Showing papers in "Journal of Entrepreneurship and Public Policy in 2017"

Institutional quality and innovation: some cross-country evidence

Abstract: Purpose The purpose of this paper is to examine the cross-country variation in innovation and propose that it can be explained by the presence of market institutions using the Global Innovation Index. Design/methodology/approach This paper uses ordinary least squares with region and OECD fixed effects to test whether more economic freedom is associated with more innovation. Findings The findings reveal that the effect of market institutions on innovation is promoted by both knowledge and creativity. When innovation is broken down into its component measures, the results suggest that a high-quality legal system is associated with more creativity and free trade is associated with greater knowledge. Originality/value These findings provide evidence that economic freedom matters for innovation through both creativity and knowledge, particularly through the protection of property rights and the legal system and free trade. Policy makers desiring to spur innovation may want to examine the level of freedom in private ownership and the reduction of trade barriers as a prerequisite for innovation policy.

Regulation and entrepreneurial intention: cross-country evidence

Abstract: Purpose Entrepreneurship, along with its effect on economic growth, has been a major topic of research for quite some time now. However, none of these studies employs the use of entrepreneurial intention, a key indicator of latent entrepreneurs, as a measure of entrepreneurship. Till now, some small-scale studies have been done using survey data, with results indicating that external entrepreneurial environment affects entrepreneurial intention. A handful of studies have also looked at the linkages between economic freedom and entrepreneurial activities. The paper aims to discuss this issue. Design/methodology/approach Using a panel data setting, this paper investigates the effects of economic freedom, especially regulation, on entrepreneurial intention. The empirical analysis uses data for 79 countries from 2001 to 2012. Findings The findings suggest that stricter credit market regulation reduces entrepreneurial intention whereas more stringent labor regulations restricts job availability and thereby encourage more people to take up entrepreneurship as a career choice. Research limitations/implications The entrepreneurial intention data available from GEM is a highly unbalanced data and the data also does not differentiate between latent entrepreneurship in agricultural and non-agricultural sectors. Practical implications Future research should focus more on latent entrepreneurship which is a rough estimate of future entrepreneurs. Social implications Entrepreneurship acts as a channel to improve economic growth by creating more jobs and the institutional qualities might act as a barrier for aspiring entrepreneurs to take up entrepreneurship as their career choices in developing countries. Originality/value This study has a twofold contribution in the literature. First, it is the foremost large scale study that deals with entrepreneurial intention using secondary data from Global Economic Monitor (GEM) report. Second, this study explores the linkages between economic freedom index and entrepreneurial intention.

Failure Is an Option: The Entrepreneurial Governance Framework

Abstract: Purpose It has been more than 20 years since the “Reinventing Government” movement swept through the American public sector. Over time, the tenets of public entrepreneurship and new public management have diverged due to liability and risk aversion. One of the core elements of entrepreneurship is risk taking, and with it the likelihood of failure. The purpose of this paper is to reconcile these issues under a simple framework of “entrepreneurial governance” that works across the elements of knowledge, innovation, opportunity, and implementation. Design/methodology/approach This is primarily a set of problems (liability, risk aversion, critiques) that negatively impacts the application of public entrepreneurship. To build a framework, the author made a substantive review of the literature to “get back to basics” and clarify the problems, as well as draw fundamental concepts about entrepreneurship. Findings The framework was developed by applying the more current notion of “governance” with the basic elements of entrepreneurship, acknowledging that in implementation we have to account for the critiques by reinforcing responsible risk reduction and ethical decision making. Research limitations/implications The intent was to create a framework based on fundamental aspects of entrepreneurship. The limitations/implications are that additional research will have to develop more concrete testing methods and then test the framework. Practical implications The intent here was to create a “practitioner friendly” prescriptive framework that could be almost immediately applied. Social implications A culture shift away from risk aversion (and corrupt practices) has to allow risk taking and with it responsible risk reduction (and failure or success). Originality/value The reliance on existing literature reduces some of the originality, except to re-conceptualize public entrepreneurship in a way that accounts for its shortcomings. The value in shifting culture and responsibly reducing risk is difficult to estimate.

