Template-Type: ReDIF-Paper 1.0 Author-Name: Seung-Hyun Lee Author-Name: Yasuhiro Yamakawa Author-Name: Mike W. Peng Title: Entrepreneurship and the Barrier to Exit: How Does an Entrepreneur-Friendly Bankruptcy Law Affect Entrepreneurship Development at a Societal Level? Abstract: Does an entrepreneur-friendly bankruptcy law encourage more entrepreneurship development at a societal level? How does bankruptcy law affect entrepreneurship development around the world? Drawing on a real options perspective, we argue that if bankrupt entrepreneurs are excessively punished for failure, they may pass potentially high-return but inherently high-risk opportunities. Amassing a longitudinal, cross-country data base from 35 countries spanning ten years, we find that a lenient, entrepreneur-friendly bankruptcy law encourages entrepreneurs to take risks and thus let entrepreneurship prosper. Components of an entrepreneur-friendly bankruptcy law are: (1) the availability of a reorganization bankruptcy option, (2) the time spent on bankruptcy procedure, (3) the cost of bankruptcy procedure, (4) the opportunity to have a fresh start in liquidation bankruptcy, (5) the opportunity to have an automatic stay of assets, (6) the opportunity for managers to remain on the job after filing for bankruptcy, and (7) the protection of creditors at the time of bankruptcy. Length: 18 pages Creation-Date: 2008 File-URL: http://www.sba.gov/advo/research/rs326tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:08slyymp Template-Type: ReDIF-Paper 1.0 Author-Name: Lawrence A. Plummer Author-Name: Brian Headd Title: Rural and Urban Establishment Births and Deaths Using the U.S. Census Bureau’s Business Information Tracking Series Abstract: This paper serves two related purposes. First, we conduct a preliminary descriptive analysis of the establishment birth and death rates by rural and urban counties. This analysis gives a surprising result: when measured by the ecological and labor force method, the rural versus urban differences in the average rates of establishment births and deaths are extremely small. While the difference is statistically significant, on average, the general dynamic of economic activities is not a function of rural versus urban conditions. It is expected, though, that such a dynamic specific to a particular industry will show strong urban versus rural effects. This result has implications for the setting and study of economic development policy for both rural and urban areas, especially where such policies hinge on stimulating and supporting local entrepreneurial activity (i.e., “economic gardening”). Note that the ecological and labor force methods provided similar results, so the choice of method for analyzing birth rates has no significant impact on the results. Second, it documents a set of establishment birth and death (EBD) tabulations now available from the U.S. Census’ Company Statistics Division. In particular, we provide an overview of the Census database from which the tabulated data were extracted, summarize the information and variables in the data, and discuss several practical issues with using the EBD tabulations. Among these issues are the reliability of the data, the industry and county classifications used in reporting the data, and issues concerning statistical analysis in a spatial context. We also discuss how the EBD tabulations and other custom data orders can be obtained. Length: 52 pages Creation-Date: 2008 File-URL: http://www.sba.gov/advo/research/rs316tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:08lpbh Template-Type: ReDIF-Paper 1.0 Author-Name: Pankaj Patel Author-Name: Rodney D’Souza Title: Uncovering Knowledge Structures of Venture Capital Investment Decision Making Abstract: Studies on venture capital (VC) investment decision using espoused criteria and utility aggregation methods have shown mixed results. Using a latent decision structures approach from psychological scaling literature, we reduce random and systematic biases arising from VC decision environment. In addition, we further address such biases using a combination of parametric and nonparametric techniques and practitioner specified decision criteria on 143 funded and nonfunded business plans. Compared to previous studies that have emphasized the central role of the venture team in obtaining funding, we find that (a) a good venture team is critical for not rejecting a business plan but is less critical for funding a business plan (b) a good venture team has decreasing returns even for funded ventures, but favorable competitive conditions and market potential have increasing returns. Length: 32 pages Creation-Date: 2008 File-URL: http://www.sba.gov/advo/research/rs315tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:08pprd Template-Type: ReDIF-Paper 1.0 Author-Name: Chad Moutray Title: Educational Attainment and Other Characteristics of