Insider perspectives on growth: Implications for a nondichotomous understanding of ‘sustainable’ and conventional entrepreneurship

The aim of this paper is to offer an alternative to a priori theorising in research on firm-level growth and environmental sustainability. We outline an approach that combines John Shotter's phenomenology with post-hoc application of the Bourdieusian concepts of habitus, practices and social capital. This is illustrated empirically through a study conducted with a small group of Finnish entrepreneurs, which examines their lived experience of growth alongside its practical application in their ventures. The entrepreneurs' responses reveal holistic perspectives on growth that extend beyond the economic to incorporate personal commitments to norms of collectivity and well-being for themselves and others. The paper offers an exploratory but empirically grounded approach, arguing that a combination of insiders' perspectives and attention to the social embedding of economic activity challenge the dichotomous distinctions between sustainable and conventional entrepreneurship and reveal a degree of commonality that would not be evident via conventional categorisations on the basis of features such as business model type.     

Goodwill and dynamic advertising strategies

In this paper, we empirically analyze weekly advertising policies of manufacturing firms in consumer goods markets. We assume firms engage in persuasive advertising, thus policies of firms affect the goodwill of a brand. We introduce a demand and a goodwill production function. A simple transformation of the demand function allows us to identify not only the demand parameters but also the parameters of the goodwill production function. We reconstruct the unobserved goodwill levels using these parameters and past advertising levels. We restrict our attention to Markov Perfect Equilibrium (MPE) strategies which are functions of payoff relevant state variables. Without imposing further restrictions on the dynamic competitive environment, we investigate the relationship between observed advertising strategies—which are assumed to be MPE—and payoff relevant state variables by means of several reduced form specifications. The most important determinant of advertising intensity turns out to be goodwill. We demonstrate that controlling for an advertising campaign significantly improves the explanatory power of the model. JEL Classification L13 . C73 . M30 . M37 I would like to thank Volkswagen Stiftung for the generous financial support which made this research possible.     

Patterns of business creation,survival and growth: Evidence from Africa

We study firm dynamics using a novel database of all formally registered firms in Cote d'Ivoire from 1977 to 1997, which account for about 60% of GDP. First, we examine entry and exit patterns and the role of new and exiting firms versus incumbents in job creation and destruction. We find that while the rate of job creation at new firms is quiet high – at 8% on average – the numbers of jobs added by new firms is small in absolute terms. Next, we examine survival rates and find that the probability of survival increases monotonically with firm size, but that manufacturing and foreign-owned firms face higher likelihoods of exit compared to service oriented and domestically-owned firms. We find that higher GDP growth increases the probability of firm survival, but this is a broad impact with no firm size disproportionately affected. In robustness checks we find that post-1987, size is no longer a significant determinant of firm survival for new entrants, suggesting that the operating environment for firms changed. Finally, we find that trade and fiscal reform episodes raised the probability of firm exit and attenuated the survival disadvantages faced by smaller firms, but exchange rate revaluation and pro-private sector reforms did not significantly lower the likelihood of exit.     

MARRIAGE,DIVORCE, AND ASYMMETRIC INFORMATION

We use data on people's valuations of options outside marriage and beliefs about spouses' options. The data demonstrate that, in some couples, one spouse would be happier and the other spouse unhappier outside of some marriages, suggesting that bargaining takes place and that spouses have private information. We estimate a bargaining model with interdependent utility that quantifies the resulting inefficiencies. Our results show that people forgo some utility in order to make their spouses better off and, in doing so, offset much of the inefficiency generated by their imperfect knowledge. Thus, we find evidence of asymmetric information and interdependent utility in marriage.     

Entry regulation as a barrier to entrepreneurship

Using a comprehensive database of European firms, we study the effect of market entry regulations on the creation of new limited-liability firms, the average size of entrants, and the growth of incumbent firms. We find that costly regulations hamper the creation of new firms, especially in industries that should naturally have high entry. These regulations also force new entrants to be larger and cause incumbent firms in naturally high-entry industries to grow more slowly. Our results hold even when we correct for the availability of financing, the degree of protection of intellectual property, and labor regulations.     

