Start-up Rates Research Articles

Innovation characteristics of high-growth startups: the Korean case startups

Efforts to overcome low growth traps are ongoing worldwide. As high-growth startups substantially contribute to the economy, it is critical to understand what allows startups to achieve high-growth. Previous research has generally focused on high-growth firms and there is a lack of understanding in the difference between high-growth and general startups, especially in terms of innovation. To address this gap, this study examines the innovation characteristics of high-growth startups by analyzing Korean Innovation Survey data with logit regression and decision tree models. Previous studies have shown that high-growth firms are associated with product innovation. We show that process innovation is the most critical factor in creating high growth in startups. This result extends the finding of previous literature that process innovation not only increases the survival rate of startups, but also has a significant effect on achieving high growth. These results suggest that process innovation should be considered important when exploring innovation strategies or designing support policies for startup growth.

Entrepreneurship and Regional Growth Regimes in the United States

We investigate
 regional growth regimes in the US states from 1980 to 2014. Based on start-up
 rates and employment growth as suggested by Audretsch and Fritsch (2002), we
 classify states into routinized, entrepreneurial, revolving door, and
 downsizing regimes. The results indicate that there was no significant
 association between start-up rates and employment growth in the 1980s, but a
 positive relationship in the 1990s, 2000s, and 2010s. Further, we document that
 the entrepreneurial and the downsizing regimes are attractor regimes that tend
 to stick, whereas the routinized and revolving door regimes are transitionary
 regimes. Importantly, states in the routinized regime predominantly move to the
 downsizing regime, suggesting that an over-reliance on established companies
 relative to start-ups in the state may threaten employment growth in the long
 run.

Flagship enterprises, entrepreneurial clusters, and business entry rates: insights from the knowledge spillover theory of entrepreneurship

ABSTRACT Employing a panel setting of 88 counties in the State of Ohio over the five-year period ending in 2006, this study aims to investigate the applicability of the knowledge spillover theory of entrepreneurship in explaining the relationships between flagship enterprises, entrepreneurial clusters, and business entry rates. The study confirms the overall positive relationship between flagship enterprises and startup rates, and the negative relationship between entrepreneurial clusters and startup rates. It further demonstrates that the effect of clusters is moderated by local unemployment rates so that higher rates of unemployment weaken the negative impact of entrepreneurial clusters on startup rates. Based on the evidence collected, policy makers should increase support for flagship enterprises in their regions, and would-be business owners should consider locating their ventures in proximity to flagship companies.

The Effect of Unemployment Insurance Benefits on (Self-)Employment: Two Sides of the Same Coin?

Although a meaningful percentage of firms are created out of unemployment and current active labor market policies in Europe often subsidize unemployed individuals to start their own businesses, little is known about the role of unemployment insurance (UI) generosity for selfemployment. By using Spanish administrative data including previously unavailable information on self-employment, we exploit a reform-driven exogenous cut in UI benefits to identify its causal effect on general employment and decompose it into the effects on self-employment and re-employment. Exploiting a discontinuity in the UI benefit schedule which changed as a result of the 2012 Spanish labor market reform, we estimate the causal reform effects on the extensive margin of (self-)employment and on unemployment duration. We find heterogeneous effects on the extensive margin: while the job-finding rate increases, the startup rate decreases. Over different time horizons, the negative effect on self-employment (35-50%) outweighs the positive effect on employment (5-33%). Our UI benefit duration elasticity estimates indicate that reduced UI benefits extend unemployment duration for individuals transitioning into self-employment but shorten unemployment for individuals finding re-employment. Due to the reform's unintended consequences for self-employment, its general employment effect is much smaller than claimed by analyses that focus only on employment.

Success factors of academic entrepreneurship education: a new approach

Discussions about whether entrepreneurship education stimulates entrepreneurial intentions and start-up activities continue due to weak empirical evidence and stagnating start-up rates. Based on th...