the Self-Employed: An Examination using Data from the Panel Study of Income Dynamics Abstract: This study examines the relationship between education and the choice to become an entrepreneur. In doing so, it builds on previous research linking entrepreneurial activity with educationalattainment. Weaver, Dickson, and Solomon (2006), for example, survey the literature on this topic, and find that individuals with more education are more likely to be self-employed and successful. Brush and Manolova (2004) write that “human capital is the starting point for obtaining and developing other types of resources when a new venture is founded and directly influences its start-up process, survival, performance, and strategic direction.” Length: 31 pages Creation-Date: 2008 File-URL: http://www.sba.gov/advo/research/rs313tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:07cm Template-Type: ReDIF-Paper 1.0 Author-Name: Brian Headd Author-Name: Bruce Kirchhoff Title: Small Business Growth: Searching for Stylized Facts Abstract: Using special tabulations from the U.S. Census Bureau, we use aggregate data to follow a cohort of firms over 10 years from their formation and the universe of existing firms to track their growth/decline in employment. We created a table to show the employment change categories for a cohort of new single establishment firms drawn from the 1992 universe of single establishment firms from 1992 to 2002. We also created tables to show the employment change categories for the universe of single establishment firms in the cohort defining declining and growing firms as separate sub-cohorts. Some industry detail is also described. We offer propositions related to firm growth and use data contained in the tables to seek verification. Length: 30 pages Creation-Date: 2007 File-URL: http://www.sba.gov/advo/research/rs311tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:07bhbk Template-Type: ReDIF-Paper 1.0 Author-Name: Erin Kepler Author-Name: Scott Shane Title: Are Male and Female Entrepreneurs Really That Different? Abstract: This report describes a statistical evaluation of the similarities and differences between male and female entrepreneurs and their ventures. The purpose of the study was to gain a better understanding of the extent to which entrepreneurship by men and women is different. Using data from the Panel Study of Entrepreneurial Dynamics, the sample included 685 new business people who indicated that they were in the process of starting a business in 1998 or 1999. Length: 6 pages Creation-Date: 2007 File-URL: http://www.sba.gov/advo/research/rs309tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:07ekss Template-Type: ReDIF-Paper 1.0 Author-Name: Polly Hardee Title: A Two-step Analysis of Standardized Versus Relationship Bank Lending to Small Firms Abstract: Using the 1998 Survey of Small Business Finances and banking data to produce a bank-firm match, the author tests for evidence of standardized versus relationship lending methods in both total bank credit and credit emanating from the firm’s most important source of financial services, its primary bank. The author employs a two-step Heckman procedure to test the likelihood a small firm has bank debt, then, conditional upon having debt, the level of credit outstanding. By comparing the determinants of bank and firm characteristics of primary bank credit with credit from all bank sources, she finds that relationship lending is inherent within the primary bank, whereas competing bank sources tend to employ standardized lending techniques such as credit scoring. With respect to credit availability, however, no clear dominance of one method over the other prevails. Length: 36 pages Creation-Date: 2007 File-URL: http://www.sba.gov/advo/research/rs305tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:07ph Template-Type: ReDIF-Paper 1.0 Author-Name: Karl J. Wennberg Author-Name: Timothy Folta Author-Name: Frederic Delmar Title: A Real Options Model of Stepwise Entry into Self-Employment Abstract: This paper tests a real options model of stepwise entrepreneurial entry. We distinguish between part time and full time entry among the self employed in Swedish knowledge intensive industries. Two multinomial logit models tests the entry from employment to part- or full time entry in 1998, and to subsequent full time entry in 1999. The empirical evidence indicates the need to distinguish between part time and full time entry, something overlooked in earlier research. We find strong support for our notion that entrepreneurs used part time entry as a strategy to test the value of their conceived business opportunity without risking their full income. However, our hypothesis that entrepreneurs use a real options heuristic shaped by the uncertainty and the irreversibility of entry received only mixed support. Length: 13 pages Creation-Date: 2007 File-URL: