nep-ent New Economics Papers
on Entrepreneurship
Issue of 2006‒12‒16
six papers chosen by
Marcus Dejardin
Facultes Universitaires Notre-Dame de la Paix
  1. Justifying the Origin of Real Options and their Difficult Evaluation in Strategic Management. By Thierry Burger-Helmchen
  2. Innovation and firm growth in "complex technology" sectors : a quantile regression approach By Alex Coad; Rekha Rao
  3. Understanding the processes of firm growth - a closer look at serial growth rate correlation By Alex Coad
  4. As luck would have it : innovation and market value in "complex technology" sectors By Alex Coad; Rekha Rao
  5. Knowledge sourcing and firm performance in an industrializing economy: the case of Taiwan in the 1990s. By Chia-Lin CHANG; Stéphane ROBIN
  6. Establishment size dynamics in the aggregate economy By Esteban Rossi-Hansberg; Mark L. J. Wright
  1. By: Thierry Burger-Helmchen
    Abstract: This work explores and reviews the introduction of real option in the strategic management literature. The aim is to contribute to a better understanding of the origin of the real option. By distinguishing between shadow and real option, and implementing entrepreneurship in the traditional option valuation framework we obtain a more exhaustive representation of the strategic decision processes in the firm. We explain the creation of a real option as an entrepreneurial process, which transforms inventive ideas into profitable innovation. This constitutes a step toward an option based-theory of the firm by describing the emergence of a firm’s options and the strategic building of new competences for exercising these options. In addition, this approach offers a parallel understanding of why the real option theory is less used in practice than in theory.
    Keywords: Real Option, Theory of the Firm, Entrepreneurship, Dynamic Capabilities.
    JEL: L29 D83 M13 M19
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:ulp:sbbeta:2006-31&r=ent
  2. By: Alex Coad (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], LEM - Laboratory of Economics and Management - [Sant'Anna School of Advanced Studies]); Rekha Rao (LEM - Laboratory of Economics and Management - [Sant'Anna School of Advanced Studies])
    Abstract: Innovation is commonly seen as the principal engine of economic development. In this paper, we investigate the microfoundations of economic growth by relating innovation to sales growth at the firm-level, for incumbent firms in four «complex technology» sectors. The average firm, which experiences only modest growth, may grow for a number of reasons that may or may not be related to «innovativeness». However, given that firms are heterogeneous and that growth rates distributions are typically heavy-tailed, it may be misleading to use regression techniques that focus on the average firm. Using a quantile regression approach, we observe that innovativeness is of crucial importance for a handful of «superstar» fast-growth firms.
    Keywords: Innovation, firm growth, quantile regression.
    Date: 2006–12–06
    URL: http://d.repec.org/n?u=RePEc:hal:papers:halshs-00118797_v1&r=ent
  3. By: Alex Coad (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], LEM - Laboratory of Economics and Management - [Sant'Anna School of Advanced Studies])
    Abstract: Serial correlation in annual growth rates carries a lot of information on growth processes - it allows us to directly observe firm performance as well as to test hypotheses. Using a 7-year balanced panel of 10 000 French manufacturing firms, we observe that small firms typically are subject to negative correlation of growth rates, whereas larger firms display positive correlation. Furthermore, we find that those small firms that experience extreme positive or negative growth in any one year are unlikely to repeat this performance in the following year.
    Keywords: Serial correlation, firm growth, quantile regression.
    Date: 2006–12–06
    URL: http://d.repec.org/n?u=RePEc:hal:papers:halshs-00118801_v1&r=ent
  4. By: Alex Coad (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], LEM - Laboratory of Economics and Management - [Sant'Anna School of Advanced Studies]); Rekha Rao (LEM - Laboratory of Economics and Management - [Sant'Anna School of Advanced Studies])
    Abstract: How do financial markets respond to firms' efforts at innovation ? To answer this question, we measure innovation by creating a synthetic indicator based on a firm's recent history of R&D expenditure and patent applications. We focus on four 2-digit «complex technology» manufacturing sectors that have been hand-picked according to their high propensities to innovate. Whilst standard regression techniques find a positive relationship between innovation and growth, quantile regression analysis adds a new dimension to the literature. We identify those «superstar» firms with the highest stock market valuations and show that these firms owe a lot of their success to their previous efforts at innovation. However, there are also other firms whose attempts to innovate are virtually ignored by financial markets. Our results emphasize the fundamental uncertainty of R&D.
    Keywords: Innovation, market value, quantile regression, patents, Tobin's q.
    Date: 2006–12–07
    URL: http://d.repec.org/n?u=RePEc:hal:papers:halshs-00119062_v1&r=ent
  5. By: Chia-Lin CHANG; Stéphane ROBIN
    Abstract: This paper examines the impact of R&D and technology imports on firm performance in Taiwan’s manufacturing industry. Using a panel of 27,754 firms observed from 1992 to 1995, we estimate Translog production functions in twenty 2-digit industries. We implement four estimations procedures: fixed-effect regression, random-effect GLS, Hausman-Taylor estimator, and Stochastic Frontier Estimation. Our most reliable estimates, obtained with fixed effect and Hausman-Taylor models, show that knowledge inputs have a significant impact on firm sales in a small number of industries, and suggest that R&D and technology imports are more likely to be complements rather than substitutes.
    Keywords: Manufacturing Industries; Newly Industrialized Countries; Technology Imports.
    JEL: L25 L60 O33
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:ulp:sbbeta:2006-33&r=ent
  6. By: Esteban Rossi-Hansberg; Mark L. J. Wright
    Abstract: Why do growth and net exit rates of establishments decline with size? What determines the size distribution of establishments? This paper presents a theory of establishment dynamics that simultaneously rationalizes the basic facts on economy-wide establishment growth, net exit, and size distributions. The theory emphasizes the accumulation of industry-specific human capital in response to industry-specific productivity shocks. It predicts that establishment growth and net exit rates should decline faster with size and that the establishment size distribution should have thinner tails in sectors that use human capital less intensively or physical capital more intensively. In line with the theory, the data show substantial sectoral heterogeneity in U.S. establishment size dynamics and distributions, which is well explained by variation in physical capital intensity.
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:fip:fedmsr:382&r=ent
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