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on Entrepreneurship |
| By: | François Derrien (HEC Paris - Ecole des Hautes Etudes Commerciales); Jean-Stéphane Mésonnier (Centre de recherche de la Banque de France - Banque de France, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Guillaume Vuillemey (HEC Paris - Ecole des Hautes Etudes Commerciales, CEPR - Center for Economic Policy Research) |
| Abstract: | Firm births are key drivers of employment growth, productivity gains, and "creative destruction". We show that set-up costs create sizable financial constraints for new firms. When firms face high set-up costs, they can only be established by leveraging up and lengthening debt maturity. We empirically confirm these predictions in a large sample of young French firms. Leverage is higher and debt maturity is longer in high set-up cost industries. Last, we show that, following an exogenous shock that reduces banks' supply of long-term loans, there is relatively lower firm creation in high set-up cost manufacturing industries. |
| Date: | 2025–01–17 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05156025 |
| By: | Enriques, Luca; Nigro, Casimiro A.; Tröger, Tobias |
| Abstract: | A vast literature has examined the contractual technology that venture capital (VC) funds and entrepreneurs deploy in the U.S. to define an agency cost-minimising structure of their relationship, leading many to conclude that U.S. VC contracts are the best real-world solution to the challenges bedeviling the financing of high-tech innovative startups and a model for VC transactional practice worldwide. Yet, whether VC funds and entrepreneurs can replicate the allocation of cash-flow and control rights resulting from U.S. VC contracts in non-U.S. jurisdictions has long been open to discussion. Research by financial economists and legal scholars have reached diverging conclusions. The existing literature exhibits three limitations, though. First, it has generally investigated at most only how a subset of the individual components of U.S. VC contracts fare under non-U.S. corporate laws. Second, it has typically considered the law on the books as opposed to the law in action. Third, it has relied on a loose definition of what qualifies as an effective substitute. This article examines how U.S. VC contracts fare under the corporate law regimes in force in two important European jurisdictions: Germany and Italy. It does so by taking a new approach to the matter. First, it considers the entire set of arrangements included in U.S. VC contracts rather than a sample. Second, it assesses the legality of those arrangements in the light of the applicable corporate law in action rather than the law on the books. Third, in assessing arrangements that deviate from U.S. private ordering solutions due to restrictive corporate law, it focuses on contract functionality rather than contract design. The results of the inquiry are straightforward: German and Italian corporate laws literally crash contracting parties' ambition to transplant U.S. VC contracts into their own jurisdictions and only allow for alternative arrangements that, if available at all, are costlier and/or less functional. |
| Keywords: | Comparative Corporate Law, Comparative Corporate Governance, Entrepreneurship, Financial Contracting, Private ordering, Start-ups, Venture Capital |
| JEL: | G38 K22 L26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:324639 |
| By: | Torben Klarl; Alexander S. Kritikos; Knarik Poghosyan |
| Abstract: | While Equity Crowdfunding (ECF) platforms are a virtual space for raising funds, geography remains relevant. To determine how location matters for entrepreneurs using equity crowdfunding (ECF), we analyze the spatial distribution of successful ECF campaigns and the spatial relationship between ECF campaigns and traditional investors, such as banks and venture capitalists (VCs). Using data from the two leading German platforms – Companisto and Seedmacht – we employ spatial eigenvalue filtering and negative binomial estimations. In addition, we introduce an event study based on the implementation of the Small Investor Protection Act in Germany allowing us to obtain causal evidence. Our combined analysis reveals a significant geographic concentration of successful ECF campaigns in some, but not all, dense areas. ECF campaigns tend to cluster in dense areas with VC activity, while they are less prevalent in dense areas with high banking activity, and are rarely found in rural areas. Thus, rather than closing the so-called regional funding gap, our results suggest that, from a spatial perspective, ECF fills the gap when firms in dense areas seek external financing below the minimum equity threshold offered by VCs and when there are few banks offering loans. |
| Keywords: | Crowdfunding, Finance Geography, Entrepreneurial Finance, Venture Capital |
| JEL: | G30 L26 M13 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:atv:wpaper:2501 |
| By: | Torben Klarl |
| Abstract: | This paper investigates the impact of creativity on technological advancement, long-term economic development, and social welfare, with creativity endogenously determined through interactions within social networks. We demonstrate that an economy remains stagnant, exhibiting neither networking nor long-term growth, when the size of the creative class falls below a certain positive threshold. Conversely, surpassing this threshold triggers active networking between creative and non-creative individuals, fostering sustained technological progress and income growth. We calibrate the model and simulate the economy’s transition from stagnation to dynamic growth. Although immediate welfare gains from transitioning to a growing economy are modest, medium- to long-term welfare improvements become substantial due to the cumulative effects of technological advancement facilitated by networking. |
| Keywords: | Creativity, Population dynamics, Innovation, Technological evolution, Endogenous growth, Network, Welfare |
| JEL: | E13 E14 I30 O11 O31 O33 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:atv:wpaper:2504 |
| By: | Brandão, Tiago |
| Abstract: | This paper offers a critical historical analysis of the intellectual and institutional precursors to the open innovation paradigm. Challenging the perception of open innovation as a radical departure from earlier models, the paper demonstrates that many of its core principles—such as external collaboration, absorptive capacity, and distributed knowledge flows—have deep roots in 20th-century innovation practices and theories. Through an extensive review of foundational literature in innovation studies, strategic management, and organizational learning, this extended paper traces how ideas of inter-firm cooperation, technological brokering, and institutional embeddedness shaped current open innovation frameworks. Emphasis is placed on the path-dependent nature of absorptive capacity, the strategic management of complementary assets, and the evolution of innovation networks. By revisiting contributions from Mowery, Teece, Cohen and Levinthal, March, Hagedoorn, Powell, and others, the study repositions open innovation within a broader intellectual trajectory, offering a more nuanced understanding of its origins and limitations. |
| Date: | 2025–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:2nbs3_v1 |