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on Entrepreneurship |
| By: | Thomas {\AA}stebro; Frank M. Fossen; C\'edric Gutierrez |
| Abstract: | How do entrepreneurs act on their beliefs when probabilities of outcomes are unknown but subjectively perceived? We theorize that two distinct dimensions of ambiguity attitudes influence entrepreneurial action: ambiguity aversion - the unwillingness to bear ambiguity - and ambiguity sensitivity - how individuals discriminate between different levels of perceived chances of success. The second dimension determines how much entrepreneurs adjust their actions based on new information - a distinct aspect that cannot be captured by ambiguity aversion alone. Our theory suggests that entrepreneurs with different growth orientations have different ambiguity attitudes as compared to employees. Using incentivized measures from a large-scale survey, we find that incorporated entrepreneurs exhibit lower ambiguity aversion than employees, indicating that they are more willing to act under ambiguity. Distinctively, unincorporated self-employed individuals show higher ambiguity sensitivity, indicating that their actions are more responsive to changes in their beliefs. These patterns persist after controlling for risk attitudes, optimism, cognitive ability, and demographics. Our results highlight the distinct impacts of ambiguity aversion and ambiguity sensitivity on entrepreneurial actions. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.14148 |
| By: | Lerner, Josh (Harvard University and NBER); Liu, Junxi (University of Warwick); Moscona, Jacob (MIT); Yang, David Y. (Harvard University, BREAD, J-PAL and NBER.) |
| Abstract: | Global innovation and entrepreneurship have traditionally been dominated by a handful of high-income countries, especially the US. This paper investigates the international consequences of the rise of a new hub for innovation, focusing on the dramatic ascent of high-potential entrepreneurship and venture capital in China. First, using comprehensive global data, we show that as the Chinese venture industry rose in importance in certain sectors, entrepreneurship increased substantially in other emerging markets. Using a broad set of country-level economic indicators, we find that this effect was driven by country-sector pairs most similar to their counterparts in China. The estimates are similar when exploiting Chinese sector-specific policies that affected the likelihood of entrepreneurship. Second, turning to mechanisms, we show that the baseline findings are driven by local investors and by new firms that more closely resemble existing Chinese companies. Third, we find that this growth in emerging market investment had wide-ranging economic consequences, including a rise in serial entrepreneurship, cross-sector spillovers, innovation, and broader measures of socioeconomic well-being. Together, our findings suggest that many developing countries benefited from the more “appropriate” businesses and technology that resulted from a rise of an innovation hub in an emerging economy. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1608 |
| By: | Melecky, Martin; Ruiz Ortega, Claudia; Bizhan, Asset; Jambal, Ganbaatar |
| Abstract: | This paper evaluates the employment and sales effects of two widely used financial support instruments for small and medium-sized enterprises, interest rate subsidies and credit guarantees, using administrative program data from Kazakhstan matched to the universe of firms. Utilizing staggered intervention rollouts and a difference-in-differences design, the analysis reveals significant differences across program designs and local labor market conditions. Interest rate subsidies, despite their large fiscal costs, fail to improve firm performance: beneficiary firms experience a 10 percent decline in employment and no significant increase in sales. Fully subsidized credit guarantees show no discernible effects on sales or employment. By contrast, a market-aligned, fee-based partial credit guarantee that ensures lender and borrower risk-sharing increases employment by 24 percent and sales by 21 percent, with particularly stronger effects among women-led and formally incorporated businesses. These employment gains are substantially larger in regions with higher pre-program unemployment, suggesting that well-designed credit guarantees are more likely to generate net job creation in labor markets with greater slack, rather than merely reallocating workers across firms. Overall, the findings underscore the pivotal role of incentive-compatible program design and local labor market condit ions in determining the effectiveness of financial policies for small and medium-sized enterprises. |
| Date: | 2026–03–23 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11344 |
| By: | Haotian Deng (Department of Economics, Ghent University, Belgium); Sam Desiere (Department of Economics, Ghent University, Belgium; IZA Institute of Labor Economics, Germany); Bart Cockx (Department of Economics, Ghent University, Belgium; IZA Institute of Labor Economics, Germany; IRES/LIDAM, UCLouvain, Belgium; CESIfo, Germany; ROA, Maastricht University, the Netherlands); Gert Bijnens (National Bank of Belgium) |
| Abstract: | This paper studies how employment subsidies for start-ups shape their performance. We exploit an unexpected policy reform in Belgium that permanently exempted start-ups hiring their first employee from payroll taxes for that employee. Using firm-level administrative data and a regression-discontinuity-in-time design, we find that subsidized post-reform startups employed fewer workers and generated lower output, value added, and profits compared to pre-reform start-ups. However, post-reform start-ups were more likely to survive as employers. These effects emerged within the first year after hiring and remained stable over a medium horizon of three years. Our findings indicate a compositional shift: the subsidy primarily induced low-productivity firms to enter the market. As most firms nowadays are nonemployers, our results meaningfully generalize the theoretical implications of standard neoclassical entrepreneurship models (employee–employer margin) and fill the important gap of the nonemployer–employer margin. |
| Keywords: | entrepreneurship; start-up; employment subsidy; tax reduction; labor demand; small firms |
| JEL: | H25 J23 J24 J38 L25 L26 M51 |
| Date: | 2026–02–04 |
| URL: | https://d.repec.org/n?u=RePEc:ctl:louvir:2026004 |
| By: | Drydakis, Nick |
