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on Entrepreneurship |
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Issue of 2005‒07‒11
thirteen papers chosen by Marcus Dejardin Facultés Universitaires Notre-Dame de la Paix |
| By: | Luigi Guiso (Università degli Studi di Sassari); Monica Paiella (Bank of Italy) |
| Abstract: | We use household survey data to construct a direct measure of absolute risk aversion based on the maximum price a consumer is willing to pay to buy a risky asset. We relate this measure to a set of consumers’ decisions that in theory should vary with attitude towards risk. We find that elicited risk aversion has considerable predictive power for a number of key household decisions such as choice of occupation, portfolio selection, moving decisions and exposure to chronic diseases in ways consistent with theory. We also use this indicator to address the importance of self-selection when relating indicators of risk to individual saving decisions. |
| Keywords: | risk aversion, heterogeneous preferences, choice under risk, entrepreneurship, self selection. |
| JEL: | D1 D8 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_546_05&r=ent |
| By: | Richard N. Langlois (University of Connecticut) |
| Abstract: | The entrepreneurial theory of the firm argues that entrepreneurship, properly understood, is a crucial but neglected element in explaining the nature and boundaries of the firm. By contrast, the theory of the entrepreneurial firm presumably seeks not to understand the nature and boundaries of “the firm†in general but rather to understand a particular type of firm: one that is entrepreneurial. This paper is an attempt to reconcile the two. After briefly delving for the concept of entrepreneurship in the work of Schumpeter, Kirzner, and (especially) Knight, the paper makes the case for the entrepreneurial theory of the firm. In such a theory, the firm exists as the solution to a coordination problem in a world of change and uncertainty, including Knightian or structural uncertainty. Taking a historical or developmental perspective, the paper then examines the changing nature of the entrepreneurial coordination problem over the life-cycle. In this formulation, “the entrepreneurial firm†is a nascent firm or proto-firm facing a problem of coordinating systemic change in economic capabilities. Lacking (by definition) adequate guidance from existing systems of rules of conduct embedded in markets or organizations, the entrepreneurial firm typically relies on a form of organization Max Weber called charismatic authority. In the end, although there is no such thing as a non-entrepreneurial firm, firms that must solve coordination problems in a world of novelty and systemic change ("entrepreneurial firmsâ€) are perhaps the purest case of the entrepreneurial theory of the firm. |
| Keywords: | entrepreneurship, transaction costs, coordination, Coase, Knight, Schumpeter, Weber. |
| JEL: | B25 L22 M13 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2005-27&r=ent |
| By: | Lucas, William A.; Cooper, Sarah Y. |
| Abstract: | Enhancing levels of innovation and entrepreneurship to grow a more competitive economy is the focus of much government effort. Attention is paid to changing a culture seen as antagonistic to entrepreneurship through initiatives designed to promote an entrepreneurial spirit. Universities, aware of the importance of developing entrepreneurial potential, are focusing on equipping students with the skills and abilities to contribute to innovation within organisations they join upon graduation, while also providing opportunities for the development of student aspirations. Cambridge-MIT Institute (CMI) has developed a one week event designed to influence deep personal values and the underlying motivations of potential entrepreneurs. This paper reports on the Connections course content as it was offered at the University of Strathclyde in 2003, content premised on the belief that students are motivated to start new enterprises through enhancement of self-confidence in their entrepreneurial skills. Measures of entrepreneurial self-efficacy and other outcomes are offered, followed by a report of the results found at the end of the event and then six months later. The programme is found to have created enduring improvements in entrepreneurial self-efficacy, and a related strengthening of pre-entrepreneurial awareness and exploration of ideas for starting companies. Other assessment results are presented suggesting the need to include explicit course content on entrepreneurial career paths. The implications of the Connections findings for entrepreneurship teaching in general are discussed. |
| Keywords: | entrepreneurship, innovation, entrepreneurial self-efficacy, |
| Date: | 2005–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:mit:sloanp:18178&r=ent |
| By: | Cécile Carpentier; Jean-Marc Suret |
| Abstract: | Some analysts and policy makers consider that the growth of New Technology Based Firms (NTBF) is impeded by an insufficient supply of capital. In Canada, as in other jurisdictions, the public authorities have interceded to fill this equity gap by increasing the supply of funds. However, several researchers contend that this gap is mainly associated with information asymmetry that particularly affects technological firms. Agency and moral hazard problems explain why it can be time consuming and costly to get outside equity. We propose the first analysis of these indirect costs of financing. These costs are partially intangible and can be determined only through a field survey and case analyses. In this study, we identify the elements that generate indirect costs of financing and estimate the costs and time frames associated with 18 financing rounds undertaken by 12 NTBF in Quebec, where the supply of venture capital is very abundant. We show that these costs are indeed substantial and heavily penalize small companies, especially during the initial financing round and prior to the commercialization phase. Thus, the classic government intervention policies intended to increase the supply of funds may be largely ineffectual. More specific training and support actions would likely be more effective. <P>Certains analystes et décideurs politiques considèrent