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on Entrepreneurship |
| By: | Kim, Seula (Pennsylvania State University) |
| Abstract: | This paper investigates how worker beliefs and job prospects impact the wages and growth of young firms, as well as the aggregate economy. Building a heterogeneous-firm directed search model where workers gradually learn about firm types, I find that learning generates endogenous wage differentials for young firms. High-performing young firms must pay higher wages than equally high-performing old firms, while low-performing young firms offer lower wages than equally low-performing old firms. Reduced uncertainty or labor market frictions lower the wage differentials, thereby enhancing young firm dynamics and aggregate productivity. The results are consistent with U.S. administrative employee-employer matched data. |
| Keywords: | Wage Differentials, Firm Dynamics, Learning, Search Frictions, Uncertainty |
| JEL: | E20 E24 J31 J41 J64 L25 L26 M13 M52 M55 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17655 |
| By: | Ine Paeleman (University of Antwerp); Virginie Mataigne (Ghent University); Tom Vanacker (Ghent University and University of Exeter Business School) |
| Abstract: | Past research shows that firms with constrained access to debt are more likely to withdraw from exporting. We argue that a firm’s debt maturity structure (i.e., the short-term/long-term debt mix) also matters because short-term debt entails liquidity risk and long-term debt entails higher costs. Using a database on Belgian start-ups, we find that start-ups relying mainly on either short-term debt or long-term debt exhibit a higher likelihood to withdraw from exporting compared to start-ups with a more balanced debt maturity structure. This U-shaped relationship is weaker for start-ups with more financial slack and stronger for start-ups with higher growth opportunities. |
| Keywords: | Complete export withdrawal, start-ups, debt maturity, financial slack, growth opportunities |
| JEL: | G32 L26 M13 M16 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbb:reswpp:202502-472 |
| By: | Elodie Andrieu (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); John Morrow (QMUL - Queen Mary University of London) |
| Abstract: | How do firms diffuse resources and do they spillover outside headquarter intensive areas? We show R&D subsidies induce French firms to hire new workers, often in new establishments and commuting zones. Using subsidy induced labor demand shocks and past employment patterns, we estimate a within industry spillover elasticity of .26 to non-subsidy firms, rising to .35 for openings outside of headquarter areas. Spillovers are also significant across firm branches and for firms. While subsidies are nominally awarded to headquarters, firms expand to distribute spillovers more broadly. |
| Keywords: | Multi-establishment Firms, Subsidies, Directed Growth, Spillovers |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:psewpa:halshs-04747880 |
| By: | Sebastián Fanelli (CEMFI); Juan Carlos Hallak (UBA-CONICET); Yin Yongkun (Shandong University) |
| Abstract: | Two facts distinctively separate exporter dynamics from firm dynamics. One is the strikingly low survival rate of new entrants into export markets. The second is that new entrants survive less than re-entrants. We argue that these two facts are critical to discipline exporter dynamics models because many sources of firm heterogeneity (e.g. fixed costs) do not affect survival rates when firms time their entry decision optimally. We extend a standard exporter dynamics model by positing that firms experiment to resolve an uncertain component in foreign-market profitability. We estimate the model using customs data from Peru. Despite its parsimony, having only four relevant parameters, the model matches the survival profile of entrants and re-entrants. It is also sufficiently rich to deliver predictions about many exporter dynamics facts highlighted in the literature. Finally, we exploit variation across products and markets to provide additional evidence supporting the model’s experimentation mechanism. |
| Keywords: | Exporter dynamics, uncertainty, experimentation, foreign demand, geometric Brownian motion. |
| JEL: | F10 F12 F14 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:354 |
| By: | Adhikari, Tamanna (Central Bank of Ireland); Mahony, Michael (Central Bank of Ireland) |