http://www.sba.gov/advo/research/rs304tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:07kwtffd Template-Type: ReDIF-Paper 1.0 Author-Name: Lawrence A. Plummer Title: The Spatial Dynamic Between Established Firms and Entrants Abstract: The research uses 377 firms that filed initial public offerings from 1990 to 1993 as the basis for existing firms and follows their financial performance from 1990 to 2004. In the first year of a new firm’s existence, before the entrant has time to contribute to positive local effects, its entry is more likely to hurt the financial performance of existing firms. By the third year after entry, however, the effect on the financial performance of existing firms is positive. In the short term, entrants are foes and in the long term, entrants are friends. Length: 35 pages Creation-Date: 2007 File-URL: http://www.sba.gov/advo/research/rs293tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:07lp Template-Type: ReDIF-Paper 1.0 Author-Name: Whitney Peake Author-Name: Maria Marshall Title: Getting the Most Bang for the Buck: An Analysis of States’ Relative Efficiencies in Promoting the Birth of Small Firms Abstract: Firm birth has recently been an important topic for many state governments. However, ways in which state governments can influence firm births are not obvious, and their efficiency in fostering firm births in comparison with their peers is even less so. Focusing on the birth of small U.S. firms, regression analysis and non-parametric efficiency testing are employed to determine both the expenditures state governments can target to promote firm birth and their relative efficiency in utilizing these expenditures. The relative efficiency tests provide insight as to how states compare with their peers in terms of efficient target expenditure use. Length: 26 pages Creation-Date: 2007 File-URL: http://www.sba.gov/advo/research/rs290tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:07wpmm Template-Type: ReDIF-Paper 1.0 Author-Name: Robert Axtell Author-Name: Rich Perline Author-Name: Daniel Teitelbaum Title: Volatility and Asymmetry of Small Firm Growth Rates Over Increasing Time Frames Abstract: In this report we have summarized our research into the nature of firm growth in the U.S. over the 5 year period 1998-2003 using comprehensive data on U.S. businesses extracted from the Census database. We have analyzed these data with a particular eye to the departures from standard assumptions and results in economics generally, and within the field of industrial organization specifically. It should be noted that our analysis is unusual in an important way compared to most analyses of firm growth rates: the typical size of establishments in the Census database is preponderantly very small - the observed modal size is a single employee. More commonly, growth rate studies use size thresholds thatare well above this, and as a result, the conclusions drawn from such truncated data may be incomplete or distorted. Length: 21 pages Creation-Date: 2006 File-URL: http://www.sba.gov/advo/research/rs285tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:06rarpdt Template-Type: ReDIF-Paper 1.0 Author-Name: Major Clark III Author-Name: Chad Moutray Author-Name: Radwan Saade Title: The Government’s Role in Aiding Small Business Federal Subcontracting Programs in the United States Abstract: Historically, small businesses in the United States have received a share of federal procurement dollars not quite commensurate with their relative importance in the U.S. economy. While 99.7 percent of all employer firms are small, they receive about 23 percent of direct federal procurement dollars and almost 40 percent of subcontracting dollars. While subcontracting has been a part of the federal procurement framework, it has not received the same focus and attention as the prime contracting program. The purpose of the paper is fourfold. First, it discusses the importance of the small business sector to the overall economy. Second, it lays out the policy framework for the federal government’s involvement in requiring “other than small” federal prime contractors to subcontract with small businesses. This policy discussion focuses on the period from 1958 to the present. Third, it examines the legislative and regulatory approaches that have been put forth to increase subcontracting opportunities for small businesses; and fourth, it discusses steps needed to improve the American small business subcontracting program to accommodate greater participation by these businesses in new and emerging global markets. Length: 31 pages Creation-Date: 2006 File-URL: http://www.sba.gov/advo/research/rs281tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:06mccmrs Template-Type: ReDIF-Paper 1.0 Author-Name: Charles Ou Title: Banking and SME Financing in the United States Abstract: Loan markets for most small business borrowers in the United States