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on Entrepreneurship |
| By: | Klein, Peter G. (University of Missouri); Mahoney, Joseph T. (University of Illinois at Urbana-Champaign); McGahan, Anita M. (University of Toronto); Pitelis, Christos N. (University of Cambridge) |
| Abstract: | This paper explores innovation, experimentation, and creativity in the public domain and in the public interest. Researchers in various disciplines have studied public entrepreneurship, but there is little research specifically on the nature, incentives and constraints of public entrepreneurship to innovate in the public interest. We begin by extending concepts of the entrepreneurial firm to include greater interactions in the public domain, and then turn to the role of entrepreneurial firms in fostering institutional change. This focus points toward opportunities for integrating transaction-costs, political and international business theories to achieve a more refined institutional theory of firm-government interactions that incorporates entrepreneurial agency as a principal mechanism for innovating in the fulfillment of public and private interests. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:illbus:09-0106&r=ent |
| By: | Frank M. Fossen |
| Abstract: | Why are female entrepreneurs so rare? Women have both to a lower entry rate into selfemployment and a higher exit rate in Germany. To explain the gender gap, a structural microeconometric model of the transition rates is estimated, which includes a standard risk aversion parameter. As inputs into the model, the expected value and variance of earnings from self-employment and dependent employment are estimated separately by gender, accounting for non-random selection into the employment states. The gender differential in the transition rates is decomposed using a novel extension of the Blinder-Oaxaca technique for nonlinear models. Women's higher estimated risk aversion is found to explain the largest part of their higher exit rate, but only a small part of their lower entry rate. |
| Keywords: | Entrepreneurship, self-employment, risk aversion, gender differential, Nonlinear Blinder-Oaxaca Decomposition |
| JEL: | J23 J16 D81 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp936&r=ent |
| By: | Michael Wyrwich (Friedrich Schiller University Jena, Department of Economics) |
| Abstract: | The present paper sheds light on how growth of young firms is affected by expansive strategies and the socioeconomic heritage of their main actors. "Socioeconomic heritage" has to do with socialization, prior socioeconomic circumstances, and regional growth conditions; the term is elaborated upon and further defined in this study. The empirical analysis is carried out both for West Germany - a mature market economy - and for East Germany, which operated under a centrally planned economy until German reunification in 1990. The main finding of the paper is that the involvement of West Germans in East German start-ups has a favourable effect on these firms' chances to grow rapidly. This effect is attributed to the fact that West Germans are more likely to possess person-related and situation-related factors necessary for growing a business in a market economy. The results are more ambiguous as to the influence of expansive strategies on fast growth. |
| Keywords: | Entrepreneurship, Rapid firm growth, Strategy, Management, West Germany, East Germany |
| JEL: | L26 M13 O1 O18 P25 |
| Date: | 2009–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-092&r=ent |
| By: | Jackline Wahba (University of Southampton); Yves Zenou (Stockholm University, Research Institute of Industrial Economics (IFN)) |
| Abstract: | The aim of this paper is to investigate whether return migrants are more likely to become entrepreneurs than non-migrants. We develop a theoretical search model that puts forward the trade off faced by returnees since overseas migration provides an opportunity for human and physical capital accumulation but, at the same time, may lead to a loss of social capital back home. We test the predictions of the model using data from Egypt. We find that, even after controlling for the endogeneity of the temporary migration decision, an overseas returnee is more likely to become an entrepreneur than a non-migrant. Although migrants lose their original social networks whilst overseas, savings and human capital accumulation acquired abroad over-compensate for this loss. Our results also suggest that social networks have no significant impact on becoming entrepreneurs for returnees but matter for nonmigrants. |
| Keywords: | Social capital, entrepreneurship, selection, savings. |
| JEL: | L26 O12 O15 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:200930&r=ent |
| By: | Groh, Alexander P. (IESE Business School); Liectenstein, Heinrich (IESE Business School) |
| Abstract: | We contribute to the knowledge about the capital flow from institutional investors, via Venture Capital (VC) funds as intermediaries, to their final destination, entrepreneurial ventures. Therefore, we run a world-wide survey among 1,079 institutional investors to determine the importance of several criteria when they select VC funds. The expected deal flow and access to transactions, a VC fund's historic track record, its local market experience, the match of the experience of team members with the proposed investment strategy, the team's reputation, and the mechanisms proposed to align interest between the institutional investors and the VC funds are the top criteria. The level of fees payable to the funds is not an important selection criterion. The VC relationship is based on a complex structure of (several) principals and agents, and is functional only if the interests of all participants are aligned. Fees are an important element of this alignment. Overall, the sorting criteria of institutional investors are very similar to what we know about the criteria applied by VC funds themselves, when selecting entrepreneurial ventures: the institutions have to mitigate the same kind of agency conflicts that VC funds and entrepreneurs are exposed to. |
| Keywords: | Entrepreneurial Finance; Venture Capital; Asset Allocation Criteria; Institutional Investor; |
