Testing Baumol: Institutional quality and the productivity of entrepreneurship

Baumol's [Baumol, W.J., 1990. Entrepreneurship: productive, unproductive and destructive. Journal of Political Economy 98 (5), 893–921] theory of productive and unproductive entrepreneurship is a significant recent contribution to the economics of entrepreneurship literature. He hypothesizes that entrepreneurial individuals channel their effort in different directions depending on the quality of prevailing economic, political, and legal institutions. This institutional structure determines the relative reward to investing entrepreneurial energies into productive market activities versus unproductive political and legal activities (e.g., lobbying and lawsuits). Good institutions channel effort into productive entrepreneurship, sustaining higher rates of economic growth. I test and confirm Baumol's theory, and discuss its significance to the literature, economic prosperity, and policy reform.     

Institutional investors and international investments in emerging economy firms: A behavioral risk perspective

While the extant literature has examined the influence of controlling and non-controlling principals on the internationalization decisions of emerging market firms, heterogeneity among non-controlling principals is largely ignored. The risk characteristics of different groups of owners, shaped by their institutional environments, could contribute to the differences in their preferences for firm internationalization. In this paper, we draw insights from institutional theory and behavioral risk perspective to examine the risk propensities and risk perceptions of various non-controlling principals, such as pressure-resistant (FIIs and mutual funds) and pressure-sensitive (banks, insurance companies and lending institutions) institutional investors. Empirical results from a sample of 2364 unique Indian firms during the 2005–2014 time-period show that, after controlling for firm-level resources and capabilities identified in prior literature, the ownership share of different types of institutional investors is associated with firms’ international investments differently. While pressure-sensitive institutional investors, such as banks and insurance companies, are not supportive of foreign investments by firms, pressure-resistant institutional investors, such as FIIs and mutual funds, are supportive of this strategic decision. Furthermore, our results show that the family ownership in a firm (measured in terms of family shareholding) further lowers the preference of pressure sensitive institutional investors for internationalization, whereas family ownership positively moderates the pressure resistant investors towards internationalization.     

Sustainable corporate entrepreneurship: Evolving and connecting with the organization

Corporate entrepreneurship necessarily entails both risk and high levels of uncertainty; yet, established organizations are typically positioned as efficient engines that function best via cautious and routine progress, which can hinder attempts to inject innovative ideas into mature businesses. As such, conscious effort is required to build a corporation's capacity for sustainable entrepreneurship. While a few exceptional companies have built and maintained an enduring capability for entrepreneurship, the majority of firms possess a general resistance to these initiatives. Commitment to entrepreneurship may cycle between high or moderate support for the activity, to floundering interest or disbanded initiatives, as conditions in the internal and external environment shift. This cycling pattern, unfortunately, prevents the development of enduring capabilities. Herein, it is revealed how companies can progress their entrepreneurial capabilities over time, adjusting and improving them as the firm learns and adapts to change. To accomplish this, companies must develop strategic objectives to guide entrepreneurs, a management structure to support their work, and processes that inform assessment and decision making. Through an Evolve and Connect model, these three contexts can adjust to shifts in the external environment and the changes and progress happening within the organization. Over time, however, managers need to maintain a link between entrepreneurial activity and the organization's mainstream.     

Institutional ownership and technological relatedness: A test of endogeneity

Building on the previous literature on corporate diversification, institutional ownership and firm innovation, this study proposes an endogenous relationship between institutional ownership and corporate technological relatedness. Technological relatedness is the degree to which a set of industries in which a firm operates its businesses demand similar technological knowledge. A Vector Autoregressive analysis of data from U.S. manufacturing firms shows that firms enhancing technological relatedness attract more institutional investors and as predicted, this pattern is particularly strong for pension fund ownership. In contrast, the analysis fails to show that institutional investors cause a firm's business portfolio to increase in technological relatedness.     

FDI location choice of Chinese multinationals in East and Southeast Asia: Traditional economic factors and institutional perspective

This paper investigates the factors determining foreign direct investment (FDI) location choices of Chinese multinational firms. We developed a conceptual framework that synthesizes traditional economic factors and institutional perspective. Then several hypotheses were developed in line with the framework and empirically tested using panel data of Chinese outward FDI to eight economies in East and Southeast Asia across a time period of thirteen years. Our findings suggest that institutional factors demonstrate a higher level of significance, complexity and diversity in determining FDI location choice in comparison with economic factors, while both types of factors influence the FDI location choice of Chinese multinational firms. We also found that the FDI location choices of Chinese firms have a dynamic nature, as statistical evidence indicates a heterogeneous response of Chinese FDI towards different economic groups and during different time periods.     

