the birth of a new industry entry by start ups and the drivers of firm growth the case of encryption software the paper analyses the birth of the encryption software industry esi a new niche in the software industry using a chandlerian perspective this work reports the main facts about fir entry and growth with a particular focus on start up strategies and actions since scale economies do not play a major role in esi the paper investigates the different sources of fir competitive advantages this work shows that innovation and product differentiation along with investments in co specialised assets are variables strongly correlated to young fir probability to survive and grow in doing so we have collected highly detailed information on product introduction us patents granted worldwide alliances and biographical data of fir founders 2004 elsevier b v all rights reserved jel classificatio m13 l86 o32

the walking debt crisis abstract this article sheds light on the question whether arising sovereign credit risk in the emu has been triggered by the us subprime crunch by adapting recent econometric methodologies suggested in the related field of speculative bubbles we find clear evidence for fast diverging and even explosive behavior of emu government bond yields of peripheral countries relative to germany during the financial and the european debt crisis this might be caused by flight to quality effects to german government bonds coincident with the collapse of lehman brothers and by a loss of confidence in the fiscal stability of greece ireland italy portugal and spain during the european debt crisis first we find compelling evidence for bubbles in the dow jones equity real estate investment trusts reits index which serves as a weekly measure of economic activity in the north american real estate sector second in our main analysis we test whether the collapsing bubble in the housing market triggered the diverging government bond yields during two crisis regimes our findings indicate that this was the case in the course of the financial crisis but not during the emu sovereign debt crisis these results suggest that the severe fiscal problems in peripheral countries are homemade rather than imported from the us

the effect of crises on firm exit and the moderating effect of firm size abstract the liability of smallness assumption suggests that smaller firms face higher exit risks however does it apply during crises we show that during downturns size reduces firms exit risk by less the hazard rate increases more rapidly in size

evidence on discrimination in mortgage lending much of the controversy about whether mortgage lenders discriminate against minorities can be explained in terms of the confusion about how to define discrimination based on the legal definition careful studies of loan denial rates such as that done by the federal reserve bank of boston represent an appropriate method for testing for discrimination by lenders based on that study it is quite clear that lenders discriminate the fact that minorities have higher default rates on average than whites is irrelevant to the interpretation of the race coefficient in such models nonetheless more research on and discussion about the relationship between the race of the applicant and delinquencies defaults and losses would be desirable

market structure and discrimination the case of small businesses this paper examines bank market structure to draw inferences concerning the role of discrimination in credit markets for small businesses the authors analyze credit application and denial rates loans outstanding and interest rates across demographic groups this set of variables in combination with information on local bank market structure helps them distinguish among borrower preferences lender tastes and inadequate lender information as likely causes of differences in credit market experiences of small business operators from distinct demographic groups the authors find that white men and women can expect similar treatment in credit markets with some benefits to female owned firms located in concentrated banking markets minorities by contrast fare worse than whites moreover by appealing to becker s 1957 classic theories we find some clear evidence to support the view that prejudicial discrimination is at least partly to blame

