New business formation and employment growth: some evidence for the Spanish manufacturing industry

This paper explores the effects of new business formation on employment growth in Spanish manufacturing industries. New firms are believed to make an important contribution to economic growth but the extent of this contribution is unclear. We consider time lags of new firm formation as explanatory variables of employment change and identify how long the effect of new firm entries on employment lasts. Our main results show that the effects of new business formation are positive in the short term, negative in the medium term and positive in the long term, thus confirming the existence of indirect supply-side effects found in similar studies for other countries.

How does new business formation affect regional development? Introduction to the special issue

This paper gives an overview of the empirical research on the effects of new business formation on regional development and introduces the contributions to this special issue. The effects of new businesses on regional development emerge over a longer time-period of up to ten years. A main focus of the contributions to this special issue is on the distribution of these effects over time and on the magnitude of the overall effect. While the basic pattern found for the different countries and regions is quite similar, the magnitude of the overall effect can be different and may even be negative. There are strong indications, that the type of entrants plays an important role in this respect.

The impact of new firm formation on regional development in the Netherlands

This paper examines the relationship between new firm formation and regional employment change in The Netherlands. Using a new regional data base for the period 1988–2002, we examine the time lags involved in the relationship. We also investigate whether the relationship differs by sector and by degree of urbanization. We find that the maximum effect of new businesses on regional development is reached after about 6 years. Our results also suggest that the overall employment impact of new-firm start-ups is positive but that the immediate employment effects may be small in The Netherlands. Furthermore, we find that the employment impact of new firms is strongest in manufacturing industries and that the employment impact of new firms is stronger in areas with a higher degree of urbanization.

Entrepreneurship,regional development and job creation: the case of Portugal

This paper investigates whether a high level of new business formation in a region stimulates employment growth in that region. We look at the lag structure of these effects using a data set covering a fairly large time span (1982–2002). We find that indirect effects of new firm births on subsequent employment growth are stronger than direct effects. However, indirect effects only occur about 8 years after new firm formation. In particular, and unlike the findings from studies of other countries using a similar approach, positive indirect effects do not seem to tail off in the Portuguese case. This is likely due to a general pattern of results in which lags appear to be longer for Portugal. In view of these results, we suggest that the lag times and magnitudes the effects on new firm formation on subsequent employment growth are likely dependent on the types and qualities of start-ups.

The effects of new firm formation on regional development over time: The case of Great Britain

This paper re-examines the link between new firm formation and subsequent employment growth. It investigates whether it is possible to have the wrong type of entrepreneurship—defined as new firm formation which leads to zero or even negative subsequent employment growth. It uses a very similar approach to that of Fritsch and Mueller (Regional Studies, 38(8), 961–976, 2004), confirming their findings that the employment impact of new firm formation is in three discrete phases. Then, using data for Great Britain, the paper shows the employment impact of new firm formation is significantly positive in the high-enterprise counties of Great Britain. However, for the low-enterprise counties, it shows that new firm formation has a negative effect on employment. Of the 15 low-enterprise regions, eight are Scottish (of nine Scottish regions in our data base) and three are North East Counties (of four). Our findings imply that having the “wrong type of entrepreneurship” is indeed possible.

Employment effects of business dynamics: Mice, Gazelles and Elephants

Much of the theoretical work on industry dynamics focuses on the role of ‘noisy’ selection and incomplete information on firm entry and survival. We extend this research by looking at the impact of firm heterogeneity on employment effects for 320 U.S. Metropolitan Statistical Areas (MSA). We find that only start-ups with greater than 20 and less than 500 employees have persistent employment effects over time and only in large diversified metropolitan regions. Therefore, both the type of entry (Gazelles) and the characteristics of the region are important for employment growth.

Small business survival and inheritance: evidence from Germany

This paper investigates whether small businesses face financial constraints that affect their survival. A model of moral hazard is developed in which financial constraints arise endogenously. The model predicts that higher private assets relax financial constraints and have a positive effect on the firm’s probability of survival. The empirical analysis confirms that the entrepreneur has a higher propensity to stay in business when she inherits capital. This effect is particularly strong for entrepreneurs who switch from self-employment into wage employment.

The impact of foreign direct investment on new firm survival in the UK: evidence for static versus dynamic industries

The paper examines the impact of Foreign Direct Investment (FDI) on the survival of business start-ups. FDI has potential for both negative displacement/competition effects as well as positive knowledge spillover and linkage effects on new ventures. We find a net positive effect for the whole dataset. However, a major contribution of the paper is to outline and test an argument that this effect is likely to be comprised of a net negative effect in dynamic industries (high churn: firm entry plus exit relative to the stock of firms) alongside a net positive effect in static (low churn) industries. We find evidence to support this view. The results identify new effects of globalisation on enterprise development with associated challenges for industrial policy.

A theoretical grounding and test of the GEM model

The Global Entrepreneurship Monitor model combines insights on the allocation of effort into entrepreneurship at the national (adult working-age population) level with literature in the Austrian tradition. The model suggests that the relationship between national-level new business activity and the institutional environment, or Entrepreneurial Framework Conditions, is mediated by opportunity perception and the perception of start-up skills in the population. We provide a theory-grounded examination of this model and test the effect of one EFC, education and training for entrepreneurship, on the allocation of effort into new business activity. We find that in high-income countries, opportunity perception mediates fully the relationship between the level of post-secondary entrepreneurship education and training in a country and its rate of new business activity, including high-growth expectation new business activity. The mediating effect of skills perception is weaker. This result accords with the Kirznerian concept of alertness to opportunity stimulating action.