A conceptual framework for entrepreneurship education policy: Meeting government and economic purposes

There is an increasing tendency for government policy to promote entrepreneurship for its apparent economic benefit. Accordingly, governments seek to employ entrepreneurship education as a means to stimulate increased levels of economic activity. However, the economic benefit of entrepreneurship education has proven difficult to substantiate. It is perceived that the problem is partly due to the multi-definitional perspectives of entrepreneurship. What stems from this is a lack of a theoretically sound conceptual grounding that will assist policy-makers and educators to locate a program within specific objectives. This article sets out an argument, extending from economic theory, to provide purpose for entrepreneurship education and proposes a policy framework supported by analysis of the Australian government policy context.     

Adolescent injuries in relation to economic status: An international perspective

The primary objective of the study was to examine the relationship between patterns in car-to-car crashes involving young drivers and car and driver characteristics and the research design was a national register-based prospective cohort study. Individual records in a cohort born 1970 – 1972 are linked to road-traffic-crash data (1988 – 2000). Subjects' first police-registered two-car crash leading to severe or fatal injury (n = 4875) are identified. Typical crash patterns are highlighted and associations between pattern and both car and individual socio-demographic characteristics are tested. Four crash patterns are highlighted. Male drivers and those with lower educational attainment are over-represented in all patterns. Pattern-based risk levels vary considerably according to car safety level and driver's age at time of injury and socio-economic status. Crash patterns might be considered in young adult driver education systems, bearing in mind the consistent higher risks of male drivers and of drivers with lower educational attainment.     

Crescive entrepreneurship in complex social problems: Institutional conditions for entrepreneurial engagement

This paper explores entrepreneurship in the context of complex social problems (often referred to as ‘social’ entrepreneurship). Most management research in this area studies the entrepreneurs; we explore the institutional conditions which frame the likelihood of entrepreneurial engagement. We name these conditions ‘crescive’ and, following A.O. Hirschman's studies on institutional conditions for development we identify two analytically different sets of conditions: those that can stir up actors' motivations to engage and those that can alter their decision making logic. Our exploration of crescive conditions yields a novel conceptual model for entrepreneurial engagement in the context of complex social problems, which we label ‘crescive entrepreneurship’ and place in a space between functionalist and institutional action.     

Legitimizing the apprenticeship practice in a distant environment: Institutional entrepreneurship through inter-organizational networks

This paper asks how Multinational Enterprises (MNEs) engage in institutional entrepreneurship to successfully transfer the organizational practice of apprenticeship-based training from Continental Europe to the distant host environment of the United States. In our case study, we highlight the important role of inter-organizational networks to coordinate engagement with the cognitive, normative, and regulative pillars of host country institutions. This networked form of institutional entrepreneurship involves the formation of inter-organizational networks for the purpose of bringing about institutional change collaboratively. In the process of transferring apprenticeship, a particular vision of workforce training was created, support gathered, and institutional change was sustained locally around the issue of training. We argue further that networked institutional entrepreneurship is a useful strategic tool to overcome the particular kind of institutional distance between the institutional settings of more coordinated market economies (CMEs) and more liberal market-oriented economies (LMEs). We contribute to existing knowledge by showing how practice transfer is shaped by particular kinds of institutional distance, and highlighting the role of inter-organizational networks as a way of governing collective agency associated with institutional entrepreneurship and the emergence of new local proto-institutions.     

我国房地产融资模式的改进与制度创新

我国房地产融资模式自上世纪90年代初的第一次创新之后,经过10多年的经济增长和市场发展,目前已发展到了亟须进行以融资渠道多元化为核心内容的第二次创新的阶段.本文从我国房地产融资结构的现状出发,讨论了为了维持房地产业的持续健康发展和有效地防范金融风险所需进行的融资工具创新问题和制度创新问题.     

Socio-cognitive traits and entrepreneurship: The moderating role of economic institutions

We examine how country-level institutional context moderates the relationship between three socio-cognitive traits—entrepreneurial self-efficacy, alertness to new business opportunities, and fear of failure—and opportunity entrepreneurship. To do this, we blend social cognitive theory (SCT) with institutional theory to develop a multi-level model of entrepreneurial entry. We merge data from the Global Entrepreneurship Monitor (GEM) surveys and the Economic Freedom of the World (EFW) index for 45 countries from 2002 to 2012. Our results, which are based on a multi-level fixed-effects model, suggest that entrepreneurs' self-efficacy and alertness to new opportunities promote opportunity entrepreneurship while fear of failure discourages it. However, the strength of these relationships depends on the institutional context, with entrepreneurial self-efficacy and alertness substantially more likely to lead to new opportunity-driven ventures in countries with higher levels of economic freedom. These results provide suggestive evidence that economic freedom not only channels individual effort to productive entrepreneurial activities, but also affects the extent to which individuals' socio-cognitive resources are likely to mobilized and lead to high-growth entrepreneurship.     