businesses without glamour an analysis of resources on performance by size and age in small service and retail firms abstract research on factors influencing performance in new and small companies is extensive earlier work found that strategies e g cost quality differentiation etc affected performance contingent on industry conditions the environment and the entrepreneur s background although this work provides a solid basis for understanding differences in entrepreneurial performance some firms are limited in their choices of strategy due to size age or industry often these firms are in industries where entry barriers are low and competitive advantages are easily imitated small service and retail businesses operate in sectors where these conditions are apparent comprising more than 50 of all small firms they require minimal start up investments but face intense competition lacking the glamour of high innovation high growth firms service and retail companies are at the end of the value chain their fortunes rising and falling as a result of the direct influence of the owner founder hence performance variation may be better explained by the capabilities of the firm or individual competencies of the owner founder that is the resource base and resource combinations rather than strategy the strategic importance of an organization s resources and capabilities is the foundation of resource based theory resources are tangible and intangible assets tied to the firm in a relatively permanent fashion their combinations are heterogeneous and form the basis for product market strategies studies of resources strategies and performance are emerging in the entrepreneurial area research shows that various resources in concert with different strategy types can lead to above average performance over the business life cycle and that combinations of resources are related to survival yet the vast majority of work focuses on high growth high tech or manufacturing businesses less is known about the relationships of resources to performance in less glamorous sectors in these small service and retail businesses we speculate that resources in particular human and organizational resources may play a greater role in explaining performance than strategy further as other authors have suggested it is expected that the combinations of these resources will vary across age and size this study examines the influence of human and organizational resources on performance in a sample of 195 service and retail firms operating in central new jersey using a structured questionnaire all companies utilized a focus strategy either focused cost or focused differentiation and employed a minimum of 3 to a maximum of 100 employees all measures had theoretical and or empirical precedent and were tested statistically for reliability we used factor analysis to reduce the independent variables to two human resource variables owner resources and commitment one organizational resource variable comprised of planning systems and staff skills and one strategy variable focused cost and focused differentiation control variables were business age business size environmental benignness and industry growth the dependent variable performance was measured in two ways net cash flow and log of growth in employees over 3 years the study first examined whether strategy or resources had a greater influence on performance results showed that strategy influenced performance less than human and organizational resources both individually and interactively the influence of owner resources background and attitudes on net cash flow was stronger than on growth where the only significant variable was industry market growth to analyze effects of resources on performance by size we divided the sample by size groupings selecting the smallest maximum five employees and largest quartiles minimum 16 employees which were comprised of 55 and 50 companies respectively these analyses showed that owner resources commitment and organizational resources contributed positively to net cash flow in very small firms however interactive effects of these resource combinations were negative for instance owner resources and organizational resources together and organizational resources and commitment together resulted in less positive cash flow than when analyzed separately this implies that different resource combinations can have negative influences in these very small firms we examined age effects in the same manner as size dividing the sample into age group quartiles and conducting an analysis only for very young fewer than 5 years and very old minimum 19 years groups which comprised 54 and 52 companies respectively these analyses showed that although growth was more rapid among the youngest firms there were no distinctive resource based correlates to growth in either age group substantive increases in formalized systems and procedures were not apparent among the oldest of these companies compared with the youngest contrary to previous work showing the evolution of these over business life cycles results of this study are applicable only in the context of service and retail firms and readers should note this sample was nonrandom and geographically concentrated our purpose was not to predict but describe associations between resources and performance this study shows that for firms in competitive industries at the end of the value chain type of strategy is less important than resource combinations for certain types of performance human and organizational resources are associated with more positive cash flow whereas industry and market factors are related to growth these results imply that firms seeking growth are best served by selecting and entering growth markets and industries on the other hand if strong positive cash flows are the primary objective attention to combinations of resources is more important for instance owner founders having a strong business and managerial background and industry experience will need less formalized systems whereas those owner founders with weaker managerial resources might benefit from more formalized procedures and skilled staff

gender biases in bank lending lessons from microcredit in france the evidence on gender discrimination in lending remains controversial to capture gender biases in banks loan allocations we observe the impact on the applicants of a microfinance institution mfi and exploit the natural experiment of a regulatory change imposing a strict eur 10 000 loan ceiling on microcredit descriptive statistics indicate that the presence of the ceiling is associated both with bank mfi co financing and with harsher treatment of female borrowers to investigate causal links we develop an econometric approach that addresses the concerns of selection biases multicollinearity and endogeneity our empirical findings suggest that the change in the mfi s gender related attitude was triggered by banks through co financing hence we speculate that co financing pushes ceiling constrained mfis to import whatever biases in loan granting that the banks are prone to overall this paper stresses that apparently benign regulations such as loan ceilings can significantly harm the women s empowerment efforts made by mfis

networks in entrepreneurship the case of high technology firms the value of networks as an integral part of the explanation of entrepreneurial success is widely acknowledged however the network perspective does not specify the role of networks in the emergence and early growth of a venture we have distinguished three entrepreneurial processes in new venture development i e discovery of opportunities securing resources and obtaining legitimacy which are of importance for survival and performance this paper examines how these processes are influenced by strong and or weak ties and whether the degree of innovation incremental versus radical acts as a contingency factor in the way network ties support entrepreneurial processes in this explorative study three cases on high technology firms in the netherlands provide empirical material enabling us to develop a number of propositions on the network effect in particular the mix of strong and weak ties on the three entrepreneurial processes

