Entrepreneurial capabilities inherited from previous employment

The start-up process of every firm is unique; backgrounds of the founders differ, the goals of the firm differ, sectors differ. However, in firm demographic research there is a continuing quest for regularities in order to understand the start-up process of firms better. In relation to problems with the new foundings birth rate, an important dimension in the start-up process is the influence of existing firms on the start-up of new ones. Is the new firm an individual effort or is the new firm heavily influenced by another firm? This question can be approached from a organisational and an individual perspective. The organisational view takes the firm as a starting point, whereas the individual perspective focuses on the entrepreneur. Both views allow an analysis of the influence of other firms. Taking the organisational viewpoint, new firms can be classified from totally new entities to diversified parts of large existing firms. The former is a totally new configuration of resources, but the latter heavily builds on existing structures and organisation. The processes are pretty straightforward to recognize as the path history of the firms can be traced back pretty easily. However, little is known about the importance of different groups. How many firms are actual new configurations, and how many built upon existing firms? From the individual viewpoint, the influence of other firms is less easily recognised. Many studies reason along the lines of experience. Firms influence the start-up of new ones by educating their employees and giving them expertise in this way. The entrepreneurs use this to start up their own firm. Experienced founders start better firms than other entrants. Several studies have come up with this logically appealing result. After all, it makes sense that entrepreneurs with a reasonable degree of knowledge about the new firm and its sector will perform better than entrepreneurs with less experience. The experience of founders, however, is usually rather loosely defined and in many cases there is only a dichotomy between sector experience (spin-offs) and entrepreneurship experience (habitual entrepreneurs). At the level of the knowledge itself, very little is known and the mechanisms of knowledge transfer from existing firms to new ones are treated as a black-box. Consequently, the role of existing firms as educational institutes for entrepreneurs is only approximately known. This paper focuses on the question to what extent firms are actually new, or that they can be seen as rearrangements of old firms. Which are the most important resources transferred from firm to firm? Both the organisational approach and the individual are applied. The empirical results are based on a large questionnaire (N=347) of Dutch entrepreneurs and a follow-up in the form of focus interviews with the entrepreneurs. It appears that most entrepreneurs have a solid background in the business they are in. About 80% of all entrepreneurs has built up knowledge during their previous job, that they now use being an entrepreneur. Besides 20% of all entrepreneurs even receive direct help from their previous employers. From an organisational perspective, a large share of all firms has been based on existing firms, either as a continuation of a stopped firm (18%), or a diversified part of a larger company (10%). The paper concludes by proposing a framework, based on the above findings, that facilitates a new approach to birth rate calculation methods.

Spin-offs and Start-ups in The Netherlands

After a decade of widespread attention for the entrepreneurial efforts of individuals, the focus seems to partly shift to companies and their contribution to new firm formation. Especially the works of Klepper (2001) have provided a solid ground for research on the entrepreneurial activities of companies. He claims that these efforts are particularly of interest in the explanation of the evolution of economic clusters, such as the Detroit automobile industry and Silicon Valley. The evidence, brought forward by Klepper, is based on case studies and a thorough analysis of very inaccessible and complicated sources. For a structural and comparative analysis of regions and their spin-off activities an easy applicable and accessible measure is needed. In the Netherlands, the Chamber of Commerce has developed an indicator, which distinguishes between individual start-ups and ?other founding?. The latter group is designed to cover spin-off activities. Figures are published from 1995 onwards. Much in line with common studies of regional variance in entrepreneurial activity, this paper presents an explanatory model for the spatial differences in occurrence of spin-offs, based on the data from the CoC?s business register. A model is defined on the one hand to explain regional differences in spin-offs, which provides a basis for structural research on cluster formation and the role of spin-offs in this process. On the other hand, it shows the differences between individual based start-ups and company driven endeavours. It is argued that these two groups of new firms are essentially distinct, and therefore cannot be explained by one and the same model. Reference: Klepper, S.J. (2001). The evolution of the U.S. automobile industry and Detroit as its capital. Carnegy Mellon University, Pittsburg Keywords: Spin-offs, spatial variances

Spin-off firms and individual start-ups. Are they really different?

In the field of firm demography, spin-offs have recently attracted attention as a very successful form of new firm formation. Policy makers see spin-offs as particularly fertile innovators in an economy. Theoretically, following lines of thought from the resource-based theory, spin-offs are also expected to perform better than other start-ups that lack the resource base spin-offs inherited from their mother companies. This paper shows, based on an empirical study of American entrepreneurs (ERC-dataset) that spin-offs are indeed a step ahead of firms that do not receive support from a third party company. In the early stages of their existence, spin-offs are leading other new firms in the development of their products, spin-offs show an increased tendency to hire personnel, and spin-offs receive their first income sooner than other firms. At start-up, spin-outs hardly differ from individual start-ups, which have not received any back-up during the gestation process. After one year they seem to perform slightly better.

