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on Entrepreneurship |
| By: | Jarkko Harju (Tampere University and Finnish Center of Excellence in Tax Systems Research); Toni Juuti (Labour Institute for Economic Research LABORE, Tampere University and Finnish Center of Excellence in Tax Systems Research); Tuomas Matikka (VATT Institute for Economic Research and Finnish Center of Excellence in Tax Systems Research) |
| Abstract: | Using detailed full-population data from Finland, we provide evidence on selection into entrepreneurship and the dynamic implications of establishing a new business. Individuals at the very top of the personal income distribution are much more likely to start a new incorporated business compared to others. There is no similar selection based on parental income, but more than half of new entrepreneurs have entrepreneurial parents. Entrepreneurship is associated with a similar average income gain of 20% relative to comparable wage earners throughout both personal and parental income distributions. However, key firm-level outcomes such as productivity and job creation are positively linked with personal income. This suggests that high-income individuals do not only benefit from entrepreneurship personally, but their businesses are associated with the largest positive spillovers in the economy. In contrast, we find no significant differences in the outcomes of new firms by parental income or parental background in entrepreneurship. |
| Keywords: | entrepreneurship; income mobility; inequality; productivity |
| JEL: | L26 J24 J3 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:fit:wpaper:17&r=ent |
| By: | Pietro Santoleri (European Commission - JRC); Emanuele Russo (Bank of Italy) |
| Abstract: | In the attempt to boost innovation, policy-makers have enacted a myriad of programs targeting innovative start-ups in recent years. Empirical evidence on these initiatives has almost exclusively focused on national-level programs, overlooking those implemented at the local level. This paper provides the first quasi-experimental evidence on the joint effects of local policies focusing on Italy, where regional governments have been very active in providing financial support to these firms. By leveraging discontinuities in program design, we adopt a local randomization approach and document a null effect of these programs over a wide range of firm-level outcomes. However, we find that securing local subsidies increases start-ups' probability to obtain additional public subsidies, which points in the direction of a vicious “Matthew effect” in subsidy allocation. Consistent with a reputation/certification mechanism, the increase in follow-on subsidies occurs for funds disbursed at the local level only, whereas no effect is detected for subsidies allocated by national or international authorities. |
| Keywords: | Regression discontinuity design, Innovation Policy, Place-based Policy, Start-ups. |
| JEL: | D22 G24 G32 L53 O31 O38 R58 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:termod:202313&r=ent |
| By: | ARATA Yoshiyuki; MIYAKAWA Daisuke; MORI Katsuki |
| Abstract: | This paper investigates firm growth dynamics by using the theory of stochastic processes and data on corporate tax records covering almost all firms in Japan. We show that the growth path of high-growth firms (HGFs) is characterized by a single large jump rather than a gradual increase. Specifically, before the jump occurs, the growth path of a HGF is similar to that of non-HGFs, but then it experiences a rapid increase in size. This growth pattern with a jump is typical (i.e., most likely) for HGFs. To provide further empirical evidence, we consider the ratio of the growth rate in the first period to the entire growth rate over two periods. The histogram of this ratio exhibits a U-shaped curve for HGFs, indicating that high growth over the two periods is explained by high growth either in the first or second period (but not both). This U-shaped curve is consistent with the idea that a single large jump determines the growth path of HGFs. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:23087&r=ent |
| By: | Otis, Nicholas G.; Clarke, Rowan Philip; Delecourt, Solene; Holtz, David (University of California, Berkeley); Koning, Rembrand (Harvard Business School) |
| Abstract: | There is a growing belief that scalable and low-cost AI assistance can improve firm decision-making and economic performance. However, running a business involves a myriad of open-ended problems, making it hard to generalize from recent studies showing that generative AI improves performance on well-defined writing tasks. In our five-month field experiment with 640 Kenyan entrepreneurs, we assessed the impact of AI-generated advice on small business revenues and profits. Participants were randomly assigned to a control group that received a standard business guide or to a treatment group that received a GPT-4 powered AI business mentor via WhatsApp. While we find no average treatment effect, this is because the causal effect of generative AI access varied with the baseline business performance of the entrepreneur: high performers benefited by just over 20% from AI advice, whereas low performers did roughly 10% worse with AI assistance. Exploratory analysis of the WhatsApp interaction logs shows that both groups sought the AI mentor’s advice, but that low performers did worse because they sought help on much more challenging business tasks. These findings highlight how the tasks selected by firms and entrepreneurs for AI assistance fundamentally shape who will benefit from generative AI. |
