Financial Literacy and Self‐Employment

In this paper, we study the relationship between financial literacy and self‐employment. We use established financial literacy questions to measure literacy levels. The analysis shows a highly significant and positive correlation between the index and self‐employment. We address the direction of causality by applying instrumental variable techniques based on information about maternal education. We also exploit information on financial support and family background to account for concerns about the exclusion restriction. The results provide support for a positive effect of financial literacy on the probability of being self‐employed. As financial literacy is acquirable, the findings suggest that entrepreneurial activities might be increased by enhancing financial literacy.     

Antecedents of Entrepreneurial Intention among Laid‐Off Individuals: A Cognitive Appraisal Approach

This study contributes to our understanding of why laid‐off individuals might explore entrepreneurial careers. Findings among 838 laid‐off individuals suggest that financial strain is associated with negative appraisal of the layoff, and openness to change and perceived organizational support are associated with positive appraisal of the layoff. We demonstrate that the indirect effect of financial impact and openness to change via negative and positive appraisals are stronger than the direct effects. Our results are significant because they highlight the mediating role of cognitive factors on entrepreneurial intentions among laid off individuals during periods of high unemployment.     

Female‐Led High‐Growth: Examining the Role of Human and Financial Resource Management

We integrate research on upper echelons theory, the resource‐based view, and gender to explore conditions that facilitate high growth for female‐led firms. We argue that female entrepreneurs have certain advantages that help them leverage their firms’ human and financial capital to achieve high growth. In support, using a sample of U.S.‐based entrepreneurial firms, we found evidence that having a female lead entrepreneur positively moderated the positive relationships between indicators of firms’ human and financial capital and high growth. The findings have implications for programs, policies, and practices to encourage more high growth in firms with female lead entrepreneurs.     

“Four Bright Coins Shining at Me”: Financial Education in Childhood,Financial Confidence in Adulthood

We analyze the relation between receiving an allowance (pocket money) in childhood and financial confidence in adulthood. We measure this confidence using self‐reported financial knowledge. Our empirical exercise is based on information provided by a Dutch survey carried out in 2015. We compute our estimates by controlling for parental attitudes and by using a “within‐family” fixed effect model. The results are robust and suggest a long‐lasting effect of pocket money as an easily implementable and informal educational vehicle to help children acquire basic financial concepts and develop good habits, such as budgeting.     

The Role of Perceived University Support in the Formation of Students' Entrepreneurial Intention

Entrepreneurship education is central to student entrepreneurship. Previous research has attempted to understand the role of entrepreneurship education in the formation of students' entrepreneurial intention and behavior, albeit in an isolated manner. Universities can support entrepreneurship in many ways, but it is important to measure students' perception of the support that they receive in order to understand the extent of such support and its impact on students. The current study proposed and tested an integrative, multiperspective framework. We have hypothesized that the three dimensions of university support, that is, perceived educational support, concept development support, and business development support, together with institutional support, shape students' entrepreneurial self‐efficacy. In turn, entrepreneurial self‐efficacy and individual motivations constitute the fundamental elements of the intention to start a business. A sample of 805 university students took part in the study and data were analyzed using structural equation modeling. Our findings showed that perceived educational support exerted the highest influence on entrepreneurial self‐efficacy, followed by concept development support, business development support, and institutional support. Self‐efficacy in turn had a significant effect on entrepreneurial intention. Individual motivations such as self‐realization, recognition, and role had an additional impact on intention. However, intention was not related to financial success, innovation, and independence. The findings suggest that a holistic perspective provides a more meaningful understanding of the role of perceived university support in the formation of students' entrepreneurial intention. Theoretical and practical implications are discussed.     

Family Firms and Labor Productivity: The Role of Enterprise‐Level Bargaining in the Italian Economy

We investigate the role of Italian firms in labor productivity performance. We find that family‐owned firms have lower labor productivity than their non‐family counterparts. In a second step, we estimate the role of firm‐level bargaining (FLB) to determine whether family‐controlled firms that adopt this type of bargaining may partially close the gap in terms of labor productivity with their non‐family competitors. Our results, obtained through IV estimation to control for endogeneity bias, suggest that enterprises under family governance achieve significant labor productivity gains—greater than those achieved by their non‐family counterparts—when they adopt firm‐level bargaining.     