mortgage lending in boston interpreting hmda data the home mortgage disclosure act was enacted to monitor minority and low income access to the mortgage market the data collected for this purpose show that minorities are more than twice as likely to be denied a mortgage as whites yet variables correlated with both race and creditworthiness were omitted from these data making any conclusion about race s role in mortgage lending impossible the federal reserve bank of boston collected additional variables important to the mortgage lending decision and found that race continued to play an important though significantly diminished role in the decision to grant a mortgage copyright 1996 by american economic association

networking and growth of young technology intensive ventures in china abstract more often than not new ventures lack established products known technologies longstanding customer relations experienced managerial teams sufficient capital and strong reputations almost by definition small new firms lack the resources of many larger established firms the task of an infant firm and a measure of its success is to make a transition from being resource weak to being resource strong how can resources that are critical for profitable growth be acquired for the resource weak new venture researchers have found that entrepreneurs can gain access to valuable resources and they can seek to achieve competitive advantage through networking activities forming and utilizing available relationships with external organizations can allow entrepreneurs to build credibility gain advice financing and customer access build a positive image and obtain resources at below market prices and obtain channel access information and innovations business relationships with other organizations allow an entrepreneur to achieve desired business results through asset parsimony a favorable view toward networking for new ventures leaves a number of unanswered questions however relevant research questions might include who should the entrepreneur seek as a business partner are all inter organizational relationships equal or are some types more valuable to new ventures than other relationships do firms relying on high levels of networking activities actually outperform firms that less actively seek resources through external organizational relationships the present study provides a specific understanding of the concept of networking for entrepreneurs we propose that networking can be understood in terms of range the number of external relationships to obtain resources and of intensity the frequency of contact of and amount of resource obtained from these relationships this research project evaluates the range and intensity of networking among high growth and low growth entrepreneurial ventures extensive interviewing with managers of six young technology oriented firms in the people s republic of china prc affirmed the importance of entrepreneurial networking managers in the three high growth firms reported greater range and intensity of business networking than did managers of three low growth firms matched by industry and age moreover the relationship between networking activities and growth transcended the stage of firm development where networking range and intensity are deemed important in the growth process new venture success may call for entrepreneurs to reach out deliberately to external organizations to capture needed resources to a certain extent such networking activities run counter to important entrepreneurial motivations of independence and autonomy the concept of networking and the results of this study imply that entrepreneurs need to combine the spirit of independence with the reality of resource dependence and they need to balance personal autonomy with strategic business relationships this study also contributes to the understanding of entrepreneurship in our increasingly global economy particularly in the prc business relationships between the united states and the prc have been expanding rapidly in the last decade many foreign businesses seek license agreements joint venture partners equity participation or channel relationships with young ventures in that country do the same rules of networking apply in the prc as the literature suggests apply in the united states new ventures in this study were found to engage in processes of networking activities consistent with those in the west although networking activities may have different cultural roots firm success appeared influenced by the same principles of networking

firm entry and exit in the canadian manufacturing sector 1970 1982 this paper measures the importance of entry and exit to the canadian manufacturing sector in the 1970s it focuses on the size of entrants as they move from a stage of infancy to adolescence the exit rates of births their length of life and the growth path of entrants are presented distinctions are made between greenfield and merger entry while entrants are small at birth the cumulative effect of successive cohorts of entrants in the 1970s adds up to a significant fraction of all firms and total sales by 1979

a quantitative content analysis of the characteristics of rapid growth firms and their founders a group of firms that is attracting attention are rapid growth firms these firms are of particular interest because rapid growth is an indication of market acceptance and firm success by studying rapidgrowth firms researchers can help all firms better understand the attributes associated with firm growth despite these positive outcomes however rapid firm growth is difficult to achieve and maintain this study adds to the literature through a quantitative content analysis of the narrative descriptions of 50 rapid growth firms and a comparison group of 50 slow growth companies the purpose of the study was to draw from the narratives a list of empirically grounded growth related attributes that are associated with rapid growth firms the findings of the study resulted in the advancement of a conceptual model of the attributes of rapid growth firms in four areas founder characteristics firm attributes business practices and human resource management hrm practices