Small-business financing after the financial crisis – lessons from the literature

Abstract: Purpose The purpose of this paper is to examine the status of small-business lending following the recession. Design/methodology/approach The authors survey the literature and analyze recent surveys of small-business lending. Findings The results reinforce the importance of owner equity as a primary source of small-business financing. In addition, the authors find that small firms have been seeking and obtaining less capital since the 2008 financial crisis. Research limitations/implications The findings about the main sources of small-business financing will be informative when formulating financial regulation. Social implications The available evidence suggests that new regulation of the financial services industry may be restricting access to products that small-business owners rely on and may adversely affect small banks. Originality/value The authors offer the most recent analysis of small-business financing, focusing on changes that may have been caused by the recession and major financial regulations.

Building the African economy: Is President Obama’s entrepreneurial public management program sustainable in Africa?

Abstract: Purpose The purpose of this paper is to assess the strengths and weaknesses of the President Obama Youth African Leadership Initiative (YALI) program with evidence from experts and other relevant stakeholders. This study examines YALI program with a focus on entrepreneurship and public management. Design/methodology/approach Qualitative semi-structured interviews used in this study explore the understanding and diverse views of various stakeholder experts on training of young leaders in entrepreneurship and public management in Africa regarding the YALI program. Findings The study provides insight into the importance of the YALI program, but questions whether it can make a positive impact and be effectively implemented in Africa. The findings suggest that there is lack of clarity in the objectives of the program, particularly with regards to the role of the key stakeholders including academics, government institutions, policymakers and the private sector. The results underscore the need for sound and clear-cut government policies toward entrepreneurship development that will foster a better relationship between the African governments and the United States Agency for International Development program. Research limitations/implications The study focused on academic experts and a number of policymakers and may not have been representative of all stakeholders. Originality/value The study specifically emphasizes policies that target entrepreneurship training and education for women and youth, using a participatory approach and multi-stakeholder partnership to promote innovative entrepreneurship and social development in the continent.

Entrepreneurship, corruption and economic freedom

Abstract: Purpose The purpose of this paper is to extend the literature on entrepreneurship and corruption by examining the link between productive and unproductive entrepreneurial activities as moderated by economic freedom. Specifically, the authors hypothesize that various aspects of economic freedom are contextual in their moderating effects, so that what matters in terms of economic freedom will depend on other factors such as levels of human capital. Design/methodology/approach The authors test these hypotheses by incorporating aggregated and disaggregated measures from the Economic Freedom of the World into a model of international entrepreneurial activity. Findings The results indicate that not only is economic freedom a major determinant of the level of entrepreneurial activity across countries, as previously verified, but that it also moderates the relationship between human capital, corruption, and productive entrepreneurship. Originality/value These findings resolve many of the ambiguities previously identified in the literature on the link between corruption, entrepreneurship, and growth.

Productivity, institutions, and market beliefs: three entrepreneurial interpretations

Abstract: Purpose Inspired by the debates among economists about the role of beliefs and informal institutions in economic development, the purpose of this paper is to derive and test different hypotheses about the ways beliefs about the market economy, institutions and policies, and productive entrepreneurship are intertwined. Design/methodology/approach The paper derives from the literature three hypotheses unified around the idea of (political, cultural, and market) entrepreneurship. The paper then tests these hypotheses by running various country-level regressions intended to check the relationships between formal institutions and policies (measured by World Governance Indicators and by the Economic Freedom of the World index), productive entrepreneurship (measured by total factor productivity form the Penn World Table), and different kinds of market beliefs from the World Values Survey (WVS). Findings The sociological hypothesis says that more pro-market beliefs provide incentives for innovation by recognizing entrepreneurship as a dignifying activity. The political hypothesis says that people with more pro-market beliefs will demand, and therefore live with, more pro-market institutions and policies. The “Schumpeterian” hypothesis says that it is market institutions that make it possible for entrepreneurs to run against anti-market beliefs, and innovate. The results support the Schumpeterian hypothesis, mainly because market beliefs predict institutions and policies as well as productivity very poorly, while formal institutions and policies make a much better job of this. Originality/value The paper contrasts three different hypotheses concerned with the broader consequences of political, cultural, and market entrepreneurship and tests them by making use of the time structure of the observations found in the WVS.