Capability development in startup and mature enterprises

PurposeThe purpose of this study is to review the literature of enterprise capability, which comprises the three dimensions of operational, dynamic and improvisational capabilities, and analyze their differences. Through this review, the authors aim to enrich the enterprise capability theory and provide some directions for entrepreneurial practice in the face of volatility, uncertainty, complexity and ambiguity (VUCA).Design/methodology/approachThe study is based on a systematic review of the literature on enterprise capability as it relates to entrepreneurial firms, following the content analysis approach as described in Gaur and Kumar (2018).FindingsThe authors’ conceptual model compares the capability levels of startups and mature enterprises and presents a model for the dynamic evolution of the capability levels of enterprises. In doing so, this study enriches the enterprise capability theory and lays the theoretical foundation for the follow-up empirical research. The authors also provide guidance for entrepreneurial practice in the face of VUCA.Originality/valueIn recent years, scholars have begun to explore the issue of enterprise capability in the field of entrepreneurship. However, because of different research perspectives, one lacks clarity on the concept and dimensions of enterprise capability. The capability theory is relatively weak in guiding the practice of enterprises; enterprises lack effective response strategies in a changing environment, and the failure rate of startups is high. This study aims to develop a deeper understanding of enterprise capability.

Institutional environments and entrepreneurial start-ups: an international study

PurposeThe purposes of this research are to examine how individuals' cognition is related to the rate of entrepreneurial start-ups and how this relationship can be modified by three institutional pillars.Design/methodology/approachDrawing upon a multilevel analysis and a global context comprising 67 countries, cross-level analyses are performed to assess the joint effects of entrepreneurial cognition and institutions on the rate of entrepreneurial start-ups.FindingsThe findings confirm the role of entrepreneurial cognition (i.e. self-efficacy, risk attitude and opportunity perception) in individuals' decisions to start new businesses and reveal how this relationship can be diversely influenced by country-level institutional pillars.Practical implicationsThis paper could be useful for designing policies to promote entrepreneurial activity through institutions in different countries.Originality/valueThe results contribute to the development of theoretical and knowledge bases by offering a multilevel perspective on how entrepreneurial cognition and institutional environments operate as interacting determinants that influence entrepreneurship.

Want more high-growth entrepreneurs? Then control corruption with less ineffective bureaucracy

ABSTRACT For decades, scholars have been concerned with the role of public policy in stimulating entrepreneurial activity. Aside from pro-entrepreneurship policy, governments can also erect barriers to startup activity. Researchers have concluded that the degree of corruption in a country can become a significant deterrent to entrepreneurship, while research on the relationship between bureaucracy and startup rates has been inconclusive. In this study, we apply the theory of planned behaviour – in particular, the perceived behavioural control construct – to clarify the role of corruption and ineffective bureaucracy both independently and jointly in their relationships with entrepreneurship participation rates. Data on individuals from 53 nations for the 2006–2015 period were utilized to test the hypotheses. This research confirms that both are negatively associated with rates of startup activity and that in the context of highly corrupt countries, the two constructs interact to further reduce startup activity.

Selecting optimal conditions for the turbine warm and hot start-up

The paper discusses optimization issues related to start-ups from intermediate states defined as hot and warm, i.e. start-ups carried out after a few or several hours of downtime. Such start-ups are characterized by a non-uniform field of the initial temperature. For this reason, any simulation of start-up processes should be preceded by simulations of the cooling process to obtain a close-to-real temperature distribution at the moment when the start-up process is to begin. This is of particular importance in the case of elements in contact with the outer environment, such as outer casings and rotors. The simulation results indicate that it is possible to speed up the start-up procedure as recommended by the turbine manufacturer without exceeding allowable stresses in the turbine elements. Naturally, this will have a beneficial impact on the flexibility of the power unit operation. Rotors are characterized by the most difficult operating conditions and it is for them directly that start-ups should be optimized. The maximum start-up rate is determined by the initial temperature field of the turbine element material. For this reason, the paper presents a concept of initial heating of the turbine key elements. Running the process during the boiler heating and start-up might substantially shorten the total time needed to restore the power unit operation. Instead of sequential heating, the boiler heating and the turbine heating processes could be carried out in parallel.

