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on Small Business Management |
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Issue of 2018‒03‒26
thirteen papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | Economidou, Claire (University of Piraeus); Grillo, Luca (Politecnico di Milano); Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Sanders, Mark (Utrecht University School of Economics) |
| Abstract: | In this paper, we introduce a special issue of Small Business Economics on Financial and Institutional Reforms for an Entrepreneurial Society in Europe. There are many reasons for Europe to want to make the transition to a more entrepreneurial society. And for decades now, policy makers are trying to bring that transition about with variations on the “educate, deregulate and finance”- approach to entrepreneurship. We argue that more fundamental reforms are required to improve the entrepreneurial ecosystem and bring about this transition. We then discuss the twelve contributions that pertain to five different facets of the entrepreneurial ecosystem. The first two papers address the most fundamental institutional foundations of the ecosystem. The next three papers discuss the (lack of) access to knowledge and incentives to start innovative entrepreneurial ventures. That is followed by three papers that focus on the institutions that (fail to) channel financial resources to such ventures and two papers that analyze the relevance of labor market institutions. The special issue concludes with two papers investigating how the interplay of institutions and productive entrepreneurship results in economic growth. |
| Keywords: | Entrepreneurship; Institutions; Reform; European Union; Innovation |
| JEL: | D02 L26 O38 O43 P11 |
| Date: | 2018–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1203&r=sbm |
| By: | Robert W. Fairlie; Frank M. 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. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp959&r=sbm |
| By: | Hong, Suting (Shanghai Tech University); Serfes, Konstantinos (Drexel University); Thiele, Veikko (Queen's University) |
| Abstract: | We examine the effect of a competitive supply of venture capital (VC) on the success rates of VC-backed startup companies (e.g. IPOs). We first develop a matching model of the VC market with heterogeneous entrepreneurs and VC firms, and double-sided moral hazard. Our model identifies a non-monotone relationship between VC competition and successful exits: a more competitive VC market increases the likelihood of a successful exit for startups with low quality projects (backed by less experienced VC firms in the matching equilibrium), but it decreases the likelihood for startups with high quality projects (backed by more experienced VC firms). Despite this non-monotone effect on success rates, we find that VC competition leads to higher valuations of all VC-backed startups. We then test these predictions using VC data from Thomson One, and find robust empirical support. The differential effect of VC competition has a profound impact on entrepreneurship policies that promote VC investments. |
| Keywords: | entrepreneurship; venture capital; matching; double-sided moral hazard; exit; IPO |
| JEL: | C78 D86 G24 L26 M13 |
| Date: | 2018–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2018_002&r=sbm |
| By: | Giovanni Ferri (LUMSA University); Raoul Minetti (Michigan State University); Pierluigi Murro (LUMSA University) |
| Abstract: | Using a rich sample of small and medium-sized European firms, we study how banks' lending technologies affected firms' export activities during the 2009 great trade collapse. We find that bank-firm relationships mitigated the contraction of firms' export by easing banks' access to inside, "soft" information on export prospects. However, relationship banks with strong past experience on firms' domestic activities were less inclined to protect exporters. Bank-firm relationships appear to be a buffer especially for young and small exporters and for exporters at an early stage of internationalization. |
| Keywords: | Bank-Firm Relationships, Lending Technologies, Trade |
| JEL: | G21 D82 F10 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:lsa:wpaper:wpc26&r=sbm |
| By: | Jeremie Bertrand (ISA Lille); Pierluigi Murro (LUMSA University) |
| Abstract: | Despite its importance to the funding of small enterprises (SMEs), the question of how trade credit is used has not been fully answered. Recently, Uchida et al. (2013) showed that trade creditors can act as relationship lenders. To advance this result, we study the use of trade credit as a substitute for relationship lending credit when firms cannot otherwise obtain such credit. Using a sample of SMEs from the Survey of Italian Manufacturing Firms, we show that when opaque firms seeking relationship credit encounter transactional banks, they retain a greater portion of trade credit in their loans. These firms thus substitute trade credit for their missing relationship credit, because trade creditors are better evaluators of firms than are transactional lenders. The results depend on the size and age of the firm, the nature of the bank, and the size of the firm’s banking pool. |
