Entrepreneurial activity across European cities

The importance of entrepreneurship as a driving force in the economic development has been widely recognised. Respectively, a growing number of empirical studies have focused on explaining variation in entrepreneurial activity at various spatial levels with the majority of them taking either a cross-country perspective or looking at the inter-regional differences. More recent studies on entrepreneurship have shifted their focus to examining cross-city variation in entrepreneurship. However, overall, given limited city-level data availability, scarce work has been undertaken so far on cross-city entrepreneurship within the spatially oriented entrepreneurship research. Furthermore, to our best knowledge, no empirical studies exist on entrepreneurship in European cities and our paper aims to fill this gap

Like mother, like daughter? Analyzing maternal influences upon women’s entrepreneurial propensity

Within the phenomenon of entrepreneurship, the extant literature suggests that the normative actor is embodied by and through stereotypical masculinized characteristics. In this paper,we contextualize entrepreneurship as self-employment in order to explore how such stereotypical characterizations might influence women’s attitudes toward this activity. However, rather than analyzing the confirmatory effects of stereotypes, we critically evaluate the effect of counterstereotypical characterizations upon women’s propensity for self-employment. Drawing upon life-span data, we explore whether self-employed mothers disconfirm masculinized stereotypes and so act as positive role models for their daughters.As hypothesized, we found that maternal self-employment has a counterstereotypical effect and so positively influences daughters to become self-employed. These data indicate, however, that this effect is tempered by personal stereotypes held by daughters; moreover, it is shaped by significant life events (marriage, parenthood, education, and prior managerial experience). By using a robust data set, this paper contributes to our understanding of how stereotypes and role expectations influence women’s propensity toward entrepreneurial activity.

Asymmetric information, credit market condition, and entrepreneurial finance

The issue of imperfect information plays a much more important role in financing “informationally opaque” small businesses than in financing large companies.1 This chapter examines the asymmetric information issue in entrepreneurial finance from two perspectives: the effects of relationship lending and the impacts of credit market concentration on entrepreneurial financial behavior. These two perspectives are strongly linked to each other via the asymmetric information issue in entrepreneurial finance. Existing literature has recognized the important role played by relationship lending in alleviating the problem of asymmetric information. However, mixed empirical results have been reported. For example, it has been found that the development of relationship lending can improve the availability of finance for small businesses borrowers (Petersen and Rajan, 1994) and reduce the costs of finance (Berger and Udell, 1995). Meanwhile, with monopoly power, banks may extract rents, in terms of charging higher-than-market interest rates, from small businesscustomers who have very concentrated banking relationships (Ongena and Smith, 2001). In addition, both favorable and unfavorable effects of credit market concentration on financing small businesses have been acknowledged. Small business borrowers may have to pay a higher-than-market price on loans (Degryse and Ongena, 2005) and are more likely to be financially constrained (Cetorelli, 2004) than in competitive markets. On the other hand, empirical studies have shown that market concentration create a strong motive for lenders to invest in private information from small business customers, and therefore a concentrated market is more efficient in terms of private information acquisition (Han et al., 2009b). The objective of this chapter is to investigate, by reviewing existing literature, the role played by relationship lending and the effects of market concentration on financing entrepreneurial businesses that are supposed to be informationally opaque. In the first section we review literature on the important role played by asymmetric information in entrepreneurial finance from two perspectives: asymmetric information and relationship lending, and the theoretical modeling of asymmetric information. Then we examine the relationship between capital market conditions and entrepreneurial finance and attempt to answer two questions: Why is the capital market condition important for entrepreneurial finance? and What are the effects of capital market conditions on entrepreneurial financial behavior in terms of discouraged borrowers, cash holding, and the availability and costs of finance?

Experiential learning from entrepreneurial failure

This paper examines the phenomenon of 'entrepreneurial failure' from a UK regionally-based qualitative study, being that of explanations for failure provided by entrepreneurial CEOs. This paper contends that there are valuable lessons to be learned, from explanations provided of failure, that may reduce the very high recorded mortality rates of entrepreneurial businesses, in particular that of nascent entrepreneurs. Our intention is to make nascent entrepreneurs and their advisors more aware of the consequences of the likely personal risks they will be assuming, especially before they embark on their new business ventures. This paper focuses strongly on entrepreneurial 'personality characteristics' which can detrimentally influence the quality of decision-making. We provide data of some 'experiential learning from failure' from our case studies, that were compiled from interviews with the former directors, following their completion of the questionnaire survey. We describe 'failed entrepreneurs' who have successfully restarted their businesses as 'phoenix' entrepreneurs.

