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on Entrepreneurship |
| By: | Coad, Alex (Waseda Business School, Waseda University, Japan); Domnick, Clemens (Joint Research Centre, European Commission); Naudé, Wim (RWTH Aachen University); Santoleri, Pietro (Joint Research Centre, European Commission); Srhoj, Stjepan (University of Split, Croatia) |
| Abstract: | This paper critically examines the Africa Entrepreneurial Ecosystem Index (AEEI) introduced by Stam et al. (2026) in World Development. We identify a series of technical, mathematical, and empirical problems in the construction and interpretation of the index. At the technical level, the paper contains inconsistent notation, equation-level errors, and ambiguities in the definition of key quantities. At the empirical level, the AEEI suffers from important representational limitations, including the exclusion of roughly half of African countries, the combination of indicators drawn from very different time windows, and reliance on data sources whose coverage may reflect platform visibility as much as underlying entrepreneurial activity. The data released by the authors raise questions about the reproducibility of the results, including issues with published rankings, variable construction and country coverage. and treatment of missing values. Finally, we document concerns regarding the paper’s text lifting and lack of engagement with prior criticism. The paper calls into question the usefulness of the AEEI as a scientifically rigorous measure of entrepreneurial ecosystems suitable for comparative analysis and policy use. |
| Keywords: | entrepreneurial ecosystems, Africa, composite indices, replication studies |
| JEL: | L26 C43 O55 B41 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18774 |
| By: | Campos, Francisco; Safir, Abla; Koffka, Celine; McKenzie, David; Zia, Bilal |
| Abstract: | Business plan competitions aim to identify and spur high-growth entrepreneurs. Two experiments were embedded into in a Kenyan competition to test how intensity of selection and of capital determine entrepreneurial outcomes. Applicants received a US$9, 000 grant after a streamlined process or went through multiple selection stages and were randomly assigned US$9, 000 or US$36, 000. All grants initially generated jobs, but the impacts only persisted over three years under multi-stage selection. The larger grants did not yield greater long-term impacts than the multi-stage US$9, 000 grant, suggesting diminishing returns to capital and limited lumpy investment opportunities. Selection, rather than grant size, determines long-run firm growth. |
| Date: | 2026–07–27 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11432 |
| By: | Vasco Carvalho; Lukas Freund; Lukas B. Freund |
| Abstract: | We develop a theory of growth in which firms forage in idea space. A firm exploits a patch of related ideas, gradually exhausting opportunities for quality improvement, and then searches for a new patch. We cast this explore-exploit tradeoff as a tractable optimal-stopping problem and embed it in an endogenous-growth model. The composition of innovation — improving existing ideas versus discovering new ground — emerges as an equilibrium object. To construct an empirical representation of the idea space, we apply natural language processing to patent text data. The data support the theory’s central premises: returns to local exploitation diminish; firms stay longer on richer patches; and entry into new patches yields more and better patents. We calibrate the model to U.S. data and establish two results, on the composition of growth and on its pace. First, at a twenty-year horizon, patenting in new clusters accounts for over half of growth from quality improvements: sustained growth rests on firms continually entering new territory. Second, the model sign-identifies the origins of the productivity slowdown of the last four decades: exploitation spells have not shortened, weighing against worsening exploitation and tentatively pointing to harder exploration. |
| Keywords: | innovation, growth, firm dynamics, foraging, exploration and exploitation, patents, natural language processing, artificial intelligence |
| JEL: | O31 O41 O33 O40 O47 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12841 |
| By: | Josh Feng; Xavier Jaravel |
| Abstract: | What are the implications of unequal access to entrepreneurial careers for labor markets? Using data from the U.S. Census and LinkedIn profiles, we document that entrepreneurs are significantly more likely to hire workers from similar social backgrounds (gender, race, age, education, etc.). These effects are quantitatively large across several demographic dimensions. For example, female employee share at female-founded startups is 36.4pp higher after controlling for industry-by-metro area-by-cohort fixed effects, with corresponding estimates of 51.2pp for Blacks, 37.3pp for Hispanics, and 11.3pp for non-college individuals. Large effects are present in high-growth startups, across industries and occupations, and remain stable across new firm cohorts. In addition, we find that these differences persist out to at least 20 years. We use wage data and an AKM research design to untangle whether the relative differences are driven by labor demand or labor supply effects. We find that demand drives the differences: group-specific wage decompositions show that new firms pay higher relative wages to individuals from similar backgrounds to the entrepreneur. Using these estimates, we calibrate a model of entrepreneurship with heterogeneous ability and production functions, and assess the impacts on relative wage from reducing access barriers to entrepreneurship. |