| Keywords: | Banks, Lending Technologies, Small Business, Trade Credit |
| JEL: | G21 L14 L22 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:lsa:wpaper:wpc25&r=sbm |
| By: | Mário Alexandre Patrício Martins da Silva (Faculdade de Economia da Universidade do Porto) |
| Abstract: | In this paper, the commitment to a policy of know-how trading by the participants in an industry is explained by the firms’ attempt to induce the equilibrium of a single industry-wide cooperative research joint venture. In a repeated game framework, we show that pre-commitments by non-cooperative firms to disclose their own know-how to the industry can be effective in inducing cooperative R&D investments by the participants. |
| Keywords: | Cooperative R&D, Know-how trading, Policy |
| JEL: | L13 O31 O33 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:601&r=sbm |
| By: | Wilfried A. KOUAMÉ (Banque Mondiale); Sampawende J.-A. TAPSOBA (Fonds monétaire international) |
| Abstract: | This paper assesses the effects of structural reforms on firm-level productivity for 37 developing countries from 2006 to 2014 period. It takes advantage of the IMF Monitoring of Fund Arrangements dataset for reform indexes and the World Bank Enterprise Surveys for firm-level productivity. The paper highlights the following results. Structural reforms such as financial, fiscal, real sector, and trade reforms, significantly improve firm-level productivity. Interestingly, real sector reforms have the most sizeable effects on firm-level productivity. The relationship between structural reforms and firm-level productivity is nonlinear and shaped by some firms’ characteristics such as the financial access, the distortionary environment, and the size of firms. The pace of structural reforms matters since being a “strong reformer” is associated with a clear productivity dividend for firms. Finally, except for financial and trade reforms, all structural reforms under consideration are bilaterally complementary in improving firm-level productivity. These findings are robust to several sensitivity checks including alternatives methodology and measure of productivity, and a counterfactual experiment based on unsuccessful reforms. |
| Keywords: | Structural Reforms, Firm-level productivity, Developing countries |
| JEL: | D22 O16 O23 O24 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:4212&r=sbm |
| By: | Giovanni Marin (Università di Urbino 'Carlo Bo', Italy); Antonello Zanfei (Università di Urbino 'Carlo Bo', Italy) |
| Abstract: | This paper evaluates the effect of host-country environmental policy stringency on the offshoring of environmental patents for 2000 top world R&D performers. It is shown that a more stringent environmental regulation triggers both the extensive and intensive margin of patent offshoring in the field of environmental technologies. Results are robust to various different specifications, alternative definitions of regulation restrictions and to the consideration of possible endogeneity of regulation. It is suggested inter alia that R&D subsidies and non-market based instrument are more important than market-based instruments as drivers of cross-border environmental innovation. |
| Keywords: | MNE, environmental policy, patent data |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:0518&r=sbm |
| By: | Nobuyoshi Yamori (Research Institute for Economics and Business Administration (RIEB), Kobe University, Japan) |
| Abstract: | In June 2017, the Japanese Diet passed “the Act on the Partial Revision of the Small and Medium-sized Enterprise Credit Insurance Act to Promote Improvements and Developments of SME's Business Management” (Credit Guarantee System Reform Act in short) in order to enhance the roles that credit-guarantee system plays in terms of supporting SMEs. In this paper, the author, who was a member of the Small and Medium Enterprise Policy-Making Council's Financial Working Group (the Financial WG), tries to explain what this reform aims. |
| Keywords: | Credit guarantee, SMEs, Bank, Government support, Japan |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2018-03&r=sbm |
| By: | G. Cette; S. Corde; R. Lecat |