The entrepreneurship-unemployment nexus in Croatia

Abstract: Purpose The purpose of this paper is to extend the literature on the entrepreneurship-unemployment nexus to the case of Croatia. Design/methodology/approach The study uses the Toda-Yamamoto causality test within a vector autoregressive model to determine the causal dynamics between the self-employment rate (SER), unemployment rate (UR), industrial production, and credit in the case of Croatia from March 1998 to December 2016. Findings The results reveal support for the recession-push hypothesis. Specifically, the authors find that an increase in the UR Granger causes an increase in the SER. Research limitations/implications Due to data availability, a more detailed analysis of self-employment by industry was prohibitive. Practical implications The results emphasize the importance of recognizing business cycle dynamics and the availability of credit when evaluating the causal relationship between entrepreneurship and unemployment. Social implications As policy makers view entrepreneurship as a potential remedy for unemployment, particular attention needs to be given to both the phases of the business cycle and credit availability to support entrepreneurial ventures in the design of policy. Originality/value Previous studies on the causal dynamics between entrepreneurship and unemployment pertain to OECD countries. This is the first study to examine a transition economy recently admitted to the European Union.

Human capital, intellectual capital, and government venture capital

Abstract: Purpose The purpose of this paper is to examine the impact of human and intellectual capital on start-ups’ attainment of government venture capital (GVC). It is theorized that as a result of government predisposition toward enhancing knowledge spillover and certifying underinvested start-ups, different types of human and intellectual capital possessed by start-ups will distinctly affect GVC funding. Design/methodology/approach The Kauffman Firm Survey, a panel data set of 4,928 new US firms over a five-year period (2004-2008), serves as the data source. Ordinary least squares regression, coupled with generalized estimating equations to check for robustness, is used to determine the effect of human and intellectual capital on GVC funding. Findings Founders’ educational attainment has a greater impact than their occupational experience in GVC funding. While the number of patents owned by the start-up increases GVC funding, the number of trademarks and copyrights negatively influence GVC funding. Originality/value By distinguishing between different aspects of human and intellectual capital, this study provides a more nuanced understanding of the influence of new venture resources in the context of GVC.

Economic freedom and veto players jointly affect entrepreneurship

Abstract: Purpose The purpose of this paper is to explore how the strength of political veto players affects the long-run credibility of economic institutions and how they jointly affect entrepreneurial activity. Design/methodology/approach The authors employ an annual panel covering 30 OECD countries from 1993 to 2011. Findings An error correction model identifies a positive and significant short-run effect on self-employment from large government spending at low levels of veto player strength. A static model conversely indicates that smaller government spending is positively associated with entrepreneurship at lower levels of veto player strength in the long run. Originality/value The authors are the first to explore the interaction of economic and political institutions in the development of entrepreneurship.

Can foreign aid motivate institutional reform? An evaluation of the HIPC Initiative

Abstract: Purpose A number of political economy concerns are associated with the provision of foreign aid to developing economies. These concerns suggest that foreign aid is likely to have harmful effects on a recipient’s institutional quality, and that attempts to give aid conditional on policy and institutional reforms are unlikely to succeed. Established in 1996, the Heavily Indebted Poor Country (HIPC) Initiative is a comprehensive, structured attempt to provide multilateral foreign aid conditional on reforms in recipient countries. The purpose of this paper is to evaluate its effectiveness at affecting institutional reform in participating countries. Design/methodology/approach The authors document how participating countries fared in terms of the quality of their policies and institutions. The authors employ the Fraser Institute’s Economic Freedom of the World index as a measure of economic institutions, and the Freedom House political rights (PR) and civil liberties indices as measures of PR and protections. Based on these measures, the authors report unconditional statistics (e.g. average changes) and also regressions of changes in the measures on HIPC Initiative aid allocations and other controls. Findings The authors find that most participating countries experienced either meager increases or outright decreases in institutional quality. The regression results provide no evidence that the Initiative affects meaningful reforms. Originality/value The potential for foreign aid to have deleterious effects on the institutional quality of recipient countries has been of increasing concern to students of economic development. Such effects can have important implications for entrepreneurial activity in these countries. The HIPC Initiative is specifically designed to acknowledge and, indeed, overcome these concerns, leading to actual increases in institutional quality of recipient countries. To the authors’ knowledge, this work is the first to assess whether the promise of the HIPC Initiative is being fulfilled.

