nep-ent New Economics Papers
on Entrepreneurship
Issue of 2019‒02‒18
ten papers chosen by
Marcus Dejardin
Université de Namur

  1. Job creation in Colombia vs the U.S.: “up or out dynamics” meets “the life cycle of plants” By Marcela Eslava; John Haltiwanger; Alvaro Pinzón
  2. Cluster externalities, firm capabilities, and the recessionary shock: How the macro-to-micro-transition shapes firm performance during stable times and times of crisis By Christian Hundt; Linus Holtermann; Jonas Steeger; Johannes Bersch
  3. Firm Entry and Exit and Aggregate Growth By Asturias, Jose; Hur, Sewon; Kehoe, Timothy J.; Ruhl, Kim J.
  4. A multi-dimensional analysis on how different types of innovations impact SMEs business performance By Juan A. Sanchis-Llopis; Alfonso Expósito
  5. Managing Small Business Human Resources: An International Approach By Elkoussa, Hayssam; Williams, John
  6. SMEs’ financing: Divergence across Euro area countries? By S. ROUX; F. SAVIGNAC
  7. From boundary line to boundary space: The creation of hybrid organizations as a Triple Helix micro-foundation By Claire Champenois; Henry Etzkowitz
  8. “Technological cooperation and R&D outsourcing at the firm level: The role of the regional context ” By Damián Tojeiro-Rivero; Rosina Moreno
  9. Discovery and Diffusion of Digital Innovations – An Analysis of Enterprise Social Networks and Data-Driven Business Models By Engelbrecht, Adrian
  10. Product Innovation and Educational Diversity in Top and Middle Management Teams By Schubert, Torben; Tavassoli, Sam

  1. By: Marcela Eslava; John Haltiwanger; Alvaro Pinzón
    Abstract: There is growing consensus that a key difference between the U.S. and developing economies is that the latter exhibit slower employment growth over the life cycle of the average business. At the same time, the rapid post entry growth in the U.S. is driven by an "up or out dynamic". We track manufacturing establishments in Colombia vs. the US and find that slower average life cycle growth in Colombia is driven by a less enthusiastic contribution of extraordinary growth plants and less dynamic selection of young underperforming plants. As a consequence, the size distribution of non-micro plants exhibits more concentration in small-old plants in Colombia, both in unweighted and employment-weighted bases. These findings point to a shortage of high-growth entrepreneurship and a relatively high likelihood of long-run survival for small, likely unproductive plants, as two key elements at the heart of the development problem. An extreme concentration of resources in micro plants is the other distinguishing feature of the Colombian manufacturing sector vis a vis the US.
    Keywords: Entrepreneurship; SMEs; employment growth
    JEL: O47 O14
    Date: 2019–02–07
  2. By: Christian Hundt; Linus Holtermann; Jonas Steeger; Johannes Bersch
    Abstract: In this paper, we examine the macro-to-micro-transition of cluster externalities to firms and how it is affected by the macroeconomic instability caused by the recessionary shock of 2008/2009. Using data from 16,166 manufacturing and business services firms nested in 390 German regions, we employ within-firm regression techniques to estimate the impact of cross-level interactions between firm- and cluster-level determinants on phase-related differences in firm performance between a pre-crisis (2004-2007) and a crisis period (2009-2011). The empirical results validate the existence of a macro-to-micro-transition that evolves best in the case of broad firm-level capabilities and variety-driven externalities. Furthermore, the results indicate that the transition strongly depends on the macroeconomic cycle. While the transition particularly benefits from a stable macroeconomic environment (2004-2007), its mechanisms are interrupted when being exposed to economic turmoil (2009-2011). Yet, the crisis-induced interruption of the transition is mainly restricted to the national recession in 2009. As soon as the macroeconomic pressure diminishes (2010-2011), we observe a reversion of the transmission mechanisms to the pre-crisis level. Our study contributes to the existing literature by corroborating previous findings that the economic performance of firms depends on a working macro-to-micro transition of external re-sources, which presupposes sufficient cluster externalities and adequate firm-level combinative capabilities. In contrast to previous studies on this topic, the transition mechanism is not modeled as time-invariant. Instead, it is coupled to the prevailing macroeconomic regime.