| Abstract: | In this Note, we compute a SME repayment difficulty outcome for 2023 and show the resilience of Irish Small and Medium Enterprises in the face of increasing cost pressures. We model the determinants of SME payment difficulty in Ireland using detailed firm-level survey data. We find that firms’ access to internal sources of finance is the most important contributor in reducing the likelihood of missed payments. Among firms with existing financial debts, leverage, liquidity, and interest burden are key determinants of repayment difficulty. A one standard deviation increase in the leverage ratio, the interest expense to turnover ratio and tax to turnover ratio from their mean values raises the probability of SME financial distress by 6.2, 4.6, and 3.3 per cent (respectively). In contrast, a one unit increase in the cash to total assets ratio from its mean value decreases the probability of SME financial distress by 4.5 per cent. Our results suggest that higher interest rates are unlikely to be the primary driver of missed payment propensity for most firms. Overall, Irish SMEs have demonstrated increasing resilience post-COVID-19 with factors such as attitude to debt, leverage, liquidity and interest burden playing a key role in determining resilience. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:cbi:fsnote:7/fs/24 |
| By: | Supriya Kapoor (Trinity Business School, Trinity College Dublin); Michael Mahony (Macro-Finance Division, Central Bank of Ireland); Anuj Pratap Singh (Macro-Finance Division, Central Bank of Ireland) |
| Abstract: | Since July 2022, European Central Bank (ECB) increased its interest rates for the first time in eleven years to bring inflation back to target. This has huge implication on the credit decision for firms, especially the small and medium enterprises (SME), instrumental in supporting employment, innovation and income. Using ECB's `Survey on Access to Finance of Enterprises' (SAFE) from 2015 to 2023, this paper assesses if the ECB's monetary policy tightening bears any relationship with SME's substituting away from bank credit towards alternative sources of finance. Our results show that contractionary monetary policy shocks were positively associated with the likelihood of SME's substituting away from bank credit. We find this behaviour across SMEs with larger turnover, employee size, age, as well as credit-quality; indicating a much stronger reliance and stickiness to bank credit for relatively smaller, younger, and riskier firms despite increases in the cost of credit following contractionary monetary policy shocks. |
| Keywords: | European Central Bank (ECB), monetary policy tightening, SME credit demand, firm bank credit substitution, firm financing behaviour and adaptability |
| JEL: | D22 E50 E51 E52 E58 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep0125 |
| By: | Djidonou, Robert (RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn); Foster-McGregor, Neil (RS: GSBE MGSoG, Mt Economic Research Inst on Innov/Techn); Mathew, Nanditha (Maastricht Graduate School of Governance, RS: GSBE MORSE, RS: GSBE MGSoG) |
| Abstract: | Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in reducing poverty and inequality by generating the majority of jobs, income, and pathways to better employment opportunities. However, informal enterprises are often characterized by low productivity and significant decent work deficits. In Sub-Saharan Africa, where a large share of the workforce is engaged in informal enterprises, transitioning to formality is essential for enhancing productivity, fostering economic growth, and ensuring decent work for all. A critical pathway for informal firms to formalize is through production and worker linkages with formal firms. Using a sample of 13, 626 informal firms from three Sub-Saharan African countries, this study examines the performance effects of informal firms with formal linkages and explores the mediating role of human capital. We find that formal backward linkages—where informal firms source inputs from formal firms—are significantly more common than other types of formal-informal linkages. Employing heteroskedasticity-based identification, our findings reveal that the productivity gains from these linkages are not automatic - higher human capital is essential for firms to benefit from knowledge and technology transfers. This highlights the critical role of absorptive capacity in enabling informal firms to leverage knowledge and technology transferred through formal backward linkages, thereby emphasizing the importance of targeted capacity-building interventions in fostering inclusive economic growth. |
| JEL: | J40 L14 L25 O12 O17 O33 |
| Date: | 2025–02–14 |
| URL: | https://d.repec.org/n?u=RePEc:unm:unumer:2025006 |
| By: | Heng-fu Zou (The World Bank; Institute for Advanced Study, Wuhan University; China Economics and Management Academy, Central University of Finance and Economics); Wei Liang (China Economics and Management Academy, Central University of Finance and Economics) |
| Abstract: | We explores the intricate relationship between culture, liberal ideas, and economic growth, presenting a formal framework to better understand the drivers behind the Great Enrichment. It highlights how core values such as liberty, dignity, equality, and individualism play a pivotal role in enhancing human welfare and fostering technological innovation. By delving into these liberal principles, the study sheds light on the mechanisms through which societies can achieve sustained economic development. |
| Keywords: | Liberal Ideas, Great Enrichment, Liberty, Dignity, Equality, Entrepreneurship, Economic Growth, Development |
