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on Small Business Management |
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Issue of 2009‒11‒21
six papers chosen by Joao Carlos Correia Leitao Polytechnic Institute of Portalegre and Technical University of Lisbon |
| By: | William Kerr; Ramana Nanda |
| Abstract: | Financing constraints are one of the biggest concerns impacting potential entrepreneurs around the world. Given the important role that entrepreneurship is believed to play in the process of economic growth, alleviating financing constraints for would-be entrepreneurs is also an important goal for policymakers worldwide. We review two major streams of research examining the relevance of financing constraints for entrepreneurship. We then introduce a framework that provides a unified perspective on these research streams, thereby highlighting some important areas for future research and policy analysis in entrepreneurial finance. |
| JEL: | E44 G21 L26 M13 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15498&r=sbm |
| By: | Agustí Segarra (GRIT, Universitat Rovira Virgili); Mercedes Teruel (GRIT, Universitat Rovira Virgili) |
| Abstract: | This paper analyses the impact of different sources of finance on the growth of firms. Using panel data from Spanish manufacturing firms for the period 2000-2006, we investigate the effects of internal and external finances on firm growth. In particular, we examine three dimensions of these financial sources: a) the performance of the firms’ capital structure in accordance with firm size; b) the effects of internal and external financial sources on growth performance; c) the combined effect of equity, external debt and cash flow on firm growth. We find that low-growth firms are sensitive to cash flow and short-term bank debt, while high-growth firms are more sensitive to long-term debt. Furthermore, equity capital seems to reduce barriers to external finance. Our main conclusion is that during the start-up phase, firms are unable to increase their financial leverage and so their capital structure fails to promote correct investment strategies. However, as their equity capital increases, alternative financial mechanisms, in particular long-term debt, become available, which have a positive impact on firm growth. |
| Keywords: | firm growth, small firms. |
| JEL: | L25 R12 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:xrp:wpaper:xreap2009-11&r=sbm |
| By: | Jaumandreu, Jordi (IESE Business School) |
| Abstract: | This paper addresses the recent evolution of productivity and competitiveness in Catalonia and their links with the innovation activity of firms. Firstly, it summarizes the evolution of productivity, competitiveness, firms' strategies and the state of innovation. A slowdown in productivity growth and increasing revealed difficulties in some world markets are real, and the weakness of innovation may be a reason. The paper then quantifies some of the links between innovation, productivity and competitiveness. Innovation has a positive impact on productivity and competitiveness. First of all, innovation expenditures induce cost advantages and these cost advantages are a significant explanation for firms' exports. Furthermore, product innovation helps exports, too. Moreover, R&D activities in Catalonia benefit from high spillovers, and productivity impact is even higher when firms develop R&D activities outside as well. Despite all this, the current level of innovation expenditure is comparatively low and shows signs of lack of dynamism. Firms need to switch from the current equilibrium to the requirements of the coming years. |
| Keywords: | Labor productivity; Competitiveness; innovation; cost; |
| Date: | 2009–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0804&r=sbm |
| By: | Giulio Cainelli (Dipartimento per lo Studio delle Società Mediterranee, Università degli Studi di Bari); Donato Iacobucci (Dipartimento di Ingegneria Informatica, Gestionale e dell’Automazione, Università Politecnica delle Marche) |
| Abstract: | This paper aims to show that the business group – i.e. the set of firms under common ownership and control – is the most appropriate unit to study the behavior and organization of firms and define their boundaries. Particular emphasis is given to notions such as unitary direction – i.e. the influence over strategic decisions – and administrative co-ordination which allow owners to exercise supervision and authority over the controlled companies. |
| Keywords: | business group; boundary of the firm; unitary direction |
| JEL: | L2 M2 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:cme:wpaper:0905&r=sbm |
| By: | Silvia Ardagna; Annamaria Lusardi |
| Abstract: | We use cross-national harmonized micro data from a broad sample of developed and developing countries and investigate the heterogeneity of the effect of entry, contract enforcement regulation, and financial development on both the decision to become an entrepreneur and the level of employment of newly created businesses. We focus on the interaction between the level of regulation and financial development and some individual characteristics that are important determinants of entrepreneurship, such as gender, business skills, and social networks. We find that entry regulation moderates the effect of business skills, while accentuating the effect of gender, even after accounting for the level of financial development. Specifically, women are more likely to enter into entrepreneurship in countries with higher levels of entry regulation, but mainly because they cannot find better work. This effect is also more pronounced in countries that are less financially developed. Furthermore, individuals who report having business skills are less likely to enter entrepreneurship in countries with higher entry regulation. Finally, we also find that individuals who know other entrepreneurs are less likely to start large businesses in countries with higher levels of entry and contract enforcement regulation. |
| JEL: | K23 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15510&r=sbm |
| By: | Sabrina Di Addario (Bank of Italy); Daniela Vuri (University of Rome Tor Vergata) |
| Abstract: | We analyze empirically the effects of urban agglomeration on Italian college graduates’ work possibilities as entrepreneurs three years after graduation. We find that each 100,000 inhabitant-increase in the size of the individual’s province of work reduces the chances of being an entrepreneur by0.2 per cent. This result is robust to controlling for regional fix effects and to instrumenting urbanization with three different sets of instruments. However, a positive urbanization externality emerges after taking into account urban amenities and dis-amenities, and, above all, provinces’ competition and cost of labor. In this case, every 100,000 inhabitant-increase raises the chance of entrepreneurship by 2.4 percent. Finally, as long as they succeed in entering the largest markets, young entrepreneurs are able to reap off the benefits of urbanization externalities: every 100,000 inhabitant-increase in the province’s population raises entrepreneurs’ net hourly income by 0.2 percent. |
| Keywords: | Labor market transitions; Urbanization |
| JEL: | R12 J24 J21 |
| Date: | 2009–11–17 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:280&r=sbm |