| Date: | 2023–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:hdjpk&r=ent |
| By: | Alicia Martin-Navarro; Jose Aurelio Medina-Garrido; Felix Velicia-Martin |
| Abstract: | The literature on effectual theory offers validated scales to measure effectual or causal logic in entrepreneurs' decision-making. However, there are no adequate scales to assess in advance the effectual or causal propensity of people with an entrepreneurial intention before the creation of their companies. We aim to determine the validity and reliability of an instrument to measure that propensity by first analysing those works that provide recognised validated scales with which to measure the effectual or causal logic in people who have already started up companies. Then, considering these scales, we designed a scale to evaluate the effectual or causal propensity in people who had not yet started up companies using a sample of 230 final-year business administration students to verify its reliability and validity. The validated scale has theoretical implications for the literature on potential entrepreneurship and entrepreneurial intention and practical implications for promoters of entrepreneurship who need to orient the behaviour of entrepreneurs, entrepreneurs of established businesses who want to implement a specific strategic orientation, entrepreneurs who want to evaluate the effectual propensity of their potential partners and workers, and academic institutions interested in orienting the entrepreneurial potential of their students. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2312.00916&r=ent |
| By: | Eugene Tan; Teegawende H. Zeida |
| Abstract: | We formulate a framework showing that differences in capital returns and capital intensity between groups of firms can identify relative differences in consumer demand and credit constraints. Using micro-data on Black- and White-owned startups, we find robust evidence that Black-owned startups have lower capital returns, implying that Black-owned startups face lower consumer demand due to race. In contrast, we find mixed evidence of tighter credit constraints due to race. We further show that differences in capital returns are persistent over time, whereas capital intensity differences are transitory. This suggests that lower demand, rather than credit constraints, might be the main barrier to growth for Black-owned startups. |
| Keywords: | Discrimination; Investment; Entrepreneurship |
| JEL: | L26 E22 J15 |
| Date: | 2023–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmoi:97508&r=ent |
| By: | Alicia Martin-Navarro; Felix Velicia-Martin; Jose Aurelio Medina-Garrido; Ricardo Gouveia Rodrigues |
| Abstract: | The tourism sector is a sector with many opportunities for business development. Entrepreneurship in this sector promotes economic growth and job creation. Knowing how entrepreneurial intention develops facilitates its transformation into entrepreneurial behaviour. Entrepreneurial behaviour can adopt a causal logic, an effectual logic or a combination of both. Considering the causal logic, decision-making is done through prediction. In this way, entrepreneurs try to increase their market share by planning strategies and analysing possible deviations from their plans. Previous literature studies causal entrepreneurial behaviour, as well as variables such as creative innovation, proactive decisions and entrepreneurship training when the entrepreneur has already created his or her firm. However, there is an obvious gap at a stage prior to the start of entrepreneurial activity when the entrepreneurial intention is formed. This paper analyses how creativity, proactivity, entrepreneurship education and the propensity for causal behaviour influence entrepreneurial intentions. To achieve the research objective, we analysed a sample of 464 undergraduate tourism students from two universities in southern Spain. We used SmartPLS 3 software to apply a structural equation methodology to the measurement model composed of nine hypotheses. The results show, among other relationships, that causal propensity, entrepreneurship learning programmes and proactivity are antecedents of entrepreneurial intentions. These findings have implications for theory, as they fill a gap in the field of entrepreneurial intentions. Considering propensity towards causal behaviour before setting up the firm is unprecedented. Furthermore, the results of this study have practical implications for the design of public education policies and the promotion of business creation in the tourism sector. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2312.00517&r=ent |
