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on Entrepreneurship |
| By: | Catherine Fazio; Jorge Guzman; Scott Stern |
| Abstract: | The acceleration of start-up activity is often cited as a rationale for the R&D tax credit, a key innovation policy instrument adopted increasingly by US states over the past quarter century. While there is a strong empirical base linking the R&D tax credit to increased R&D expenditures and innovation, prior work has not provided causal evidence that this policy effects the rate of formation and growth potential of new businesses. This paper combines data from the US Startup Cartography Project with the Panel Database on Incentives and Taxes to implement a difference-in-differences estimate of the impact of the R&D tax credit on the quantity and quality-adjusted quantity of entrepreneurship. Our key finding is that the R&D tax credit is associated with a significant long-term impact on both the overall quantity and quality-adjusted quantity of entrepreneurship, with the bulk of the effect materializing more than five years after the policy is enacted. These findings stand in contrast to an analysis of the adoption of state-level investment tax credits. There, we observe no long-term impact on the quantity of entrepreneurship but a marked decline in the rate of formation of growth-oriented startups over time. Combined with other evidence regarding the efficacy of R&D tax credits in spurring innovative investment, our results shed light on the potential for this fiscal policy to also stimulate the formation of growth-oriented start-ups. |
| JEL: | H25 L26 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26099&r=all |
| By: | Fossen, Frank M. (University of Nevada, Reno) |
| Abstract: | Entry rates into self-employment increase during recessions and decrease during economic upswings. I show that this is mostly explained by the higher unemployment rate during a recession, together with the fact that at all times, unemployed persons have a relatively high propensity to become entrepreneurs out of necessity because they do not find paid employment. I use econometric decomposition techniques to quantify these effects based on the monthly matched US Current Population Survey before, during and after the Great Recession. I also document that this counter-cyclical pattern of entrepreneurial entry strongly applies to unincorporated entrepreneurship, but only weakly to incorporated entrepreneurship. This highlights the association of unincorporated and incorporated entrepreneurship with necessity and opportunity entrepreneurship, respectively. The results are useful for policy-makers and practitioners to understand, forecast and act on the different types of entrepreneurial activities that are to be expected over the business cycle. |
| Keywords: | entrepreneurship, business cycle, Great Recession, unemployment, opportunity, necessity, decomposition |
| JEL: | L26 J22 J23 M13 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12499&r=all |
| By: | Ulceluse, Magdalena; Kahanec, Martin |
| Abstract: | The paper contributes to the on-going debates concerning the effectiveness of immigration policies, by investigating the case of the transitional arrangements implemented during the European Union enlargement rounds of 2004 and 2007. It has been argued that instead of deterring immigration, the arrangements rather altered the channels of entry. The hypothesis is that, as self-employed workers were not subjected to the transitional arrangements, these migrants used self-employment as a strategy to circumvent restrictions. Our results suggest that this might indeed have been the case post-2007, but not post-2004. We argue that in the latter case, migrants did not need to use self-employment as a strategy, because of alternative, restrictions-free destinations like Ireland and the UK. Our results point to the importance of immigration policies in shaping destination choices and have implications for future EU enlargement rounds. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:379&r=all |
| By: | Michael Ewens; Alexander S. Gorbenko; Arthur Korteweg |
| Abstract: | We estimate the impact of venture capital (VC) contract terms on startup outcomes and the split of value between the entrepreneur and investor, accounting for endogenous selection via a novel dynamic search and matching model. The estimation uses a new, large data set of first financing rounds of startup companies. Consistent with efficient contracting theories, there is an optimal equity split between agents that maximizes the probability of success. However, VCs use their bargaining power to receive more investor-friendly terms compared to the contract that maximizes startup values. Better VCs still benefit the startup and the entrepreneur, due to their positive value creation. Counterfactual exercises show that eliminating certain contract terms benefits entrepreneurs and enables low-quality entrepreneurs to finance their startups more quickly, increasing the number of deals in the market. Lowering search frictions shifts the bargaining power to VCs and benefits them at the expense of entrepreneurs. The results show that selection of agents into deals is a first-order factor to take into account in studies of contracting. |