Interactivity's Unanticipated Consequences for Marketers and Marketing

The digital interactive transformation in marketing is not unfolding, as some thought it would, on the model of direct marketing. That model anticipated that marketing, empowered by digital media using rich profiling data, would intrude ever more deeply and more precisely into consumer lives than broadcast media had been able to. Instead the transformation is unfolding on a model of consumer empowerment, in which consumers use digital media to communicate with one another and deal with marketing's intrusions, showing none of the passivity displayed by mass media audiences. This paper categorizes five roles for the interactive consumer and draws implications for marketing practice. It concludes that the balance of power over marketplace meaning-making is shifting from marketer to consumer to the extent that media usage migrates from broadcasting to interactivity. The new marketplace rewards more participatory, more sincere, and less directive marketing styles than the old.     

Further Evidence on the Link between Finance and Growth: An International Analysis of Community Banking and Economic Performance

We try to contribute to both the finance-growth literature and the community banking literature by testing the effects of the relative health of community banks on economic growth, and investigating potential transmission mechanisms for these effects using data from 1993 to 2000 on 49 nations. Data from both developed and developing nations suggest that greater market shares and efficiency ranks of small, private, domestically owned banks are associated with better economic performance, and that the marginal benefits of higher shares are greater when these banks are more efficient. Only mixed support is found for hypothesized transmission mechanisms through improved financing for small and medium enterprises or greater overall bank credit flows. Data from developing nations are also consistent with favorable economic effects of foreign-owned banks, but unfavorable effects from state-owned banks.     

Capital Structure and Financial Risk: Evidence from Foreign Debt Use in East Asia

Using a data set of East Asian nonfinancial companies, we examine a firm's choice between local, foreign, and synthetic local currency (hedged foreign currency) debt. We find evidence of unique as well as common factors that determine each debt type's use, indicating the importance of examining debt at a disaggregated level. We exploit the Asian financial crisis as a natural experiment to investigate the role of debt type in firm performance. Surprisingly, we find that the use of synthetic local currency debt is associated with the biggest drop in market value, possibly due to currency derivative market illiquidity during the crisis.     

Financial literacy and financial resilience: Evidence from around the world

We measure financial literacy using questions assessing basic knowledge of four fundamental concepts in financial decision making: knowledge of interest rates, interest compounding, inflation, and risk diversification. Worldwide, just one in three adults are financially literate—that is, they know at least three out of the four financial concepts. Women, poor adults, and lower educated respondents are more likely to suffer from gaps in financial knowledge. This is true not only in developing countries but also in countries with well-developed financial markets. Relatively low financial literacy levels exacerbate consumer and financial market risks as increasingly complex financial instruments enter the market. Credit products, many of which carry high interest rates and complex terms and conditions, are becoming more readily available. Yet only around half of adults in major emerging countries who use a credit card or borrow from a financial institution are financially literate. We discuss policies to protect borrowers against risks and encourage account holders to save.     

What does “entrepreneurship” data <Emphasis Type="Italic">really</Emphasis> show?

In this paper, we compare two datasets designed to measure entrepreneurship: The Global Entrepreneurship Monitor (GEM) dataset and the World Bank Group Entrepreneurship Survey (WBGES) dataset. We find a number of important differences when the data are compared. First, GEM data tend to report significantly higher levels of early stage entrepreneurship in developing economies than do the World Bank business entry data, while the World Bank business entry data tend to be higher than GEM data for developed countries. Second, we find that the magnitude of the difference between the datasets across countries is related to the local institutional and environmental conditions for entrepreneurs, after controlling for levels of economic development. Our findings suggest that entrepreneurs in developed countries have greater ease and incentives to incorporate, both for the benefits of greater access to formal financing and labor contracts, as well as for tax and other purposes not directly related to business activities.