TAKING THE FIRST HURDLE IN NEW FIRM FORMATION. THE EFFECTS OF INDUSTRY-SPECIFIC SKILLS AND SUPPORT ON SURVIVAL DURING THE FOUNDING PROCESS

Successful firms are important elements of sound economic development. In order to understand the factors that influence firm success many studies have addressed this issue. Success factors in the nascent phase of firm formation are however still unclear. Even as early as in the founding stage, however, firms are discontinued and the processes in this phase hold important information about success factors. This study addresses the founding success of several founding types, including spin-outs and spin-offs. It finds that industry-specific experience of the founders is a crucial success factor. Direct support from a parent firm does however not always enhance survival. Independence rather than support appears to be important for starting a successful firm.Entrepreneurship, survival, resources-based theories

Taking the First Hurdle. The Effects of Industry Specific Skills and Support on Survival During the Founding Process

Spin-offs are considered successful founding efforts. The combination of relevant industry specific knowledge and direct support from a parent company make these firms stand out from the rest. Spin-offs are usually defined on the basis of the previous employment positions of the entrepreneurs. This method disregards the process of resource transfer that theoretically explains the differences in performance with other foundings. This paper offers an empirical analysis based on the actual resource transfer from parent firm to founding. Using the ERC dataset, entrepreneurial skills are used to explain the successful conclusion of the founding process. Having skills related to production seems to be beneficial, especially when the founding effort also receives support from the parent company. Receiving support as such does not render any positive results. Next to the effect of production skills, industry experience adds to the explanation of successful founding. It is probable that skills related to market knowledge, being part of a network, and reputation enhance chances of pre-entry survival as well.

The relationship between start-ups, market mobility and employment growth: An empirical analysis for Dutch regions

Recent literature suggests that two types of competition may contribute to macro-economic performance: the extent of new-firm entry and the extent of competition among incumbent firms. In the present paper we explain employment growth at the region-sector level using direct indicators for both these types of competition -the start-up rate and the market mobility rate- as main independent variables. While previous studies in this field measured competition among incumbent firms in an indirect way, we use a direct measure called market mobility. The empirical analysis reiterates existing results in that we find the long-term economic effect of start-ups to be bigger than the short-term effect. We also find empirical indications that this long-term effect consist of two significant parts. First, the most successful start-ups grow out to become high-growth firms, and second, the entry of new firms stimulates incumbent firms to perform better. �

The networks of the solo self-employed and their success

An increasing proportion of the Dutch labour market is formed by the solo selfemployed (i.e. one person enterprises, mainly offering their own human capital). Knowledge on solo self-employed is still limited and this makes tailoring policy measures towards this group difficult. Their network position may play a crucial role in economic performance of solo self-employed, as resources available are by definition limited. They are likely to depend heavily on their professional networks for acquisition and mobilizing additional resources. In this paper we use a specially constructed panel of solo self-employed from the Netherlands to explore the motives, gestation and spatial extent of their networks. (Multinomial) logit models are used to relate network position to their economic performance. The results suggest that the motives for and gestation of cooperation between solo self-employed differ from other groups of entrepreneurs. In contrast to existing ideas about network benefits, information sharing and knowledge spill-overs are not an important motive for solo self-employed. Rather, they focus on executing jobs and joint acquisition. Finally, we find that in terms of success a good network position is negatively related to economic performance. In more detail, cooperation on scope is connected to success, whereas joined acquisition is related to poor performing solo self-employed. It seems that solo self-employed reach out to their colleagues when business is slow. �

Small airports:Runways to regional economic growth?

Regions typically take great pride in having an airport within their boundaries. Policymakers go through great lengths in maintaining and sustaining airports, small as some of them may be. This support is often justified by pointing out the potential positive economic spin-off of the airport. This study adds to the body of literature on the role of airports in economic growth by assessing the link between air accessibility – with a focus on smaller airports - and regional economic development across European regions. We take into account spatial and airport heterogeneity as well as overlapping catchment areas. The data set consists of a strongly balanced panel of 274 European NUTS-2 regions spanning the years 2000–2018. For most regions, the contribution of smaller airports in providing accessibility is found to be limited. Nevertheless, in 2018, air accessibility for 19% of the European population covered is provided mainly by medium-sized and small airports, and for 3% mainly by small airports. The long-run elasticity between air accessibility and GDP per capita is estimated at 0.106 and is stronger for large airports (0.179) than for medium-sized (0.033) and small airports (0.022). Causality mainly runs from economic growth to air accessibility, especially considering smaller airports. However, considerable spatial heterogeneity exists in the nature of this causal relationship, with dense regions with lagging per capita GDP levels especially benefiting from air accessibility

Start-ups as drivers of market mobility: An analysis at the region-sector level for the Netherlands

We investigate the impact of start-up rates on a measure of competition among incumbent firms called market mobility. While recent literature suggests that competition among incumbent firms is caused by (lagged) start-up rates, this relation has not yet been tested using a direct measure of competition among these firms. In the present paper we estimate a regression model, at the region-sector level for the Netherlands, where the mobility rate is explained by (lagged) start-up rates and control variables. Using data for 40 regions and five sectors over the period 1993-2006 we find that the impact of start-ups on market mobility varies by sector. We find a strong positive relation between start-up rates and mobility rates for industry sectors (manufacturing and construction) but an insignificant relation for services sectors. These results suggest there are differences in the types of entry between sectors and in the roles start-ups play in different sectors. �