que la croissance des nouvelles entreprises technologiques est contrainte par une offre insuffisante de capital. Au Canada, comme dans d’autres juridictions, les pouvoirs publics sont intervenus pour corriger cette lacune des marchés en augmentant l’offre de capital. Toutefois, la plupart des chercheurs défendent que cette lacune est essentiellement due aux problèmes d’asymétrie informationnelle, qui touchent particulièrement les entreprises technologiques. Les problèmes d’agence et d’anti-sélection qui en découlent rendent l’obtention de capital longue et coûteuse. Dans la présente étude, nous étudions les coûts et délais associés à l’obtention de capital de risque par douze entreprises technologiques, au cours de 18 rondes de financement distinctes. L’étude est menée au Québec, où l’offre de capital de risque est particulièrement abondante. Nous observons que les coûts associés à l’obtention du capital sont considérables et de nature à pénaliser les entreprises, notamment au cours des rondes initiales de financement. L’intervention gouvernementale classique, qui consiste à augmenter l’offre de capital, semble donc largement inefficace. D’autres types d’intervention, qui viseraient à encadrer et aider les dirigeants dans la recherche de fonds, devraient être étudiés. |
| Keywords: | financing, indirect costs, public policy, SME, venture capital, capital de risque, coûts indirects, financement, PME, politique publique |
| Date: | 2005–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2005s-25&r=ent |
| By: | Asim Mishra (Indian Institute of Management, Lucknow, India) |
| Abstract: | The Venture capital (VC) industry in India is of recent origin. However, the average investment value of each deal in India have grown from $3.85 million in 2000 to $7.89 million in 2001.These developments together with the recent steps taken by government to promote venture capitalism in India provide an opportunity for an examination of venture capital industry in India. This paper analyses the validity of venture evaluation model in India by directly comparing the relative importance of evaluation criteria on the funding decision with the relative importance to factors influencing venture's empirical performance. In the light of the differences in investment opportunities around India, and the nature of industrial development in South East Asia in general, the author anticipated that the investment criteria employed by Venture Capital Firms (VCs) in India would differ. A questionnaire was administered to venture capitalists (regular members of Indian Venture Capital Association) to determine the criteria they use to decide on funding new ventures. The response rate was 100%. A list of forty two criteria was developed on previously developed lists. The criteria fell into six groups: the entrepreneur’s personality, the entrepreneur’s experience, characteristics of the product or service, characteristics of the market, financial consideration and characteristics of venture management team. Answers were given on a four point rating scales. The results reveal that criteria adopted by Indian VCs are different from those adopted by VCs in other countries including US. The results also confirm that the entrepreneur’s personality and experience are seen as being primary indicators of the venture’s potential. |
| Keywords: | India, Venture, Capital, Vanture Capital, Criteria, VCs, VCCs, VCFs, Venture Capitalists |
| JEL: | G20 G21 G22 G23 G24 G28 G29 G30 G32 G35 |
| Date: | 2005–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0507002&r=ent |
| By: | Allen N. Berger; W. Scott Frame |
| Abstract: | U.S. commercial banks are increasingly using credit scoring models to underwrite small business credits. This paper discusses this technology, evaluates the research findings on the effects of this technology on small business credit availability, and links these findings to a number of research and public policy issues. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2005-10&r=ent |
| By: | Leeuwen, Eveline S. van (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Nijkamp, Peter |
| Abstract: | This paper addresses the local-regional-supra-regional orientation of small-scale farms and firms in rural areas. Due attention is given to the role of local centres (villages, towns) for the functioning of rural areas. With help of a quantified indicator spatial linkages related to sales and purchases of small enterprises are shown. Furthermore the allocation of labour to the local economy is taken into account. The degree of embeddedness of small local firms in rural areas appears to be fairly strong, which means that they play a significant role in the local economy in several ways |
| Keywords: | local economy; rural areas; small enterprises |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2004-21&r=ent |
| By: | Bossink, Bart A.G. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) |
| Abstract: | This article presents four basic innovation leadership styles: charismatic, instrumental, strategic and interactive innovation leadership. The leadership styles and their characteristics relate to process and product innovations in construction projects. A theoretical framework - which synthesizes these relations enables explorative research into the effects of leadership on organizational innovativeness. Four case studies, observing the same manager in four comparable projects, explore the effects of each leadership style on a construction project's innovativeness in ecological terms. On an analytical level the case study explorations indicate that a manager's consistent performance of a leadership style stimulates the project's ecological innovativeness when the manager also injects the project with ecological information, knowledge and competence. It also indicates that a manager's consistent performance of a leadership style, without an injection of information, knowledge and competence in the project, doesn't stimulate the project's ecological innovativeness. |
| Keywords: | construction; innovation; leadership; management; projects |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2004-27&r=ent |
| By: | Masurel, Enno (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) |
