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on Small Business Management |
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Issue of 2018‒02‒26
thirteen papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | Pugsley, Benjamin; Sedlacek, Petr; Sterk, Vincent |
| Abstract: | Only half of all startups survive past the age of five and surviving businesses grow at vastly different speeds. Using micro data on employment in the population of U.S. businesses, we estimate that the lion's share of these differences is driven by ex-ante heterogeneity across firms, rather than by ex-post shocks. We embed such heterogeneity in a firm dynamics model and study how ex-ante differences shape the distribution of firm size, ``up-or-out'' dynamics, and the associated gains in aggregate output. ``Gazelles'' --a small subset of startups with particularly high growth potential-- emerge as key drivers of these outcomes. Analyzing changes in the distribution of ex-ante firm heterogeneity over time reveals that the birth rate and growth potential of gazelles has declined, creating substantial aggregate losses. |
| Keywords: | Big Data; Firm Dynamics; Macroeconomics; Startups |
| JEL: | D22 E23 E24 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12670&r=sbm |
| By: | Peters, Bettina; Riley, Rebecca R.; Siedschlag, Iulia; Vahter, Priit; McQuinni, John |
| Abstract: | This paper examines the links between internationalisation, innovation and productivity in service enterprises. For this purpose, we use micro data from the Community Innovation Survey 2008 in Germany, Ireland and the United Kingdom, and estimate an augmented structural model. Our empirical evidence highlights the importance of internationalisation in the context of innovation outputs in all three countries. Our results indicate that innovation in service enterprises is linked to higher productivity. Among the innovation types that we consider, the largest productivity returns were found for marketing innovations. |
| Keywords: | internationalisation of services,innovation,productivity |
| JEL: | L25 O31 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:18009&r=sbm |
| By: | Hvide, Hans K. (University of Bergen); Oyer, Paul (Stanford University) |
| Abstract: | We document three new facts about entrepreneurship. First, a majority of male entrepreneurs start a firm in the same or a closely related industry as their fathers' industry of employment. Second, this tendency is correlated with intelligence: higher-IQ entrepreneurs are less likely to follow their fathers. Third, an entrepreneur that starts a firm in the same 5-digit industry as where his father was employed tends to outperform entrepreneurs in the same industry whose fathers did not work in that industry. We consider various explanations for these facts and conclude that "dinner table human capital", where children obtain industry knowledge through their parents, is an important factor behind what type of firm is started and how well it performs. |
| Keywords: | entrepreneurship, human capital, IQ |
| JEL: | J24 L26 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11303&r=sbm |
| By: | Grillitsch, Markus (Lund University) |
| Abstract: | This paper proposes a conceptual and analytical framework for the development of place-based entrepreneurship and innovation policies aiming at industrial diversification. The starting point for this paper is the entrepreneurial ecosystem concept, which is frequently used to inform such policies. However, this concept does not specify the causal mechanisms driving industrial diversification. Furthermore, it remains questionable to what extent the concept can be applied to different regional contexts. In order to address these shortfalls, this paper i) discusses the barriers and opportunities for industrial diversification in different regional contexts, and ii) introduces a place-based policy framework for new industrial path development through entrepreneurship and innovation policies. |
| Keywords: | economic diversification; new industrial path development; innovation; entrepreneurship; entrepreneurial ecosystems; place-based policy |
| JEL: | L50 O10 O30 O38 R10 R58 |
| Date: | 2018–02–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2018_003&r=sbm |
| By: | Békés, Gábor; Muraközy, Balázs |
| Abstract: | How do firms enter international markets? To answer this question, this paper uses a unique multi-country firm-level dataset which, besides direct exporting and FDI, provides explicit information on a number of internationalization modes: indirect exporting, outsourced manufacturing and service FDI. We present a theoretical framework in which modes requiring higher and higher commitment have progressively higher fixed and lower marginal costs. By estimating multinomial and ordered logit models, we present evidence in line with such a sorting framework with respect to TFP and innovativeness. We identify three 'clusters' of modes: indirect exporters are similar to non-exporters, direct exporters and outsourced manufacturers constitute a second cluster while service and manufacturing FDI are the most demanding internationalization modes. |
| Keywords: | export; FDI; Firm Heterogeneity; internationalization mode; ordered logit; Outsourcing; sorting |
| JEL: | F14 F23 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12639&r=sbm |