Succession and firm growth: results from a non-parametric matching approach

The article analyses the relationship between succession and firm performance. Applying a non-parametric matching approach on a panel of roughly 4,000 Austrian family firms we evaluate the impact of actual (past) succession as well as planned (future) successions on employment growth. Analysing succession plans, we do not find a significant difference in employment growth between firms that plan to transfer the firm in the next 10 years and those who do not. In contrast, past succession exerts a significant and positive employment growth effect, which becomes stronger over time.

Business Ethics Training: Insights from Learning Theory

This paper explores research in educational psychology and learning theory in a search for insights to enhance business ethics training Useful educational principles uncovered are then applied to the development of an ethics training initiative for sales professionals. The paper concludes with suggestions for future research to help enrich business ethics training.

Effect of credit guarantee policy on survival and performance of SMEs in Republic of Korea

This study evaluates the effect of credit guarantee on SMEs at the firm level. To estimate the effect of credit guarantee, we analyze relations between credit guarantee, the survival of guaranteed firms, and their productive performance. The result indicates that credit guarantee frequency enabled guaranteed firms to achieve good performances in general. On the contrary, the effect of guarantee amounts is ambiguous in that there is difference between the contemporary effect and the lagged effect. Therefore, we conclude that credit guarantee satisfied partially its goal to alleviate SMEs’ difficulty in acquiring finance and to stabilize employment.

Cultural Crossvergence and Social Desirability Bias: Ethical Evaluations by Chinese and Canadian Business Students

The purpose of this study is to determine whether there are cross-cultural differences between Chinese and Canadian business students with respect to their assessment of the ethicality of various business behaviors. Using a sample of 147 business students, the results indicate cultural crossvergence; the Chinese (72 students) and Canadians (75 students) exhibit different ethical attitudes toward questionable business practices at the individual level but not at the corporate level. A social desirability bias (a tendency to deny socially unacceptable actions and to admit to socially desirable ones) is also found to be a cross-cultural phenomenon, with the Canadians demonstrating a greater bias than the Chinese. Finally, this bias causes respondents to increase their assessment of the un-ethicality of questionable business activities.

Firm growth in industrial clusters of the United Kingdom

This article examines how firm growth is influenced by the strength of the industrial cluster in which the firm is located. It presents econometric estimates of firm growth for 56 two-digit industries in the UK. In about half of these industries, there is a positive and statistically significant association between firm growth and own-sector employment. Significant associations between firm growth and other-sector employment are less common, but where these arise they are generally negative. We find that a weak rule of thumb applies in most industries: own-sector effects are positive or insignificant, while other-sector effects are negative or insignificant. Cluster effects are strongest in manufacturing, manufacturing-related, and infrastructure, but weaker in services.

Global Software Piracy: Searching for Further Explanations

This paper identifies that Information and Communication Technology (ICT) has a negative effect on software piracy rates in addition to consolidating prior research that economic development and the cultural dimension of individualism also negatively affect piracy rates. Using data for 59 countries from 2000 to 2005, the findings show that economic well-being, individualism and technology development as measured by ICT expenditures explain between 70% and 82% of the variation in software piracy rates during this period. The research results provide important implications for policy makers and business practitioners to help reduce software piracy.

Cost of small business banking: a New Zealand study

The research reported in this article develops a model for assessing the cost of banking services faced by small businesses. The lack of price competition in the provision of small business banking services combined with limited transparency concerning actual fee levels prevents small businesses from readily estimating likely fee levels. Prior research and government reports note the difficulties faced by small business in relation to banking services and this research contributes to an understanding of the potential dead weight losses incurred resulting from poor signalling and information asymmetry and potentially a deficient public policy framework.

Business students’ attitudes toward unethical behavior: A multi-country comparison

Business students are confronted early in their academic careers with examples of questionable acts and practices related to individual and corporate integrity. The current study identifies four segments of students with respect to their attitudes toward unethical behavior and is one of the first known attempts to understand country corruption and its impact on students of business. Findings from a worldwide survey of over 6,000 business students suggest that corruption does breed corruption and that business students in more corrupt countries have a greater likelihood than their counterparts in less corrupt countries to equate legal and ethical. It appears that business students in more corrupt countries expect to use the law as their ethical gauge in business decisions.

Technological Innovation and Its Impact on Business Model, Organization and Corporate Culture – IBM’s Transformation into a Globally Integrated, Service-Oriented Enterprise

This article investigates the influence of information and communication technology (ICT) on business transformation. First, the general, ICT-driven development lines of globalization and service-orientation are described. Then, an analysis of the IBM Corporation’s transformation over the past 50 years into a globally integrated, service-oriented company illustrates that ICT innovations must be dealt with by simultaneous adaptation of business model, organization and corporate culture. For many companies the ability to manage this change becomes increasingly critical.

Business-to-Business Markets – Status Quo and Future Trends

As a phenomenon of modified value-chain structures the economic importance of business-to-business markets has been growing immensely during the past decades. This paper delivers a quantified overview of the market dimensions in terms of transactional volume. In addition, it explains the causes for this market development such as an increased service orientation in business transactions, higher degrees of customization, and influential factors on a macro level. In this context, future trends in this sector will be outlined as well.

The effects of entrepreneurial orientation, market orientation, and marketing subunit influence on firm performance

The study investigates how an organization’s entrepreneurial orientation moderates the interplay between market orientation and marketing subunit influence on firm performance. The hypothesized model predicts that the positive interaction between market orientation and marketing subunit influence has a weaker effect on firm performance under conditions of high entrepreneurial orientation. The regression and supplementary analyses provide support for most predictions and, most importantly, for a negative three-way interaction effect: At higher levels of entrepreneurial orientation, the positive moderating effect of marketing subunit influence on the market orientation–business performance relationship is reduced. The authors discuss the managerial and theoretical implications of their findings and provide a number of directions for further research.