have become more competitive over the past decade, evidenced by the emergence of a nationwide market for credit lines and credit cards and the entry of large regional banks in local markets. However, the impact of increased competition on the cost of funds to small firms, as indicated by the rate spreads between small business rates and the rates paid by the banks’ best prime customers, is more difficult to assess because of data limitations. Length: 38 pages Creation-Date: 2006 File-URL: http://www.sba.gov/advo/research/rs277tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:06ou Template-Type: ReDIF-Paper 1.0 Author-Name: Jacky Yuk-Chow So Title: AGENCY* COSTS AND OWNERSHIP STRUCTURE: EVIDENCE FROM THE SMALL BUSINESS FINANCE SURVEY DATA BASE Abstract: In this paper, “agency” refers to the relationship between a principal, such as a business owner or owners, and his or her agent, such as a manager.Our empirical results support the John-Kedia theory, which recommends treating optimal corporate governance as a system within which the internal control variables, such as manager-owners, family-owners, and major and minor shareholders, interact with the external agents such as banks and bondholders and act to minimize or eliminate agency problems. We argue in this study that if the internal variables provide similar functions, they could substitute for each other. Similar argument holds for external control variables. Since external stakeholders such as banks and bondholders have different claims than owners and shareholders, we hypothesize that external and internal monitoring mechanisms provided by these groups will be a complement; they will reinforce each other. Using the OLS method and SUR, we find that the interaction effect and substitute-complement relationship are supported by the sales-to-asset data. Specifically, family ownership seems to replace bondholders in monitoring managerial behavior. We find that good managers do not attempt to differentiate themselves from the bad ones by pre-commitment. The pre-committed-based governance system proposed by John and Kedia (2003) is therefore not supported by the small firm samples. Length: 32 pages Creation-Date: 2005 File-URL: http://www.sba.gov/advo/research/rs268tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:05jys Template-Type: ReDIF-Paper 1.0 Author-Name: Ying Lowery Author-Name: ying.lowrey@sba.gov Title: U.S. Sole Proprietorships: A Gender Comparison, 1985-2000 Abstract: This paper analyzes one of the best sets of small business data – 1985-2000 U.S. sole proprietorship data that Statistics of Income Division, Internal Revenue Service, produces for researchers. It explains the differences in business owners across the nation from 1985 to 2000 by looking into sole proprietorships by gender in general and by business size, owner’s marital status, 10 industrial classifications, six broad industry categories, and the 10 most populous states in particular. This paper sheds new light on previous research puzzles such as firm-sensitivities and gender segregations in business activities and earnings, and the possible reason for certain existing gender differences. Women sole proprietors grew faster than men in terms of the number of businesses and net income during 1985-2000. Male sole proprietors were more firm size sensitive and disparate than women in business earnings. Gender segregation seemed to be clear when looking into industrial classifications but less so across six broad industry categories. Florida had the highest sole proprietorship growth between 1985 and 2000. A higher proportion of women than men sole proprietors bore the responsibility of taking care of their children. Lack of family support is a possible reason female sole proprietors earned less on average than their counterparts did during the same period. A set of micro data from SOI, rather than aggregated tabulations, might result in more robust findings. Length: 59 pages Creation-Date: 2005 File-URL: http://www.sba.gov/advo/research/rs263tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:05yl Template-Type: ReDIF-Paper 1.0 Author-Name: Brian Headd Author-Name: brian.headd@sba.gov Title: Business Estimates from the Office of Advocacy: A Discussion of Methodology Abstract: The Office of Advocacy creates estimates of the number of employer and nonemployer businesses for recent years, since the newest available data have around a two-year lag. Advocacy estimates the number of nonemployers using growth rates from Internal Revenue Service’s sole proprietor count estimates. Advocacy estimates the number of employers using the net difference in employer births and deaths from the Employment and Training Administration. Analysis shows that historical estimates have been close to the actual figures, as employers and nonemployers exhibited slow steady growth during the period of analysis. Nonemployers, however, tended to be slightly underestimated as sole proprietors have consistently grown faster than nonemployers in recent years. As more data become available, more sophisticated techniques could be employed to create current estimates of the number of businesses. Length: 17 pages Creation-Date: 2005 File-URL: http://www.sba.gov/advo/research/rs258tot.