    Keywords: Macro-to-micro-transition, combinative capabilities, agglomeration economies, cluster-level externalities, unrelated variety, related variety, macroeconomic regimes, Great Recession, economic resilience
    JEL: C33 R11 R58
    Date: 2019–02
  3. By: Asturias, Jose (Georgetown University Qatar); Hur, Sewon (Federal Reserve Bank of Cleveland); Kehoe, Timothy J. (Federal Reserve Bank of Minneapolis); Ruhl, Kim J. (University of Wisconsin)
    Abstract: Applying the Foster, Haltiwanger, and Krizan (FHK) (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that the entry and exit of plants account for a larger fraction of aggregate productivity growth during periods of fast GDP growth. Studies of other countries confirm this empirical relationship. To analyze this relationship, we develop a simple model of firm entry and exit based on Hopenhayn (1992) in which there are analytical expressions for the FHK decomposition. When we introduce reforms that reduce entry costs or reduce barriers to technology adoption into a calibrated model, we find that the entry and exit terms in the FHK decomposition become more important as GDP grows rapidly, just as they do in the data from Chile and Korea.
    Keywords: Entry; Exit; Productivity; Entry costs; Barriers to technology adoption;
    JEL: E22 O10 O38 O47
    Date: 2019–02–01
  4. By: Juan A. Sanchis-Llopis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Alfonso Expósito (Department of Economic Analysis and Political Economy, University of Seville, Calle San Fernando 4, 41004 Sevilla (Spain).)
    Abstract: This paper examines the impact of innovation decisions on business performance for small and medium-sized enterprises based on a multi-dimensional analytical approach. With this aim, the impact of the firm’s innovation decisions (in terms of the introduction of product, process, and/or organisational innovation) on four alternative performance indicators (two financial indicators: sales increase and cost reduction; and two operational indicators: increase of productive capacity and improvement in quality) is analysed. Additionally, an array of potential moderating determinants (such as firm and entrepreneur characteristics) are controlled for. Our findings highlight the existence of positive impacts of innovation decisions on both dimensions of business performance (financial and operational), but these impacts significantly differ depending on the type of innovation and the performance indicator considered. Thus, in order to study the multifaceted effects of innovation decisions made by the firm, results point out that the relationship between innovation (product, process, or organisational) and business performance should be analysed from a multi-dimensional approach. These findings imply significant implications for the design and implementation of innovation strategies in SMEs, since these should be tailored according to the business performance sought by the firm.
    Keywords: innovation, business performance, SMEs, Spain
    JEL: M21 L25 O30
    Date: 2019–02
  5. By: Elkoussa, Hayssam; Williams, John
    Abstract: While much of our knowledge concerning traditional HR topics (e.g., recruiting, compensation, or performance management) in large firms may also apply in small or emerging organizations, evidence suggests that new ventures are different and that management of people within them may not clearly map to management within larger, more established organizations. This paper reviews extant research on managing people within small and emerging ventures and highlights additional questions that have not yet been addressed. Our review suggests that as scholars, our understanding of the HR issues important to small and emerging firms is limited. While we have begun to understand how these firms should hire, reward, and perhaps even motivate their employees, we lack much of the theory and data necessary to understand how small and emerging firms train their employees, manage their performance, promote or handle organizational change, or respond to potential labor relations and political issues. The existing literature presents an often-confounded relationship between size and age, between the issues important to small firms and the issues important to young ones. Given the potential early HR decisions must impact the organization's downstream success, it is important that we understand how these functional areas of HR (as well as their integration and evolution) affect small and emerging firms, and how the HR decisions made during the formative stages of firm development impact the firm's long-term goals.
    Keywords: Emerging Small Business, ethical, Sustainable, Performance Management, entrepreneurial model
    JEL: M5 M51 M54 O2 O21
    Date: 2019–01–15
  6. By: S. ROUX (Insee, Crest et Ined); F. SAVIGNAC (Banque de France)
    Abstract: This paper studies the divergence/convergence process of European countries as regard the financing behavior of small and medium sized enterprises. Using a firm level and country representative survey, we construct country-time indicators of SMEs’ use of three external financing sources: bank loans, credit line/overdraft and trade credit. These indicators account for composition effects and demand effects. We find substantial differences between countries in the SMEs’ use of the three financing sources. In particular, the cross-country differences related to SMEs’ use of bank loans have significantly increased over the period 2010-2014. This divergence is not related to a global increase in the volatility of this use between countries. Instead, it has been driven by a sharper increase (resp decrease) in the countries where SMEs’ use was initially higher (resp. lower). Finally, we investigate whether SMEs’ uses of financing sources are correlated at the country level with various macroeconomic and banking structure indicators. The results suggest that indicators about banking concentration are good candidates to explain the cross-country divergence of SMEs’ use of bank loans.