discrimination in the small business credit market we use data from the 1993 and 1998 national surveys of small business finances to examine the existence of racial discrimination in the small business credit market we conduct an econometric analysis of loan outcomes by race and find that black owned small businesses are about twice as likely to be denied credit even after controlling for differences in creditworthiness and other factors a series of specification checks indicates that this gap is unlikely to be explained by omitted variable bias these results indicate that the racial disparity in credit availability is likely caused by discrimination

does corporate lending by banks and finance companies differ evidence on specialization in private debt contracting this paper establishes empirically the existence of specialization in private market corporate lending adding a new dimension to the public versus private debt distinctions now common in the literature comparing corporate loans made by banks and by finance companies we find that the two types of intermediaries are equally likely to finance information problematic firms however finance companies tend to serve observably riskier borrowers particularly more leveraged borrowers evidence supports both regulatory and reputation based explanations for this specialization in passing we shed light on various theories of debt contracting and intermediation and present facts about finance companies

board of director gender and corporate tax aggressiveness an empirical analysis this study examines the impact of board of director gender diversity on corporate tax aggressiveness based on a sample of 418 u s firms covering the 2006 2009 period 1672 firm year observations our ordinary least squares regression results show a negative and statistically significant association between female representation on the board and tax aggressiveness after controlling for endogeneity our results are consistent across several measures of tax aggressiveness and additional robustness checks

relation of dominant problems to stages of growth in technology based new ventures two studies investigating the growth patterns of new ventures are presented in the first study a stage of growth model theorized to apply specifically to technology based new ventures was develop

the economics of formal business networks abstract this paper analyzes the under researched issue of formal business networks comprising voluntary groupings of entrepreneurs who share knowledge and experiences between themselves economic analysis is used to show how formal business networks which enable entrepreneurs to share good and bad practice can improve efficiency and social welfare the paper also derives conditions for the existence and equilibrium size of formal business networks two principles of network design are proposed to promote their stability and to avoid their collapse

the housing and credit bubbles in the united states and europe a comparison a house price boom occurred simultaneously in the united states and in a number of european countries from 2003 to 2007 accompanied in each case by an expansion in housing finance this article considers the role of financial innovation along with incomplete markets in these cycles

conference on housing stability and the macroeconomy international perspectives this article provides an introduction to the jmcb special issue on housing bubbles the global financial crisis and the ensuing recessions in countries that experienced housing busts we focus on five themes that are important for policymakers and researchers alike the domestic and international factors driving housing booms and busts the relevance of the housing sector for the real economy how monetary policy should react to housing booms and busts how housing and mortgage finance reform could affect financial stability and the broad lessons learned for macroeconomics and macroprudential policy

gender discrimination in microfinance some evidence from uganda abstractmicrofinance literature has proved the existence of gender discriminatory practices against women in some specific contexts discrimination is often explored from the access side loans approved or denied following agier and szafarz 2013 we deviate from this practice and use the variable loan size considering up to four loans for each client drawing on data from a microfinance programme in uganda we find no evidence of gender discrimination against women clients even though our results show that the loan size is influenced by personal characteristics and that women in contrast to men are rewarded according to their credit history

founded in adversity operations based survival strategies of ventures founded during a recession abstract we examine the survival of 404 new ventures founded during the 2008 recession we find that industry explains a significant but small percentage of variance in survival 2 81 percent and therefore focus on which operations related actions could enhance ventures odds of survival we find marginally significant support for our hypotheses that a venture founded during a recession is more likely to survive if it increases its production efficiency increases both its production efficiency and variable costs or increases both its production efficiency and fixed costs in property plant and equipment our findings demonstrate that operational decisions are key determinants of survival for ventures founded during a recession

do lenders discriminate against minority and woman entrepreneurs abstract this paper draws on a conceptual analysis of discrimination to improve the methodology for estimating discrimination in small business credit markets and to provide some evidence about the possible causes of discrimination in these markets using a variety of statistical enhancements to existing studies we find statistically significant evidence of substantial discrimination in loan approval against black owned and hispanic owned businesses in 1998 we also find some hints that this discrimination takes the form of statistical discrimination driven by lenders stereotypes about the ability of black and hispanic owned businesses to succeed under some circumstances although we find no discrimination on average in interest rates on approved loans we also find that black owned businesses do face discrimination in interest rates when they borrow from finance companies and businesses such as mutual fund companies and leasing companies with a primary mission other than lending these findings suggest that federal financial regulatory agencies should re double their efforts to uncover and prosecute lenders who discriminate against black and hispanic owned businesses and that new tools may be needed to find discrimination by firms not well covered by the existing fair lending enforcement system

