Index and Abstracts

Volume 12, Number 1
March 2007

Entrepreneurship and Economic Growth: An Empirical Analysis
Hector Salgado-Banda

Entrepreneurship and Ethnicity: The Role of Human Capital and Family Social Capital
Ana Cristina O. Siqueira

Microenterprise Development Success: A Path Analysis of Factors that Lead to and Mediate Client Success
Michele Cranwell Schmidt and Jane M. Kolodinsky

Barriers to Entrepreneurship and SME Growth in Transition: The Case of Kosova
Besnik A. Krasniqi

Entrepreneurship Development: SMEs in Indonesia
Tulus Tambunan

Entrepreneurship and the Informal Economy: A Study of Ukraine’s Hidden Enterprise Culture
Colin C. Williams and John Round

Entrepreneurship and Economic Growth: An Empirical Analysis

Hector Salgado-Banda

This study examines the impact of entrepreneurship on economic growth by using a new variable based on patent data to proxy for productive entrepreneurship. Data on self-employment is used as an alternative proxy. The study considers 22 OECD countries and finds a positive relationship between the proposed measure of productive entrepreneurship — degree of innovativeness of different nations — and economic growth, while the alternative measure, based on self-employment, appears to be negatively correlated with economic growth. A battery of econometric specifications and techniques backs the findings.

Entrepreneurship and Ethnicity: The Role of Human Capital and Family Social Capital

Ana Cristina O. Siqueira

This study of Brazilian immigrants in the United States examines the extent to which the human capital and the family social capital theories explain the probability of owning a business. This study incorporates into the analytical models a variable that controls for the presence of a market niche and tests for the net effects of human and family social capital. Analyses of U.S. 2000 Census data find that high school graduates are more likely to own their own business and that a college education exerts a significantly larger effect than that of a high school education on the probability of owning a business. Additionally, the presence of a co-habiting spouse, treated as an indicator of family social capital, enhances the probability that immigrants will own their own establishment. The results support the human capital and the family social capital theories. The study discusses implications for theory and future research.

Microenterprise Development Success: A Path Analysis of Factors that Lead to and Mediate Client Success

Michele Cranwell Schmidt and Jane M. Kolodinsky

Through a path regression analysis of data from the Vermont Micro Business Development Program, this study examined the relationships between client characteristics, program activities, interim outcomes, and impacts, to understand factors that lead to and mediate client success in microenterprise development programs and as entrepreneurs. Statistics demonstrated excellent model fit to the data. The interim outcome of improved personal well-being was related to more sources of capital, course completion, being partnered and younger. Starting a business was related to having more financial resources and mediated by improved well-being. Clients who experienced an increase in income had previous business experience and an increase in assets. Increased income was mediated by improved well-being and business start. Reduction in public assistance was related to course completion, more sources of capital, not being in poverty, and increased assets. Increased assets were related to more education, not being in poverty, and more sources of capital. Being older, more sources of capital, a larger family, and improved well-being led to job creation. Overall, access to more financial resources enabled clients to meet personal and business goals and work toward self-sufficiency. The results suggest implications for public policy regarding business training and loan financing.

Barriers to Entrepreneurship and SME Growth in Transition: The Case of Kosova

Besnik A. Krasniqi

This study investigates the barriers to growth of small and medium-sized enterprises (SMEs) in Kosova. It is based on a SME survey conducted by Riinvest Institute at the end of 2002 which identified critical business environment barriers perceived by entrepreneurs such as legal environment, administrative burden, external financing, tax burden, and unfair competition. First, based on this SME survey, the econometric model is constructed and empirically tested the Gibrat’s Law. Then, in order to identify and measure the impact of current reported business environment barriers on SME growth, the Gibrart’s law is augmented with other business environment variables. The econometric results suggest that firms’ growth is negatively linked to firms’ size and age suggesting that Gibrat’s Law does not hold for growing SMEs in Kosova. Also the growth of the SMEs is reduced by the presence of the business environmental barriers such as tax burden, unfair competition and inadequate financing. Econometric results raise important issues and policy implications for the development of the SME sector in Kosova.

Entrepreneurship Development: SMEs in Indonesia

Tulus Tambunan

The Indonesian government has been trying to encourage entrepreneurship development by supporting the development of small and medium enterprises in the country, since these enterprises provide an avenue for the testing and development of entrepreneurial ability. This paper examines the current developments of SMEs in the country. The paper comes with a number of interesting facts. First, SMEs are of overwhelming importance in Indonesia, as they account for more than 90 percent of all firms outside the agricultural sector, and thus the biggest source of employment . Second, the representation of women entrepreneurs is low. Third, women entrepreneurs are less educated than their men counterparts. Fourth, the main constraints faced by small entrepreneurs are lack of working capital and marketing difficulties. Finally, the majority of existing studies suggest that the effectiveness of government programs to support SME development programs is low. The paper concludes that in national efforts to develop high competitive entrepreneurships, owners of small enterprises should be given the first priority as they have some previous experience running a business or how to survive in competitive markets, and the emphasis should be to promote modernization, capacity building and size upgrading.

Entrepreneurship and the Informal Economy: A Study of Ukraine’s Hidden Enterprise Culture

Colin C. Williams and John Round

How many entrepreneurs start-up their business ventures conducting some or all of their trade in the informal economy? The aim of this paper is to answer this key question that has been seldom addressed using data from 600 face-to-face structured interviews conducted in Ukraine in late 2005 and early 2006. Analyzing the 331 entrepreneurs identified (i.e., individuals starting-up an enterprise in the past three years), just 10 percent operate on a wholly legitimate basis, while 39 percent have a license to trade and/or have registered their business but conduct a portion of their trade in the informal economy and 51 percent operate unregistered enterprises and conduct all of their trade on an off-the-books basis. Given that some 90 percent of all business start-ups operate partially or wholly in the informal economy, and that 40 percent of all respondents depend on the informal economy as either their principal or secondary contributor to their livelihoods, the paper concludes by considering the wider implications of these findings both for further research and public policy.