Remittance inflows and starting a business

Abstract: Purpose Political economy research recognizes that the inflows of external financial resources help the governments enact market-oriented reforms. Since remittances have outpaced other types of financial inflows in many countries, they can potentially increase the government’s incentive to implement regulatory reform that can contribute to business-friendly environment. This issue has long been overlooked by the literature on remittances. The purpose of this paper is to examine whether remittances promote business regulatory reform in the recipient countries. Design/methodology/approach This study uses balance of payments data on remittances for 114 countries during 2004-2012 period. Since remittances could be endogenous to business regulation, the identification strategy follows an instrumental variable approach. The author assesses the general stability of linear model estimates by fitting the beta regression model. Findings The results show that, while the increase in remittance inflows is associated with lower regulatory requirements for starting a business in the recipient economy, this association is stronger in developing countries than in high-income nations. Various sensitivity tests reinforce the robustness of these findings. Originality/value One of the most important yet overlooked aspects of remittances is that they can potentially shape the political will to enact regulatory reform for businesses. The incentives for the government to relax burdensome entry regulations tend to stem from potential gains associated with the formalization of remittances. This paper makes a first attempt at studying the link between remittances and the quality of entry regulation.

The entrepreneurial rent: the value of and compensation for entrepreneurship

Abstract: Purpose The purpose of this paper is to show that entrepreneurship can be fruitfully analyzed by positing that entrepreneurs are searching for rates of return exceeding the risk-adjusted market rate of return, i.e., they try to create or discover economic rents. Design/methodology/approach A conceptual paper trying to bridge the gap between neoclassical economics and the entrepreneurship field by seeing entrepreneurship as the search for and creation of (entrepreneurial) rents. Findings In the short to medium term the search for and creation of entrepreneurial rents give rise to supernormal profits if successful. In the longer term these rents are dissipated and accrue to society at large as cheaper and better products. Entrepreneurial rents are crucial for bringing about the innovation and continuous structural change required to generate economic growth. Practical implications The search for entrepreneurial rents is crucial for economic development. Without the possibility to earn entrepreneurial rents, no entrepreneur would be willing to exercise entrepreneurship and exploit entrepreneurial opportunities. Successful entrepreneurship attracts imitating firms that push back profits to normal levels and the benefits of the innovation will be diffused to consumers. Social implications Understanding the role of entrepreneurship and its compensation is crucial for analyses of potential policy measures. High ex post compensation for successful entrepreneurship cannot be taxed harshly without affecting entrepreneurs’ willingness to supply effort. Originality/value The entrepreneurial function and its compensation are often neglected in neoclassical economics. This is a major shortcoming, as the presence of and search for entrepreneurial rents are necessary for bringing about the innovation and structural change that result in economic growth.

Spillovers from public entrepreneurship: a case study

Abstract: Purpose Existing scholarship indicates that more research is needed to explore beneficial spillovers from public entrepreneurship. The purpose of this paper is to fill the gap in that literature by examining a case of public entrepreneurship by a corporation. While political engagement by private firms frequently reduces to rent-seeking, this paper explores an instance in which public entrepreneurship by a private firm lead to beneficial spillovers – specifically, positive externalities resulting from the engagement of Cummins Engine Company with city government in Columbus, Indiana. In the case study, these spillovers consist of improved infrastructure, altered norms, and the reintroduction of economic calculation. Design/methodology/approach This case study uses publications in popular outlets, newspapers, and historical documents to understand the relationship between Cummins Engine Company and its local government. Findings Contrary to the presumption that public engagement by private firms necessarily reduces to rent-seeking, the activities of the Cummins Engine Company lead to beneficial public spillovers by way of improved infrastructure and norms, as well as by restoring a degree of economic calculation to the production of public buildings in Columbus, Indiana. Originality/value The authors illustrate the precise mechanisms that generate the potential spillovers from public entrepreneurship that Klein et al. (2010) explore theoretically.