Entrepreneurship in Small Cities: Evidence From U.S. Micropolitan Areas

This article presents the spatial patterns of general and high-tech start-up rates and explores regional factors associated with entrepreneurship in U.S. micropolitan areas. Regression results show that general entrepreneurship in these small cities is predicted by population growth, the middle-age population group, the presence of small businesses, and natural amenities. Additionally, high-tech start-up activities are positively associated with human capital, creative knowledge (instead of technological knowledge), high-tech clustering, and proximity to a large metropolitan area. These findings are compared with the patterns in larger metropolitan areas. This research sheds light on local entrepreneurship policy in the small-city context.

Microfirms and innovation in the service sector

In the context of microfirms, this paper analyzes whether the link between the three aspects involving innovative activities—R&D, innovative output, and productivity—hold for knowledge-intensive services. With especially high start-up rates and the majority of employees in microfirms, knowledge-intensive services (KIS) have a starkly different profile from manufacturing. Results from our structural models indicate that KIS firms benefit from innovation activities through increased labor productivity with highly skilled employees being similarly important compared to R&D for creating innovation output in microfirms. Moreover, the firm size advantage of large firms found for manufacturing almost disappears in KIS, with start-ups and young firms having a higher probability of initiating innovation activities and of successfully turning knowledge into innovation output than mature firms.

Institutional Relationships，Start-up Size and Growth of Start-ups

China is currently facing problems such as declining marginal output of investment, overcapacity, and insufficient innovation drive. It is urgent to obtain new growth momentum through innovation and entrepreneurship. “Mass entrepreneurship and innovation” is exactly the strategy advocated by the central government. Inspired by this strategy, some government officials and heads of state-owned enterprises also decide to quit their jobs and seek out entrepreneurial opportunities outside the system. The existing literature only focuses on the impact of institutional relationships on whether the individual will start a business, and does not really reflect the value of institutional relationships in entrepreneurial activities. Therefore, the more important research question is whether entrepreneurial institutional relationships will affect the initial size of start-ups and the long-term growth in the future when the entrepreneur leaves the system for business. If there is a significant impact, then “what are the impact channels” is also an important issue.We empirically test the impact of entrepreneurial institutional relationships on the size and long-term growth of start-ups. The data used in this study come from the 7th to the 10th Private Enterprise Survey data in 2006, 2008, 2010 and 2012. The results show that, compared with entrepreneurs from outside the system, the scale of entrepreneurs created by entrepreneurs with institutional relationships（former government official or head of state-owned enterprise）is 19.7 percentage points higher, and the compound growth rate of start-ups is 1.9 percentage points higher. Furthermore, we find that entrepreneurs who serve as public servants or SOE managers depend more on bank loans or restructured SOEs to obtain seed capital. They are more familiar with the government’s support policy, and more likely to get NPC deputies and CPPCC members or leaders of the Federation of Industry and Commerce. It can be seen that the above entrepreneurs have the advantages of resource acquisition, information superiority and political identity, which is beneficial for entrepreneurs to achieve better entrepreneurial results. Finally, this paper also finds that institutional relationships play a more limited role in regions with more developed financial industries.This paper shows that the informal institution such as institutional relationships play an important role when the formal institution is incomplete. In order to achieve the “mass entrepreneurship and innovation” strategy, we need to create a fairer and more just entrepreneurial environment, and promote the reform from administrative orientation to market-oriented resource allocation. This paper not only makes an important supplement to the relevant literature, but also provides valuable policy inspiration for China’s “mass entrepreneurship and innovation” strategy.

Modeling Analysis and Cost-Performance Ratio Optimization of Virtual Machine Scheduling in Cloud Computing

As an essential feature of cloud computing, dynamic scalability enables the cloud system to dynamically expand or shrink resources according to user needs at runtime. Effectively predicting and optimizing the cost and performance of cloud computing platforms have become one of the key research challenges in the field of cloud computing. In this article, to quantitatively predict the cost and performance of cloud computing platforms, we propose a cloud computing resource analysis model considering both hot/cold startup and hot/cold shutdown of virtual machines (VMs), and use the M/M/N/oo queuing model to analyze cloud computing platform and acquire accurate performance indicators, such as elasticity indicators, cost indicators, performance indicators, cost-performance ratios, etc. In addition, we establish a multi-objective optimization model to optimize both performance and cost of cloud computing platform. Then the optimal stopping and cost-performance optimization algorithm are applied to obtain the optimal configurations, including the number of hot startup VMs, the system service rate, the hot/cold startup rate of VMs, and the hot/cold shutdown rate. By comparing with existing optimization methods, we demonstrate the superiority of our cost-performance ratio optimization method.

