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on Entrepreneurship |
| By: | Fabrizi, Simona (Massey University Auckland); Lippert, Steffen (Massey University Auckland); Norbäck, Peh (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)) |
| Abstract: | In this paper we construct a model in which entrepreneurial innovations are sold into oligopolistic industries and where adverse selection problems between entrepreneurs, venture capitalists and incumbents are present. We show that as exacerbated development by better-informed venture-backed rms is used as a signal to enhance the sale price of developed innovations, venture capitalists must be sufciently more ecient in selecting innovative projects than incumbents in order to exist in equilibrium. Otherwise, incumbents undertake early preemptive, acquisitions to prevent the venture-backed rms' signaling-driven investment, despite the risk of buying a bad innovation. We nally show at what point the presence of active venture capitalists increases the incentives for entrepreneurial innovations. |
| Keywords: | Venture Capitalists; Innovation; Entrepreneurs; Signaling; Development; |
| JEL: | C70 D21 D82 G24 L20 M13 O30 |
| Date: | 2008–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0776&r=ent |
| By: | Werner, Arndt |
| Abstract: | Start-ups and their respective market partners are faced with severe problems of asymmetric information due to their lack of prior production history and reputation. Given this situation, it is most likely that outside financiers will not be informed about the potential gains, losses, and risks of the new venture. In our paper, we study how banks screen the abilities of the entrepreneurs. We argue that specific characteristics of the educational history of individuals signal their quality as founders. Namely, we expect banks to also use “college dropout” as an indicator when deciding to extend credit to a founder. We empirically test our hypotheses using a dataset of 189 German start-ups collected in 1998/99. Our hypothesis is borne out by the data. Applying ordered probit techniques we find that college dropouts have more difficulties to obtain the credit they need in the beginning of their start-up than those without college dropout experience. |
| Keywords: | adverse selection; financial constraints; entrepreneurship; education |
| JEL: | G14 D82 M13 M21 |
| Date: | 2008–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11867&r=ent |
| By: | Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Noseleit, Florian (Friedrich-Schiller-University Jena) |
| Abstract: | We use longitudinal data over a decade on start-ups and employment in Swedish regions and analyze the effect of start-ups on subsequent employment growth. We extend previous analyses by examining the influence of regional start-ups in a sector on regional employment growth in the same sector and on other sectors. We find differences between different types of start-ups. Knowledge-intensive start-ups seem to have larger effects on the regional economy. In particular, start-ups in high-end services have significant negative impacts on employment in other sectors but a positive long-run impact. This is consistent with the idea that start-ups are a vehicle for changes in the composition of regional industry. Moreover, our results illustrate that the known S-shaped pattern can be attributed to different effects that start-ups in a sector have on employment change in the same sector and in others. |
| Keywords: | Entrepreneurship; Employment Growth; Regional; Development; Start-ups |
| JEL: | J23 M13 O52 |
| Date: | 2008–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0155&r=ent |
| By: | Manoj Atolia (Department of Economics, Florida State University); Kislaya Prasad (Robert H. Smith School of Business, University of Maryland) |
| Abstract: | We develop a model of occupational choice and entrepreneurship in the presence of relative wealth concerns. A concern for relative standing arises even though individuals care only about consumption of standard commodities. We assume that entrepreneurial returns are not diversifiable, which results in less entrepreneurship than would be the case with complete markets. Relative wealth concerns are shown to lead to an increase in entrepreneurship and risk-taking, mitigating this difficulty substantially. When we change the profile of the economy to include more risk-averse people, we find that there is a greater increase in entrepreneurship. We examine the effects of uncertainty about economic policies such as market-based reforms on entrepreneurship. |
| Keywords: | Entrepreneurship, risk, occupational choice, policy uncertainty, relative wealth concerns |
| JEL: | D84 J24 O11 O12 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:fsu:wpaper:wp2008_11_02&r=ent |
| By: | Dirk Dohse; Ingrid Ott |
| Abstract: | We develop an endogenous growth model which is focussed on entrepreneurial skills and their impact on growth and convergence. Our work is closely related to the model by Acemoglu et al. (2006) but extends their analysis in some important respects. Entrepreneurs in our model dispose of two different skills (technological and systemic skills) and we are able to show that it is not only the absolute skill level but also the aggregate distribution of different skills that drives growth and convergence of an economy towards the world technology frontier |
| Keywords: | growth, skills, innovation, selection, distance to frontier |
| JEL: | O31 O33 O38 J24 L26 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1467&r=ent |
| By: | Robin A. Prager; John D. Wolken |
| Abstract: | This paper uses data from the Federal Reserve Board’s 1998 and 2003 Surveys of Small Business Finances (SSBFs) to examine the evolving relationship between community banks and small businesses. The SSBFs provide extensive data on the types of financial services used by small businesses and the sources of those services. These data allow us to answer a number of interesting questions regarding small business usage of community banks, including the following: To what extent do small businesses rely on community banks as providers of at least some financial services? What types of financial services are small businesses most likely to obtain from a community bank? What types of small businesses are most likely to obtain some or all of their financial services from a community bank? How have the answers to these questions changed between 1998 and 2003? In addition to providing detailed descriptions of the patterns of community bank usage observed in the data, we develop a simple reduced form model that uses both firm and local banking market characteristics to explain these patterns. We test a number of hypotheses regarding the extent to which community banks and larger banks differ with respect to the types of financial services provided to small businesses and the types of firms served. Finally, we discuss the implications of our findings for the future of community banking. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2008-60&r=ent |