Journal ArticleDOI
An Estimated Model of Entrepreneurial Choice under Liquidity Constraints
David S. Evans,Boyan Jovanovic +1 more
TLDR
The authors show that the data point to liquidity constraints: capital is essential for starting a business, and liquidity constraints tend to exclude those with insufficient funds at their disposal, and a would-be entrepreneur must bear most of the risk inherent in his venture.Abstract:
Is the capital function distinct from the entrepreneurial function in modern economies? Or does a person have to be wealthy before he or she can start a business? Knight and Schumpeter held different views on the answer to this question. Our empirical findings side with Knight: Liquidity constraints bind, and a would-be entrepreneur must bear most of the risk inherent in his venture. The reasoning is roughly this: The data show that wealthier people are more inclined to become entrepreneurs. In principle, this could be so because the wealthy tend to make better entrepreneurs, but the data reject this explanation. Instead, the data point to liquidity constraints: capital is essential for starting a business, and liquidity constraints tend to exclude those with insufficient funds at their disposal.read more
Citations
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Report SeriesDOI
Policy Lessons from Financing Innovative Firms
TL;DR: In this article, the authors summarize the lessons learned in seed and early stage finance based on OECD work focused on policies related to financing high growth firms, including angel investment and venture capital, and highlight the role that financial development and other policies play in firm dynamics and job creation.
Posted Content
Self-Employed Immigrants in Denmark and Sweden: A Way to Economic Self-Reliance?
TL;DR: In this paper, the authors make use of two large data sets to study self-employment among immigrants in Denmark and Sweden and find that immigrants from non-western countries are overrepresented among self-employed in both countries.
Journal ArticleDOI
Institutions, networks and entrepreneurship development in Russia: An exploration
TL;DR: In this article, the authors explore the ways in which institutions and networks influence entrepreneurial development in Russia and explore the effectiveness of Russia's informal networks for circumventing the weak institutional environment for business development.
Journal ArticleDOI
Wealth, Tastes, and Entrepreneurial Choice
TL;DR: In this paper, a population with varying entrepreneurial tastes and wealth in a simple general equilibrium model of occupational choice is studied, and it is shown that entrepreneurship can be thought of as a normal good, generating wealth effects independent of any financing constraints.
Journal ArticleDOI
Agglomeration dynamics of innovative start-ups in Italy beyond the industrial district era
TL;DR: In this article, the authors examined how urbanization, industry diversification, district economics and incubating initiatives are associated to the creation of innovative start-ups in Italy and found that industrial districts play a major role for new venture creation and support the positive role of urbanization economies and industry specialization over diversification.
References
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Book
The theory of economic development
TL;DR: Buku ini memberikan infmasi tentang aliran melingkar kehidupan ekonomi sebagaimana dikondisikan oleh keadaan tertentu, fenomena fundamental dari pembangunan EKonomi, kredit, laba wirausaha, bunga atas modal, and siklus bisnis as mentioned in this paper.
Posted ContentDOI
Credit Rationing in Markets with Imperfect Information.
Joseph E. Stiglitz,Andrew Weiss +1 more
TL;DR: In this paper, a model is developed to provide the first theoretical justification for true credit rationing in a loan market, where the amount of the loan and amount of collateral demanded affect the behavior and distribution of borrowers, and interest rates serve as screening devices for evaluating risk.
Book
Risk, Uncertainty and Profit
TL;DR: In Risk, Uncertainty and Profit, Frank Knight explored the riddle of profitability in a competitive market profit should not be possible under competitive conditions, as the entry of new entrepreneurs would drive prices down and nullify margins, however evidence abounds of competitive yet profitable markets as mentioned in this paper.
Journal ArticleDOI
The theory of economic development
Posted Content
Competition and Entrepreneurship
TL;DR: Kirzner as discussed by the authors argues that the assumption of perfect knowledge is unrealistic and argues that every market participant is a potential entrepreneur who can exploit a situation, which depends on a lack of perfect information among the market participants.