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on Small Business Management |
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Issue of 2017‒10‒08
sixteen papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | Peters, Bettina; Hud, Martin; Dachs, Bernhard; Köhler, Christian |
| Abstract: | We investigate employment effects of innovations over the business cycle using data of manufacturing firms from 26 EU countries for the period 1998-2010. Using a structural model, our empirical analysis reveals three important findings: 1) The net effect of product innovation on employment growth is pro-cyclical. It is positive in all BC phases except for the recession. 2) Product innovators are more resilient to recessions than non-product innovators. 3) We only find resilience for SMEs. |
| JEL: | O33 J23 C26 D2 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168211&r=sbm |
| By: | Moder, Isabella; Bonifai, Niccolò |
| Abstract: | Limited access to finance is one of the main obstacles for firms located in the Western Balkans and hampers economic growth as well as the transmission of monetary policy. The aim of this paper is to undertake an in-depth analysis of access to finance constraints in this region, where countries as EU candidates or potential candidates have a prospect of joining the European Union. Besides touching upon macroeconomic and banking sector indicators that influence access to finance, this paper empirically assesses firm-level factors that determine whether a firm operating in the Western Balkans is credit-constrained, both in actual and perceived terms. In line with the literature, the results suggest that size, age, location, being audited, having outstanding loans and expectations about future performance matter for actual credit availability. The econometric analysis is complemented by a review of the Western Balkan countries’ Economic Reform Programmes, which indicate that financing constraints are tackled by most national authorities through specific policy measures, mostly for small and medium-sized enterprises. JEL Classification: E22, G30, O16 |
| Keywords: | economic development, financing constraints, SMEs |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:2017197&r=sbm |
| By: | Monica Plechero (Dept. of Management, Università Ca' Foscari Venice) |
| Abstract: | The paper investigates the mechatronics industrial district of the Veneto region, key for Industry 4.0 and for pursuing development opportunities related to smart specialization strategies. It shows how firms of a local system can gain competitiveness from different modalities of participation to processes of globalization of innovation. Firms' size matters when exploiting own innovation in the international markets, but it is not essential for linking to specific external knowledge sources which can sustain the injection of new knowledge into the system and help firms increase their innovation performances. |
| Keywords: | Industrial district, innovation, internationalization, global innovation network, mechatronics, Veneto region |
| JEL: | R11 F23 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:vnm:wpdman:144&r=sbm |
| By: | C. Cahn; M. Girotti; A. Landier |
| Abstract: | We analyze how public information on past entrepreneurial failure affects entrepreneurs’ ability to borrow. We exploit a policy shock from 2013 in France, which eliminated a highly salient public reporting to banks of managers involved in non-fraudulent corporate liquidations. We find that the flag removal makes failed entrepreneurs significantly more likely to restart a business or to borrow from a surviving business, despite the fact that bankers can find the failure information from other public sources for a small cost. Restarters create companies that have a higher probability of default. |
| Keywords: | Entrepreneurship, Access to credit, Bankruptcy. |
| JEL: | G33 L26 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:644&r=sbm |
| By: | Giannetti, Mariassunta; Liao, Guanmin; You, Jiaxing; Yu, Xiaoyun |
| Abstract: | We show that corruption affects negatively the performance of small entrepreneurial firms, which compete with corrupted industry peers. We exploit the Chinese anti-corruption campaign to establish causality and identify the channels through which corruption causes negative externalities. Small firms have lower sales growth in industries with high corruption, arguably because demand is diverted to the largest firms in their industries, which spend more in corrupting officials. Small firms also have higher financing costs in industries with high corruption and therefore invest less. Furthermore, corruption decreases the efficiency of labor and capital allocation and deters firm entry. |
| Keywords: | capital and labor allocation; China; corporate governance; Corruption |
| JEL: | D22 D62 G30 L20 O12 P26 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12345&r=sbm |
| By: | Murmann, Martin |