DO INNOVATION AND ENTREPRENEURSHIP HAVE DOMINANT ROLES IN ECONOMIC GROWTH? A NEW PERSPECTIVE OF DEVELOPED COUNTRIES

Purpose of the study: The purpose of this paper is to analyze the potential causal link between innovation, entrepreneurship activity, and economic growth in the case of nine developed countries over the time-span ranging between 2001 and 2014. The research goal is to examine if the findings of this paper support the endogenous growth theory.
 Methodology: This paper has initially explored the stationary properties of the variables. Moreover, the causal links between the variables of interest have been investigated by estimating the panel VAR model (trivariate) employing the GMM framework. This paper also examines the potential causal linkage amid the variables of interest by employing the Granger causality test.
 Main Findings: Empirical results suggest that economic growth is found to Granger cause innovation and entrepreneurship activity. These findings emphasize the necessity to take both innovation and entrepreneurship while analyzing the determinants of economic growth since these are found to be interconnected and may play a critical role in the growth of the economy. These findings also support the endogenous growth.
 Applications of this study: Outcome of this paper is expected to provide significant insights for decision-makers to make a necessary effort not only to increase the start-up rates in developed countries but also to reduce the informal sector that is likely to occur as a result of start-ups in developing countries jeopardizing developed countries’ competitiveness.
 Novelty/Originality of this study: The first contribution of this study to the literature is the examination of cross-sectional dynamics of developed countries’ innovation, entrepreneurship, and economic growth. Secondly, these results indicate that entrepreneurial activity is a proximate cause and should be modelled as the channel through which innovation contributes to economic growth. Thirdly, the data used in this study are more comprehensive.

The Effects of State and Local Economic Incentives on Business Start-Ups in the United States: County-Level Evidence

Even as economic incentives are increasingly used by policy makers to spur state and local economic development, their use is controversial among the public and academics. The authors examine whether state and local incentives lead to higher rates of business start-ups in metropolitan counties. Existing research indicates that start-ups are important for supporting (net) job creation, long-term growth, innovation, and development. The authors find that incentives have a statistically significant, negative relationship with start-up rates in total and for some industries including export-based and others that often receive incentives. The findings support critics who contend that incentives crowd out other economic activity, potentially reducing long-term growth. The authors also find that greater intersectoral job flows are positively linked to total start-ups, consistent with claims of those who advocate for policies that enhance labor market flexibility through reducing barriers to job mobility.

Spatio-temporal dynamics in municipal rates of business start-ups in Chile

ABSTRACT While there is a growing body of studies on persistence and change in municipal start-up rates in more developed countries, this type of study for developing countries is still scarce. This work analyzes the spatio-temporal dynamics of municipal business start-up rates in Chile between 2005 and 2015 using spatial panel data for 342 Chilean municipalities from the Internal Revenue Service (SII) database and the National Municipal Information System (SINIM). We employ descriptive statistics, spatial analysis, Markov chains and econometric models to identify persistence and change in the start-ups rates and identify the determinants of the spatio-temporal dynamics in entrepreneurship rates. Results confirm a high level of persistence in the most and least entrepreneurial areas of the county but, at the same time, show mobility in the intermediate municipalities. Econometric models confirm that past rates of entrepreneurship can explain current business start-up rates, and also validate the influence of spatially sticky characteristics, in many cases related to extreme differences in economic development among Chilean municipalities. Increasing diversity and urbanization favour persistence and change, while density, poverty, mining activity and the percentage of large firms and mining have a negative impact. The results suggest place-based policies according to entrepreneurial dynamism.