| JEL: | D63 E20 E22 H56 L26 O10 O30 O40 P48 |
| Date: | 2025–02–11 |
| URL: | https://d.repec.org/n?u=RePEc:cuf:wpaper:737 |
| By: | Bruno Merlevede; Pablo Muylle (-) |
| Abstract: | Since the late 2000s, shocks and crises of various types have led to a revival of state intervention around the world. This paper builds a large firm-level dataset to analyze state ownership of firms in Europe for the period 2002-18. We confirm the underperformance of state-owned enterprises (SOEs) relative to privately-owned enterprises (POEs) found in earlier literature for this recent period for a range of firm-level performance indicators. We also examine the impact of SOEs on private firms. We find that larger SOE presence in an industry is associated with lower productivity growth and lower productivity levels among private firms in that industry, but does not affect industry dynamics in terms of entry and exit. This suggests potential aggregate productivity gains from reallocating resources from SOEs to POEs. Further, we show that employment is more stable and crisis-resistant at SOEs, and that SOEs are a more stable source of downstream input demand for other firms. Leveraging our dataset's cross-country nature, we find that SOEs are complements to, rather than substitutes for, lower quality institutions. |
| Keywords: | State ownership, Firm performance, Productivity, Spillover e ects, Privatization, Business dynamism |
| JEL: | H11 L25 L32 O47 P31 P52 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:rug:rugwps:25/1105 |
| By: | Marco Bellandi; Gianluca Fiorindi; Jasna PoÄ ek; Sara Pucci; Silvia Ramondetta |
| Abstract: | This paper focuses on the Tuscany’s innovation and entrepreneurial ecosystem of the Life Sciences. We pay attention to innovative startups and SMEs within more consolidated entrepreneurial fabrics, where large companies have a greater role compared to the typical production sectors of the region. We highlight the role of triple and quadruple helix relationships for innovation, therefore not only between companies, but also between these and research actors, levels of governments, and non-governmental organizations. The features of a dynamic regional ecosystem are thus outlined. Elements of relative weakness also emerge compared to other Italian regions. Finally, we consider policies supporting the development of this ecosystem and some prospects for related in-depth studies and research. |
| Keywords: | Innovation and Entrepreneurial Ecosystems; Life Sciences; Tuscany |
| JEL: | O31 R11 R58 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2024_28.rdf |
| By: | Antoine Bozio (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, IPP - Institut des politiques publiques, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Étienne Fize (IPP - Institut des politiques publiques); Arthur Guillouzouic (IPP - Institut des politiques publiques); Clément Malgouyres (CREST - Centre de Recherche en Economie et Statistique [Bruz] - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz], PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, IPP - Institut des politiques publiques, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Laurent Bach (ESSEC Business School) |
| Abstract: | L'objectif affiché des réformes de la fiscalité du capital mises en place entre 2017 et 2018 était de baisser la fiscalité sur le capital afin de soutenir l'investissement privé, et in fine la croissance de l'économie française. L'enjeu d'évaluation est donc de pouvoir quantifier ces potentiels effets sur l'investissement, et plus généralement sur la circulation du capital dans l'économie. Les précédents travaux de recherche menés jusqu'à présent n'ont pas mis en évidence d'effets sur l'investissement de la mise en place du PFU pour les entreprises déjà existantes (Bach et al., 2021a), et le constat s'est avéré similaire pour la transformation de l'ISF en IFI (Bach et al., 2021b). La marge intensive de l'investissement ne semble donc pas être une marge de réponse comportementale majeure aux modifications de la fiscalité sur la distribution des revenus ou sur le stock de capital. Les travaux de recherche sur données françaises ont, par contre, mis en évidence une forte réaction de la distribution des revenus du capital à ces réformes, avec notamment une très forte hausse de la distribution des dividendes à la mise en place du PFU (Bach et al., 2019, 2021a), mais aussi à la mise en place de l'IFI avec la suppression du mécanisme du plafonnement (Bach et al., 2023). L'objectif de l'étude présentée dans ce rapport est de compléter ces travaux en mesurant l'impact des réformes du PFU et de l'IFI sur des décisions d'investissement à la marge extensive, c'est-à-dire correspondant à des choix discrets d'investissement comme la création d'entreprise, l'expatriation ou au retour d'entrepreneurs, et les décisions de réinvestissement de capital. |
| Date: | 2023–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:psewpa:halshs-04439415 |