| Abstract: | Recent research based on aggregate data suggests that employment in young firms is more negatively impacted during economic crises than employment in incumbent firms. Using firm-level data, we show that under constant human capital of the firms' founders, employment growth in less than 1 1/2-year-old start-ups reacts countercyclically and employment growth in older start-ups reacts procyclically. The young start-ups realize their countercyclical growth by hiring qualified labor market entrants. |
| JEL: | E32 J23 L26 M13 L25 L11 D22 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168290&r=sbm |
| By: | Michael, Bryane |
| Abstract: | Brunei must enact an effective competition policy in order to participate as a member in regional trading blocs like the APEC, ASEAN and the Trans-Pacific Partnership. What effect would Brunei’s Competition Order have on Brunei – and specifically its small and medium enterprises or SMEs (the motor of non-petrol led growth)? We develop an indication of the scope of competition policy – and use that indicator in cross-country analysis to figure out competition’s effect on Brunei’s SMEs. Using back-of-the-envelope calculation methods, increasing competition under the status quo would likely cost Brunei US$100 million. Yet, if serious innovation policy tags along with Brunei’s expanding competition policy, Brunei’s SMEs could experience a $10 billion jump in GDP. Without policies to boost the effectiveness of the US$1.5 billion in Wawasan innovation spending, increased competition could harm Brunei’s SMEs. We identify the lack of Competition Commission independence and information dissemination. |
| Keywords: | antitrust,Brunei,competition policy,Competition Order |
| JEL: | K21 L44 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:169114&r=sbm |
| By: | Hansen Viriya (Universitas Multimedia Nusantara, Indonesia Author-2-Name: Rosita Suryaningsih Author-2-Workplace-Name: Universitas Multimedia Nusantara, Indonesia) |
| Abstract: | "Objective – The objective of this study is to observe the effects of managerial ownership, institutional ownership, dividend policy, firm growth, business risk, liquidity, and profitability on debt policy. Methodology/Technique – Using the purposive sampling method, secondary data were retrieved from 16 firms that fulfil the criteria of this study. Analysis was made through the multiple regression method. Findings – The results of this research indicate that: (1) managerial ownership has a significantly negative effect on debt policy, (2) institutional ownership has no positive effect on debt policy, (3) dividend policy has no negative effect on debt policy, (4) firm growth has no positive effect on debt policy, (5) business risk has a significantly positive effect on debt policy, (6) liquidity policy has a significantly negative effect on debt policy, (7) profitability has no negative effect on debt policy, (8) managerial ownership, institutional ownership, dividend policy, firm growth, business risk, liquidity, and profitability, simultaneously, have a significant effect on debt policy. Novelty – This study implies that all the independent variables are related to debt policy, simultaneously. This shows that the regression model has an appropriate fit in estimating the accrual value of the model." |
| Keywords: | "Business Risk, Debt Policy, Dividend Policy, Liquidity and Profitability, Managerial and Institutional Ownership." |
| JEL: | G32 G35 |
| Date: | 2017–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jfbr117&r=sbm |
| By: | Randall Jones; Yosuke Jin |
| Abstract: | Never in the past 30 years has productivity growth been lower than since the 2008 global financial crisis, and never has income inequality been higher than it is today in Japan, and in the OECD area. The two challenges have some common origins, including a widening productivity and wage gap between leading firms and those that are lagging. This creates scope for positive synergy between policies to promote productivity and inclusive growth. Exit policy should be improved to facilitate the closure of non-viable firms, whose survival hampers the growth of viable firms in Japan. This would also increase firm entry, along with policies to promote entrepreneurship. The growing gap between small and medium-sized enterprises and large firms also needs to be addressed. Breaking down labour market dualism, which limits human capital accumulation by non-regular workers and contributes to earnings and income inequality, is also a priority. Finally, ensuring appropriate skills, including those needed for digitalisation, would help support higher productivity and inclusive growth. This Working Paper relates to the 2017 OECD Economic Survey of Japan (www.oecd.org/eco/surveys/economic-surve y-japan.htm) |
| Keywords: | Abenomics, bankruptcy law, corporate governance, entrepreneurship, firm exit, human capital, income inequality, innovation, labour market dualism, product market regulation, productivity, SMEs |
| JEL: | J4 K3 O3 O4 |
| Date: | 2017–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1414-en&r=sbm |
| By: | J. David Brown; John S. Earle; Mee Jung Kim; Kyung Min Lee |