The reciprocal and non‐linear relationship of sustainability and financial performance

The goal of this paper is to describe the link between financial performance and the level of sustainability. In a novel approach, the paper classifies firms based on past financial success to address a potentially reciprocal relationship. For the groups of better and worse performing firms and for the entire sample, the above link is then tested, also accounting for non‐linearity in the relationship. We show that environmental management system (EMS) implementation as a proxy for a firm's sustainability level is only positively associated with the financial performance of financially well‐performing firms. Conversely, it has a negative association with the performance of less good firms. We show that this implies that firms cannot change from good to bad performance, and vice versa, solely through the implementation of an EMS, and also that the result remains when introducing non‐linearity in the link. Based on this result, we discuss implications for the direction of causality.     

Become Independent! The Paradoxical Constraints of France's “Auto‐Entrepreneur” Regime

The Law on Economic Modernization of August 4, 2008, introduced a new form of individual entrepreneur, the “auto‐entrepreneur,” the goal being to enhance the competitiveness of the French economy by promoting entrepreneurial spirit. This paper proposes to discuss the “auto‐entrepreneur” model with reference to the fundamentals of the theory of the firm and the legal variants of the “auto‐entrepreneur.” The argument will be structured around the criterion of independence, and its various interpretations, which will be used to put the auto‐entrepreneur model to the test. Three forms of autonomy are given precedence: productive, concerning the availability of sufficient financing and material to provide professional services; managerial, which measures the ability to assume the risks inherent to business, regarding both interested and third parties; and financial, or the chances of earning enough money to subsist upon. The result, highlighted in the conclusion to this paper, is that the “auto‐entrepreneur” regime is contrary to every referenced approach to the firm. This business model appears best adapted as a means of supplementing income from another, unrelated activity or in retirement.     

Socially responsible downsizing: Comparing family and non‐family firms

This study seeks to investigate whether family firms are more likely to downsize their workforce than their non‐family counterparts. Drawing on socioemotional wealth approach, we first explore the effect of family presence on workforce downsizing. Furthermore, we examine the moderating role of R&D activity on the family presence–downsizing relationship. Our sample covers a panel of manufacturing SMEs in Spain over the 1993–2014 period. We find that family firms are less likely to downsize than non‐family firms. Our results also reveal a negative association between R&D activity and workforce downsizing. Finally, the relationship between family presence and downsizing is contingent upon R&D activity, that is, family firms engaged in R&D activities are less likely to downsize than non‐innovative family firms.     

Financial Knowledge and “Don't Know” Response

We investigate the effect of group characteristics and educational interventions on young respondents' objective financial knowledge level. We examine six questions about personal finance and covariates selected from the 2015 National Financial Capability Study. Because these questions include “Don't Know” or “Refuse” (DK/RF) responses, a simple regression model could cause researchers to reach misleading conclusions if DK/RF responses are not random. Thus, we suggest a binomial‐latent regression model to evaluate the effect of educational interventions and group differences that are hidden in DK/RF responses. The estimation result shows that rejecting financial education opportunities is disadvantageous to obtaining proper financial knowledge. In addition, both formal and informal financial education are less effective in improving objective financial knowledge in our preferred model. We also find few or no gender, income, and age differences in young adults' objective financial knowledge level after controlling for financial education interventions.     

Problem‐Solving Orientations,Financial Self‐Efficacy,and Student‐Loan Repayment Stress

Using data acquired from a four‐time longitudinal survey, we tested a model linking two measures of self‐agency, i.e., problem‐solving orientations and financial self‐efficacy, to student‐loan repayment stress. Of those participants who responded at Wave 4 (N = 855) of a longitudinal study, 396 who had acquired student loans were included in our structural equation model's Mplus analysis. After we controlled for gender, college financial education, ethnicity, and participant annual income, we found that both financial self‐efficacy and negative problem‐solving orientation were related to perceived difficulty. More specifically, those participants with a greater financial self‐efficacy at Wave 4 perceived less difficulty in paying off their loans, while those with a more negative problem‐solving orientation perceived more difficulty in paying off their loans. We also found perceived difficulty to be directly related to the actual difficulty of repaying a loan, and this perceived difficulty was, in turn, associated with loan‐specific stress. We provide implications for financial education.     