| JEL: | G23 G24 |
| Date: | 2009–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0795&r=ent |
| By: | Tobias Stucki (KOF Swiss Economic Institute, ETH Zurich, Switzerland) |
| Abstract: | Start-ups mostly have only limited internal financing. Post-entry performance should thus strongly depend on the availability of new external capital. In this study we analyze the impact of financial constraints on the performance of Swiss start-ups. Since we use cohort data, we have for some start-ups data at different points in time. This allows us to analyze whether the effect of the availability of external capital on firm performance changes with increasing age of the firms. To measure the impact of external capital as a whole, we include separate indicators for debt and venture capital constraints. Using different performance measures, we find that debt constraints are not only a problem of the first years. While the negative impact of debt constraints on firm survival disappears with increasing age of the firms, profit is persistently negative affected by debt constraints. Debt constraints, however, do not impact employment growth of the firms, not even in the first years. The availability of venture capital is of lower relevance for the post-entry performance. Surviving and growth of the start-ups is not affected by venture capital constraints. However, firms with limited access to venture capital persistently have problems to attain profit break-even. |
| Keywords: | start-ups, performance, financial constraints, firm age |
| JEL: | M13 L25 G32 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:09-241&r=ent |
| By: | Lofstrom, Magnus (Public Policy Institute of California) |
| Abstract: | Low-skilled workers do not fare well in today's skill intensive economy and their opportunities continue to diminish. Given that individuals in this challenging skill segment of the workforce are more likely to have poor experiences in the labor market, and hence incur greater public expenses, it is particularly important to seek and evaluate their labor market options. Utilizing data from the Survey of Income and Program Participation, this paper provides a comprehensive analysis of the economic returns to business ownership among low-skilled workers and addresses the essential question of whether self-employment is a good option for low-skilled individuals that policymakers might consider encouraging. The analysis reveal substantial differences in the role of self-employment among low-skilled workers across gender and nativity – women and immigrants are shown to be of particular importance both from the perspectives of trends and policy relevance. We find that although the returns to low-skilled self-employment among men are relatively high we find that wage/salary employment is a substantially more financially rewarding option for most women. These findings raise the question of why low-skilled women enter self-employment. Our business start-up results are consistent, but not conclusive, with lack of affordable child care options and limited labor market opportunities in the wage/salary sector as motivating native born women to enter self-employment. We do not find empirical evidence of similar constraints among immigrant women. |
| Keywords: | self-employment, entrepreneurship, low-skill, women, immigrants |
| JEL: | J15 J16 J31 L26 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4539&r=ent |
| By: | Uwe Cantner (Department of Economics, Friedrich Schiller University of Jena); Sarah Kösters (DFG RTG 1411 "The Economics of Innovative Change", Friedrich Schiller University of Jena) |
| Abstract: | This paper investigates the allocation of R&D subsidies given to start-ups. Considering the coexistence of various R&D project schemes, we take an aggregate view and analyze the determinants of the receipt of (any) R&D subsidies within the first three business years of the start-ups. We argue that policymakers and funding authorities follow a strategy of "picking the winner". Analyzing a unique data set of start-ups in the East German state of Thuringia, we conduct logistic regressions and find ambiguous support. R&D subsidies are given to start-ups with innovative business ideas, especially academic spin-offs. On the other hand, the ambitions and the patent stock of the founder(s) do not decide the receipt of R&D subsidies. These insights into the overall allocation of R&D subsidies are important since they have implications for policy effectiveness and efficiency. The implied difficulties of policy targeting fundamentally question the massive subsidization of private R&D. |
| Keywords: | Start-ups, R&D subsidies, Subsidy allocation |
| JEL: | O38 L26 L52 |
| Date: | 2009–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-093&r=ent |
| By: | Andrea Weber; Christine Zulehner |
| Abstract: | According to Becker's (1957) famous theory on discrimination, entrepreneurs with a strong prejudice against female workers forgo profits by submitting to their tastes. In a com- petitive market their firms lack efficiency and are therefore forced to leave. We present new empirical evidence for this prediction by studying the survival of startup firms in a large longitudinal matched employer-employee data set from Austria. Our results show that firms with strong preferences for discrimination, i.e. a low share of female employees relatively to the industry average, have significantly shorter survival rates. This is espe- cially relevant for firms starting out with female shares in the lower tail of the distribution. They exit about 18 months earlier than firms with a median share of females. We see no differences in survival between firms at the top of the female share distribution and at the median, though. We further document that highly discriminatory firms that manage to survive submit to market powers and increase their female workforce over time. |
| Keywords: | Firm survival, profitability, female employment, discrimination, market test, matched employer-employee data |
| JEL: | J16 J71 L25 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:jku:nrnwps:2009_26&r=ent |