Showing papers in "Journal of Entrepreneurship and Public Policy in 2015"

Financing small and medium enterprises in Asia and the Pacific

Abstract: Purpose – The purpose of this paper is to propose policy suggestions for the financing of small and medium enterprises (SMEs) in the Asia-Pacific region. Recent literature suggests that lack of capital is the most severe constraint for SME survival and growth. Enabling policymakers to assist SMEs in their search for financing will boost economic growth. Design/methodology/approach – The methodology includes both quantitative and qualitative components. Current World Bank data on the strength of various financial institutions in the countries of interest is analyzed to discover areas of improvement. Additionally, 32 experts from East and South Asia were interviewed several times to determine areas of concern in financing SMEs. Their responses and the evidence from the World Bank data form the basis of the policy prescriptions in the paper. Findings – Financing is a critical constraint for SMEs for several reasons. Many SME owners do not manage working capital effectively, information asymmetry between bank...

Using the eurostat-OECD definition of high-growth firms: a cautionary note

Abstract: Purpose – High-growth firms (HGFs) have attracted an increasing amount of attention from researchers and policymakers, and the Eurostat-Organisation for Economic Co-operation and Development (OECD) ...

Measuring Schumpeterian activity using a composite indicator

Abstract: Purpose – As an economic development strategy, entrepreneurship policies should target innovative activities – those which Schumpeter described as leading to new goods, production methods, markets, input sources, or new industries. However, popular entrepreneurship proxies, such as firm births (<500 employees) and sole proprietorships, capture multiple types of entrepreneurship which may have conflicting qualities. To address the need for more accurate measures of Schumpeterian activity, indices are constructed to specifically measure the relative amount of Schumpeterian activity among US states. The paper aims to discuss these issues. Design/methodology/approach – Four composite indices of Schumpeterian activity are constructed using different methods to combine variables related to innovative activity into single indicator, since there is uncertainty about the weighting of dimensions: principal component analysis (PCA), factor analysis (FA), data envelopment analysis and equal weights. Robustness checks...

National culture, institutions and economic growth

Abstract: Purpose – The purpose of this paper is to examine the potential pathway of influence of formal and informal institutions and economic development on the business productive behaviour at the national level. Design/methodology/approach – In the paper SEM models and regression analysis are used to define the causal relationships. Using data from cultural dimensions of Hofstede, Inglehart and Tabellini, proxies for formal institutions and economic development this research empirically examines the way of influence of these factors on entrepreneurship performance in the national economy. Findings – This paper demonstrates that, stimulating by the economic growth, formal and informal institutions could affect business productive behaviour at the macro level in both direct and indirect ways through each other. Formal and informal institutions were found to act as substitutes. The author argues that the decision to act productively is not just a result of the formal institutional framework – “bad” outcomes of bus...

Entrepreneurship, corruption, and the size of US underground economies

Abstract: Purpose – Using state-level data on productive and unproductive entrepreneurship, shadow economy size, and public official corruption, the purpose of this paper is to examine whether formal sector productive (unproductive) entrepreneurial activity is associated with lower (higher) levels of informal economic activity. Design/methodology/approach – Additionally, the author aims to connect US state-level entrepreneurship, shadow economy size, and corruption by asking whether corruption affects entrepreneurial outcomes primarily through its effects on the shadow economy. The author contends that if this is the case, then estimates of corruption should serve as a good instrument for shadow economy size in regressions on formal sector entrepreneurial outcomes. Findings – Results from OLS regressions suggest that shadow economy size shares a strong, negative (positive), and statistically significant relationship with productive (unproductive) entrepreneurship. These results are fairly robust to GMM estimation. ...