The Role of Collateral in Entrepreneurial Finance

Previous research has suggested collateral has the role of sorting entrepreneurs either by observed risk or by private information. In order to test these roles, this paper develops a model which incorporates a signalling process (sorting by observed risk) into the design of an incentivecompatible menu of loan contracts which works as a self-selection mechanism (sorting by private information). It then tests this Sorting by Signalling and Self-Selection Model, using the 1998 US Survey of Small Business Finances. It reports for the first time that: high type entrepreneurs are more likely to pledge collateral and pay a lower interest rate; and entrepreneurs who transfer good signals enjoy better contracts than those transferring bad signals. These findings suggest that the Sorting by Signalling and Self-Selection Model sheds more light on entrepreneurial debt finance than either the sorting-by-observed-risk or the sorting-by-private information paradigms on their own.

Bricks vs clicks: entrepreneurial online banking behaviour and relationship banking

Purpose – Little research has been conducted on the effects of information technology on financing entrepreneurial businesses or small and medium sized enterprises (SMEs). The purpose of this paper is to examine the impacts of entrepreneurial online banking and relationship banking on the severity of financial problems perceived by entrepreneurs and their interactive effect. It also investigates how characteristics of individual businesses and entrepreneurial demographics influence SMEs’ financial situation. Design/methodology/approach – An ordered logistic model is used on a UK dataset to empirically test the hypotheses derived in this paper. The empirical evidence is drawn from the 2004 UK survey of SME finances, which contains a sample of 2,500 firms. Findings – This paper finds that both entrepreneurial online banking behaviour and relationship banking alleviates the severity of financial problems perceived by entrepreneurs. The relationship affect is less evident for entrepreneurs who most frequently use an online approach to communicate with their banks than for those using traditional methods. Business and entrepreneur characteristics also have a strong impact on the severity of the financial problems suffered by SMEs. Originality/value – This paper provides evidence supporting the favourable impacts of the application of information technology on entrepreneurial finance from the perspective of entrepreneur/business. It also identifies a substitute relationship between entrepreneurial online banking behaviour and relationship banking, a relationship which contradicts existing evidence.

The interface between organizational learning capability, entrepreneurial orientation, and SME growth

This paper investigates the interface between organizational learning capability, entrepreneurial orientation (EO), and small business performance. It reports on the findings from 350 small and medium enterprises (SMEs) in North Cyprus operating in the services and retailing sectors. The findings indicate a positive relationship between EO and sales and market share growth, but not between EO and employment growth. There is also a positive relationship between organizational learning capability and EO. This paper contributes to the small business management literature by providing a holistic analysis of the interface between organizational learning capability, EO, and growth.

Entrepreneurial failure and economic crisis: an historical perspective

This chapter analyses the major UK economic crises that have occurred since the speculative bubbles of the seventeenth century. It integrates insights from economic history and business history to analyse both the general economic conditions and the specific business and financial practices that led to these crises. The analysis suggests a significant reinterpretation of the evidence – one that questions economists’ conventional views.

Entrepreneurial dynamics and higher education institutions in the post-communist world

This study draws on the institutional and regional entrepreneurship literature to develop a conceptual framework that analyses the impact of higher education institutions on entrepreneurial dynamics. It is used to examine the cities of the Commonwealth of Independent States (CIS) during the period 1995–2008. Extending the multi-pillar institutional concept, it is found that higher education institutions play a prominent role in fostering entrepreneurial dynamics in CIS cities through multiple channels, including human capital development, cultivating a positive attitude towards entrepreneurship, affecting the perceptions of the knowledge and skills needed to start up a successful business, and knowledge spillovers.

Entrepreneurial ecosystems in cities: establishing the framework conditions

This study focuses on regional entrepreneurial ecosystems and offers a complex model of start-ups, Regional Entrepreneurship and Development Index (REDI) and six domains of the entrepreneurial ecosystem (culture, formal institutions, infrastructure and amenities, IT, Melting Pot and demand). Altogether they capture the contextual features of socioeconomic, institutional and information environment in cities. To explain variations in entrepreneurship in a cross-section of 70 European cities, we utilize exploratory factor analysis and structural equation modelling for regional systems of entrepreneurship using individual perception surveys by Eurostat and the REDI. This study supports policymakers and scholars in development of new policies conducive to regional systems of innovation and entrepreneurship and serves as a basis for future research on urban entrepreneurial ecosystems.