| Keywords: | entrepreneurship, hiring, labor market, production functions |
| JEL: | L26 J31 D24 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-45 |
| By: | OECD |
| Abstract: | The ability of innovative start-ups to scale is a key driver of productivity and economic growth. This paper examines the factors associated with successful scaling among start-ups founded between 2000 and 2025 in the European Union (EU) and the United States (US). It distinguishes between growth-oriented firms (raising at least USD 50 million) and rising superstars (valuations above USD 1 billion), comparing their characteristics across innovation, finance, market expansion, talent, and local ecosystems. Differences in scaling outcomes relate to the timing and commercialisation of innovation (rather than inventive capacity per se), the depth of late-stage financing, and the ability to mobilise managerial capabilities and acquisitions. Scaling events are also associated with distinct ecosystem spillovers, though these depend on ecosystem depth and type of scaling event. Overall, scaling is a cumulative, selective process in which firms progressively overcome interrelated constraints, underscoring the need for stage- and ecosystem-specific scale-up policies. |
| Keywords: | entrepreneurial ecosystems, innovation, scale-up gap, scale-ups, start-ups, unicorns, venture capital |
| JEL: | G24 G28 L25 L26 R11 |
| Date: | 2026–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:oec:stiaaa:2026/08-en |
| By: | Beatrice Di Marco (LUMSA University, Rome, Italy); Giovanni Ferri (LUMSA University, Rome, Italy; HURfuture Research Center); Marco Pini (Centro Studi delle Camere di Commercio Guglielmo Tagliacarne) |
| Abstract: | Investors increasingly assess firms using broader performance measures beyond return on equity, emphasizing ESG (environmental, social and governance) outcomes. Micro- and small-sized enterprises (MSEs), which traditionally rely on cooperative banks to ease credit constraints, now face growing pressure to adopt sustainable practices. This shift calls for re-examining whether relationships with credit cooperative banks (CCBs) enhance not only credit access but also ESG performance. Using data from the 2023 Tagliacarne Institute Survey in Italy, the study develops an innovative metric and applies an instrumental variables approach to address endogeneity. Results are robust and show a positive ESG effect, particularly when firms are geographically close to CCB branches. |
| Keywords: | Cooperative banks; Small businesses; Access to credit; ESG performance |
| JEL: | G21 L25 L26 L31 M14 P13 Q56 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:lsa:wphurf:wphurf04 |
| By: | Kotamäki, Mauri |
| Abstract: | This study estimates the causal impact of financial constraints on Finnish SMEs using 68, 000 survey observations (2016–2024) linked to tax registry data. Applying propensity score matching with extensive balance checks and multiple-testing control, I examine six outcomes: turnover, employment, investment, profitability, solvency, and innovation. Financial constraints sharply increase the likelihood of adverse outcomes: solvency and profitability risks rise by up to 29%, and the probability of improvement falls by up to 4 percentage points. Registry-based analysis confirms considerably lower taxable income growth. Heterogeneity analysis reveals a dual mechanism: micro firms suffer liquidity shocks, while mid-sized firms cut jobs and investment. These findings underscore the need for differentiated credit policies, rapid-access liquidity support for micro firms and adapted investment financing for growth-oriented mid-sized SMEs, and offer actionable insights for SME managers, including the importance of precautionary cash buffers, proactive relationship banking, and early financing commitments. |
| Keywords: | credit constraints; financing; impact analysis; propensity score matching |
| JEL: | C21 D22 G32 L25 O16 |
| Date: | 2026–04–07 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128615 |
| By: | Fetzer, Thiemo; Palmou, Christina; Schneebacher, Jakob |
| Abstract: | We study how businesses adjust to significant rises in energy costs. This matters for both the current energy crisis and the longer-term shift towards Net Zero. Using firm-level real-time survey and administrative data backed by a pre-registered analysis plan, we examine how firms respond to the energy price shock triggered by Russia’s invasion of Ukraine along output, price, input, process and survival margins. We find that, on average, fi rms pa ss on some cost increases, build up cash reserves, and face higher debt, but do not yet see layoffs or bankruptcies. However, effects are highly heterogeneous by size and industry: for instance, small firms tend to increase cash reserves and prices, while large firms invest more in capital. We estimate separate elasticities for many small industry cells and subsequently use k-means clustering techniques on the estimated effects to identify high-dimensional firm-adaptation archetypes. These estimates can help tailor firm support in the energy transition both in the short and the long term. More generally, the machinery developed in this paper enables policymakers to evaluate and adjust economic policy in near-real time. |