| Abstract: | This paper discusses the use of patent information by innovative SMEs. The standard literature tends to focus on obtaining patents; studies of using patent information for different purposes are underrepresented in the innovation literature. Studying the case of SMEs is especially interesting, because they often do not have in-house specialists dealing with patent issues. Our research reveals that the most important reasons why SMEs do not use patent information are: (i) costs; (ii) unclear procedures. These constraints may be tackled by improving the communication on the usefulness of patent information, improving access to patent information, and integrating more lessons on using patent and patent information in education. Given that using patent information is useful for SMEs, its use should be promoted. The key players in this respect are NIPO (the Dutch organization responsible for patents and patent information), trade associations, and educational institutions. |
| Keywords: | SMEs; entrepreneurship; innovation; patents; patent information |
| JEL: | O34 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2005-2&r=ent |
| By: | Flikkema, Meindert (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics) |
| Abstract: | The identification of innovation in services is problematic. This seems remarkable, since many papers have emerged, which emphasize distinctive features of service innovation. However, some of these contributions strain the Schumpeterian innovation opinion or describe in fact the role of service firms in systems of innovation. In the present paper service innovation is concerned as a special case of service development and a direct reference to Schumpeter is made as Drejer proposes (Drejer, I., 2004. Identifying innovation in surveys of services: a Schumpeterian perspective. Research Policy 33, 551-562). With the deduction of 'special case criteria' the paper contributes to tackling the identification problem. |
| Keywords: | service innovation; service development; Schumpeter |
| JEL: | O31 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:vuarem:2005-1&r=ent |
| By: | Yongil Jeon (Central Michigan University); Stephen M. Miller (University of Nevada, Las Vegas, and University of Connecticut) |
| Abstract: | This paper considers the aggregate performance of the banking industry, applying a modified and extended dynamic decomposition of bank return on equity. The aggregate performance of any industry depends on the underlying microeconomic dynamics within that industry . adjustments within banks, reallocations between banks, entry of new banks, and exit of existing banks. Bailey, Hulten, and Campbell (1992) and Haltiwanger (1997) develop dynamic decompositions of industry performance. We extend those analyses to derive an ideal decomposition that includes their decomposition as one component. We also extend the decomposition, consider geography, and implement decomposition on a state-by-state basis, linking that geographic decomposition back to the national level. We then consider how deregulation of geographic restrictions on bank activity affects the components of the state-level dynamic decomposition, controlling for competition and the state of the economy within each state and employing fixed- and random-effects estimation for a panel database across the fifty states and the District of Columbia from 1976 to 2000. |
| Keywords: | aggregate fluctuations, dynamic decomposition, productivity |
| JEL: | L1 G2 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2005-25&r=ent |
| By: | Yongil Jeon (Central Michigan University); Stephen M. Miller (University of Nevada, Las Vegas, and University of Connecticut) |
| Abstract: | Regulatory change not seen since the Great Depression swept the U.S. banking industry beginning in the early 1980s and culminating with the Interstate Banking and Branching Efficiency Act of 1994. Banking analysts anticipated dramatic consolidation with large numbers of mergers and acquisitions. Less well documented, but equally important, was the continuing entry of new banks, tempering the decline in the overall number of banking institutions. This paper examines whether deregulation affected bank new-charter (birth), failure (death), and merger (marriage) rates during the 1980s and 1990s after controlling for bank performance and state economic activity. We find evidence that intrastate deregulation stimulated births and marriages, but not deaths. Moreover, we find little evidence that interstate deregulation affected births, deaths, or marriages, except that the marriage rate rose after the implementation of the Interstate Banking and Branching Efficiency Act. Finally, pair-wise temporal causality tests among births, deaths, and marriages show that mergers temporally lead new charters and that failures lead mergers (a demonstration effect). |
| Keywords: | commercial banks, new charters, failures, mergers |
| JEL: | G21 L51 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2005-24&r=ent |
| By: | Marcela Meléndez; Katja Seim; Pablo Medina |
| Abstract: | This paper analyzes the effects on Colombian manufacturing productivity of tax and foreign trade policy changes during the 1990s. Our results indicate that between 1977 and 1999, aggregate manufacturing productivity largely stagnates and even declines in some of the larger industries. There is little entry and exit of plants or reallocation of labor. The productivity stagnation can be explained by this lack of liquidation of unproductive plants combined with slow technological advance. Dynamics vary significantly across sub-sectors, however, and our findings attribute this variation primarily to within-sector output reallocation. The importance of industrial policy is large. Sector-level productivity declines coincide with protectionist policies in the form of import tariffs or beneficial tax treatments, while higher productivity levels are correlated with sectors’ increasing foreign exposure. Our finding of small productivity effects of preferential treatments further points to the insignificant role played by output reallocation across plants in stimulating productivity growth. |
| Keywords: | Productivity dynamics |
| JEL: | C14 |
| Date: | 2003–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:col:000138:001049&r=ent |