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Imperfect Transmission of Tacit Knowledge and Other Barriers to Entrepreneurship

Author

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  • Kanniainen, Vesa

    () (University of Helsinki)

  • Poutvaara, Panu

    () (University of Munich)

Abstract

This paper identifies several distortions which create barriers to entrepreneurship. First, in addition to the innate entry cost, there are entry costs caused by regulation. Second, union wage policies raise the opportunity cost of entrepreneurship. Third, inefficiencies in the transmission of tacit knowledge between generations of entrepreneurs can arise: with access to within-family ownership transfer, the outside market for entrepreneurship operates as a lemon’s market. This problem becomes relevant when the economic life of a business idea exceeds the active life of an entrepreneur.

Suggested Citation

  • Kanniainen, Vesa & Poutvaara, Panu, 2007. "Imperfect Transmission of Tacit Knowledge and Other Barriers to Entrepreneurship," IZA Discussion Papers 2859, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp2859
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    References listed on IDEAS

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    9. Vesa Kanniainen & Mikko Leppämäki, 2009. "Union power, entrepreneurial risk, and entrepreneurship," Small Business Economics, Springer, vol. 33(3), pages 293-302, October.
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    17. Vesa Kanniainen & Timo Vesala, 2000. "Enterprise Formation and Labor Market Institutions," CESifo Working Paper Series 359, CESifo.
    18. Robin Boadway & Michael Keen, 2006. "Financing and Taxing New Firms under Asymmetric Information," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(4), pages 471-502, December.
    19. Poutvaara Panu, 2002. "Income Redistribution and Risky Occupational Choices," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-19, July.
    20. David de Meza & David C. Webb, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 281-292.
    21. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    22. Vesa Kanniainen & Timo Vesala, 2000. "Enterprise Formation and Labor Market Institutions," CESifo Working Paper Series 359, CESifo.
    23. Parker,Simon C., 2006. "The Economics of Self-Employment and Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521030632, June.
    24. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-595, September.
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    Cited by:

    1. Thomas Gries & Wim Naudé, 2009. "When to Start a New Firm?: Modelling the Timing of Novice and Serial Entrepreneurs," WIDER Working Paper Series RP2009-39, World Institute for Development Economic Research (UNU-WIDER).
    2. James R. Hines & Niklas Potrafke & Marina Riem & Christoph Schinke, 2019. "Inter vivos transfers of ownership in family firms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(2), pages 225-256, April.
    3. Hessels, Jolanda & Brixy, Udo & Naudé, Wim & Gries, Thomas, 2014. "Skill Variety, Innovation and New Business Formation," IZA Discussion Papers 7889, Institute of Labor Economics (IZA).
    4. Wim Naudé, 2008. "Entrepreneurship in Economic Development," WIDER Working Paper Series RP2008-20, World Institute for Development Economic Research (UNU-WIDER).
    5. Thomas Gries & Wim Naudé, 2010. "Entrepreneurship and structural economic transformation," Small Business Economics, Springer, vol. 34(1), pages 13-29, January.
    6. repec:dau:papers:123456789/6913 is not listed on IDEAS

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    More about this item

    Keywords

    occupational choice; barriers to entrepreneurship; tacit knowledge;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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