| Abstract: | We study the patterns and determinants of job creation for a large cohort of start-up firms. Analysis of the universe of U.S. employers reveals strong persistence in employment size from firm birth to age seven, with a small fraction of firms accounting for most employment at both ages, patterns that are little explained by finely disaggregated industry controls or amount of finance. Linking to data from the Survey of Business Owners on characteristics of 54,700 founders of 36,400 start-ups, and defining “high growth” as the top 5% of firms in the size distribution at age zero and seven, we find that women have a 30% lower probability of founding high-growth entrepreneurships at both ages. A similar gap for African-Americans at start-up disappears by age seven. Other differences with respect to race, ethnicity, and nativity are modest. Founder age is initially positively associated with high growth probability but the profile flattens after seven years and even becomes slightly negative. The education profile is initially concave, with advanced degree recipients no more likely to found high growth firms than high school graduates, but the former catch up to those with bachelor’s degrees by firm age seven, while the latter do not. Most other relationships of high growth with founder characteristics are highly persistent over time. Prior business ownership is strongly positively associated, and veteran experience negatively associated, with high growth. A larger founding team raises the probability of high growth, while diversity (by gender, age, race/ethnicity, or nativity) either lowers the probability or has little effect. More start-up capital raises the high-growth propensity of firms founded by a sole proprietor, women, minorities, immigrants, veterans, novice entrepreneurs, and those who are younger or with less education. Perhaps surprisingly, women, minorities, and those with less education tend to choose high growth industries, but fewer of them achieve high growth compared to their industry peers. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:17-53&r=sbm |
| By: | Raffaello Bronzini (Bank of Italy); Giampaolo Caramellino (London School of Economics); Silvia Magri (Bank of Italy) |
| Abstract: | Italian startups financed by venture capitalists (VCs) experience a faster growth in size and become more innovative compared with other startups. VC-backed firms also show a much larger increase in equity and a reduction in their leverage. This evidence is obtained by comparing a representative sample of firms financed by private VCs in the period 2004-2014 with a sample of firms rejected by VC at the very last stage of the screening process or in the due diligence phase. These firms narrowly lost the contest and before VC financing have very similar observable and unobservable characteristics to the VC-backed firms; self-selection is specifically taken into account. The effects on firms' size and innovation are not exclusively explained by equity financing. The results hold when we restrict the comparison to firms in the control group that also increase their equity from investors other than VCs: this suggests that VC effects can also be linked to their managerial expertise and network connection. Finally, the results are exclusively driven by independent VC investors compared with captive VCs. |
| Keywords: | venture capital, innovation, firm financial structure, differences-in-differences |
| JEL: | G21 G24 G32 O30 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1131_17&r=sbm |
| By: | Mirjam (C.M.) van Praag (Copenhagen Business School, University of Amsterdam, CEPR, IZA; Tinbergen Institute, The Netherlands); Arvid Raknerud (Statistics Norway, Norges Bank) |
| Abstract: | Empirical studies show low pecuniary returns of switching from wage employment to entrepreneurship. We reconsider the pecuniary gains of this switching by employing a two-stage procedure, where the randomness in the timing of inheritance transfers is used as an exclusion restriction to identify causal effects. The model is estimated on data covering the whole Norwegian population of individuals matched to the entire population of firms established in the period 2002–2011. The results indicate that the average returns to entrepreneurship are significantly negative for individuals entering entrepreneurship through self-employment and modest, but significantly positive, for incorporated startups. |
| Keywords: | Returns to entrepreneurship; Earnings distribution; Matched person-firm data; Self-employment; Random effects probit model |
| JEL: | L26 C23 J31 G32 |
| Date: | 2017–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20170089&r=sbm |
| By: | Roxana Gutiérrez-Romero; Luciana Mendez-Errico |