Costly Ties: Social Capital as a Retardant of Network‐Level Entrepreneurial Orientation

Challenging social capital research, we argue that network top management teams (TMTs) established to support entrepreneurship in strategic multipartner networks should be careful in developing ties to outside organizations and networks. We suggest that such ties limit the network TMT's ability to engage in the strategy‐making processes needed to facilitate entrepreneurial orientation on a network level. Based on five‐year panel data from 53 formalized networks of small and medium‐sized enterprises, we demonstrate that homogenous and highly educated network TMTs can compensate the negative effects of TMT ties to other organizations, but not the negative effects of interlocking directorates.     

Private equity and entrepreneurial management in management buy-outs

Critics claim that short-term profit orientation and high deal price strategies of private equity (PE) firms can negatively affect the ability of management buyouts to initiate and sustain entrepreneurial management. This study investigates this claim by comparing effects of majority PE backed and other buy-outs at different levels of financial leverage on post buy-out increases in entrepreneurial management. We propose that PE can be used as an organizational refocusing device that simultaneously increases entrepreneurial and administrative management. We find that majority PE-backed buy-outs significantly increase entrepreneurial management practices. Furthermore, the increased financial leverage positively affects administrative management in management buy-outs. However, the effect of high financial leverage is larger for majority PE-backed buy-outs. These results support the notion that PE firms help buy-out companies develop ambidextrous organizational change: i.e. simultaneously develop entrepreneurial and administrative management practices. The findings have important implications for practitioners and policy makers.     

Financial literacy and high‐cost borrowing: Exploring the mechanism

Recent studies have suggested that financial literacy is an important determinant of informed borrowing decisions. Despite the evidence that financially literate consumers are less likely to use alternative financial services, the mechanism through which financial literacy discourages demand for alternative financial services has yet to be fully understood. The previous studies proposed several explanations, such as the ability to undertake complex financial calculations and understand contract terms, to link financial literacy to savvy credit choices. This study evaluates the validity of this argument by examining whether or not financial knowledge plays a greater role in borrowing decisions where consumers are forced to rely on financial knowledge. It is assumed that consumers in an information‐sparse environment have a greater incentive to utilize financial knowledge to infer the hidden cost of borrowing contracts. To test this argument, this study examines the extent to which information availability moderates the negative impact of financial knowledge on rent‐to‐own transactions. Information content is captured by state‐level disclosure mandates for rental contracts, given that consumer in a loosely regulated state are exposed to less pricing information. The results illustrate that limited information strengthens the negative association between financial knowledge and rent‐to‐own transactions. This confirms the previous arguments that consumers are active thinkers who refer to financial knowledge to estimate the overall cost of borrowing.     

“Going global” and FDI inflows in China: “One Belt & One Road” initiative as a quasi‐natural experiment

This paper investigates the impact of “One Belt & One Road” as an exogenous policy shock on the utilisation of foreign capital in China in the short term. Based on provincial panel data for the years 2003–15, the empirical study is conducted with difference‐in‐differences design. The first difference is whether a province is an OBOR province, and the second is whether “One Belt & One Road” initiative has been proposed. The empirical results suggest the utilisation of foreign capital in OBOR provinces has decreased significantly compared to non‐OBOR provinces after the initiative has been proposed. The study has further shown that the OBOR construction not only means factor movements and projects but also stands for policy shock. Its impact on utilisation of foreign capital cannot be simply captured by the commonly quantifiable “going global” indicators, namely outward direct investment, overseas contracted projects or overseas labour services. The negative impact of the initiative on foreign capital utilisation is strongly reflected in the OBOR provinces with low levels of economic development, heavy fiscal burdens and high proportions of state‐owned economy. In the short term, the negative impact of the initiative on foreign capital utilisation may be due to its role in resource competition and signal delivering. The former means that the OBOR initiative may induce resource competition between “going global” and “bringing in,” and the latter suggests that this initiative is likely to be regarded as a “signal” by foreign investors that “going global,” not “bringing in,” has become the priority of the government.     

Linking family-to-business enrichment and support to entrepreneurial success: Do female and male entrepreneurs experience different outcomes?

