While after the 2008 financial crisis most European enterprises were faced with a reduction in the demand for their products, some were not. This study examines to which extent this depends on the overall innovation performance of their domestic country. The innovativeness of a country is reflected by the share of frequent innovators in a country and by the level of technological specialisation of a country. Our results show that the share of frequent innovators in a country does not affect the probability that individual enterprises are faced with negative demand effects of an economic crisis. If we interpret the share of frequent innovators as an indicator of the overall performance level of innovation of a country, this implies that – despite the overall innovativeness of a country might help to shorten times of recovery after a crisis – it does not mitigate the crisis’ effects on the turnover of individual enterprises. Our results further show a negative effect of technological specialisation: higher levels of technological specialisation are associated with a higher probability for individual enterprises to be faced with negative demand effects of an economic crisis. The size of this effect is considerable: on average, the difference in the probability that enterprises are faced with negative demand effects between the lowest and highest level of technical specialisation is approximately 10% points. Finally, our findings also show that smaller and older firms were more often faced by a reduction in their demand than larger and younger firms.
Workplace innovation can be defined as the implementation of new and combined interventions in work organisation, HRM and supportive technologies, and strategies to improve performance of organisations and quality of jobs. Previous research confirms the presence of a positive relationship between workplace innovation and firm performance. Within this study we are interested in the scale effects in workplace innovation. Does firm size moderate the relationship between workplace innovation and organisational performance?
We investigate the interplay between entrepreneurial activity, the business cycle and unemployment in relation to the openness of the economy. Also, we explore to what extent the observation frequency (quarterly versus annual data) influences estimation results. Following empirical literature, we estimate a pooled VAR model of the three macro-economic variables. Using both quarterly and annual data for 19 OECD countries over the period 1998-2007, we find that in the short run (after one quarter), a country’s entrepreneurial activity is stimulated when its business cycle is lagging the world’s business cycle, whereas in the medium run (after one to two years), entrepreneurial activity is stimulated when its business cycle is leading the world’s business cycle. This suggests that a country’s business cycle position relative to the world’s cycle creates different types of entrepreneurial opportunities depending on the time horizon considered. These results apply to relatively open economies only which suggests that economic openness plays a role for entrepreneurial opportunities related to a country’s cyclical performance.
This eleventh edition deals with Top sectors and their importance to the Dutch economy. In 2010, the Dutch government introduced a new policy framework regarding the business sector. Besides generic measures to strengthen the business environment for all companies, there is a specific policy track to improve the performance of a number of important business sectors by building excellent eco-systems of government, knowledge institutes and businesses. Products and technologies produced by these sectors are furthermore important because they can provide solutions for societal problems. Topics: Entrepreneurship in the Netherlands in international perspective The policy of the Dutch government on top sectors Characteristics of SMEs in top sectors Entrepreneurship and business dynamics in the Netherlands - enabling experimentation
This report is part of the research program “SMEs and Entrepreneurship” which is financed by the Dutch Ministry of Economic Affairs.
Until seven years ago, user innovation studies focused on specific cases or industries, leaving room for criticism that the phenomenon is marginal. This chapter summarizes and discusses the empirical work concerned with the scope of user innovation in broader samples. A first finding is that user innovation is widespread. The share of firms developing and/or modifying processes for in-house use is generally about 15 to 20 percent, while amongst consumers four to six percent innovated to satisfy personal needs in the past three years. This corresponds with millions of innovating businesses and consumers across the globe. For firms, user innovation indicators measure process-related innovation activities which remain partly invisible in official surveys, while user innovation by individual consumers is not at all present in the official statistics. A second finding is that user innovation is more open than traditional, producer-oriented innovation. Especially innovating consumers do not patent their knowledge, and 10 to 30 percent of them even shares their knowledge freely with other users and/or adopting businesses. Finally, it appears that users’ innovations can be useful to other economic actors. Diffusion mechanisms include free revealing to other users, new venture creation, and adoption by commercial producers. Overall, the empirical studies suggest that user innovation indicators should be part of the official innovation metrics.
The temporal dimensions of managerial behavior and their impact on organizational outcomes have garnered increasing attention in the literature. Given the significant role of managers' time perception in shaping a firm's strategic direction, this study contributes by examining the relationship between temporal focus and the entrepreneurial orientation (EO) of solo self-employed workers. Drawing on a Dutch sample of 783 self-employed individuals, we find that both present and future temporal focus positively relate to their EO, and that this relationship is stronger for future focus. Our findings also suggest that these two temporal orientations act as substitutes rather than complements, in determining the EO of self-employed workers. We contend that this outcome may be attributed to the resource limitations typically encountered in solo self-employment. Collectively, our results underscore the critical role of temporal focus in the context of entrepreneurial pursuits.