| Keywords: | energy price shock; firm dynamics; climate change; high-dimensional analysis |
| JEL: | D24 H23 L11 O30 |
| Date: | 2024–11–14 |
| URL: | https://d.repec.org/n?u=RePEc:eoe:escoed:escoe-dp-2024-15 |
| By: | Scott Kaplan; Ryan Raimondi |
| Abstract: | This paper studies the impact of geographic proximity to and utilization of publicly funded advisory services offered to US small businesses on firm take-up and performance. We leverage a novel administrative dataset from the Northern California Small Business Development Center (SBDC) Network covering all firm-center interactions from 2006-23. To address endogeneity in firm engagement with centers, we exploit exogenous variation in center-firm geographic proximity generated by center closures and openings. We instrument for paired center-firm consulting time with changes in distance resulting from these organizational shifts. A one standard deviation reduction in distance between a firm and corresponding center (20 miles) increases expected annual consulting time by 0.15 hours (7.5%); each additional consulting hour raises average firm annual revenue and employment by 3.6-5.2% and 1.6-2.9%, respectively. Back-of-the-envelope calculations suggest advisory services are cost-effective. This study provides novel causal evidence on take-up and effectiveness of small business advisory services in the US using quasi-experimental variation in geographic proximity. Our findings highlight the importance of both physical distance and localized expertise in shaping small business outcomes. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.07849 |
| By: | Bambe, Bao-We-Wal; Tamasiga, Phemelo |
| Abstract: | Climate mitigation and adaptation require substantial investment to advance sustainable development. In low- and middle-income countries (LMICs), mobilising such finance is particularly challenging for small and medium-sized enterprises (SMEs) due to persistent market failures, including limited financial disclosure and weak credit-risk information. High upfront costs, uncertain returns and weak regulatory frameworks further constrain adoption of low-carbon technologies. While fiscal constraints and the capital-intensive transition underscore the need for private capital, traditional bank financing is restricted by long project horizons, high risk and macroeconomic instability. Blended finance and guarantees are key instruments for mobilising private investment in LMICs. Blended finance combines concessional public resources with private or additional public capital to mitigate profitability risks, while guarantees reduce perceived risk by covering partial losses, particularly for non-commercial risks. This policy brief assesses their role in scaling SME climate finance, alongside their limitations and context-specific applicability. Evidence suggests that leverage effects, especially for blended finance, are more modest than often assumed and are context dependent; nonetheless, these instruments remain relevant for de-risking SME finance, contingent on improved design and implementation. The policy brief advances the following recommendations: - Financial intermediaries should prioritise SMEs facing binding financing constraints that prevent projects with clear socio-economic and environmental benefits. Project selection should integrate financial and climate vulnerability, though assessment remains difficult in low-income countries (LICs). De-risking instruments should target specific constraints, with guarantees mitigating risks and blended finance supporting projects with insufficient risk-adjusted returns to attract private capital. Multilateral development banks (MDBs) and development finance institutions (DFIs) should ensure additionality, minimise concessionality and strengthen monitoring and transparency. - MDBs and DFIs should better align donor incentives with effective risk-sharing and flexible financing structures. Concessional senior loans dominate blended finance but have limited loss absorption, reducing effectiveness in high-risk environments. A more balanced mix, including subordinated debt, equity and guarantees, can improve risk allocation and crowd in private investors. Greater use of special purpose vehicles and off-balance-sheet structures can further expand financing capacity in fragile contexts. - MDBs and DFIs should strengthen coordination, standardisation and local engagement. Fragmentation in blended finance and guarantees increases complexity and transaction costs and deters institutional investors. Greater harmonisation across MDBs, DFIs and private investors would improve capital allocation and complementarity, while standardised procedures and contracts would streamline project preparation and scaling in LMICs. Governments in LMICs should address structural constraints, with MDBs and DFIs providing complementary de-risking and capacity-building support. Weak investment climates, shallow financial markets, poor project pipelines and weak credit information systems reduce the effectiveness of blended finance and guarantees, particularly in LICs. Governments should strengthen investment climates, deepen financial markets and improve SME capabilities, while MDBs and DFIs support local intermediaries and broader reforms. |
| Keywords: | Blended finance, guarantees, small and medium-sized enterprises, green finance, low- and middle-income countries, SDGs |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:idospb:342586 |