Small business and cohesion policy - statistical evidence from the Czech Republic

2017

JEEE

Purpose The purpose of the present study is to empirically investigate the impact of the newly established entrepreneurial activity on economic development of the Czech NUTS 3 regions during the period of years 2003-2015. Design/methodology/approach An econometric approach was used to validate the stated hypotheses assuming a positive relationship between the new entrepreneurial activity and regional economic growth and a negative relationship between the new entrepreneurial activity and unemployment rate. For the methods, regression models with fixed effects were estimated on the panel that included 13 Czech regions, covering the period of years 2003-2015. The new entrepreneurial activity was classified into two forms – rate of newly established self-employed set-ups per capita and rate of newly established business companies and partnership set-ups per capita. Findings Different impacts of newly established business companies and the self-employed were found on real gross domestic product (GDP) per capita. Only the higher rates of newly established business companies and partnership were associated with higher levels of GDP per capita in the Czech regions, and no impact was found for the rate of new self-employed set-ups. Nevertheless, both forms of newly established entrepreneurial activity were associated with lower unemployment rates in the Czech regions; however, the impact of newly established business companies was significantly higher. The obtained results have several policy implications, which are discussed in the present paper. Practical implications Support of entrepreneurship in the Czech regions may improve the situation on the local labour markets and may deliver new job opportunities through the newly established enterprises. The Czech entrepreneurship policies focused on the growth of GDP and economic boom should be oriented more on the support of high-growth enterprises (unicorns). Originality/value The empirical analysis was conducted on the basis of the research gap in the studies related to the impact of the newly established entrepreneurial activity on the economic development of the Czech regions. Obtained results have several policy implications, which are discussed in the present paper.

Section: Czech Regional Disparities and Tested Hypothesesmentioning

confidence: 99%

Can policy makers count with positive impact of entrepreneurship on economic development of the Czech regions?

2017

JEEE

“…Most of the recent studies in the Central and Eastern European region have been focused on the evaluation of cohesion R&D policies and those aimed at the elimination of the regional disparities, e.g., [60][61][62][63][64][65][66][67][68][69][70], policies facilitating trainings and education [71,72] and effectivity of the self-employment programmes for the unemployed [73][74][75]. However, based on a search in the databases of previously published academic articles and research reports, no study has been focused on the evaluation of entrepreneurship support through the financial instruments yet.…”

Section: Introductionmentioning

confidence: 99%

Effects of Soft Loans and Credit Guarantees on Performance of Supported Firms: Evidence from the Czech Public Programme START

2017

Sustainability

Abstract:The purpose of this article was to conduct an empirical evaluation of the Czech public programme START, which was funded from the European Regional Development Fund. The programme lasted from 2007-2011, and supported new entrepreneurs through the zero interest soft loans and credit guarantees. The counterfactual analysis (using three matching techniques: propensity score, nearest neighbour, and kernel) was conducted on the firm level and investigated the changes in financial performance (net profits, return on assets (ROA), return on equity (ROE), sales, assets turnover, and debt ratio) of the supported firms four years after the end of intervention. The obtained findings could not support the hypothesis assuming a positive impact of the programme on the firm's performance. On the contrary, supported companies reported on average lower sales and lower return on assets, when compared to the control group. The remaining variables could not prove any statistically significant impact of the programme. Indicators measuring firm's profitability (net profit, return on assets, and return on equity) suggested a negative influence of the programme and the variable representing debt ratio further indicated that firms that were supported by the programme reported on average higher debt ratio in comparison with the control group. Several policy implications are discussed in the study.

“…One extension on the presented article perceived as a challenge for future research is to estimate separate econometric models for different forms of entrepreneurial activity, e. g. self-employment and business companies and to investigate their dynamics with the business cycle (Dvouletý and Mareš, 2016c). Future research in the Czech Republic needs to also address the impacts of entrepreneurship policies and to evaluate their effectivity and influence on the new business formation (Dvouletý and Lukeš, 2016;Mirošník et al, 2016or Blažková, 2016.…”

Section: Resultsmentioning

confidence: 99%

Relationship Between Unemployment and Entrepreneurship Dynamics in the Czech Regions: a Panel VAR Approach

Acta Univ. Agric. Silvic. Mendelianae Brun.

2017

Investigation of the relationship between unemployment and entrepreneurship still does not provide conclusive results and scholars argue that the relationship needs to be further investigated. In the Czech context, the knowledge about entrepreneurship is still underdeveloped. The purpose of this paper is to investigate the dynamics of the relationship between unemployment and entrepreneurship, applying the methodology used by Koellinger and Thurik (2012) with usage of the quarterly data for the Czech NUTS 3 regions for the period of years 2003 -2014. Collected sample of 672 region-quarter observations was obtained from the Czech Statistical Office. Estimated panel vector autoregressive (VAR) models with impulse response function supported hypothesis assuming a positive relationship between unemployment and entrepreneurship, operationalized as annual growth in registered business activity. Obtained results also showed that after the shock in unemployment, dynamics of entrepreneurship increased above its initial level after two years, concluding that it may take up to two years before positive effects on entrepreneurship reveal. This finding provides value for entrepreneurship policy makers. Based on the obtained results author suggests to support entrepreneurial activity, especially during the times of higher unemployment rate.