credit card redlining abstract this paper evaluates the presence of racial disparities in the issuance of consumer credit using a database of credit histories i link location based information on race with individual credit files after controlling for place specific factors such as housing vacancy rates and general population demographics i find qualitatively large differences in the amount of credit offered to similarly qualified applicants living in black versus white areas high data quality allows distinguishing between issuer provision supply and utilization of credit demand additional estimates using information on payday lending provide support for idea that issuers condition lending on location

age order of entry strategic orientation and organizational performance abstract this paper proposes an empirical test of several hypotheses linking age order of entry and strategic orientations to a firm s performance three strategies are defined cost leadership strategy innovative differentiation and marketing differentiation the aim is to show that the impact on performance of both age and each of the three strategic orientations may differ according to a firm s order of entry into an industry following lieberman and montgomery s 1998 evaluation of their major contribution on first mover advantage we emphasize three points first we develop and test hypotheses related to early and late followers strategic orientations broadening the scope of traditional studies on pioneers second the model combines the dimensions of a firm s age order of entry and strategic orientations as well as industry conditions stage of the industry environmental unpredictability and technology diffusion to establish a contingent model of performance analysis finally the empirical study deals chiefly with organizational performance and not market share which is considered a typical advantage accruing to pioneers in addition the scope of the study 582 french manufacturing firms provides the means to fill a void in empirical studies because it is a broad cross sectional test on non u s data the firms are mainly private small to medium sized and single or dominant business firms therefore our assumptions must be understood as particularly applicable to this type of firm the results reveal important lessons for practitioners first we did not find a first mover advantage in terms of organizational performance in addition pioneers organizational performance is enhanced by the cost leader strategy contrary to our assumption emphasizing innovative differentiation for these firms second early followers performance benefits from innovative differentiation and marketing differentiation finally late entrants developing a cost leader strategy have a significantly higher performance all groups considered late followers are the firms most sensitive to environmental uncertainty and age effects our study clarifies the impact of a firm s age and strategic orientations on its performance depending on the firm s order of entry the implications of these results are particularly relevant for practitioners and entrepreneurs first a cost leadership strategy seems to be a guarantee for a pioneer to increase its organizational performance new ventures should therefore take into consideration the fact that newness and innovative differentiation might not be the best strategic orientations for high performance in the long run second as a second mover however developing a superior product and being able to market it efficiently appear to be the enhancing factors of firm performance third for both pioneers and early followers age does not significantly reduce their performance however the longer a firm waits before entering the greater is the negative effect of age on its performance this is due to the difficulty of resisting competitive erosion because pioneers and early followers drive the changes in the industry the identification of these effects should help managers and stakeholders to make more effective entry decisions to sustain a firm s advantage leading to better performance and higher probability of survival

caste and credit a woeful tale this paper examines caste based differences in farmers access to bank loans in rural india we investigate whether banks practice taste based discrimination on the basis of caste in order to identify potential discrimination we consider loan applications and approval decisions separately we find significant inter caste differences in application rates and evidence of discrimination against scheduled tribe borrowers at the approval stage to rule out the role of statistical discrimination we simulate unobserved credit histories with various distributions evidence for taste based discrimination persists despite accounting for unobservables however we find that this discrimination does not affect small farmers

connectedness and sme financing in post communist economies evidence from uzbekistan this paper investigates effects of interpersonal links with bureaucrats on sme access to formal finance a survey of 502 smes in post communist uzbekistan shows fewer smes with government connections express a need for external finance but success rates of applications are higher than for smes without connections econometric models show government connected smes receive more formal credit than their counterparts the small share of sme credit available is thus distributed in favour of those capitalising on bureaucratic links with consequent resource misallocation findings imply that greater sme credit flows need supplementing with capacity building that improves bank transparency and efficiency

access to credit by small businesses how relevant are race ethnicity and gender this paper employs data from the 1998 and 2003 survey of small business finances to analyze whether after controlling for observable factors that influence loan decisions there is a significant difference in the loan approval rate and the interest rate charged on approved loans for businesses owned by minority or white females and firms owned by white males