| Abstract: | The productivity slowdown has been analysed as an effect of weaker technological progress, of the digital economy or of a less efficient reallocation process. Using data on firms operating in France, we highlight that, at the technological frontier, productivity has accelerated, especially over the recent period, which contradicts the hypothesis of a decline in innovation. The most productive firms in a given year do not, however, improve their relative advantage. The convergence of firms’ productivity does not seem to have slowed down in the 2000s, which does not confirm the hypothesis of a decrease in the dissemination of innovation. On the other hand, the dispersion of productivity between firms has increased, which suggests growing difficulties in reallocating production factors, labour and capital, between firms. |
| Keywords: | total factor productivity, dissemination of innovation. |
| JEL: | E22 L11 O47 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:662&r=sbm |
| By: | Klimczuk-Kochańska, Magdalena |
| Abstract: | Currently obtaining and maintaining a competitive advantage require implementation of innovation in companies. This trend is mainly caused by the rapid development cycle of technologies. Thus, there is a question of adaptability especially regarding introducing innovation. It can be assumed that cooperation between entities at various stages of the business development is increasingly important and large enterprises from the agri-food industry are willing to interact with startups. This interaction may allow startups to overcome the difficulties that are emerging at the early stage of the development such as the problem of delivering the reliable proof of concept. The goal of this paper is an analysis of cooperation and use of the synergies between large enterprises and startups especially in order to address needs of innovation in the economy. The cooperation can take various forms, and this paper will discuss selected types of collaboration between large enterprises and startups, which are related to business acceleration activities, co-development, co-branding, acquisitions, and acqui-hire. |
| Keywords: | acqui-hire, acquisition, agri-food industry, co-branding, co-development, forms of cooperation, startups |
| JEL: | C71 L66 O16 P12 Q13 Q18 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:84756&r=sbm |
| By: | Teresa Farinha Fernandes; Pierre-Alexandre Balland; Andrea Morrison; Ron Boschma |
| Abstract: | There is ample evidence of regions diversifying in new occupations that are related to pre- existing activities in the region. However, it is still poorly understood through which mechanisms related diversification operates. To unpack relatedness, we distinguish between three mechanisms: complementarity (interdependent tasks), similarity (sharing similar skills) and local synergy (based on pure co-location). We propose a measure for each of these relatedness dimensions and assess their impact on the evolution of the occupational structure of 389 US Metropolitan Statistical Areas (MSA) for the period 2005-2016. Our findings show that new jobs appearing in MSA?s are related to existing ones, while those more likely to disappear are more unrelated to a city?s jobs' portfolio. We found that all three relatedness dimensions matter, but local synergy shows the largest impact on entry and exit of jobs in US cities. |
| Keywords: | evolutionary economic geography, regional capabilities, jobs, skills, relatedness, similarity, complementarity, local synergy, US cities |
| JEL: | J24 O18 R10 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1813&r=sbm |
| By: | Dalton, Patricio (Tilburg University, Center For Economic Research); Rüschenpöhler, Julius (Tilburg University, Center For Economic Research); Zia, Bilal |
| Abstract: | Small-scale entrepreneurs are ubiquitous in developing countries, yet very few graduate to become larger businesses. We ask whether such entrepreneurs even aspire to grow, and if so on which dimensions of the business? Among a representative sample of retail shop owners in Jakarta, we find that the average business has strong short- and long-term aspirations for growth in shop size, number of employees, number of customers, and sales. Yet, there is pronounced heterogeneity with more than half the businesses reporting no aspirations for growth in the next 12 months, and 16 percent failing to imagine an ideal business over the long-term. We find that entrepreneurs with low profits, business skills, and agency beliefs, as well as those who are older, female, and less educated have significantly lower aspirations. We also show that aspirations predict future-oriented behaviors such as savings, credit use, business expansion, and innovation, even after controlling for business practices. These results have important implications for the design and targeting of business growth programs and policies. |
| Keywords: | aspirations; micro-enterprises; innovation; small business growth; firm performance; technology adoption; self-efficacy; locus of control |
| JEL: | O12 L26 M20 O17 M50 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:5208b11c-cf81-45bc-9dd7-e7f81d2ea9b8&r=sbm |