Research in Entrepreneurship
Saxon, N., Tosun, M. & Yang, J.: State and Local Sales Taxes and Business Activity in the United States
In this paper, we are examining the relationship between sales taxation and business activity by utilizing county-level business data and sales tax rates for the period 2002-2011. We find that there is indeed a significant negative impact on business payroll, regardless of industry, an almost similar impact on employment, and mixed and somewhat inconsistent results for establishments, indicating that establishments (including small businesses) may not be responding significantly to short-run sales tax rate changes. Further, we confirm at this level of data the portion of literature indicating that manufacturing is strongly and negatively impacted by sales taxes. An interesting result between annual payroll and employment is that annual payroll is much more easily negatively impacted by a sales tax rate increase, suggesting that businesses in general in a county tend to respond to a sales tax rate increase first, or more directly, by reducing payroll more than they do by reducing employment.
Pippin, S., Tchigriaeva, E. & Tosun, M. Business Entity Choice, Entrepreneurship and State Tax Policy
This paper examines federal income tax returns filed for different business entity types during the 2005-2013 period. Preliminary analysis shows that the percentage of C corporations, S corporations, and partnerships varies significantly across states and time. More specifically, the percentages range from 2% to 66% of all entity returns for C corporations (filing form 1120), 2% to 73% of all entity returns for S corporations (filing form 1120S), and 15% to 91% of all entity returns for Partnerships (filing form 1065). These differences could be due to cross-state (and time-series) variations in economic structures, certain demographics, tax policy and legal environments. Consequently, the focus of our analysis is to determine the role played by tax policy and also understand other factors behind business entity choice.
The most obvious answer for the significant cross state and time variation of business entity choice is that certain entities are treated differently in different states with regard to their tax status and other legal issues. In other words, different legal (and tax) environments in different states and/or changes of the legal (and tax) environments over time will lead to different entity choices. However, an initial analysis comparing certain state statutes and costs of entity formation and operation suggest that this is not always the case.
Alternatively, business owners may choose different entities because of the type of business, the projected outlook of the company, and/or the current and future owners. Smaller businesses where the owners have no interest in taking the company public are more likely to choose an unincorporated business entity (partnership or LLC). It is also possible that family businesses are more likely to be unincorporated (flow-through) entities that allow for more flexibility when assigning income to the business owners. Thus, this study also examines whether business entity choices are affected by demographic variables and economic differences such as industry and business sectors. We believe that demonstrating how these factors correlate to business entity choices will paint a picture of the culture of entrepreneurship in different states and across time.
The results of this study add to the growing literature discussing business climate - specifically in the context of entrepreneurship - at the state and local level. To our knowledge our paper is the first to examine federal income tax return data and entity choices with the purpose of determining why certain entities may be more prevalent in some areas of the country (and for certain time periods) compared to others.
We use the data from the Internal Revenue Service ("IRS") website for the proportion of C corporations, S corporations, and partnership income tax returns filed in the past ten years. For the demographic and some of the economic, socio-economic, and business data we use information from the Census Bureau as well as the Bureau of Labor statistics. Certain state information, such as state income tax rates for different business entity types, was collected from the CCH State Tax Handbook and from the States' taxing authorities' websites.
The study starts with an overview of the information available summarizing all information for the 50 states and across the ten year period. We show graphically and in table form the significant variation of business entity tax returns filed and formulate our research questions and hypotheses accordingly. Next, we employ regression analysis to examine the impact of economic, demographic, fiscal and legal environments on business entity choice. We show that while legal and tax environment are important these are not the only factors affecting what kind of entity is formed.
Wieland, A., Huang, L., & McKelvey, W. (Working paper). Cognitions and Decisions: An Exploration of Gender and Entrepreneurial Choice
Recent research suggests that women are disadvantaged when entering and pursing entrepreneurial opportunities supposedly due to the incongruity between feminine gender norms and the entrepreneurial role. This research draws from social-cognitive psychology and judgment and decision making research to explore the specific factors that influence decisions to pursue various kinds of venture opportunities both for men and women. A conceptual model is presented and tested using SEM which explores the influence of gender congruity of venture selection while estimating the influence of state self-efficacy, anticipated social resources, perceived risk and venture desirability. As expected, findings support the strong effect of gender congruence on cognitions related to venture risk, desirability and state self-efficacy. Interestingly, findings indicate that women, but not men, evaluate anticipated social support when making decisions about which ventures to pursue, and the relationship between gender congruency of entrepreneurial opportunity becomes insignificant when including all the variables in the model.
Gupta, V., Wieland, A. & Turban, D. (Under Review). What's good for the gander is not always good for the goose: Contextual variations in gender stereotypes about entrepreneurs
Substantial research within the management literature has emphasized the role of gender stereotypes in influencing entry and success in various occupational roles. The present study investigates gender stereotypical beliefs associated with entrepreneurship, and the relationship of perceiver gender and type of entrepreneurial role with stereotypes about entrepreneurship. We randomly assigned participants to complete the Schien Descriptive Index describing one of several target stimuli (entrepreneurs in general, men, women, entrepreneurs running rapid-growth ventures, entrepreneurs running slow-growth ventures, commercial entrepreneurs, or social entrepreneurs). We found that male and female respondents do not always agree on the stereotypic gendered characterizations about entrepreneurship. Specifically, although entrepreneurs and the various entrepreneurial roles are seen as masculine by men and women, only women, but not men, also perceive some overlap between feminine characteristics and attributes ascribed to entrepreneurs running commercial ventures and high-growth ventures. Practical implications and directions for future research are discussed. These results indicate that women have a somewhat broader repertoire of the characteristics associated with entrepreneurs, although they too, like men, place a strong emphasis on masculine attributes for entrepreneurship. Practical implications and directions for future research are discussed.
Hsu, D., Wieland, A. & Simmons, S. (Research in Progress). Entrepreneurship Experimental Research Methods: What's Been Done, What's Left to Do.
An exploration of the experimental research methods employed to date, including randomized, quasi, field and natural experiments. Opportunities are highlighted that would benefit from the greater use and inclusion of experimental methods in entrepreneurship research.