| Abstract: | This article assesses the extent to which historical levels of inequality affect the creation and survival of businesses over time. To this end, we use the Global Entrepreneurship Monitor (GEM) survey across 66 countries over 2005–2011. We complement this survey with data on income inequality dating back to early 1800s and current institutional environment, such as the number of procedures to start a new business, countries’ degree of financial inclusion, corruption and political stability. We find that although inequality increases the number of firms created out of need, inequality reduces entrepreneurial activity as in net terms businesses are less likely to be created and survive over time. These findings are robust to using different measures of inequality across different points in time and regions, even if excluding Latin America the most unequal region in the world. Our evidence then supports theories that argue early conditions, crucially inequality, influence development path. |
| Keywords: | Inequality; entrepreneurship; panel data; instrumental variables. |
| JEL: | M2 O1 D3 C23 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:83&r=sbm |
| By: | Sarah Miller; David Amirault; Laurent Martin |
| Abstract: | Since 1997, the Bank of Canada’s regional offices have been conducting the Business Outlook Survey (BOS), a quarterly survey of business conditions. Survey responses are gathered through face-to-face, confidential consultations with a sample of private sector firms representative of the various sectors, firm sizes and regions across Canada. Participation is voluntary and although efforts are made to encourage participation, some firms either do not respond to the Bank’s contact attempts or refuse to or cannot participate for various reasons, resulting in unit non-response. Using data for all firms contacted between 2009 and 2016, this paper analyzes the determinants of unit non-response including the impact of the tenure of the Bank’s survey booking teams. Difference-in-differences estimates suggest that new survey booking teams increase the probability of unit non-response. Building on previous findings, regression results also provide further support that some firm characteristics are associated with non-response, including firm size, ownership status, sector and participation history. There is little evidence to conclude that the effect linked to new booking teams differs significantly for new versus repeat firms. Finally, we find no statistically significant relationship between firms’ credit scores and unit non-response, and no obvious upward trend in the BOS non-response rate once other relevant factors have been taken into account. |
| Keywords: | Econometric and statistical methods, Firm dynamics, Regional economic developments |
| JEL: | C81 D22 C21 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocadp:17-11&r=sbm |
| By: | Roxana Gutiérrez (Queen Mary University of London. School of Business and Management); Luciana Méndez (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía) |
| Abstract: | This article assesses the extent to which historical levels of inequality affect the creation and survival of businesses over time. To this end, we use the Global Entrepreneurship Monitor (GEM) survey across 66 countries over 2005–2011. We complement this survey with data on income inequality dating back to early 1800s and current institutional environment, such as the number of procedures to start a new business, countries’ degree of financial inclusion, corruption and political stability. We find that although inequality increases the number of firms created out of need, inequality reduces entrepreneurial activity as in net terms businesses are less likely to be created and survive over time. These findings are robust to using different measures of inequality across different points in time and regions, even if excluding Latin America the most unequal region in the world. Our evidence then supports theories that argue early conditions, crucially inequality, influence development path. |
| Keywords: | Inequality; entrepreneurship; panel data; instrumental variables |
| JEL: | M2 O1 D3 C23 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ulr:wpaper:dt-10-17&r=sbm |
| By: | Nguyen Trong, Co; Vu Van, Huong; Bartolacci, Francesca |
| Abstract: | Using a panel dataset of five waves of private manufacturing SMEs surveys in the period 2007-15, this paper contributes to literature by considering for the first time the effects of government support on firms’ financial performance in Vietnam. Interestingly, contrary to the many findings of previous studies, we find that government assistance affect firms’ financial performance after controlling for heterogeneity, unobservable factors and dynamic endogeneity. This finding supports for the viewpoints of institutional theory. Also, the study shows that technical supports from government such as export promotion, human resource training and technology programmes have insignificant linkages with firm financial performance, but financial supports play an important role, suggesting that supporting measures as tax exemptions, soft loans and investment incentives promote financial efficiency and are vital for the development of Vietnamese private SMEs. |
| Keywords: | Government support, innovation, firm financial performance, SMEs, Vietnam |
| JEL: | D22 G3 |
| Date: | 2017–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:81752&r=sbm |