Birth mode of family firms, family entering time and R&D investment: evidence from China

PurposeOn the basis of behavioural agency theory and resource-based view, this study investigates the influence of family firm birth mode (i.e. indirect-established or direct-established), family entering time on R&D investment and the moderating role of the family entering time on the relationship between birth mode and R&D investment.Design/methodology/approachThe authors collected 2,990 firm-year observations from family firms listed on A-share in China from 2008 to 2016 in the China Stock Market and Accounting Research database. They used pooled regression for data analysis and Tobit regression for robustness checks.FindingsIndirect-established family firms show more inclined behaviour towards R&D investment than direct-established counterparts. Family entering time positively affects the R&D investment of family firms. Moreover, family entering time plays a significant moderating role in the relationship between family firm birth mode (i.e. indirect-established or direct-established) and R&D investment.Originality/valueTo the best of the authors’ knowledge, this work is a pioneering study that introduced the concept of family firm birth mode (i.e. indirect-established or direct-established) and family entering time. This work is novel because it differentiated family firms according to their birth modes, an approach which is a contribution to the existing literature of family firms. Moreover, the investigation of the moderating role of family entering time has also produced notable results that help understand the impact of family entering time on different types of family firms. The interpretation of outcomes according to behavioural agency theory also produced useful insights for future researchers as well as for policymakers.

The impact of founder’s regulatory focus on the process of firm birth and firm abandonment

PurposeThe purpose of this paper is to show how self-regulation influences the relationship between nascent entrepreneurial exploitation activities, firm birth and firm abandonment.Design/methodology/approachThis study draws from a unique longitudinal dataset of 181 nascent entrepreneurs from Switzerland who have been interviewed by phone in 2015 and 2016. It uses a moderated binary logistic regression to test the hypotheses.FindingsThis study provides evidence that discrepancies in promotion orientation can explain different ways exploitation can lead to an increased likelihood of firm birth and a decreased likelihood of firm abandonment while respectively increasing persistence. Findings suggest that this is attributed to the regulatory fit between a promotion orientation and exploitation activities.Research limitations/implicationsFor scholars, our findings provide insights into reasons for entrepreneurial persistence, as well as how firm birth can be achieved with different levels of exploitation activities.Practical implicationsThis study provides entrepreneurs with information on how to increase their persistence as well as the likelihood of firm birth while considering their regulatory focus.Originality/valueBased on regulatory focus theory, this paper highlights different paths to firm birth with varying quantity of exploitation activities. We contribute to a greater understanding of firm emergence by accounting for the impact of regulatory foci.

Does Regional Variation in Startup Concentration Predict Employment Growth in Rural Areas of Ohio, Pennsylvania, and West Virginia?

Measures of entrepreneurship, such as average establishment size and the prevalence of start-ups, correlate strongly with employment growth across and within urban areas. Is it possible for entrepreneurship to occur outside of urban areas and be active in rural areas such as Ohio, Pennsylvania, and West Virginia? There are causal links of entrepreneurial finance to industry or city growth but little link of the evidence of entrepreneurship outside of urban areas overall. This chapter examines the regional variation in startup concentration used to predict employment in the rural areas of Pennsylvania, Ohio, and West Virginia by metropolitan statistical area (MSA)/micropolitan areas for the year 2017. The authors find significant differences in new firm formation rates from industrial regions to technologically progressive regions using the generalized linear models (GLM). Variations in firm birth rates are explained by industrial size, population growth, the number of startups, human capital variables, and establishments.

Start-ups, job creation, and founder characteristics

Analyzing data on all US employers in a cohort of entering firms, we document a highly skewed size distribution, such that the largest 5% account for over half of cohort employment at firm birth and more than two-thirds at firm age 7. Analyzing linked survey-administrative data, we find that female, African–American, and younger founders are initially less likely to start large firms. The gender gap persists through firm age 7, while racial and age gaps do not. Education is positively associated with start-up size, except for graduate degrees. Prior entrepreneurship and founding team size are positively associated, but team diversity is not. Specifications with capital and industry controls illuminate roles of financial constraints and sectoral choice.

The foreign business and domestic enterprise relationship: Its implications for local entrepreneurial resilience

Both domestic small- and medium-sized enterprises and foreign direct investment are often seen as key parts in helping economies to withstand and recover from shocks. What is less clear is the impact that a greater presence of foreign-owned firms has on domestic enterprises’ ability to withstand such shocks and for entrepreneurial activity to renew itself after economic shocks, described as local entrepreneurial resilience. To examine how foreign influence affects local entrepreneurial resilience rather than considering the relationship between foreign influence and domestic firm births or deaths at a given point in time, this study takes a more dynamic perspective. The relationship between foreign influence and the change in local firm births, deaths, and their overall impact in terms of net births and business churn after the financial crisis is examined. UK data are examined at the local level to account for the within-region heterogeneity of foreign investments that will lead to quite different outcomes being found for domestic enterprises in the same regions. The results indicate that those areas with greater foreign business influence in the labour market are likely to have seen firm birth rates remain higher and recover more quickly. There are policy implications for localities with both higher and lower levels of foreign business ownership.

The impact of taxes and regulations on firm births and deaths in state border counties

Purpose – The purpose of this paper is to examine the influence of the institutional environment on firm birth and death rates. It is hypothesized that high taxation levels, large government size, high levels of unionization and high minimum wages will be associated with relatively low firm birth and death rates. Design/methodology/approach – This study makes use of a set of custom tabulations from the US Census Bureau that contain data on county-level firm births and deaths. To account for differences in state policies, matched contiguous counties located on state borders are used to calculate matched birth and death ratios. Findings – In the sample of eastern US state border counties, state taxation levels and minimum wages had no significant relationship with firm birth rates, but there was a negative relationship between state union densities and firm birth rates. Both state education and public welfare expenditures were marginally negatively related to firm birth rates. State public welfare expenditures were negatively related to firm death rates, while a marginally significant negative relationship between hospital/health expenditures and firm death rates was observed. Research limitations/implications – These results indicate that state government expenditures may have varying influences on firm birth and death rates, and that high union densities may deter new firm entry. Originality/value – This paper makes use of a county matching technique to help control for confounding variables, allowing for differences in state policies to be better accounted for.