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International Entrepreneurship and Management Journal

Erschienen in:

01.03.2014

“Do incentives matter to promote high technology-driven entrepreneurial activity?”

verfasst von: Ferran Vendrell-Herrero, José L. González-Pernía, Iñaki Peña-Legazkue

Erschienen in: International Entrepreneurship and Management Journal | Ausgabe 1/2014

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Abstract

A productive human capital is a necessary but not sufficient condition for regional economic growth. An additional condition is the adequate allocation of talented people in innovative entrepreneurial activities, which according to previous literature have a higher social value than traditional ones. Using a large and representative sample of small and medium enterprises (SMEs) located in the Basque Autonomous Community (Spain), we empirically analyze, separately in manufacture and services, whether individual incentives and market conditions are aligned in such a way that the talent is properly allocated in innovative entrepreneurial activities. Through a novel use of existing empirical methods we find that (i) entrepreneurs operating in high-tech sectors have, on average, more entrepreneurial talent and private returns than their counterparts; and that (ii) entrepreneurial talent and private returns are positively and significantly correlated. These novel insights suggest that private and social incentives are adequately aligned.

Vorheriger Artikel RETRACTED ARTICLE: Beyond necessity versus opportunity entrepreneurship: some lessons from English deprived urban neighbourhoods

Nächster Artikel Exploring the antecedents of born-global companies’ international development

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See, for instance, the lastest Global Entrepreneurship Monitor report for the Basque Autonomous Community, which shows a consecutive two-year decrease of the Total Entrepreneurial Activity index (Peña-Legazkue 2010)

Consistent with this idea, Landes (1969) argues that a major reason why France did not experience a successful industrial revolution during the eighteenth century was the inefficient allocation of talented people.

Retrieved on July 22nd 2010 from: http://money.cnn.com/magazines/fortune/fortune500/2009/performers/industries/profits/assets.html

See, for example, Cassar (2006), Chandler et al. (2005), Cooper et al. (1994), Parker and Van Praag (2006), Storey (1994), Thornhill (2006), Wiklund et al. (2003).

We have made an exhaustive search in Ebscohost and Google scholar including words reflecting productivity and profitability. We only were able to find two articles reporting explicitely a correlation for these two variables.

See, for example, the recomendation 2003/361/EC adopted by the European Commission on 6th May 2003 regarding the SME definition.

For more information see Bureau Van Dijk webpage : http://Sabi.bvdep.com.

The group of companies established can diverge much from the incoming group of companies in terms of size and/or there may be companies with extraordinary returns excessively.

Johansson and Lööf (2008) argue that most innovative firms share common characteristics regardless the place where they are located. However, for the same geographic context analyzed in the present study, González-Pernía et al. (2009) found that there are specificities on the local (i.e., counties) environment that affect the entrepreneurial and innovative activity, and therefore, the local competition. For that reason, we control for whether the companies are located in metropolitan or non-metropolitan areas.

The technological intensity of a sector refers to the degree to which companies competing in the given sector invest in innovation or creative activities (Sarkar et al. 2006), for example, investment in research and development (R&D).

The values of inputs and outputs are calculated following the methodology of Ortín-Ángel and Vendrell-Herrero (2010).

Importantly, following Hall (1990) the fixed capital stock is deflated to the year of acquisition. The same author proposes a method of estimating the year of purchase from accumulated depreciation. Unfortunately this information is missing in 93.1% of the identified companies. The authors have decided for this reason not to deflate this variable. The bias that may occur is thought to be small as the elasticity factor in many cases is not statistically different from zero (for example, Fariñas and Martín-Marcos 2007).

From abovementioned regression we can know if new technology (knowledge intensive) firms are closer to established technology (knowledge intensive) firms than new firms with low technology (knowledge), and also the probability that this statement is true from a simple hypothesis test. The P-values of non-metropolitan areas \( \left( {TF{P_{{G1}}} - TF{P_{{G2}}} = TF{P_{{G5}}} - TF{P_{{G6}}}} \right) \) are 0.124 and 0.006 for manufacturing and services respectively. The P-values of metropolitan areas \( \left( {TF{P_{{G3}}} - TF{P_{{G4}}} = TF{P_{{G7}}} - TF{P_G}_{{8}}} \right) \) are 0.090 and 0.883 for manufacturing and services respectively. In addition the returns to scale can be tested from Eq. 3. On average Basque SMEs operate with increasing returns to scale in both manufacturing (\( {\beta_1} + {\beta_2} + {\beta_3} = {1}.0{37} \), greater than 1 statistically significant at 1%) and services (\( {\beta_1} + {\beta_2} + {\beta_3} = {1}.0{49} \), greater than 1 statistically significant at 1%).

This census gathers together all types of legally registered civil and commercial organizations. Therefore, we excluded those observations which, by virtue of their legal identity, do not clearly constitute an economic activity, such as local authorities, religious bodies and government agencies.

Geroski (1995) suggests that survival rates for most new entrants are generally low, however, comparing survival data for the CAPV with those of previous studies the results are quite encouraging. For example, Mata and Portugal (1994) found that only 50% of new manufacturing enterprises established in Portugal in 1983, survived after 4 years and Strotmann (2007) found that around 60% of the new manufacturing enterprises established in Germany between 1981 and 1984, survived after 5 years. Reported rates from other contexts are below the 60–70% range to display data from the CAPV.

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Titel: “Do incentives matter to promote high technology-driven entrepreneurial activity?”
verfasst von: Ferran Vendrell-Herrero
José L. González-Pernía
Iñaki Peña-Legazkue
Publikationsdatum: 01.03.2014
Verlag: Springer US
Erschienen in: International Entrepreneurship and Management Journal / Ausgabe 1/2014
Print ISSN: 1554-7191
Elektronische ISSN: 1555-1938
DOI: https://doi.org/10.1007/s11365-011-0181-4

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