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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Journal ArticleDOI
Families, Human Capital, and Small Business: Evidence from the Characteristics of Business Owners Survey:
Robert W. Fairlie,Alicia Robb +1 more
TL;DR: This article found that more than half of business owners in the confidential, restricted-access 1992 Characteristics of Business Owners Survey had a self-employed family member before starting their business, suggesting that the intergenerational link in self-employment is not primarily due to the acquisition of general and specific business human capital.
Journal ArticleDOI
Entrepreneurship and the Business Cycle
Philipp Koellinger,Roy Thurik +1 more
TL;DR: This paper found new empirical regularities in the business cycle in a cross-country panel of 22 OECD countries for the period 1972 to 2007; entrepreneurship Granger-causes the cycles of the world economy.
Journal ArticleDOI
Why Are Black‐Owned Businesses Less Successful than White‐Owned Businesses? The Role of Families, Inheritances, and Business Human Capital
Robert W. Fairlie,Alicia Robb +1 more
TL;DR: Using confidential microdata from the Characteristics of Business Owners survey, this article examined why African American owned businesses lag substantially behind white owned businesses in sales, profits, employment, and survival.
Journal ArticleDOI
Does firm size matter? Evidence on the impact of liquidity constraints on firm investment behavior in Germany
TL;DR: This paper examined the link between liquidity constraints and investment behavior for German firms of different sizes from 1970 to 1986 and found that medium sized firms appear to be more liquidity constrained in their investment behavior than either the smallest or largest firms in the study.
Journal ArticleDOI
Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship
William R. Kerr,Ramana Nanda +1 more
TL;DR: In this article, the authors examine entrepreneurship and creative destruction following US banking deregulations using US Census Bureau data and find evidence for the standard story of creative destruction, the most pronounced impact was a massive increase in churning among new entrants.
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.