This study used survey data from 253 entrepreneurs who founded small to medium sized enterprises (SMEs) to examine how experiences in their family domain may benefit their experiences in their business domain. Specifically, it hypothesized that affective family-to-business enrichment, instrumental family-to-business enrichment, and family-to-business support would be positively related to entrepreneurial success and that each relationship would be more positive for female entrepreneurs than male entrepreneurs. Entrepreneurial success was assessed by economic measures (business performance, growth in employment) and measures of satisfaction with the entrepreneurial experience (satisfaction with status, satisfaction with employee relationships). Results offered substantial support for the notion that female entrepreneurs benefit from the linkages of family-to-business enrichment and support to entrepreneurial success, whereas they offered no support for the notion that male entrepreneurs benefit from these linkages. Female entrepreneurs may experience such benefits because of their relative lack of access to other resources such as human, social, and financial capital and because the female gender role encourages them to pursue work–family synergies. In contrast, male entrepreneurs may fail to experience such benefits because of the relative abundance of other resources available to them and because the male gender role discourages them from pursuing work–family synergies.     

Visualizing financial success: planning is key

Recent economic troubles in the US and abroad highlight the importance of family financial capability, including an understanding of financial markets. Financial capability is the foundation for desired financial behaviours, such as saving, budgeting, using credit wisely and planning. Study participants, a subsample of respondents to a Turkish university financial literacy survey (n = 374), who reported uninterrupted income for a 3‐year period were grouped as ‘planners’ and ‘non‐planners’. These groupings allowed examination of the relationships between planning, financial management decisions, and differential outcomes in daily household financial well‐being. The practice of preferred financial management behaviours was predictive of debt. This research makes a unique contribution to the literature, demonstrating the importance of uninterrupted income over income amount in support of the planning process. Findings of this study have implications for professionals in the family and consumer sciences field and other practitioners assisting consumers with improving financial management outcomes.     

Entrepreneurship,economic development,and institutional environment: evidence from OECD countries

The purpose of this article is to establish a typology of entrepreneurship for OECD countries over the 1999–2012 period. Our aim is to draw a distinction between managerial and entrepreneurial economies, to identify groups of countries with similar economic and entrepreneurial activity variables, and to determine the economic and institutional drivers of entrepreneurial activities in each group. We show that the level of development, sectoral specialization, and institutional variables related to entrepreneurship, functioning of the labor market, and openness of the country are decisive to understand differences in entrepreneurship activity across countries. Results show that the pre-crisis period, from 1999 to 2008, is a period of growth favorable to entrepreneurship. The financial crisis involved a break in entrepreneurial dynamism, with agricultural economies withstanding the financial crisis better. The 2010–2012 period of recovery is a period of a sharp slowdown in entrepreneurial activity, during which the countries that are less dependent on the financial sector proved to be the most resilient in terms of entrepreneurial activity. Nevertheless, it is the advanced knowledge economies with developed financial markets, fewer institutional regulatory constraints, and greater scope for qualitative entrepreneurship that show lower unemployment rates. These findings have important implications for the implementation of public policy in order to promote entrepreneurial activity and reduce unemployment.     

Practice makes perfect: Entrepreneurial-experience curves and venture performance

This study tackles the puzzle of why increasing entrepreneurial experience does not always lead to improved financial performance of new ventures. We propose an alternate framework demonstrating how experience translates into expertise by arguing that the positive experience–performance relationship only appears to expert entrepreneurs, while novice entrepreneurs may actually perform increasingly worse because of their inability to generalize their experiential knowledge accurately into new ventures. These negative performance implications can be alleviated if the level of contextual similarity between prior and current ventures is high. Using matched employee–employer data of an entire population of Swedish founder-managers between 1990 and 2007, we find a non-linear relationship between entrepreneurial experience and financial performance consistent with our framework. Moreover, the level of industry, geographic, and temporal similarities between prior and current ventures positively moderates this relationship. Our work provides both theoretical and practical implications for entrepreneurial experience—people can learn entrepreneurship and pursue it with greater success as long as they have multiple opportunities to gain experience, overcome barriers to learning, and build an entrepreneurial-experience curve.     

Letting Go to Grow—Empirical Findings on a Hearsay

Research to date has largely neglected the role of management style in new entrepreneurial ventures. We address this gap by investigating the impact of management style on company performance and how the impact is different contingent on the life cycle stage of new entrepreneurial ventures. By employing the concept of microinvolvement, our study demonstrates that management style significantly impacts company performance and that the merits of a highly involved management style are less in later‐stage new entrepreneurial ventures. This finding provides support for the saying “letting go to grow” and raises important implications for management.