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on Entrepreneurship |
| By: | William Kerr (Harvard University); Ufuk Akcigit (University of Pennsylvania); Nicholas Bloom (Stanford); Daron Acemoglu (Massachusetts Institute of Technology) |
| Abstract: | We build a model of firm-level innovation, productivity growth and reallocation featuring endogenous entry and exit. A key feature is the selection between high- and low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using detailed US Census micro data on firm-level output, R&D and patenting. The model provides a good fit to the dynamics of firm entry and exit, output and R&D, and its implied elasticities are in the ballpark of a range of micro estimates. We find industrial policy subsidizing either the R&D or the continued operation of incumbents reduces growth and welfare. For example, a subsidy to incumbent R&D equivalent to 5% of GDP reduces welfare by about 1.5% because it deters entry of new high-type firms. On the contrary, substantial improvements (of the order of 5% improvement in welfare) are possible if the continued operation of incumbents is taxed while at the same time R&D by incumbents and new entrants is subsidized. This is because of a strong selection effect: R&D resources (skilled labor) are inefficiently used by low-type incumbent firms. Subsidies to incumbents encourage the survival and expansion of these firms at the expense of potential high-type entrants. We show that optimal policy encourages the exit of low-type firms and supports R&D by high-type incumbents and entry. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed015:188&r=ent |
| By: | Blumberg, Boris; Pfann, Gerard Antonie |
| Abstract: | This paper studies the event history of business foundation and distinguishes between transgenerational entrepreneurship and self-made start-ups. Three theoretical concepts of human, financial and social capital are linked to investigate variations over time in the decision process to become self-employed. Data from a cohort of Dutch inhabitants born in 1939/1940 who have been interviewed three times during their lives in 1952, 1983, and 1993 allows testing theoretical hypotheses that state clear differences between these two paths towards business ownership. Empirical results show that the base-line hazard of individuals without self-employed parents increases with time, while people with entrepreneurial parents become self-employed at an early age. Moreover, social capital is a better predictor of enterprise than human capital. |
| Keywords: | entrepreneurship; occupational choice; self-employment; transgenerational mobility |
| JEL: | J24 J62 L26 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10699&r=ent |
| By: | Hubert Janicki (U.S. Census Bureau); Henry Hyatt (US Census Bureau); Emin Dinlersoz (U.S. Census Bureau) |
| Abstract: | Compared with mature firms, young firms, most of which represent entrepreneurial activity, disproportionately hire younger, nonemployed individuals, and provide them with lower earnings. Furthermore, in recent years the number of young firms has been declining, along with their employment share, employee size, and worker earnings. To account for these facts, this paper introduces heterogeneous labor markets with search frictions to a dynamic model of entrepreneurship. Individuals differ in productivity and wealth. They can choose not to work, become entrepreneurs, or work in one of two sectors: a corporate versus an entrepreneurial sector. The differences in production technology and labor market frictions across the sectors lead to sector-specific wages. Worker sorting across sectors arises, as individuals with lower assets and higher productivity tend to take lower-paying jobs in the entrepreneurial sector because they do not have enough savings to smooth consumption while unemployed until the arrival of a higher-paying corporate sector job offer. This sorting is found to be consistent with the data on the average net worth of workers in young versus mature firms. The model is also used to explore potential mechanisms behind the recent decline in entrepreneurship in the U.S. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed015:104&r=ent |
| By: | Suprinovič, Olga; Schneck, Stefan; Kay, Rosemarie |
| Abstract: | This paper analyzes how statutory entitlements to maternity or parental leave affect female entry into self-employment after childbirth. For our estimations we use comprehensive panel data for German adults born between 1944 and 1989. We find that utilization of statutory parental leave decreases women's probability to switch into self-employment. This effect is statistically significant for start-ups in highskilled occupations. In contrast, start-ups in low-skilled occupations are not significantly affected by statutory parental leave. |
| Abstract: | Der Aufsatz untersucht, wie sich familienbedingte Erwerbsunterbrechungen auf die Gründungsneigung von Frauen auswirken. Hierfür wurden Paneldaten für die Erwachsenenbevölkerung in Deutschland (Geburtsjahrgänge 1944 bis 1989) ausgewertet. Das Ergebnis: Gesetzlich geregelte familienbedingte Auszeiten reduzieren signifikant die Wahrscheinlichkeit, dass eine Frau sich in einem hochqualifizierten Tätigkeitsbereich selbstständig macht. Für Gründungen in den gering qualifizierten Bereichen konnte ebenfalls ein negativer, jedoch nicht signifikanter Effekt solcher Erwerbsunterbrechungen nachgewiesen werden. |
| Keywords: | family policy,parental leave,women's self-employment |
| JEL: | J16 J18 L26 M13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifmwps:0315&r=ent |
| By: | Xavier Gabaix; Jean-Michel Lasry; Pierre-Louis Lions; Benjamin Moll |