We study the role of the business cycle in the individual decision of own-account workers to hire employees. Using panel data from the European Community Household Panel for the EU-15 countries, we show that own-account workers are less likely to hire employees during recessions. Next, we focus on identifying the underlying mechanisms of this negative relationship, while bearing in mind that liquidity constraints, unemployment and the prevalence of unpaid family workers are more common during recessions. First, we observe how liquidity constraints reduce the probability of transitioning from own-account worker to employer. Second, additional results from our paper suggest that formal education and former work experience (both work experience in paid employment and venture-specific work experience) are important assets for own-account workers which increase the probability that they create new jobs. Third, as a mechanism partly offsetting the lower probability of job creation during recessions, we also find that own-account workers who are assisted by unpaid family workers are more likely to start employing (salaried) personnel.
We extend Lazear’s theory of skills variety and entrepreneurship in three directions. First, we provide a theoretical framework linking new business creation with an entrepreneur’s skill variety. Second, in this model we allow for both generalists and specialists to possess skill variety. Third, we test our model empirically using data from Germany and the Netherlands. Individuals with more varied work experience seems indeed more likely to successfully start up a new business and being a generalist does not seem to be important in this regard. Finally, we find that innovation positively moderates the relationship between having varied experiences, and being successful in starting up a new business. Our conclusion is that entrepreneurs with more varied work experience are more likely to introduce innovations that have not only technical, but also commercial value. Our findings support the notion that entrepreneurship can be learned.
We investigate developments in business ownership rates in four CEE transition economies (Czech Republic, Hungary, Poland and Slovak Republic), and compare them with similar developments in other OECD countries in the period 1989-2008. Our analysis reveals that business ownership rates in the four CEE countries have been converging rapidly towards the levels of other OECD countries, and these CEE countries were able to rebuild their private sectors in a relatively short period of transition. We also find sizable differences among the four CEE countries under study in the level and dynamics of change of business ownership since 1989.
Start-up size is a key strategic decision for entrepreneurs. Should entrepreneurs start up close to minimum efficient scale or should they take less risks and start-up on a smaller scale? Previously, this strategic decision appeared to be one of simply making a choice between a higher risk/reward larger start-up versus a lower risk/reward smaller scale start-up. However, recent research on the relationship between risk management and performance (Burke, 2009) indicates that in situations of greater uncertainty and where innovation is incremental, a lower risk small start-up size can enable greater reward through enhanced post start-up flexibility and agility. In this paper we provide the first statistical test of the efficacy of start-up size strategies. We focus on employer businesses that provide jobs. We find that employer businesses that originally adopted a small scale (own-account) start-up strategy have higher survival chances and entrepreneurial incomes than employer businesses that employed personnel immediately from start-up. We also find that prior entrepreneurial experience positively affects firm survival and entrepreneurial incomes. Given the high failure rates among start-ups and the associated difficulty for new enterprises to create sustainable jobs, the research results highlight how strategic choice in relation to firm start-up size and risk management can have an important bearing on new venture performance.
In the current economic crisis, some enterprises are faced with a reduction in the demand for their products whilst others are not. The research question of this study is: to which extent does this depend on the innovativeness of the country of origin? Go to the publication 'The impact of the 2008 financial crisis on European enterprises: the role of innovation systems'
This article explores the process of learning from inter-organizational projects by SMEs. We analyse a sample of 1,500 SMEs to empirically develop a typology of different types of projects and conduct an in-depth comparative case study in each of the types. We find that 1) differences between project types influence the degree of project-based learning by SMEs, and 2) the mechanisms by which SMEs learn from projects can be unintentional, haphazard, and resemble learning by bricolage. These findings lead us to question the deliberate and pro-active nature of organizational learning that has been central to recent theory development.
At the meso-economic level, GDP is defined as the balance between sales of final goods and services and sales of intermediate goods and services on the one hand, and the use of domestically produced and imported intermediate goods on the other. At the macro-economic level, sales of intermediate goods and services and use of domestically produced goods and services cancel out, and a direct relation between final sales and GDP is obtained: the well-known Y= C + G + I + X – M identity. Still, as sectors differ significantly regarding the distribution of sales over sales categories (including intermediate goods and services), it would still be interesting to analyse the relation between GDP at the meso-level and final demand. A Cumulative Production Structure (CPS) matrix provides such information. The current document documents the development of such a matrix for the Dutch SME-sector for the year 2009, and summarises its results.