| By: | Yuki Higuchi (Faculty of Economics, Sophia University, Japan); Vu Hoang Nam (Faculty of International Economics, Foreign Trade University, Viet Nam); Tetsushi Sonobe (Asian Development Bank Institute, Japan) |
| Abstract: | We conducted randomised experiments to provide management training for 312 small Vietnamese manufacturers in 2010 and repeatedly collected follow-up data in the span of a decade. Analysing panel data constructed from our original surveys with an attrition rate of 4%, we find that our training significantly improved the management quality of the treated entrepreneurs, and such improvement was sustained for at least 5 years. The control entrepreneurs, however, caught up in the longer run. |
| Keywords: | management training, Kaizen, small and medium-sized enterprises, RCT, Viet Nam. |
| JEL: | L2 M1 O1 |
| Date: | 2023–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2022-42&r=ent |
| By: | HONDA Tomohito; ONO Arito; UESUGI Iichiro; YASUDA Yukihiro |
| Abstract: | In this study, we use a detailed and comprehensive dataset on out-of-court debt workouts for distressed small and medium-sized enterprises in Japan to describe characteristics of these workouts. We then investigate their determinants and the subsequent effects on firm performance. We find that most cases of debt restructuring involve a rescheduling (deferral of debt repayment). In contrast, firms infrequently use more drastic measures, some of which could reduce their debt overhang. For the determinants, firms with operating surpluses and negative net worth are more likely to take drastic measures to restructure debt, which is consistent with the debt overhang theory. Firms with operating surpluses are more likely to adopt measures to hold management responsible and to use new outside executives. In terms of performance, firms that use drastic debt restructuring strategies have better gross sales and profits. Firms that use restructuring to hold management more responsible reduce employment and improve profits. These results indicate that firms that use measures to reduce their debt overhang and limit their moral hazard improved their performance. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:23088&r=ent |
| By: | Diana Barro (Department of Economics, Ca' Foscari University of Venice); Marco Corazza (Department of Economics, Ca' Foscari University of Venice); Gianni Filograsso (Department of Economics, Ca' Foscari University of Venice) |
| Abstract: | Through ESG assessment, companies can effectively measure their exposure to environmental, social, and governance (ESG) risks identifying opportunities for long-term sustainable growth and future social and environmental impact. This process is crucial for listed small and medium-sized enterprises (SMEs) wanting additional support in their ESG transition. The importance of such assessments will only intensify in the future as the implementation of the Sustainable Finance Disclosure Regulation (SFRD) and the Corporate Sustainability Reporting Directive (CSRD) will require all listed companies to be on equal footing. In this contribution, we propose to apply a multi-criteria method (MURAME) to assess the sustainability profiles of SMEs. The methodology, which allows for measuring a firm's environmental, social, and governance (ESG) efforts, is applied to a sample of European-listed SMEs with the aim of identifying ESG leaders and laggards and analyzing potential sector-specific effects. The obtained ranking results show some degree of robustness across different model parameterizations. Furthermore, we propose to model the benefits of voluntary disclosure of sustainability information under a prudential scoring framework. |
| Keywords: | corporate social responsibility, sustainability policy, small- and medium-sized enterprises, multi-criteria decision making |
| JEL: | C44 Q56 M14 O16 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2023:27&r=ent |
| By: | Davide Azzolini; Nicola Doppio; Luca Mion; Iunio Quarto Russo; Alessio Tomelleri |
| Abstract: | Innovating product design is crucial for firms operating in the digital sector as it is closely linked with innovation capability and, therefore, with firm performance and productivity. In this paper, we run a randomized controlled trial to assess if participating in an open innovation initiative increases SMEs’ capability to design more competitive digital products. More specifically, the intervention aimed at increasing firms’ knowledge of the Design Sprint and their readiness to implement user-centered design techniques. 190 SMEs based in 7 different European countries took part in the field trial in spring 2021. We find that the intervention increased participants’ knowledge about user-centered design methods, although no statistically significant effects are found on participants’ intention to adopt that in their firms. This may be traced back to organizational and financial constraints typically related to the small-sized firms involved. |
| Keywords: | Open Innovation, SMEs, Randomized Controlled Trial, User Experience Design, Design Sprint |
| JEL: | D22 M31 O31 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:fbk:wpaper:2024-01&r=ent |