Did the ACA reduce job-lock and spur entrepreneurship?

Abstract: Purpose The purpose of this paper is to assess the effect of the recent Affordable Care Act’s (ACA) Dependent Mandate (DM) that requires health insurers to extend dependent coverage to the children of their insured, up to age 26. The DM has the potential to free young persons from “job lock,” enabling them to engage in entrepreneurial activity. Using the American Community Survey, the authors analyze the change in self-employment for ages 18-25 relative to the implementation of the DM. Design/methodology/approach The authors approach the research question in a unique manner and in doing so, extend the literature. Employing national data, the authors focus on young adults impacted by the DM (those under the age of 26 may remain on their parents’ insurance). While the DM is a condition of the ACA, prior to its implementation several states had already passed their own such provision. The authors exploit this state-by-state variation in the methodology. Findings The authors find no evidence that the ACA has stimulated self-employment among all young adults. However, the authors determine that the DM has a positive and significant effect on the likelihood of students being self-employed. The result is even more pronounced when using a stricter definition of entrepreneurship, an incorporated business. Sub-group analyses show no evidence of a significant effect on entrepreneurship among young adults in other groups. The results remain after conducting various falsification tests. Originality/value The paper empirically addresses the commonly held belief that the ACA is creating new businesses via reduced job lock. Policy makers may wish to target other explanations of job lock rather than health insurance availability.

An agent-based model of entrepreneurship: Examining the role of alertness and transaction costs

Abstract: Purpose The purpose of this paper is to develop an agent-based model that highlights the role of entrepreneurship in the market process. Design/methodology/approach The authors explore the effect of entrepreneurial alertness and transaction costs on two normative standards: the speed of price equilibration and the level of product diversity. Findings Both higher alertness and lower transaction costs lead to faster equilibration, as expected. High alertness contributes to high product diversity, also as expected. However, and counter-intuitively, lower transaction costs actually leads to lower levels of product diversity, as markets equilibrate before entrepreneurs can discover many new products. Originality/value The analysis provides new insight into entrepreneurship theory and policy.

Income-expenditure elasticities of less-healthy consumption goods

Abstract: Purpose The purpose of this paper is to identify how consumption of 12 goods – alcohol, cigarettes, fast food, items sold at vending machines, purchases of food away from home, cookies, cakes, chips, candy, donuts, bacon, and carbonated soft drinks – varies across the income distribution by calculating their income-expenditure elasticites. Design/methodology/approach Data on 22,681 households from 2009-2012 from the Bureau of Labor Statistics’ Consumer Expenditure Survey were used. The data were analyzed using ordinary least squares regressions and Cragg’s double hurdle model which integrates a binary model to determine the decision to consume and a truncated normal model to estimate the effects for conditional (y>0) consumption. Findings Income had the greatest effect on expenditures for alcohol (0.314), food away from home (0.295), and fast food (0.284). A one percentage-point increase in income (approximately $428 at the mean) translated into a 0.314 percentage-point increase in spending on alcoholic beverages (approximately $1 annually at the mean). Income had the smallest influence on tobacco expenditures (0.007) and donut expenditures (−0.009). Research limitations/implications Percentage of a household’s discretionary budget spent on the studied goods falls substantially as income gets larger. Policies targeting the consumption of such goods will disproportionately impact lower income households. Originality/value This is the first manuscript to calculate income-expenditure elasticities for the goods studied. The results allow for a direct analysis of targeted consumption policy on household budgets across the income distribution.

Income inequality: How efforts to reduce it can undermine motivation – and the pursuit of excellence