In this paper, we argue that institutions affect the allocation of entrepreneurship across new and established organizations. This is confirmed by empirical analysis of the Global Entrepreneurship Monitor (GEM) data on early-stage (independent) entrepreneurial activity and entrepreneurial employee behavior. Most comparative international research on entrepreneurship has focused on independent new ventures and has ignored the pursuit of entrepreneurial opportunities within established organizations (intrapreneurship). However, in developed economies the prevalence of entrepreneurial employee behavior is on average found to be in the same order of magnitude as that of independent entrepreneurial activity. At the same time prevalence rates of these two types of entrepreneurship vary substantially between countries. We analyze the allocation of entrepreneurial activity across early-stage independent entrepreneurial activity (entrepreneurship in new organizations) and entrepreneurial employee activity (entrepreneurship in established organizations) in 36 countries, taking into account effects of the level of economic development as well as the formal and informal institutional setting. We find that labor market institutions and the extent to which societies value autonomy affect the allocation of entrepreneurship across new and established organizations.
We investigate the role of an entrepreneur’s start-up motivation in determining the mode of entrepreneurial exit. A distinction is made between involuntary exit through business failure and voluntary exit through business sell-out or transfer. Regarding an entrepreneur’s start-up motivation, we include two measures distinguishing between opportunity and necessity motivated business owners. Internationally comparable data from 2009 for 35 countries containing more than 2,600 former business owners are used. We find some evidence that necessity business owners are more likely to exit through failure than opportunity business owners or business owners that are driven by a combination of opportunity and necessity reasons. We argue that necessity business owners have lower entrepreneurial ability than opportunity business owners and run lower quality businesses which increases their probability of failure versus sell-out. Entrepreneurial ability seems to play a role beyond the human capital aspects that are included in the model.
Traditionally, regulations are seen as harmful for the starting and growing of firms. However, strict environmental regulation can also trigger the discovery and introduction of clean technologies, and this innovation might improve the competitiveness of the firm (the so-called Porter hypothesis). This project focuses on the environmental regulation paradox in the context of new venture growth. The key questions are: 1) to what extent do new ventures perceive environmental regulation to be a bottleneck; and 2) how does environmental regulation affect the growth of clean tech ventures? The characteristics of a panel of new ventures are analyzed during their emergence, and in particular the effect of environmental regulation on the subsequent growth of these new ventures. These analyses are also performed on a subsample of firms that is especially liable to environmental regulations, namely clean tech ventures. The empirical evidence shows the paradox of environmental regulation for clean tech ventures: they more often perceive this to be a bottleneck, but environmental regulation also seems to drive their growth. Our interpretation of the environmental regulation paradox is that environmental regulation should be treated as a barrier to growth: entrepreneurs that aim to expand their business in markets that are sensitive to environmental regulation face these regulations as a bottleneck for their activities, but this necessary evil informs them how to successfully expand in these markets giving them a competitive edge over other less well informed firms. Without this hurdle they would probably not be sufficiently informed about the possibilities and impossibilities in these markets. This especially counts for clean tech ventures, but also for the group of non-clean tech ventures that is active on markets liable to environmental regulations. This interpretation does justice to the initial Porter hypothesis - environmental regulation can trigger innovation that may partially or more than fully offset the costs of complying with them – as environmental regulation is both perceived as a cost, but in the end seems to more than fully offset these costs indicated by the growth inducing effect of environmental regulation.
Are firm growth and firm survival related to each other? This paper tests the hypothesis that the relationship between firm growth and firm survival can be characterised by an inverted U-shaped relation. This hypothesis is confirmed by our estimations. At the same time, the results indicate that the top of the inverted U-shaped relation occurs at very high growth rates. This suggests that for the large majority of enterprises, the relationship between firm growth and firm survival can be better described by a positive relationship rather than an inverted U-shaped relationship. Although these results are preliminary, they suggest that policies that aim to increase the number of fast-growing firms have no negative effects on the rate of firm deaths.
National Accounts provide detailed information on the development of the economy detailed by sector of industry. However, a disaggregation by enterprise size class is not available. The available data on the size class structure of the economy shows huge and unrealistic fluctuations and can therefore not directly be used to disaggregate the information from National Accounts. This paper reviews some methods to smooth developments shown in source data with respect to the share of small, medium-sized and large enterprises. It appears that in principle, the Hodrick-Prescott filter is most suited to fulfill this task. A modified Hodrick-Prescott filter is used. In particular, the simultaneous smoothing of interrelated series, taking into account the definitional relations existing between them, performs quite well. The methodology has been tested for two rather different sectors of industry, i.e. chemical industry (large-scaled, business-to-business oriented, capital-intensive) and retail trade (small-scaled, oriented towards consumers, labor-intensive). It appears that adjusted series, according to industry experts, give a more realistic description of historical developments than the original series do.