Randomized control of arrivals in a finite-buffer GI/M/1 system with starting failures

This paper proposes a randomized policy for the control of arrivals in a finite-bufferGI/M/1 system with a single server. When the capacity of system is full, no new arrivals are permitted to enter the system. When the number of customers in the system decreases to thresholdF, a new arriving customer is allowed to join the system with probabilityp. The system requires an exponential startup time before allowing customers to enter the system. The startup process may not be successful and is then restarted once again. Using the supplementary variable technique in a recursive process, we obtain the stationary distribution of the system size. Various performance measures of the system are developed. We also create a cost model based on the system performance measures and cost elements. The optimal threshold, optimal capacity and optimal startup rate of the system are determined to minimize the expected cost per unit time. Finally, we provide numerical examples to conduct a sensitivity analysis.

The Potential of Pressurised Water Reactors to Provide Flexible Response in Future Electricity Grids

The electricity market is undergoing significant change with the increasing deployment of Variable Renewable Energy Sources (VRES) and the adoption of policies to electrify transport, heating and industry, which will continue to increase demands on all conventional power plants including nuclear. The increase in VRES also puts additional emphasis on services such as inertia and frequency response that only conventional plants, including nuclear, are readily able to meet. This study discusses what factors limit the ability of nuclear power plants to provide flexible response and how the UK nuclear power plants might be affected by the changes in future demand profiles. The study focuses on what impact there will be on current Pressurised Water Reactor (PWR) plants, though it also considers Small Modular Pressurised Water Reactor plants which might offer benefits with respect to improved power manoeuvrability. The main finding is that the most important attribute is the minimum power level for long-term operation, followed by the speed at which the plants can be brought online (that is, both start-up rate and ramp rate during power operation). With respect to both of these attributes, new build future PWR plants could potentially achieve large and rapid power changes by dumping part of the steam directly into the condenser, bypassing the steam turbine. Discussions with plant operators highlighted that there is currently limited demand for flexible operation in the UK from nuclear plants when other power plants are readily available to partake in flexible operation. The lack of any requirement for nuclear plants to operate flexibly means that the UK lags behind France, for example, which has much more experience in nonstationary operation of nuclear power plants. The paper also draws attention to the fact that with increasing VRES, there will be fewer plants able to provide rotational inertia and therefore more emphasis on the role the remaining plants (which include nuclear) can play in maintaining grid stability.

Regulation, Entrepreneurship, and Dynamism

Recent empirical studies estimating the impact of US federal regulations on domestic business activity have reached seemingly contradictory conclusions. When measuring business activity with traditional measures of entrepreneurship (i.e., firm startups and job formation), some researchers observe a negative association between regulatory accumulation and entrepreneurship. Others, however, fail to find a significant association between regulatory accumulation and startup business activity when measuring business activity with metrics common to the dynamism literature. After ruling out differences in unit of measure (i.e., firms vs. establishments), industry aggregation (i.e., three- vs. four-digit NAICS code classification), and measurement of regulation (i.e., RegData 2.0 vs. 2.1), we demonstrate that methodological differences in the measurement of entrepreneurship are responsible for the conflicting results. However, when we allow the impact of regulation on the startup rate to vary across industries and over time, we empirically demonstrate that the decline in dynamism measured over the sample period is associated with higher regulation.

The Effect of Unemployment Insurance Benefits on (Self-) Employment: Two Sides of the Same Coin?

Although a relevant share of firms is created out of unemployment and current active labor market policies in Europe often subsidize unemployed individuals to start their own businesses, little is known about the role of unemployment insurance (UI) generosity for self-employment. By using Spanish administrative data including so far inaccessible information on self-employment, we exploit a reform-driven exogenous cut in UI benefits to identify its causal effect on general employment and decompose it into the effects on self-employment and re-employment. Exploiting a discontinuity in the UI benefit schedule which changed as a result of the 2012 Spanish labor market reform, we estimate the causal reform effects on the extensive margin of (self-)employment and on unemployment duration. We find heterogeneous effects on the extensive margin: while the job-finding rate increases, the startup rate decreases. Over different time horizons, the negative effect on self- employment (35-50%) outweighs the positive effect on employment (5-33%). Therefore, omitting self-employment as a counterfactual outcome might lead to overestimate general employment effects. Our UI benefit duration elasticity estimates indicate that reduced UI benefits extend unemployment duration for individuals transitioning into self-employment but shorten unemployment for individuals finding re-employment. These results might be relevant for the (optimal) design of UI systems.