| By: | Lorendana Fattorini (IMT School for advanced studies); Mahdi Ghodsi (The Vienna Institute for International Economic Studies); Armando Rungi (IMT School for advanced studies) |
| Abstract: | In this paper, we empirically test the effects of the EU ‘cohesion policy’ on the performance of about 500,000 European manufacturing firms after combining regional policy data at NUTS- 2 level with firm-level data. In a framework of heterogeneous firms and different absorptive capacity of regions, we show that financing of ‘cohesion policy’ by European Regional Development Fund (ERDF) aimed at direct investments in R&D correlates with improvement of firms’ productivity in a region. Conversely, funding designed at overall Business Support correlates with negative productivity growth rates. In both cases, we registered an asymmetric impact along the firms’ productivity distribution, where a stronger impact can be detected in the first quartile, i.e. less efficient firms in a region. We finally argue that considering the heterogeneity of firms allows a better assessment of the impact of ‘cohesion policy’ measures. |
| Keywords: | firm performance, total factor productivity, cross-country analysis, convergence, regional policy |
| JEL: | D22 D24 E23 F15 L25 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:ial:wpaper:2/2018&r=sbm |
| By: | Bijnens, Gert; Konings, Jozef |
| Abstract: | We build on Decker et al. (2016) who show that business dynamism and entrepreneurship in the U.S. have declined over recent decades and that the characteristics of this decline changed around 2000. Since 2000 the U.S. decline in dynamism has been accompanied by a decline in high-growth, young firms. Using 30 years of data from all for-profit firms incorporated in Belgium, we now offer evidence that Belgium, a far more rigid economy than the U.S., experienced a similar decline in dynamism. Furthermore, the decline set in around 2000 as well. We attribute this not only to the declining share of young firms that become high-growth firms, but more importantly also to the declining propensity for small (not necessarily young) firms to experience fast growth. We do not yet know what caused this decline. Since there are remarkable similarities between Belgium and the U.S. with respect to the secular decline in business dynamism, global trends rather than country specific changes are most likely to be at the basis of this evolution. A possible global trend causing dynamism to decline, is the ICT revolution that started the second half of the '90s. We find preliminary indications that industries with higher ICT intensity have experienced a dynamism trend change during that same period and show a steeper dynamism decline. |
| Keywords: | business dynamism; Entry; high-growth firms |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12615&r=sbm |
| By: | Stefano Cosma; Alessandro G. Grasso; Francesco Pagliacci; Alessia Pedrazzoli |
| Abstract: | Equity crowdfunding is an emerging financing tool that can help social start-ups and firms to bring people and resources together around a project. This paper focuses on equity crowdfunding. We look at this as a complementary financing channel useful for promoting innovation and social change by paring down the traditional features of financial investment. Our unique dataset regards all the Italian Equity Crowdfunding campaigns launched by different platforms on the Italian equity crowdfunding market from 2013 to 2018. Our aim is twofold: a) to describe some characteristics of the Italian Equity crowdfunding market; b) to describe the characteristics of the social firms which have had recourse to equity crowdfunding, in order to investigate which factors influence the campaign’s success. The results suggest that social firms’ investment offerings are not different from those of non-social ones, but so far, the Italian equity crowdfunding market does not seem suitable for supporting the financial needs of this type of firm, on the side of either investors or firms. |
| Keywords: | equity crowdfunding; sustainability; social enterprises; entrepreneurial finance |
| JEL: | G23 G24 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:mod:wcefin:18022&r=sbm |
| By: | YAMASHITA Nobuaki; YAMAUCHI Isamu |
| Abstract: | This paper examines innovation response of a panel of Japanese firms to the intensified import competition from China for the period 1994-2009. We build a comprehensive firm-level dataset linking innovation activities including patenting and research and development (R&D) merged to cross-industry measures of Chinese import competition. Carefully accounting for a simultaneity bias between innovation and importing and the possible heterogeneous effects across firms, it is found that firms filed for more patents in response to increased import competition from China. However, this effect is only evident for a group of globally engaged firms. At the same time, Chinese import competition has adversely affected the quality of innovation as measured by citations. Overall, firms with a more domestic market focus are the ones who have felt most of the Chinese import competition, which is also reflected in their declined R&D efforts. |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:17126&r=sbm |
| By: | Robert W. Fairlie; Frank Fossen |