Abstract: Purpose The purpose of this paper is to explain why (based on an extensive body of research findings) efforts to reduce income inequality may have negative effects on motivation and the desire to excel. Design/methodology/approach This paper presents the author’s personal perspective on income inequality and efforts to reduce it. However, these views are grounded in extensive literature concerning the nature of “fairness,” and the harmful effects of weakening the link between performance or effort on the one hand, and rewards on the other. Breaking this connection may be especially harmful for entrepreneurs, who have strong beliefs that the hard they work in building their new ventures, the more likely are these companies to be successful. Findings The paper presents what, it is hoped, provides a broadened framework within which to examine the causes and income inequality, definitions of “fairness,” and the potential effects of efforts to reduce such inequality. Practical implications By weakening the relationship between performance and rewards, efforts to reduce income inequality involving large tax increases may weaken the relationship between performance (accomplishment) and rewards, thus reducing motivation to work hard and achieve excellence. Social implications Understanding the negative implications of government-funded programs designed to reduce income inequality helps to clarify the potentially detrimental effects of such programs – effects that are neither intended not expected by proponents of such efforts. Originality/value The effects of efforts to reduce income inequality have not previously been examined in the context of their negative implications for human motivation to work hard and attain excellence in any endeavor – implications suggested by a large body of relevant research.

Exploring the case of The White Moustache: Entrepreneurship and regulatory capture in the milk products industry

Abstract: Purpose Small and emerging business failure rates are high for numerous reasons. Government regulation has been cited as a contributing factor, yet literature documenting the actual effects of government regulation on small business is limited. The purpose of this paper is to clearly outline the regulatory compliance costs and effects on small businesses in the California dairy industry. Design/methodology/approach This paper applies a public choice framework to the history of dairy regulation and performs a case study on a small business, The White Moustache (TWM). The case study traces the burdens and costs of state dairy regulations placed on TWM as they sought the necessary permits to sell their artisan yogurt. Findings Strict and unresponsive regulation restricted TWM from selling their product. To comply with state dairy regulations, the direct costs to TWM would have increased by 70 percent. In addition, regulation caused two and a half years of delay before the company decided to leave the state. California’s dairy regulations place burdens on small dairy businesses that work as a strategic barrier to entry in the marketplace. Originality/value This case study highlights the direct effects that strict and unresponsive regulation can have on entrepreneurs and emerging businesses through a case study. Improving the understanding of how regulation affects small business can highlight new paths forward and help improve the small business failure rate in the USA.

Local entrepreneurial programming: myth or reality– a southern case study

Abstract: Purpose Entrepreneurship is argued to be a critical driver of economic growth for both individual communities and the nation. Regional scientists, economists, and policy makers underscore the importance of a diverse economy that supports recruitment of new firms, existing firms, and entrepreneurship efforts. However, there remains evidence that many states and localities prefer traditional industrial recruitment efforts and that local and state entrepreneurial efforts may be less coordinated. The paper aims to discuss these issues. Design/methodology/approach This research explores the commitment and priorities of local and regional developers to entrepreneurial policy and other economic development policy efforts. This study uses a statewide survey to local economic developers and logistic regression to determine the likelihood of local entrepreneurial program efforts across South Carolina. Findings The model results reveal that the probability of local or regional entrepreneurial development programming is complex and dependent on the type of organization involved in economic development along with other community and state characteristics. However, results further confirm that barriers to entrepreneurship, like access to seed capital, and the influence of perceived alternative policies affect local and regional support of entrepreneurship. Originality/value The policy priorities of local economic developers appear to play a significant role in the probability of having local entrepreneurship policy and programs. This confirms that the signals local policymakers receive from the state may impact the programming choices and policy emphasis at the local and regional level. In conclusion, if states want entrepreneurial efforts to be a critical driver of economic growth and development, there must be a coordinated and focused state driver supporting these efforts.

Institutional inefficiency: small farms starve India’s economy

Abstract: Purpose The purpose of this paper is to examine differences in property institutions in the USA and India and their effects on agricultural productivity. Design/methodology/approach This paper undertakes a case study of industrial organization of agriculture, comparing agricultural development in the USA and India, with a focus on changes in farm size over time. Findings In the USA, unlimited individual land ownership has enabled the gradual, long-term development of scale economies in agriculture through the application of capital and technology. In contrast, land reforms in India, especially land ceilings that limit farm size, have stunted productivity growth in agriculture by limiting achievement of scale economies and capital formation. Practical implications The finding that India’s consistently meager agricultural productivity stems largely from legal limitations on land ownership indicates that reforms that create a US-style open-ended land ownership structure would greatly increase farm productivity and total crop output in India. Originality/value This paper presents a side-by-side analysis of the USA and India and their radically different paths of agricultural development over time, and connects these divergent outcomes directly to the underlying institutional framework of property rights. Moreover, the paper analyzes the prospects for pro-market reform in light of public choice political economy, specifically applying Tullock’s insights regarding the “transitional gains trap.”