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:05hd Template-Type: ReDIF-Paper 1.0 Author-Name: Charles Ou Author-Email: charles.ou@sba.gov Title: Banking Consolidation and Small Business Lending:A Review of Recent Research Abstract: Banking consolidation has continued to accelerate over the past several years, assisted by technological innovations in information management and statistical modeling, and by the large merger and acquisition (M&A) deals of the late 1990s. Total domestic assets held by the largest 50 bank holding companies (BHC) rose from around 52 percent in June 1997 to nearly 70 percent in June 2002, and the number of small banks with assets under $500 million declined from 8,647 in June 1997 to 7,208 in June 2002. The perennial question about the impact of banking consolidation on the availability of financing to small business remains a major concern to small business researchers and policymakers. This paper provides a review of recent major studies conducted over the past several years. Length: 15 pages Creation-Date: 2005 File-URL: http://www.sba.gov/advo/research/wkp05ou.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:05ou Template-Type: ReDIF-Paper 1.0 Author-Name: Brian Wu Author-Name: Anne Marie Knott Title: Entrepreneurial Risk and Market Entry Abstract: This paper attempts to reconcile the risk-bearing characterization of entrepreneurs with the stylized fact that entrepreneurs exhibit conventional risk aversion profiles. We propose that the disparity arises from confounding two distinct dimensions of uncertainty: demand uncertainty and ability uncertainty. We further propose that entrepreneurs will be risk averse with respect to demand uncertainty, yet “risk-seeking” (or overconfident) with respect to ability uncertainty. To examine this view we model the entrepreneur’s entry decision then test the model empirically. We find that entrepreneurs in aggregate behave as we predict. Accordingly, risk-averse entrepreneurs are willing to bear market risk when the degree of ability uncertainty is comparable to the degree of demand uncertainty. A potential market failure exists however in instances where there is a high degree of demand uncertainty, but low ability uncertainty. In those settings there may be insufficient entry, competition and innovation. Length: 30 pages Creation-Date: 2005 File-URL: http://www.sba.gov/advo/research/wkpbw249.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:05bwmk Template-Type: ReDIF-Paper 1.0 Author-Name: Major Clark III, J.D. Author-Name: Chad Moutray, Ph.D. Author-Name: chad.moutray@sba.gov Author-Name: major.clark@sba.gov Title: The Future of Small Businesses in the U.S. Federal Government Marketplace Abstract: The federal government purchased goods and services valued at approximately $100 billion from small businesses in FY 2003, which was up from previous years. Moreover, in FY 2003, the federal government exceeded its small business contracting goal of 23 percent. Despite such achievements, implementation of the acquisition reforms enacted in the 1990s has limited small businesses’ access to the federal procurement market. Federal agencies have, for instance, not met their goals for women, minorities, or veterans, and contract bundling and purchase cards may restrict small business opportunities. Meanwhile, both judicial actions and a reduction in the number of acquisition workers complicate matters. This paper discusses each of these issues and offers five recommendations that, if fully implemented, should ensure a brighter future for small businesses in the federal government marketplace. Length: 21 pages Creation-Date: 2004 File-URL: http://www.sba.gov/advo/stats/wkp04mccm.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:04mccm Template-Type: ReDIF-Paper 1.0 Author-Name: Charles Ou Author-Email: charles.ou@sba.gov Title: Statistical Databases for Economic Research on the Financing of Small Firms in the United States Abstract: This paper updates information about the databases available for researchers in conducting small business financial research. A definition of a statistical database is provided first as a basis for selecting a database suitable for statistical research. Five major databases are discussed in detail, followed by a brief discussion of eight data sources for time series information on activities in specific financing markets for small firms. Comments are provided on the strengths and weaknesses of each of the five major databases regarding their uses for conducting different types of research and on possible areas for improvement. Length: 33 pages Creation-Date: 2004 File-URL: http://www.sba.gov/advo/research/wkp04ou.