| Abstract: | A common finding in the entrepreneurship literature is that business creation increases in recessions. This counter-cyclical pattern is examined by separating business creation into two components: “opportunity” and “necessity” entrepreneurship. Although there is general agreement in the previous literature on the conceptual distinction between these two factors driving entrepreneurship, there are many challenges to creating a definition that is both objective and empirically feasible. We propose an operational definition of opportunity versus necessity entrepreneurship using readily available nationally representative data. We create a distinction between the two types of entrepreneurship based on the entrepreneur’s prior work status that is consistent with the standard theoretical economic model of entrepreneurship. Using this definition we document that “opportunity” entrepreneurship is pro-cyclical and “necessity” entrepreneurship is counter-cyclical. We also find that “opportunity” vs. “necessity” entrepreneurship is associated with the creation of more growth-oriented businesses. The operational distinction proposed here may be useful for future research in entrepreneurship. |
| Keywords: | entrepreneurship, opportunity, necessity, self-employment, business cycle |
| JEL: | L26 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6854&r=sbm |
| By: | Brian Fabo (Centre for European Policy Studies); Miroslav BEBLAVY (Centre for European Policy Studies); Karolien LENAERTS (Centre for European Policy Studies); Zachary KILHOFFER (Centre for European Policy Studies) |
| Abstract: | The platform economy has become an important consideration within the European Commission’s Digital Economy agenda. By mapping the platform economy within the 28 European Union (EU) Member States, this report draws on a database of 200 service platforms active in Europe, and aims to serve as a resource for the development of a European policy response. It identifies a huge diversity of platforms within the EU in terms of size, geographical scope, services offered and business models. Further, the innovative potential of platforms is confirmed, notably the way in which they employ technology to facilitate socially beneficial activities, such as volunteering or ridesharing. At the same time, we note the tendency of a number of platforms to withhold information about their functioning. There are also inconsistencies in the treatment of service providers, whose autonomy in organising their work is quite limited even though their status is almost universally that of independent contractors, which raises questions about the protection of workers. The European platform environment comprises both domestic and international actors, with the latter usually being the market leaders. These platforms often operate across national boundaries, strengthening the case for EU-level intervention. |
| Keywords: | Digital labour platform, collaborative economy |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc109190&r=sbm |
| By: | Bratti, Massimiliano (University of Milan); De Benedictis, Luca (University of Macerata); Santoni, Gianluca (CEPII, Paris) |
| Abstract: | In this paper we highlight a new complementary channel to the business and social network effect à la Rauch (2001) through which immigrants generate increased export flows from the regions in which they settle to their countries of origin: they can become entrepreneurs. Using very small-scale (NUTS-3) administrative data on immigrants' location in Italy, the local presence of immigrant entrepreneurs (i.e. firms owned by foreign-born entrepreneurs) in the manufacturing sector, and on trade flows in manufacturing between Italian provinces and more than 200 foreign countries, we assess the causal relationship going from diasporas and immigrant entrepreneurs towards export flows. Both the size of the diaspora and the number of immigrant entrepreneurs have a positive, significant and economically meaningful effect on exports. We find that increasing the stock of (non-entrepreneur) immigrants by 10% would lead to a 1.7% increase in exports in manufacturing towards immigrants' countries of origin, while increasing the number of immigrant entrepreneurs in manufacturing by 10% would raise exports by about 0.6%. We also show that, besides these bilateral effects, the population of immigrant entrepreneurs raises a province's overall competitiveness and export flows towards all potential destinations. |
| Keywords: | exports, immigrants, gravity model, immigrant entrepreneurs, Italy |
| JEL: | F10 F14 F22 R10 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11280&r=sbm |
| By: | Moritz Lennert |
| Abstract: | In this paper, I present the results of ongoing experimentations with micro-data data of firms in order to develop better insights into the economic specialization and openness to trade of regions. Using newly developed indicators, one based on Huff-like models and another on Marcon and Puech's M function, I explore the possibilities offered by building analyses on the basis of point data instead of the classic regional aggregations. |
| Keywords: | Economic geography; Spatial concentration; Regional trade; Location quotient; Micro-data |
| JEL: | R12 F17 R15 R10 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/266631&r=sbm |