| JEL: | C78 D86 G24 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26115&r=all |
| By: | Tobias Fuchs; Georg Gebhardt |
| Abstract: | Are entrepreneurs liquidity constraint? Using quasi-random housing wealth variation resulting from communist era decisions, we argue yes, as we find that wealthier East Germans are more likely to become self-employed after reunification. In the literature, no such strong relationship was found using regional house price changes the US and UK. In these economies, our results suggest, the effects of liquidity constraints are masked by anticipatory savings of the would be self-employed, which was impossible for the East Germans in our sample due to communism. |
| Keywords: | self-employment, financial constraints, wealthy households, starting capital |
| JEL: | J23 L26 G32 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7765&r=all |
| By: | Marcello D'Amato (Università di Salerno, CELPE and CSEF); Christian Di Pietro (Università di Napoli Parthenope and CELPE); Marco M. Sorge (Università di Salerno, University of Göttingen and CSEF) |
| Abstract: | Historical examinations of credit markets provide ample evidence on the coexistence of a variety of banking models, some of which specialize in information-intensive business practices. This paper studies the operation of markets in which asymmetrically informed lenders compete for investment projects with stochastic returns. We explore how the business model underlying informed lending — profit maximization (e.g. for profit relational lenders) vs. inter-member surplus redistribution (e.g. credit cooperatives) — shapes relative comparative advantages and affects market efficiency. Three findings stand out. First, consistent with real world evidence, a variety of market configurations — in terms of e.g. credit volumes and market shares — may obtain in equilibrium. Second, market failures (overlending) always prove mitigated when both types of lenders are operative, relative to a world in which equally uninformed lenders only populate the banking landscape. Third, market interaction between asymmetrically informed lenders can generate multiple equilibria. Hence, small changes in the business conditions or other fundamentals can cause large shifts in the allocation of credit leading to either highly selective markets or ones which rather endorse credit provision to undeserving entrepreneurs. |
| Keywords: | Credit markets, Asymmetric information, Universal banks, Credit cooperatives |
| JEL: | D2 D4 G2 |
| Date: | 2019–08–19 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:539&r=all |
| By: | Christian Catalini; Jorge Guzman; Scott Stern |
| Abstract: | This paper develops a novel approach for assessing the role of passive learning versus a proactive growth orientation in the entrepreneurial growth process. We develop a simple model linking early-stage founder choices, venture capital investment and skewed growth outcomes such as the achievement of an IPO or significant acquisition. Using comprehensive business registration data from 34 US states from 1995-2004, we observe that firms that register in Delaware or obtain intellectual property such as a patent or trademark are far more likely to ultimately realize significant equity growth, and these choices also predict early-stage venture capital investment. Moreover, the estimated probability of receiving venture capital as reflected in early-stage founder choices predicts growth even for firms that do not receive venture capital. We use these findings to estimate bounds on the fraction of proactive versus passive firms among firms that ultimately achieve significant equity growth. While nearly half of all firms that achieve modest equity growth (> $10M) are consistent with passive learning (as they neither make early-stage founder choices nor receive venture capital), 78% of firms experiencing an equity growth event greater than $100M are associated with active founder choices and/or venture capital investment, and these firms are concentrated in geographic hubs such as Silicon Valley. Finally, our approach offers a novel approach for estimating the private returns to venture capital, matching on founder choices rather than demographics; consistent with prior studies, venture-backed firms are approximately 5X more likely to grow, with heterogeneity across location and time period. |
| JEL: | L25 L26 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26073&r=all |
| By: | Dan Andrews; Chiara Criscuolo; Peter N. Gal |