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:04ou Template-Type: ReDIF-Paper 1.0 Author-Name: Robert Hartl Author-Email: robert.hartl@unisg.ch Title: Industry, Enterprise, and Behavioral Predictors For Inter-Firm Cooperation in Small and Medium-Sized Enterprises Abstract: Often the cooperation behavior of enterprises is described as a rational, conscious, and planned process. If so, a model should be able to identify distinguishing features that have a significant impact on the propensity for inter-firm cooperation. The proposed model analyzes the influence of the firm’s, the entrepreneur’s, and the industry-specific characteristics on the cooperation behavior via a single model that can be used to explain different kinds of cooperation. In thiscontext, the model utilizes five year panel data to identify significant differences with regard to the place of cooperation and the origin of cooperation partners. Length: 8 pages Creation-Date: 2003 File-URL: http://www.sba.gov/advo/stats/wkp03rh.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:03rh Template-Type: ReDIF-Paper 1.0 Author-Name: Radwan N. Saade Author-Email: radwan.saade@sba.gov Title: Rules Versus Discretion in Tax Policy Abstract: The current fiscal climate is predicated on the notion that revisions to the tax code would be forthcoming every four years, i.e., corresponding to the presidential election cycle. While the depth of the adjustments is usually unknown, the probability that adjustments will happen is substantial. Yet it is the depth and the direction of the adjustment that has real effects. Businesses, large and small, fa ce a burden; but as has been documented by previous research, small businesses bear a disproportionate share of the burden imposed by all federal regulations, including tax regulations. Small business associations identify taxes as the single most important issue facing small businesses. Unexpected shifts in the tax rate and structure only exacerbate the already difficult circumstances involved in running a small business. Now in addition to the uncertainties inherent in operating a small business, business owners must make allowances for unknown changes in the tax code while making plans that extend beyond the next presidential election cycle. There is an inherent problem here that, when explicitly stated, can be quite worrisome: the time horizon that a small business adopts when making plans is longer than the certainty period afforded by the election cycle. Therefore, every possible outcome would be less than optimal. The advantages of a policy- making system based on rules rather than discretion have long been debated in the economics literature. Kydland and Prescott (1977) formalized the debate as it applies to macroeconomic policy. Their work and the literature that it generated has led to formal propositions favoring rules that constrain changes in monetary policy. The present paper extends the analysis in the rules-versus-discretion literature to evaluate the proper role of rules in tax policy. Unexpected tax rates, a consequence of discretionary tax policy, are detrimental to the sustainability of economic progress. An empirical investigation of the effects of unexpected tax rates in the American states supports the theoretical findings. Explicitly agreed upon rules limit the range within which tax rates can vary, and consequently restrict their volatility. With uncertainty reduced over a sufficiently long time horizon, optimal plans can be implemented at both the public and private levels. Length: 32 pages Creation-Date: 2002 File-URL: http://www.sba.gov/advo/stats/wkp02rs.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:02rs Template-Type: ReDIF-Paper 1.0 Author-Name: George Haynes Author-Name: Charles Ou Author-Email: charles.ou@sba.gov Title: A Profile of Owners and Investors of Privately Held Businesses in the United States in 1989–1998 Abstract: This study gives estimates of the number of households owning privately held businesses in the United States, compares the demographic and economic characteristics of business owners and non-business owners, and examines the relationship between the growth in the total number of business entities and total business owners from 1989 to 1998. The analysis is based on the Federal Reserve Board’s Survey of Consumer Finances for the years 1989, 1992, 1995, and 1998. This study concludes three things. (1) Between 13 percent and 14 percent of U.S. households own privately held businesses. (2) These households have relatively higher income, significantly higher net worth, were in the prime age group of 35 to 60 years of age, and have more education. (3) The increase in the total number of business entities during the 1990s seems to be the result of individual households owning more than one business, not of an increased number of business owners or entrepreneurs. This appears to be the case, given that the ratio of business-owning households to total households stayed the same or declined slightly during the 1989-1998 period, but the total number of business entities relative to total households and the nonfarm labor force rose during the same period. Length: 16 pages Creation-Date: 2002 File-URL: http://www.sba.gov/advo/stats/wkp02co.