Work-family state support for the self-employed across Europe

Abstract: Purpose – The purpose of this paper is to map and understand work-family state support for the self-employed compared to employees across European countries Design/methodology/approach – To map state work-family support policies for the self-employed, an overview of public childcare, maternity, paternity, and parental leave arrangements across European countries is created based on databases, local government web sites, and local experts’ country notes Secondary data analyses are conducted in order to compare support for the self-employed to support for employees and across countries Differences across countries are analysed from a welfare state regime perspective, which explicates assumptions about the role of the government in providing work-family state support and which is often used in research on work-family support for employees Findings – Results show that, in general, the self-employed receive less work-family state support than employees or none at all The extensiveness of work-family state

Government roles in venture capital development: a review of current literature

Abstract: Purpose – Interest in venture capital markets continues to be of relevance to politicians and policy makers, recognizing the importance of government participation in venture capital market development. Yet advice regarding developing venture capital markets appears increasingly disparate. The paper aims to discuss these issues. Design/methodology/approach – The authors engage the assumptions that underpin three dominant policy approaches to the development of venture capital markets with regard to the role of governments in that process. The authors categorize existing empirical studies against three approaches and give examples of the different government policies associated with the various approaches. Findings – Direct and indirect approaches recognize the importance of active stock markets but largely ignore the dynamic processes of markets, asserting that the provision of capital, institutional changes, and financial incentives ex ante will cause a positive market reaction, regardless of the market’...

Central city vibrancy and new business venturing

Abstract: Purpose – Researchers have identified the “vibrancy” of living in a spatially defined area as having a positive impact on entrepreneurial activity, measured as new business start-ups. Vibrant areas attract and facilitate would-be entrepreneurs, and attract other entrepreneurs and the skilled people and other resources who can take advantage of the opportunities other entrepreneurs create. A vibrant locale, then, can trigger a virtuous cycle of entrepreneurially led economic and social development. The purpose of this paper is to test this hypothesis. Design/methodology/approach – The unit of observation is the county of the US Census-designated central city of metropolitan statistical areas. The authors use principal components analysis to recover scores from a variety of measures of urban vibrancy. The authors embed these scores in an OLS model of new business venturing. Findings – Within a standard model of new business launches that is designed to be comparable across time and space, the inclusion of p...

Gender Differences in the Use of Assistance Programs

Abstract: Purpose – The purpose of this paper is to examine differences in factors influencing use of entrepreneurial assistance programs by male and female entrepreneurs. Design/methodology/approach – Data from the Panel Study of Entrepreneurial Dynamics I are used to determine drivers of assistance program use by men and women using logistic regression. These drivers include size and composition of the start-up team and personal network, experiences of the entrepreneur, team and network; support provided by the team and network, and other factors. Findings – In total, 31 percent of female entrepreneurs and 24 percent of male entrepreneurs in the sample used entrepreneurial assistance programs. Results show that drivers of assistance use do vary by gender. Education, business/entrepreneurial knowledge and involvement in a technology-based start-up are drivers of program use by women. Personal network size, entrepreneurial experience of start-up team, and having worked for parents’ business are drivers of program u...

U.S. State Government policies and entrepreneurship

Abstract: Purpose – The purpose of this paper is to test the effects of government policies on entrepreneurial activity within the 50 US states. Design/methodology/approach – Using panel data and a fixed-effects model, the authors examine the determinants of the nominal establishment entry rate, the nominal establishment exit rate, and the net establishment entry rate. To measure government policy, the authors use the Economic Freedom of North America (EFNA) index published by the Fraser Institute. The authors use both the overall index and its components. The authors also use the state and local tax burden published by the Tax Foundation. Findings – The authors find that a smaller government is associated with a net increase in business establishments. A freer labor market is also associated with a net increase in business establishments. However, the relationship between the tax burden and entrepreneurship is more complex. Using a measurement of the tax burden from the Fraser Institute, the authors find that an i...