北京市出口贸易与经济增长关系的实证研究

通过对改革开放以来北京市出口贸易与经济增长关系的实证分析,得出的基本结论是,经济体制改革和对外开放两因素对经济增长都具有显著的促进作用(前者的产出弹性为0.635,后者为0.110),其中非国有化程度的提高对经济增长的作用较大;同时,北京市的经济增长方式仍以要素投入为主,其中主要是劳动的投入。     

Foreign direct investment and entrepreneurship: gender differences across international economic freedom and taxation

Using recent cross-national data, this paper examines the impact of foreign direct investment (FDI) on entrepreneurship activity. The impact of FDI on entrepreneurship is not clear a priori, with possibilities of both a negative effect (crowding out) and a positive effect (synergy or complementarity via spillovers). Results find support for the crowding out effect; however, this effect varies across nations with different prevalence of entrepreneurship. Another focus of this work is on gender differences. The crowding out effect is stronger for the full sample rather than the subsample of female entrepreneurship. This finding stands up to a battery of robustness checks. Policy implications are discussed.     

On exports and economic growth: the case of Italy

The export-led growth hypothesis for the Italian economy (1960-98) is tested through a VAR model with four macroeconomic variables: an index of the GDP of the rest of the world; the Italian real exchange rate; Italian real exports; and the Italian real GDP. Our results provide clear empirical support for the hypothesis. They also suggest that the Kaldorian approach is very useful in analysing short-run as well as long-run growth and fluctuations of an open economy such as Italy.     

Entrepreneurship,economic development and institutions

This paper is an introduction to the special issue from the 3rd Global Entrepreneurship Monitor Research Conference held in Washington, D.C., in 2008. The paper has three objectives. First, to discuss the importance of the three stages of economic development, the factor-driven stage, the efficiency-driven stage and the innovation-driven stage. Second, to examine the empirical evidence on the relationship between stages of economic development and entrepreneurship. Third, to present a summary of the papers in the context of the theory.

Leaving home: An institutional perspective on intermediary HQ relocations

We investigate the effect of changing national institutions on relocations of intermediary HQs. Using a dataset of 154 cross-border relocations between the period from 2000 to 2015, we draw on the intermediary HQ’s middle position within the MNC and investigate how a decrease in institutional quality in the HQ’s host country and a change in institutional distance between different MNC units affect the relocation decision. Our findings advance the emergent literature on HQ relocations as well as our knowledge of intermediary HQs and the effect of changing institutions on organizational location choices. Beyond our theoretical contributions, we offer policy and managerial implications.     

Examining the economic growth and the middle-income trap from the perspective of the middle class

In recent decades, while some countries have been growing consistently, others were not able to keep high growth rates and got stuck in the “middle-income trap.” This study aims to explore the relationship between the middle class and the persistence of economic growth, and understand the role of the middle class in avoiding the middle-income trap which is a serious threat for many emerging markets, yet an understudied topic in the academic literature. Our findings suggest that the key growth factors including the middle class, innovation, productivity, and foreign direct investment have diminishing marginal effect on economic growth. Moreover, the middle class plays an important role in avoiding the middle-income trap. We also find regional differences in the middle-class growth and economic evolution of emerging markets over time. To our knowledge, this is the first study examining the relationships between the middle class, economic growth, and the middle-income trap.     

Reconceptualizing entrepreneurial exit: Divergent exit routes and their drivers

We develop a conceptual model of entrepreneurial exit which includes exit through liquidation and firm sale for both firms in financial distress and firms performing well. This represents four distinct exit routes. In developing the model, we complement the prevailing theoretical framework of exit as a utility-maximizing problem among entrepreneurs with prospect theory and its recent applications in liquidation of investment decisions. We empirically test the model using two Swedish databases which follow 1,735 new ventures and their founders over eight years. We find that entrepreneurs exit from both firms in financial distress and firms performing well. In addition, commonly examined human capital factors (entrepreneurial experience, age, education) and failure-avoidance strategies (outside job, reinvestment) differ substantially across the four exit routes, explaining some of the discrepancies in earlier studies.     

Entrepreneurship capital and its impact on knowledge diffusion and economic performance

In this paper, we develop two hypotheses: First, regional innovation efforts have a positive impact on regional knowledge based entrepreneurial activity. Second, knowledge based entrepreneurship positively affects regional economic performance. We test these hypotheses using county level data from West Germany, employing a structural equation model to analyze the relationships between latent variables. Our empirical analysis provides evidence supporting both hypotheses. In particular, our results suggest that innovation efforts have an indirect effect on economic performance via entrepreneurship. This indirect effect is neglected in existing empirical studies focusing on the direct effect of innovation on economic performance.     

制度距离与外商直接投资--一项基于中国的经验研究

利用2000-2003年间69个投资国和地区的国别资料,本文分析了制度上的差异与作为东道国的中国吸引外商直接投资之间的关系.研究结果表明:文化制度差异越大,投资国在中国的直接投资越少;包括法律完善程度和私有财产保护程度在内的法律制度差异越大,投资国在中国的直接投资越少;贸易政策、货币政策、金融管制政策等宏观经济制度差异越大,投资国在中国的直接投资越少;政府干预程度、工资控制程度和市场规范程度等微观经济制度差异越大,投资国在中国的直接投资越少.在上述发现的基础上,本文提出了相应的政策建议.