| Abstract: | We are grateful to Daron Acemoglu, Ufuk Akcigit, Martin Baily, Eric Bartelsman, Giuseppe Berlingieri, Olivier Blanchard, Patrick Blanchenay, Nick Bloom, Erik Brynjolffson, Sara Calligaris, Gilbert Cette, Mirko Draca, Luis Garicano, John Fernald, Jonathan Haskel, Remy Lecat, Catherine L. Mann, Giuseppe Nicoletti, Dirk Pilat, Alessandro Saia, Louise Sheiner, Chad Syverson, John Van Reenen and Andrew Wyckoff, Jeromin Zettelmeyer for their valuable comments and suggestions. We would also like to thank seminar participants at the Bank of England, Bank of Canada, the Brookings Institution, the Central Bank of the Netherlands, ESCoE, European Commission, France Strategie, IMF, MIT, NBER Productivity, Innovation and Entrepreneurship Program meeting, OFCE, Peterson Institute for International Economics, Royal Economic Society, UCL, US Census Bureau, and participants at the OECD Global Forum on Productivity Conferences in Mexico City and Lisbon as well as OECD Committee Meetings. The opinions expressed and arguments employed herein are solely those of the authors and do not necessarily reflect the official views of the OECD or its member countries. |
| Keywords: | firm dynamics, regulation, knowledge diffusion, technological change, productivity |
| JEL: | O30 O40 M13 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1645&r=all |
| By: | Hezam Haidar (G-SCOP - Laboratoire des sciences pour la conception, l'optimisation et la production - UJF - Université Joseph Fourier - Grenoble 1 - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INPG - Institut National Polytechnique de Grenoble - UGA - Université Grenoble Alpes - CNRS - Centre National de la Recherche Scientifique, CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS - Centre National de la Recherche Scientifique - UPMF - Université Pierre Mendès France - Grenoble 2 - UGA - Université Grenoble Alpes); Karine Evrard Samuel (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS - Centre National de la Recherche Scientifique - UPMF - Université Pierre Mendès France - Grenoble 2 - UGA - Université Grenoble Alpes); Jean-François Boujut (GILCO - Gestion Industrielle Logistique et Conception - INPG - Institut National Polytechnique de Grenoble) |
| Abstract: | Academia-Industry collaboration is increasingly seen as an essential engine of local economic development and the open innovation model is a key element in such collaboration. The aim of this paper is to explore the existing literature in a systematic way to identify the factors that influence decision makers to start an open innovation collaborations between universities and SMEs. The review shows that open innovation' in the context of university-Industry is receiving more and more attention. The majority of the existing research focus on knowledge and technology transfer. We used the Content Analysis method to analyze the final sample, the findings fall into four categories of factors: Organizational Structure, External Resources, Performance Indicators and Proximity. The article concludes with suggestions for future research. |
| Keywords: | SMEs,open innovation,university-Industry collaboration,early-stage development knowledge and technology transfer,systematic review |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02184337&r=all |
| By: | Wei-Fong Pan (Department of Economics, University of Reading) |
| Abstract: | Although most empirical studies conclude that uncertainty delays firms' investments based on real options theory, empirical evidence regarding the impact of uncertainty on innovation is mixed. This study examines the impact of geopolitical risk (GPR) on corporate research and development (R&D) investment using newly developed indices. We find a negative relationship between GPR and R&D investment. The R&D investment rapidly drops and rebounds several quarters after high GPR. The impact of GPR is most significant for high-tech firms, small firms, and firms with high growth options. However, when GPRs are realised, these significant and negative effects disappear. These results are shown to be robust after controlling for firm characteristics, macroeconomic environment, other uncertainty measures, time, and alternative GPR and R&D measures, as well as considering the simultaneity and endogeneity issues. Overall, our study suggests that GPR plays a key role in determining R&D investment. |
| Keywords: | R&D, Political uncertainty, Geopolitical risk, Innovation |
| JEL: | D80 H56 O31 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2019-11&r=all |
| By: | Zhu, Zhongkun; Leng, Chenxin; Delgado, Michael |
| Keywords: | Labor and Human Capital |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290988&r=all |
| By: | Kraemer-Eis, Helmut; Botsari, Antonia; Gvetadze, Salome; Lang, Frank; Torfs, Wouter |
| Abstract: | This analysis provides an overview of the main markets relevant to the EIF. It starts by discussing the general market environment, then looks at the main aspects of equity finance and the guarantee and SME securitisation markets. It also highlights important aspects of microfinance in Europe. Finally, the analysis includes a chapter dedicated to Fintech. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eifwps:201957&r=all |