| Abstract: | The past forty years have seen a rapid rise in top income inequality in the United States. While there is a large number of existing theories of the Pareto tails of the income and wealth distributions at a given point in time, almost none of these address the fast rise in top inequality observed in the data. We show that standard theories, which build on a random growth mechanism, generate transition dynamics that are an order of magnitude too slow relative to those observed in the data. We then suggest parsimonious deviations from the basic model that can explain such changes, namely heterogeneity in mean growth rates or deviations from Gibrat's law. These deviations are consistent with theories in which the increase in top income inequality is driven by the rise of "superstar" entrepreneurs or managers. |
| JEL: | D31 E24 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21363&r=ent |
| By: | Andrés Rodríguez-Pose; Callum Wilkie |
| Abstract: | Smart specialization approaches to regional innovation policies have attracted, and in all likelihood will continue to attract, considerable attention. With this attention has come significant interest in one of the approach’s defining features: the ‘entrepreneurial discovery process’ (EDP). While this interest has yielded substantial progress in the development of a comprehensive collective understanding of the EDP, several important, even vital, aspects of the EDP remain ‘under-‘ or even ‘unaddressed’. This essay aims to fill what we consider to be two prominent gaps in the aforementioned collective understanding by, first, identifying the actors who are responsible for the EDP, investigating their respective roles, and exploring how they should be engaged, and, second, by dissecting the relationship between the EDP and the institutional context within which it occurs recognizing that institutions can exercise tremendous influence on the effectiveness and outcomes of the EDP. Four prominent conclusions emerge from this exercise – each of which is made explicit in the final section of the paper – that will hopefully contribute to the more effective implementation and execution of the EDP across diverse socioeconomic and institutional contexts. |
| Keywords: | Smart specialisation, entrepreneurial discovery process (EDP), innovation, innovation policy, institutions, Europe. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1523&r=ent |
| By: | Ambrose, Brent W. (Pennsylvania State University and the Federal Reserve Bank of Philadelphia); Cordell, Lawrence R. (Federal Reserve Bank of Philadelphia); Ma, Shuwei (Federal Reserve Bank of Philadelphia) |
| Abstract: | Small businesses are the backbone of the U.S. economy and account for approximately one-half of the private-sector economy and 99% of all businesses. To start a small business, individuals need access to capital. Given the importance of an entrepreneur’s personal debt capacity in financing a startup business, student loan debt, which is difficult to discharge via bankruptcy, can have lasting effects and may have an impact on the ability of future small business owners to raise capital. This study examines the impact of the growth in student debt on net small business formation. We find a significant and economically meaningful negative correlation between changes in student loan debt and net business formation for the smallest group of small businesses, those employing one to four employees. This is important since these small businesses depend heavily on personal debt to finance new business formation. Based on our model, an increase of one standard deviation in student debt reduced the number of businesses with one to four employees by 14% on average between 2000 and 2010. The effect on larger firm formation decreased with firm size, which we interpret to mean that these firms have greater access to outside capital. |
| Keywords: | Student loans; Small business finance; Debt capacity |
| JEL: | D1 H31 I22 I25 I28 R2 |
| Date: | 2015–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:15-26&r=ent |
| By: | Tommaso Ciarli; Chiara Kofol; Carlo Menon |
| Abstract: | In this paper we use a unique dataset that combines spatial detailed information on conflict events and on households' activity, to show a positive and significant correlation between violent conflict and entrepreneurship in Afghanistan. We build spatial and IV identifications to estimate the effect of different measures of conflict on the investment in a range of private economic activities of nearby households. The results consistently show that the level of conflict, its impact, and to a lesser extent its frequency, increase the probability that a household engages in self-employment activities with lower capital intensity and in activities related to subsistence agriculture, and reduce the probability of investing in higher capital self-employment. Overall, by increasing entrepreneurship, conflict pushes the country towards a regressive structural change. However, the magnitude of most of the effects is quite small. The paper contributes to a literature that, due to data constraints and identification issues, has not yet delivered conclusive evidence. |
| Keywords: | Violent conflict, entrepreneurship, development |
| JEL: | O12 D74 L26 R12 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0182&r=ent |
| By: | FU Jiangtao; SHIMAMOTO Daichi; TODO Yasuyuki |