The impact of labor freedom on geographic cost of living differentials: Controlling for economic and quality of life factors, 2016

Abstract: Purpose The purpose of this paper is to examine the impact of labor market freedom on state-level cost of living differentials in the USA using cross-sectional data for 2016 after allowing for the impacts of economic and quality of life factors. Design/methodology/approach The study uses two-stage least squares estimation controlling for factors contributing to cost of living differences across states. Findings The results reveal that an increase in labor market freedom reduces the overall cost of living. Research limitations/implications The study can be extended using panel data and alternative measures of labor market freedom. Practical implications In general, the finding that less intrusive government and greater labor freedom are associated with a reduced cost of living should not be surprising. This is because less government intrusion and greater labor freedom both inherently allow markets to be more efficient in the rationalization of and interplay with forces of supply and demand. Social implications The findings of this and future related studies could prove very useful to policy makers and entrepreneurs, as well as small business owners and public corporations of all sizes – particularly those considering either location in, relocation to, or expansion into other markets within the USA. Furthermore, the potential benefits of the National Right-to-Work Law currently under consideration in Congress could add cost of living reductions to the debate. Originality/value The authors extend the literature on cost of living differentials by investigating whether higher amounts of state-level labor market freedom act to reduce the states’ cost of living using the most recent annual data available (2016). That labor freedom has a systemic efficiency impact on the state-level cost of living is a significant finding. In our opinion, it is likely that labor market freedom is increasing the efficiency of labor market transactions in the production and distribution of goods and services, and acts to reduce the cost of living in states. In addition, unlike previous related studies, the authors investigate the impact of not only overall labor market freedom on the state-level cost of living, but also how the three sub-indices of labor market freedom, as identified and measured by Stansel et al. (2014, 2015), impact the cost of living state by state.

Using predictive decisionmaking to implement technology prizes

Abstract: Purpose The purpose of this paper is to propose a system for regularly offered government-sponsored technology prizes. Such prizes would preserve the incentive to invent without the barriers to entry that come with the patent system. This is of particular interest to entrepreneurs as they lack the patent portfolio that incumbent firms can leverage into derivative technology. Design/methodology/approach After reviewing various efficiency concerns with the patent system, the author describes how technology prizes could work alongside the patent system. Such prizes are best when the sponsor can capture as much of the technology spillover as possible – i.e. through a government agency. This paper provides a framework for a practical prize structure while paying special attention to combating the logistical and public choice concerns of creating a prize. Findings This paper focuses on two methods to prevent inefficiency in government-sponsored prize: truth-bonding and information markets. Each mechanism helps combat different kinds of problems. Various complications to this system are explored and addressed. Practical implications The paper suggests that an efficient prize system is a possible policy and, if implemented, would embolden technology-focused entrepreneurship and other subsequent technological development. Originality/value While previous work has noted the benefits of technology prizes over patents, few attempts have been made to outline an incentive-compatible system for doing so. This paper is the first of its kind to propose a practical and efficient government-sponsored prize system.

Privatization and corporate entrepreneurship in telecommunication companies

Abstract: Purpose The purpose of this paper is to investigate the effect of privatization on corporate entrepreneurship in Telecommunication Company of Iran (TCI). The study examines the five dimensions of entrepreneurial orientation including innovativeness, risk taking, proactiveness, competitive aggressiveness and autonomy, before and after privatization. Design/methodology/approach Using a “descriptive-survey” method, the required data were collected from a sample of 32 senior and middle managers with over ten years of management and work experience, who were project team members for business transformation working in TCI before and after privatization. Findings The results show that after privatization, the company acts more entrepreneurially. The most considerable dimension is its aggressive competition through entering competitive markets and increasing risk taking to develop new services, products and processes. Originality/value Although many studies have been performed on privatization and entrepreneurship in the past, to the best of the authors’ knowledge, the effect of privatization on every dimension of entrepreneurial orientation has not been investigated in a large company.