Policy process lessons from the Orphan Drug Act: applications for health policy advocates

Abstract: Purpose – The Orphan Drug Act has provided the pharmaceutical industry with incentives to research and develop drugs for orphan diseases: rare diseases with little profit potential. It is considered very successful legislation by legal scholars, the Food and Drug Administration (FDA), and orphan drug activists. The policy process of the Act provides an important model of the policy process for future incentive-based pharmaceutical legislation. The purpose of this paper is to summarize the important incentives of the Act and the historical events leading up to the Act. The paper applies three different theoretical models of the public policy process to understand the emergence of the Orphan Drug Act: Kingdon’s Multiple Streams Model, the Advocacy Coalition Framework, and Social Constructionism Theory. The paper then synthesizes the public policy process lessons from each perspective and provides four recommendations for other social activists seeking to propel incentive-based pharmaceutical legislation for...

Political entrepreneurship: Jefferson, Bayard, and the election of 1800

Abstract: Purpose – The purpose of this paper is to demonstrate that an implication of Holcombe’s (2002) model is a “revolution trap.” This paper extends Holcombe’s model adding Klein’s concept of entrepreneurship as judgment concerning the use of heterogeneous political capital. The authors use the case of the USA presidential election of 1800 to demonstrate the utility of the extension, and to discuss how political entrepreneurship served to prevent a revolution trap. The political entrepreneurship of 1800 established the precedent of peaceful transition of power in the USA, which opened the door to the rapid economic development of the early nineteenth century. Design/methodology/approach – This is a historical case study using letters, newspapers, pamphlets, and other pieces of empirical evidence to highlight an important moment of political entrepreneurship. Findings – Many contemporary observers predicted that the USA would devolve into continuous revolution, which the authors argue Holcombe’s (2002) model pr...

Cultural traits and stock market development: an empirical analysis

Abstract: Purpose – During recent times, the stock market has emerged as a major financial institution of an economy. Yet, cross-country differences, in size and role of stock market, persist. The purpose of this paper is to investigate the correlation between cultural traits and the development of the stock market in a country. Considering multiple dimensions of culture, identified in the literature by Hofstede (1980/2001) and World Value Survey, the authors construct the hypotheses: trust, a key cultural trait, should positively influence stock market development; uncertainty avoidance, Hofstede’s cultural dimension should negatively influence the development of the stock market; and individualism, an alternate cultural dimension of Hofstede’s measures, should be positively correlated with stock market development. The cross-country empirical analysis supports the hypotheses. The results hold for multiple measures of stock market development. Design/methodology/approach – This paper investigates the correlation b...

The role of economic policy uncertainty in the US entrepreneurship-unemployment nexus

Abstract: Purpose – The purpose of this paper is to extend the literature on the entrepreneurship-unemployment nexus to include the role of economic policy uncertainty in the causal dynamics. Design/methodology/approach – The study utilizes the Toda-Yamamoto causality tests of a vector autoregressive (VAR) model to infer the causal dynamics between the self-employment rate (SER), the unemployment rate (UR), industrial production (IP), and the economic policy uncertainty index (EPUI) in the case of the USA. In addition to the examination of the causal dynamics, generalize impulse response analysis is undertaken to examine the role of unexpected shocks to the current and future behavior of the variables specified in the VAR model. Findings – The results reveal unidirectional causality from the SER, IP, and the EPUI to the UR. An increase in the SER and IP lowers the UR while an increase in the EPUI raises the UR. The findings also show unidirectional causality from the EPUI to IP in which an increase in the EPUI redu...

Economic freedom, homeownership, and state labor market conditions

Abstract: Purpose – The purpose of this paper is to reconcile research finding that labor market outcomes are related to economic freedom for entrepreneurs and separate research finding that higher homeownership rates are associated with more unemployment. Design/methodology/approach – Using panel data covering the 50 states over 1981-2009, this paper analyzes the relationship between labor market conditions, economic freedom, and homeownership rates. Findings – The results indicate that economic freedom is associated with favorable labor market conditions but that the relationship between homeownership and poor labor market outcomes is small and insignificant in most specifications once economic freedom is accounted for. Originality/value – This paper is the first paper to examine the relationship between labor market outcomes and both homeownership and economic freedom. The results suggest that the economic environment for entrepreneurs is more important than any rigidities created by homeownership.