the high growth in new metal based manufacturing and business service firms in finland this study examined the effects of the factors involved in the start up situation and the first seven years development on the subsequent high growth of firms the criterion of success used in this study was high growth in business during the first seven years the subjects were finnish metal products manufacturing firms and business service firms established in 1990 the results indicated firstly that it is the internal networks of firms that bring about competitive advantage innovations and efficiency in these entrepreneurial team driven firms a group of people participate in the strategic management of the firm it was also found that co operation between firms and changes in external personal networks contributed to a high rate of growth the empirical results showed that new firms had equal chances for growth irrespective of their locality on the other hand growth was affected by changes in a new firm s competitive situation and by changes in strategic factors the results also clearly indicated that high growth firms were characterised by rising productivity of labour at the same time as they were generating new jobs

the benefits of lending relationships evidence from small business data this paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm we analyze data collected in a survey of small firms by the small business administration the primary benefit of building close ties with an institutional creditor is that the availability of financing increases we find smaller effects on the price of credit attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit in sum relationships are valuable and appear to operate more through quantities rather than prices

the financial power of the powerless socio economic status and interest rates under partial rule of law in advanced economies interest rates vary inversely with the borrower s socio economic status which itself depends inversely on default risk these relationships depend on the impartiality of the law where the law is markedly biased in favour of certain groups the latter will pay a surcharge for capital legal power as measured by privileges before the law thus undermines financial power the capacity to borrow cheaply developing this argument this paper also tests it through judicial records from ottoman istanbul 1602 1799 three privileged ottoman groups men muslims and titled elites all paid relatively high interest rates conditional on various loan characteristics this article is protected by copyright all rights reserved

networks and local environmental characteristics in the survival of new firms this study seeks firstly to clarify which networks at start up situation and early in life influence the survival of new firms secondly the study examines regional differences in the success of new firms the subjects were firms which had closed down during their fourth to sixth year of operations and they were compared with firms continuing in business the results indicate firstly that it is networks internal to firm that create competitive advantage innovation and efficiency secondly management based on working in groups was emphasized in the firms that continued in business in a typical family enterprise ownership management and family are united in a single entity in other types of firms networks are seen as participating in the strategic management of the firm thirdly close downs were often caused by uncontrolled risks a firm which fails after a successful start up often tends to grow rapidly in the beginning leaning on its product idea but this rate of growth is too high from the viewpoint of the financing and the management of the firm in firms which closed the growth objectives were too ambitions compared with the resources of the entrepreneur

sex and credit do gender interactions matter for credit market outcomes abstract this paper studies the effects of gender interactions on the supply of and demand for credit using data from a large albanian lender we document that first time borrowers assigned to officers of the opposite sex are less likely to return for a second loan the effect is larger when officers have little prior exposure to borrowers of the other gender and when they have more discretion to act on their gender beliefs as proxied by financial market competition and branch size we also find that first time borrowers matched with opposite sex officers pay higher interest rates and receive smaller and shorter maturity loans but do not experience higher arrears our results are consistent with the existence of a gender bias and learning effects that lead to the disappearance of the bias

employment and smes during crises the persistent increasing duration of unemployment has become an issue during economic crises although lay offs at large firms normally make headlines during crises we still know little about the potential impact of firm size on adjustment behavior in a crisis we studied effects of firm size on employment growth during economic slowdowns using a rich microeconomic database for the 1988 2007 period in portuguese manufacturing industry the results show that economic downturns affect firm growth negatively this negative effect is found to be higher for larger firms both during and immediately following crisis periods small and medium sized enterprises smes emerge as potential stabilizers in downturn periods however larger firms seem to be able to quickly recover from downturn periods our results contribute to the scarce literature and to the understanding of the portuguese case where many smes secure most jobs these first results may be useful because smes play a determinant role in other european union economies

competition small business financing and discrimination evidence from a new survey we analyze credit applications loan denials and interest rates paid by small businesses across owner gender race and ethnicity in addition we examine data from owners who said they did not apply for credit because they believed that their applications would have been turned down after controlling for a rich set of explanatory variables including personal and business credit histories substantial differences in denial rates between firms owned by african americans and white males remain moreover consistent with becker s classic theories 1957 we find evidence that increases in competition in the firm s local banking market reduces these differences