| Abstract: | Using unique firm-level data for manufacturing sectors in Indonesia, we examine how political and economic connections of firms affect their access to finance. We identify the political connections of a particular firm by whether the government owns its shares, whether politicians are on its board of directors, and whether its highly-ranked manager knows any politician personally. We find that politically connected firms are more likely to be able to borrow from state-owned banks. Moreover, being connected to the government raises the probability of being able to borrow as much as needed without any credit constraint. The financial benefit from political connections is more prominent for small and medium enterprises (SMEs) than for large firms. Furthermore, the benefit mostly comes from personal connections with politicians, rather than more formal connections as measured by government ownership or politicians on the boards of directors. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:15087&r=ent |
| By: | Timothy Guinnane (Economic Growth Center, Yale University); Susana (University of Murcia, Spain) |
| Abstract: | Economists have long neglected study of an important contractual decision, a firm’s choice of legal form. Enterprise form shapes the relations among a firm’s owners as well as many features of a firm’s interactions with the rest of the economy. Using unusual firm-level data on Spain 1886-1936, we estimate nested logit models of the determinants of enterprise form choice. In 1919, Spain introduced a new enterprise form that compromised between partnerships and corporations, and displaced larger partnerships and smaller corporations. This Sociedad de Responsabilidad Limitada was especially important for small and median-sized enterprises whose owners were not related. |
| Keywords: | Law and finance, law and economics, legal form of enterprise, Spanish economic history, limited partnership, limited-liability company |
| JEL: | K20 N43 N44 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:1049&r=ent |
| By: | L. Chauvet; H. Ehrhart |
| Abstract: | This paper explores the impact of foreign aid on firm growth for a panel of 4,342 firms in 29 developing countries, 11 of which are in Africa. Using the World Bank Enterprise Surveys data and controlling for firm fixed effects, we find a positive impact of foreign aid on firms' sales growth. This result is robust to several checks, notably to the instrumentation of aid and to estimations on various sub-samples. We then provide evidence that the positive effect of aid is especially strong for firms operating in sectors that are intensive in infrastructure and external finance, suggesting that aid may improve firm performance through the alleviation of infrastructure and financing constraints in developing countries. |
| Keywords: | Foreign aid. Firm growth. Infrastructure constraint. Financing constraint |
| JEL: | F35 O16 O50 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:563&r=ent |
| By: | Yi Zhou; Canfei He; Shengjun Zhu |
| Abstract: | Creative destruction is a key driving force behind industrial development. The continuing process of creative destruction provides an impetus to regional industrial renewal. Our analytical framework that emphasizes the ways in which firm exit creates a stimulus for firm entry, resulting in incremental innovation and productivity increase is complementary to the process of technological change and industrial renewal articulated by Schumpeter who pays attention to how new entrants bring in radical innovation and new products, making incumbents’ products and technologies obsolete and force them to exit or catch up. Using firm-level data of China’s industries during 1998-2008, this paper seeks to argue that the articulation between firm exit and entry has been constantly shaped by an assemblage of various factors, including firm characteristics, industrial linkages, regional institutions and geographical proximity. |
| Keywords: | Creative destruction, Firm Exit, Firm Entry, Industrial Dynamics, China |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1522&r=ent |
| By: | Yael V. Hochberg (RICE UNIVERSITY, MIT & NBER); Carlos J. Serrano (UNIVERSITAT POMPEU FABRA, BARCELONA GSE & BANCO DE ESPAÑA); Rosemarie H. Ziedonis (UNIVERSITY OF OREGON & STANFORD UNIVERSITY) |
| Abstract: | This paper investigates the market for lending to technology startups (i.e. venture lending) and examines two mechanisms that facilitate trade within it: the ’saleability’ of patent collateral and financial intermediaries. We find that intensified trading in the secondary market for patent assets increases the annual rate of startup lending, particularly for startups with more re-deployable patent assets. Moreover, we show that the credibility of venture capitalist commitments to refinance and grow fledgling companies is vital for startup debt provision. Following a severe and unexpected capital supply shock for VCs, we find a striking flight to safety among lenders, who continue to finance startups whose investors are better able to credibly commit to refinancing their portfolio companies, but withdraw from otherwise promising projects that may have most needed their funds. The findings are consistent. |
| Keywords: | fi nancing innovation, patent collateral, venture capital, market for patents. |
| JEL: | L14 L26 G24 O16 O3 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1519&r=ent |
| By: | Radovan Pejanovi (University of Novi Sad, Faculty of Agriculture, Department of Agricultural Economics and Rural Sociology); Dunja Demirovi (University of Novi Sad, Faculty of Sciences, Department of Geography, Tourism and Hotel Management); Vladimir Niki (University of Novi Sad, UNESCO Chair for Entrepreneurial Studies) |