An examination of the burdens faced by entrepreneurs at start-up and five years later

Abstract: Purpose – The purpose of this paper is to consider the burdens faced by small business entrepreneurs in North Dakota. Design/methodology/approach – Two surveys of entrepreneurs are reported on, assessing burdens at start-up and five years later. Burdens are compared within each time period, across time periods, and are linked to industry type and business size. The study also compares survivors and non-survivors, and considers whether survivorship is linked to initial burdens. Findings – Regulatory factors and taxes were not as burdensome in the initial time period, compared to workforce and financing factors. In the follow-up survey property taxes were the largest burden, particularly among larger businesses. Among survivors, availability of capital was more burdensome at start-up and permitting and licensing complexity at follow-up. Survivors had more employees and rated permit/license complexity as more of a burden compared to non-survivors. Cross-industry burden differences were noted. Finally, busine...

Is the American dream dead? Inequality, mobility and entrepreneurship

Abstract: Purpose – The purpose of this paper is to question the frequently heard claims of a negative relationship between inequality and intergenerational mobility (such as the “Great Gatsby Curve” by Alan Krueger) and to propose entrepreneurship as the neglected prime countervailing force against the putative advantages of the rich. Design/methodology/approach – A critical examination of evidences marshalled to support the case for a negative relationship between inequality and mobility, in terms of the appropriateness of statistical inferences and the consistency between implications and observations. The paper adopts alternative approach of Austrian economic in emphasizing the role of entrepreneurship in generating mobility. Findings – The putative negative relationship between inequality and mobility is not supported by evidence. The result is partly that egalitarians tend to skip close examination when they run into evidence that seems to support their preconception. It is also partly that the dominant tradi...

Measuring and testing general fundamental attribution error in entrepreneurship effecting public policy

Abstract: Purpose – The purpose of this paper is to empirically test for fundamental attribution error (FAE) – the naturally occurring bias of humans to over-attribute business success to celebrity-entrepreneur disposition. Design/methodology/approach – Employing a five-step process, this paper measures and tests for FAE bias in entrepreneurial situations. The methodology includes anecdotal historical evidence; developing a FAE survey instrument; having 101 respondents classify variables; statistically testing and validating the instrument; and then statistically identifying the importance of each factor with a sample 105. Findings – Significant statistical evidence for an active FAE bias was found. People do tend to attribute business success to entrepreneurial dispositions, rather than team behavior and circumstantial outcome factors which can reduce the effectiveness of public policy. Research limitations/implications – There is minimal research on FAE in entrepreneurship effecting public policy, thus there is a...

Building boundary capabilities at the base of the pyramid

Abstract: Purpose – Over the last 15 years, articles about the base of the pyramid (BOP) have begun to appear in scholarly business journals. Although attention was driven initially by claims that corporations could earn a fortune selling to these consumers, it became clear that this is difficult. The paper aims to discuss these issues. Design/methodology/approach – To move beyond this difficulty, the authors emphasize the iterative boundary capabilities built by local, for profit enterprises as the key to creating markets at the BOP. Findings – The authors argue that the evolution of the business models to permit firms to earn profits and have positive social impact requires building iterative boundary capabilities and support this claim by reviewing two cases of community based non-profits. Research limitations/implications – Future research should demonstrate that the process the authors observed in these two cases applies in other contexts. Scaling social impact will require sharing knowledge about iterative bo...

Development policies and partnerships in Greece: experiences from Thessaloniki

Abstract: Purpose – The purpose of this paper is to investigate the importance of specific local development policies and partnerships for SME enterprises in Thessaloniki one of the metropolis of south Europe The two main research questions are: first, what are the most important development policies for firms’ development? and second, in what level these policies receive different significance from firms belonging in different production sectors? Design/methodology/approach – In order to achieve the aims of the paper and answer the research questions, the study uses an extensive use of bibliography, and field research that has been implemented by administering questionnaires on a representative sample of 227 enterprises The study comes up to valuable conclusions for the firms and the city through the use of exploratory factor analysis, reliability analysis and clustering Findings – The present research brings on important issues and questions about local economic development because it presents directly the est