch um gezielte Digitalisierungsförderung ergänzt werden. Unterbleiben hingegen wichtige Weichenstellungen und verstärken sich ggf. durch unvorhersehbare Ereignisse, stellen KMU selbst ihre derzeit geplanten Digitalisierungsvorhaben zurück und vollziehen die digitale Transformation deutlich langsamer als dies aus heutiger Sicht wahrscheinlich erscheint. Von zentraler Bedeutung für die Umsetzung der zukünftigen Digitalisierungsvorhaben von KMU ist eine angemessene Breitbandversorgung, die auch den perspektivischen Anforderungen an Bandbreite, Qualität und IT-Sicherheit gerecht wird. Gerade für die Veränderungsmöglichkeiten von KMU sind dabei auch Möglichkeiten zur Skalierbarkeit von zentraler Bedeutung. Dabei reicht das Spektrum der Anforderungen von Kleinstunternehmen, deren Ansprüche anspruchsvollen Privatkunden ähneln, bis hin zum global agierenden Mittelstand mit einem Bedarf, der eher Großunternehmen gleicht. |
| Abstract: | Regarding the use of digital applications, there is a clear need for SMEs to catch up with large companies, which varies significantly within the heterogeneous SME segment and in different application clusters. Against this background, this study uses the WIK SME demand segmentation to divide companies into different user segments according to their ICT usage behaviour and derive their connectivity requirements. "Digital beginners", "digital opportunity users", "supply chain-driven digitalisers", "digital experts" and "digital industry champions" are identified as relevant user segments. "Digital beginners" represent by far the largest user segment today. They mainly deploy basic applications in the area of web and app technologies. In contrast, "digital opportunity users" have recognised the potential of digital applications to strengthen their competitiveness and use them in a strategic and proactive manner. "Supply chain-driven digitalisers" also make intensive use of digital applications but tend to act reactively to the specifications of their business partners. The rather small user segments of "digital experts" and "digital industry champions" are characterised by intensive use across all application clusters. While the latter largely employ more than 50 people in the manufacturing industry, the "digital experts" segment mainly consists of start-ups and companies with a focus on ICT business models. As the demand for digital applications depends on a wide range of uncertain influencing factors, various shifts between the user segments are conceivable by 2030. If the foreseeable trends are extrapolated and existing plans are implemented ('trend scenario'), the digital transformation in the SME sector will take place gradually. "Digital newcomers" will move step by step into the more digitalised user segments. An 'optimistic scenario' could arise in particular in the case of unexpected progress in integrating new technologies into demand-oriented and competitive ICT services, ideally complemented by targeted digitisation support. If, however, important steps are not taken and are exacerbated by unforeseen events, SMEs themselves will postpone their currently planned digitalisation projects and complete the digital transformation much more slowly than it seems most likely from today's perspective. An adequate broadband supply that also meets the future requirements for bandwidth, quality and IT security is of central importance for the implementation of SMEs' future digitalisation projects. Scalability options are also a critical factor to enable the digital transformation of SME. The spectrum of requirements ranges from micro companies, whose requirements are similar to those of demanding residential customers, through to globally active SMEs with needs that are similar to those of large companies. |
| Keywords: | KMU, Digitalisierung, Breitbandkommunikation, Zielgruppe, Prognose, Deutschland |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wikdps:308066 |