POLICY ENVIRONMENT AND

ENTREPRENEURIAL TRANSIENCE

Sergey Anokhin
Jaume Franquesa
Jino Mwaka
Management & Information Systems Department
Kent State University
September 28, 2007
Entrepreneurial Transience: A novel area of study
Environmental conditions

By the local residents

New venture creation

within the area
By the individuals
residing elsewhere Gainful employment of Entrepreneurial
Entrepreneurial Failure
Transience
entrepreneurial talent within the
Migration into the area area

Inflow of the existing

ventures into the area
from elsewhere

Expansion into the area

Local policies

Stimulate Prevent

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Hypotheses

Education
H.1+

Enterprise Zones H.2+

Income Tax H.3-

TRANSIENCE
H.4-
Property Tax
H.5+
Sales Tax H6 (a, b, c)

Personal Income

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Data & Method
 Rich multi-source secondary data: including BWC, ODOD,
Ohio Department of Taxation, Bureau of Census, Bureau of
economic analysis, SBA, and FDIC
 Panel data (2001 – 2004), 88 counties, 352 observations
 Random – Effects generalized Least squares regression
 Robust estimation of standard errors
 Wald χ2 statistics
 D.V: Rate of Net transience (Transience/Actives)
 Net Transiencei(t) = [Activesi (t) – Activesi (t-1)] – [Newi (t) – Cancelledi (t) – Bankrupti (t)]

 IVs:
 Educational attainment (% of adult population with
Bachelors degree or higher)
 Enterprise Zones (# of active EZ/# of municipalities)
 Tax Rates: Sales, income, property – class II
 Controls
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Results
Interaction plots

0.600

0.400
Low Income
Net Transience

0.200
Mean Income

0.000
High Income

-0.200

-0.400
40 45 50 55 60
-0.600
Average Property Tax Rate

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Interaction plots …

0.600

0.400 High Income

Net Transience

0.200

0.000
Mean Income

-0.200

-0.400
Low Income
-0.600
0.750 0.950 1.150 1.350
Sales Tax Rate

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Discussions
 Importance of policy variables
 The importance of human capital
 No direct effect of creation of special
economic zones
 Moderating effect of average income
 Exploratory study

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 Questions, Comments,
Suggestions?

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