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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Funding gaps: a symposium*
TL;DR: Theoretical and empirical foundations of government policies to plug alleged business funding gaps are highly controversial but rarely subject to wide-ranging in-depth debate as mentioned in this paper, which provides a counterbalance.
Journal ArticleDOI
Financing technology-based small firms in Europe: what do we know?
Valérie Revest,Alessandro Sapio +1 more
TL;DR: In this article, the authors reviewed the evidence on financing technology-based small firms (TBSFs) in Europe and found that European TBSFs finance new investments by relying primarily on internal funds, due to capital market failures induced by asymmetric information.
Journal ArticleDOI
Social networks and self-employment
TL;DR: In this article, the authors apply social network concepts, developed in sociology, to the analysis of the self-employment decision and find that women receive less influential social support for entrepreneurial activity than men receive.
Journal ArticleDOI
Are individuals entering self‐employment overly optimistic? an empirical test of plans and projections on nascent entrepreneur expectations
TL;DR: In this paper, the rationality of the expectations of self-employed individuals is examined and the authors find substantial overoptimism in entrepreneurs' expectations, in that they overestimate the probability that their nascent activity will result in an operating venture, and for those ventures that achieve operation, individuals overestimate their expected future sales and employment.
Journal ArticleDOI
SME financing in the UK and in China: a comparative perspective
TL;DR: In this article, the authors outline the preliminary results of an empirical investigation into access to finance and related issues, as experienced by SME owner/managers in the UK and in China.
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.