| Abstract: | Artificial intelligence (AI) is increasingly recognised as a key driver of business innovation, yet its adoption among small and medium-sized enterprises (SMEs) varies considerably. This study examines whether AI Capital, defined as AI-related knowledge, skills and capabilities, is associated with business innovation among SMEs in England. Using a two-wave longitudinal panel dataset comprising 504 observations from SMEs collected in 2024 and 2025, the study develops and validates a 45-item AI Capital of Business scale. Business innovation is measured across five dimensions: product and service innovation, process innovation, technology adoption, market and customer engagement, and organisational culture and strategy. Regression models, including pooled OLS, Random Effects, and Fixed Effects specifications, are employed. The findings reveal a robust positive association between AI Capital and business innovation across all model specifications. This association holds across all business innovation dimensions and remains consistent for SMEs with differing levels of financial performance, size, and operational maturity. Each component of AI Capital independently exhibits a positive association with business innovation outcomes. The results highlight the central role of AI Capital in enabling SMEs to translate AI adoption into tangible business innovation. From a policy perspective, the findings indicate the value of targeted interventions that prioritise AI upskilling, organisational capability development, and accessible support mechanisms to promote inclusive and sustainable AI-driven business innovation among SMEs. |
| Keywords: | Artificial Intelligence, Artificial Intelligence Capital, Business Innovation, Innovation, SMEs |
| JEL: | O31 O33 O32 L26 L25 M15 D83 J24 O14 O39 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1723 |
| By: | Alexandra Bykova (The Vienna Institute for International Economic Studies, wiiw); Francesca Guadagno (The Vienna Institute for International Economic Studies, wiiw); Ioannis Gutzianas (The Vienna Institute for International Economic Studies, wiiw); Mario Holzner (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Europe’s innovation bottleneck increasingly manifests in the difficulty of scaling promising startups into globally competitive firms. Central, East and Southeast Europe (CESEE) is particularly exposed to this due to limited finance and local acquirers, which lead to serious risks of relocation particularly beyond the EU’s borders. This policy note documents the sectoral structure and dynamics of CESEE small enterprises (10-49 employees) across six broadly defined macro-sectors Digital Economy, Life Sciences, Media, Creative Economy, Production, and Neighbourhood Economy. It uses Eurostat’s Structural Business Statistics and patent data from the OECD Patent Database. An analysis of the most influential rankings of innovative clusters and related outcome indicators complements the descriptive analysis. The note finds that Production and the Neighbourhood Economy represent the lion’s share of the region’s small enterprises, while Digital Economy is the clear growth champion. Creative Economy activities show solid, if uneven, expansion. And while the Media macro-sector stagnates, Life Sciences exhibits highly concentrated but distinctive niche specialisations, especially in smaller economies. Ecosystem rankings and unicorn outcomes reveal an intensely urban, highly heterogeneous innovation landscape. Some small CESEE states, such as Estonia, Lithuania, and Croatia, achieve exceptional unicorn densities, yet many of these firms relocate their headquarters to the US or the UK to access deeper capital markets. The paper posits that strategic intra-EU relocation and dual-hub models – particularly leveraging, for instance, Vienna’s role as a proximate, research-intensive hub – can help to keep CESEE firms and value creation within the European innovation system while Capital Markets Union reforms remain incomplete. |
| Keywords: | CESEE, Startups, Scaleups, Unicorns, Innovation, Sectoral specialisation, Patents, Urban hubs, Capital markets |
| JEL: | L26 O30 O52 R11 R58 G24 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:wii:pnotes:pn:105 |
| By: | Steinhuebel-Rasheed, Linda; Darwish, Maram; Ecker, Olivier |
| Abstract: | Rural households in many low- and middle-income countries remain highly dependent on agriculture and related value chain activities, making them particularly vulnerable to the impacts of climate change. As rising temperatures and increasing climate variability reduce agricultural productivity and income stability, small and medium enterprises (SMEs) are increasingly promoted as a path toward rural development and the transformation of the agrifood systems (AFS). Yet, little is known about whether climate change influences rural households’ decision to start an enterprise to diversify or switch their income sources away from agriculture-related activities in order to adapt to weather risks. We address this research gap by drawing from nationally representative data from the Egypt Labor Market Panel Survey 2023 and estimating a dynamic duration model to explore how heat stress is linked to households’ likelihood to start a (nonfarm) SME. Our findings offer new evidence for climate-responsive rural policy and SME support strategies in vulnerable regions. |
| Keywords: | small and medium enterprises; development; climate change; climate change adaptation; food systems; agrifood systems; heat stress; dynamic models; modelling; Egypt; Africa; Northern Africa |
| Date: | 2025–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:gsspwp:180550 |
| By: | Roberto Brunetti (GATE CNRS, France; Universitè Lumiére Lyon 2, France; Université Jean-Monnet Saint-Etienne, France; Emlyon Business School, France.); Gianluca Grimalda (Passau University, Germany.); Maria Marino (Universitat de Barcelona, Spain.) |
| Abstract: | Despite growing income inequality, demand for redistribution has remained stagnant, which is puzzling for the poor. We investigate whether attitudes toward “trickle-down” economics and fairness affect redistribution demand. We involve US residents from the bottom and top 20% of the income distribution (N = 2, 346) in experimental redistributive decisions from high-income real-life entrepreneurs to low-income recipients. We find that entrepreneurs’ activities possibly generating trickle-down effects, such as employing 1, 000 workers, are irrelevant to redistribution. Conversely, the desire to sanction the “undeserving poor” and, less importantly, to reward the “deserving rich” significantly affect redistribution. High-income and low-income participants’ decisions follow surprisingly similar patterns. |
| Keywords: | Trickle-down; Fairness; Merit; Redistribution. JEL classification: D72; D91; H2; H23; H41. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:ira:wpaper:202518 |