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:02co Template-Type: ReDIF-Paper 1.0 Author-Name: James Dewald Author-Name: Jeremy Hall Author-Name: James J. Chrisman Author-Email: jim.dewald@haskayne.ucalgary.ca Title: Why Do Small Firms Choose Quasi-Integration? The Case Of The Homebuilding Industry Abstract: This article explores the variables that drive small firms to choose quasi- integration as an alternative to vertical integration in situations of high asset frequency. Our study provides new insights by focusing on (1) the preferences of small, vulnerable firms, and (2) an institutionalized form of quasi- integration. The findings indicate that the preference for quasi- integration is driven by asset specificity, bargaining power, and opportunistic expectations. The implications are that preferences for quasi- integration go beyond simple efficiency considerations. Length: 8 pages Creation-Date: 2004 File-URL: http://www.sba.gov/advo/stats/wkp04jrd.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:04jrd Template-Type: ReDIF-Paper 1.0 Author-Name: George Haynes Author-Name: Charles Ou Author-Email: charles.ou@sba.gov Title: Uses of Equity Capital by Small Firms—Findings from the Surveys of Small Business Finances (for 1993 & 1998) Abstract: While the importance of venture capital to the growth of small firms has been widely discussed during the past decade, little is know about the uses of equity capital, especially internal equity capital, by majority of small firms in the United States. Information from the Federal Reserve Board's Survey of Small Business Finances provides a rare opportunity to examine this important issue. This paper utilizes the information collected in the 1993 and 1998 Small Business Finance surveys to investigate the uses of equity capital by small firms. We found that while the importance of public issue markets (IPOs) and the role of venture capital investment in promoting the growth of small dynamic firms cannot be denied, the importance of external equity capital in promoting the formation and the growth of small firms seems to be overstated. Only a very small number of small firms used external equity. In fact, the information on the uses of venture capital (equity capital from external sources) from the national surveys is too limited to permit a statistical analysis of the factors determining their uses by small firms. It is the internal equity capital, not external equity, that is one of the major financing sources for most of small firms in these surveys. A majority of small firms relied on internal sources of capital (owner’s capital, owner’s loans, and retained earnings) and external borrowing from financial institutions to finance their business operation and growth. There appeared to be a "pecking order" of borrowing from financial sources from internal sources to financial institutions to non- financial lenders. In addition, internal equity and commercial bank loans appeared to be complementary financial resources. Length: 22 pages Creation-Date: 2003 File-URL: http://www.sba.gov/advo/stats/wkp03co.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:03co Template-Type: ReDIF-Paper 1.0 Author-Name: Ying Lowery Author-Email: ying.lowery@sba.gov Title: The Entrepreneur and Entrepreneurship: A Neoclassical Approach Abstract: This paper attempts to introduce the entrepreneur as the “economic man” into a neoclassical framework and to indicate the role of government in fostering entrepreneurship. The entrepreneur is assumed to behave as if he maximizes utility including his value and desire to succeed, subject to an income constraint, of which his physical effort in subsistent production and entrepreneurial production generate this income. Entrepreneurship, specifically, is defined as an “economic system” that consists of three components: (1) entrepreneurs, who desire to achieve their goals of economic survival and advancement; (2) the social constitution, that the entrepreneur’s right of free enterprise is granted; and (3) the government, that has the ability to adjust the economic institutions that can work to protect each individual entrepreneur and to stimulate entrepreneurs’ motive to achieve toward fostering of economic development and growth. Length: 26 pages Creation-Date: 2003 File-URL: http://www.sba.gov/advo/stats/wkp03yl.pdf File-Format: Application/PDF Handle: RePEc:sba:wpaper:03yl