The role of entrepreneurial networking on internationalization of a micro-sized Born Global Swedish fashion company : A narrative ethnographic research

Background: In recent studies a lot of attention is drawn to the connection between networking and entrepreneurship. Many scholars consider successful business and networking inseparable. Taking into consideration the topicality of the two notions discussed above the authors of this thesis decided to conduct the research dedicated to these phenomena in the field that interests them most – in the field of Swedish fashion. Purpose: The purpose of the thesis is to gain a deeper insight into entrepreneur’s experiences to point out the role of entrepreneurial networking in the process of internationalization of a micro-sized Swedish fashion company and to contribute to the research in this field by telling its unique story. Method: To achieve the purpose of the research a narrative ethnographic research was conducted. This research strategy was chosen because it suits the purpose best by giving an opportunity to get fresh insights into the field of entrepreneurial networking from the point of view of the entrepreneur. The data collected has a narrative nature therefore narrative analysis is used to present it. The methods of gathering the data are face-to-face interview and documents. Conclusion: we can define the most important role of entrepreneurial networking on the internationalization process of Odeur as an effective accelerator and a tool to fulfil the knowledge and expertise gaps in certain areas through other actors in the network.

Profit sharing with heterogeneous entrepreneurial prowess

This paper analyzes the impact of profit sharing on the incentives that individuals face to set up their own business. It presents a model of capital accumulation in which individuals are equally skilled to be workers but differ in their abilities to manage a firm Given an exogenous profit sharing parameter, an individual chooses whether to be an employer or an employee in order to maximize his net income. It is shown that profit sharing can inhibit entrepreneurial initiatives, reducing the number of firms in operation, the aggregate output and the economy's long run capital stock.

Entrepreneurial risk and labour's share in output

This paper presents a theoretical model which discusses the role played by the entrepreneurial risk on the distribution of the national income. In a two-period general equilibrium framework with competitive risk-averse entrepreneurs it is shown that the highest the risk borne by firms, the lower will be real wages, employment and the labour's share in output. The model helps explain the fall of the labour's share in the Brazilian output during the 1980s.

Mandatory profit sharing, entrepreneurial incentives and capital accumulation

The impact of a mandatory tax on profits which is transferred to workers is analyzed in a general equilibrium entrepreneurial model. In the short run, this distortion reduces the number of firms and the aggregate output. In the long run, if capital and labor are bad substitutes, it fosters capital accumulation and increases the aggregate output. In a small open economy with free movement of capital, it improves the welfare of the economy's average individual. One concludes that the benefits of sharing schemes may go beyond the short run employment-stabilization goal focused by the profit sharing literature.

The influence of urban structures on entrepreneurial decision-making: a comparative analysis of Mexico City and São Paulo

Promover a atividade empreendedora é hoje mais do que nunca uma prioridade para as economias em desenvolvimento. Em diferentes partes do mundo, empreendedores têm sido reconhecidos como verdadeiros agentes de transformação, e as novas empresas que eles criam tornam-se condutoras de inovação, que ao final pode ser difundida ao resto da economia. Teorias de economia urbana, que analisam a dinâmica da relação entre aglomeração urbana e atividade econômica, enfatizam a importância da concentração espacial das indústrias num mesmo setor industrial. Entender os incentivos que dão início à atividade empreendedora é algo novo e o foco desses estudos tem sido principalmente em alguns poucos casos de economias industrializadas. Não obstante, o sucesso de um punhado de clusters de alta tecnologia, como o Vale do Silício, por exemplo, na Califórnia, Estados Unidos, não pode ser replicado, e as condições locais devem ser consideradas a fim de entender a surgimento desses ecossistemas. Este estudo pretende investigar os critérios em que os empreendedores fundamentam suas decisões quando selecionam as localizações do seu negócio. Especificamente, a pesquisa explora o recente movimento dos ecossistemas de empreendedores na Cidade do México e em São Paulo, as duas maiores áreas metropolitanas da América Latina, à luz das teorias de economia urbana. A fim de chegar aos resultados, a pesquisa segue o método baseado sobre uma análise comparativa de estudo de casos em dois bairros: Vila Leopoldina em São Paulo e a Colônia Roma Norte na Cidade do México. Os resultados consolidados baseados em entrevistas qualitativas realizadas nos dois bairros revelam que o lugar/sitio urbano, definido em termos de laços locais assim como da atmosfera geral do ambiente, continua sendo importante para os atores apesar das comunicações de alta velocidade que produzem mais interações entre as regiões do mundo. Além disso, a relação entre o empreendedor e o seu entorno é altamente dependente do estágio de desenvolvimento e da natureza da atividade da empresa; redes informais revelam-se essenciais para identificar as oportunidades de negócio antes de serem progressivamente substituídas por relações instituídas com fundos de capital de risco ou incubadoras. Estes dois ecossistemas nascentes geram suas próprias características, o que já pode sugerir suas futuras evoluções.