| Abstract: | The role of universities has changed. Universities are not only focused on transferring knowledge and conducting research, but have become a link between the state and the economic environment. The new role of the university is referred to as its third mission through which the university becomes an institution that monitors development in society and actively is involved in solving its problems. In order to determine the appropriate development model of the third mission, at the University of Novi Sad (Serbia) was conducted survey on four levels: university - the Rector, faculties - dean, the department directors/heads of departments and staff. 200 employees at the University were surveyed, and the starting point for research was the questionnaire HE-Innovate tool, designed by the European Commission and Organisation for Economic Co-operation and Development (OECD). Research conducted at the University of Novi Sad presents empirical results of an entrepreneurial university in Serbia and indicates which are the key aspects of the strategic approach in the development of the University as an entrepreneurial university, as well as how to improve the quality of scientific research and educational work and therefore its internationalization. |
| Keywords: | the third mission, entrepreneurship, social role, internationalization, University of Novi Sad (Serbia) |
| JEL: | I25 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:2604237&r=ent |
| By: | May-Strobl, Eva; Welter, Friederike |
| Abstract: | Als Ergänzung der im Jahr 2014 durchgeführten Expertenbefragung zu den Herausforderungen des deutschen Mittelstands (Zukunftspanel Mittelstand) wird nun basierend auf der Mittelstandsbefragung des IfM Bonn die Unternehmersicht dargestellt. Es zeigt sich, dass von den acht identifizierten Handlungsfeldern die Sicherung der Wettbewerbs- und Innovationsfähigkeit weit oben rangiert. Hingegen erscheinen in der Gesamtschau unternehmerischer Herausforderungen ansonsten als hochrangig angesehene Themen wie der Fachkräftemangel und die Bürokratiebelastung nicht prioritär. Unterschiede werden für die Teilgruppen des Mittelstands herausgearbeitet, um Hinweise für die Gestaltung von Mittelstandspolitik zu geben. |
| Abstract: | This paper complements our expert survey on the challenges for the German Mittelstand in 2014 (The IfM Bonn Future Panel on SMEs) by taking into consideration the entrepreneurs' point of view. The results of our business survey show that (out of eight relevant action fields) the companies' top priority is to preserve or even enhance competitiveness and innovation capabilities. Topics such as demand for skilled labour or bureaucratic burdens which are highlighted in other policy contexts and discourses turn out to be less important. We identify specific challenges for different segments of the Mittelstand in order to provide policy makers with information for the design of Mittelstand support policies. |
| Keywords: | Mittelstand,Herausforderungen des Mittelstands,Mittelstandspolitik,German Mittelstand,challenges for entrepreneurs and Mittelstand (SMEs),SME policies |
| JEL: | L20 L26 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifmmat:239&r=ent |
| By: | Britta Stöver (GWS - Institute of Economic Structures Research); Dr. Marc Ingo Wolter (GWS - Institute of Economic Structures Research) |
| Abstract: | Basierend auf der Unternehmensdemografie des Statistischen Bundesamtes (Rink et al. 2013) und den Daten zu den Gründungs- und Schließungsraten von Unternehmen wird von den Autoren der Versuch unternommen, die Unternehmensentwicklung nach Wirtschaftszweigen im Modellkontext INFORGE besser abzubilden. Der Ansatz berücksichtigt Gründungen, Schließungen und sonstige Vorgänge (u. a. Ausgliederung, Übernahme und Reaktivierungen) für Unternehmen nach Wirtschaftsabschnitten (WZ 2008). Weiterhin werden zur Interpretation der Ergebnisse Kennzahlen gebildet. Mit der Methode lassen sich Fragen zur Dimension der unternehmensdemografischen Prozesse, zur Entwicklung der Unternehmenszahlen und zu den Folgen für die Unternehmensgröße bezogen auf Produktion oder Anzahl der Erwerbstätigen beantworten. Erste Ergebnisse zeigen, dass die Zahl an Handelsunternehmen weiter abnehmen, die Menge von Unternehmen bei Freiberuflern und sonstigen Dienstleistungen hingegen steigen werden. Im Bereich des Produzierenden Gewerbes kann nur die Energieversorgung und die Bauwirtschaft an Unternehmen zulegen. Bis auf die Bauwirtschaft zeigen alle Wirtschaftszweige konsistente Entwicklungen. |
| Keywords: | Unternehmensdemografie, Unternehmensentwicklung, Modellierung, Kennzahlen |
| JEL: | E27 E20 M13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gws:dpaper:15-8&r=ent |
| By: | Nong Zhu; Cecile Batisse |
| Abstract: | The objective of this research is to analyze the relationship between self-employment and socio-economic integration of immigrants in Canada. Using the micro-census data from 1991 and 2006, our results show that self-employment reduces income inequality ; however, its effect on income distribution is not uniform over time. L’objectif de cette recherche est d’analyser les relations existant entre exercice d’une activité indépendante et intégration socio-économique des immigrants au Canada. Établis à partir des microdonnées des recensements de 1991 et 2006, nos résultats montrent que le travail indépendant réduit les inégalités de revenu, mais que son effet sur la distribution du revenu n’est pas uniforme au cours du temps. |
| Keywords: | Self-employment, socio-economic integration, immigrants, Activité indépendante, intégration socio-économique, immigrants |
| Date: | 2015–07–13 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2015s-31&r=ent |