    Keywords: credit constraints, bank financing, trade credit, institutional factors
    JEL: G31 G01 D22 C35
    Date: 2018
  7. By: Claire Champenois (Audencia Recherche - Audencia Business School); Henry Etzkowitz (University of London [London])
    Abstract: In a Triple Helix framework, independent hybrid organizations can be created at the intersection of overlapping yet separate institutional spheres to address innovation blockages. However, the formation process of these organizations, which incorporate and combine elements from the Triple Helix spheres, has seldom been investigated. We address this gap by proposing a model that conceptualizes the creation process of these organizations. We argue that their creation opens up a "boundary space" that differs from a boundary line. By comparing empirical results of three cases, we identify a three-step creation process (recognizing a gap; bringing Triple Helix representatives together and creating a consensus; and designing an ad hoc contingent solution). We highlight the individual role of a boundary spanner in these dynamics. The results provide new insights on the micro-foundations of the Triple Helix. They also suggest an extension of the "boundary spanner" concept.
    Keywords: Venture Creation,Innovation Organizer,Boundary Spanner,Triple Helix,New Venture,Entrepreneurship
    Date: 2018
  8. By: Damián Tojeiro-Rivero (AQR-IREA Research Group, University of Barcelona. Department of Econometrics, Statistics and Applied Economics. Av. Diagonal 690, 08034 Barcelona, Spain. Tel.(+34) 934 021 412.); Rosina Moreno (AQR-IREA Research Group, University of Barcelona. Av. Diagonal 690 - 08034 Barcelona (Spain). Tel. +34934021823 - Fax +34934021821.)
    Abstract: Much has been said about the role that technological networking activities play on the innovative performance of firms, but little is known about the relevance of the context where the firm is locate shaping the efficiency of such networking activities. In this article we hypothesize that the transformation of firms' networking activities into innovation may vary depending on the regional environment in which the firm is located. For Spanish manufactures in the period 2000-12 and through the use of a multilevel framework, we obtain that after controlling for the firm's characteristics, the regional context has not only a direct effect on firms' innovation performance, but it also conditions the returns to firms' networking activities, although differently in the case of cooperation and outsourcing. Cooperating in innovation activities is more beneficial for those firms located in a knowledge intensive region, whereas R&D outsourcing seems to be more profitable for firms in regions with a low knowledge pool.
    Keywords: Technological cooperation, R&D Outsourcing, Local Knowledge Spillovers; Multilevel; Panel data; Spanish Firms, Manufactures. JEL classification: D21, D22, O31, R10, R15
    Date: 2019–02
  9. By: Engelbrecht, Adrian
    Abstract: Digital technologies radically transform today’s organizations as they permeate both innovation processes and outcomes. While the potential of digital innovations is tremendous, many companies hardly realize the extensive benefits of digital technologies so far. Furthermore, the theoretical understanding of digital innovations is limited since scholars started to challenge the assumptions made in traditional innovation research due to digital technologies’ affordances. Therefore, this thesis seeks to improve the knowledge about digital innovations by analyzing their discovery and diffusion. The discovery of innovations relates to the development of ideas, which can result in new products, processes, or business models. It is essential to investigate companies’ innovation discovery as they often struggle to create innovative ideas and existing theory rarely incorporates the increasing diversity of employees involved in these processes. Papers A and B of this thesis address these issues by examining how Enterprise Social Networks (ESNs) facilitate employees’ innovation discovery. According to Communication Visibility Theory (CVT), the consideration of ESNs is crucial in this regard as they make employees’ everyday communication permanently visible, which provides a basis for acquiring new knowledge. Paper A validates and extends the newly developed CVT. By incorporating individuals employed in diverse contexts, it empirically supports the theory’s external validity. Therefore, different companies can draw on ESNs to foster their innovation discovery, which is made possible through improvements in employees’ meta-knowledge. Besides, the paper reveals that meta-knowledge is not merely formed in the long-run, as indicated by previous research, but in the short-run as well. Interestingly, it also shows that managers can gain more meta-knowledge using ESNs compared to non-managers, which is in contrast with prior literature’s findings. Paper B investigates when employees disclose information in ESNs, which is essential to attain high communication visibility and, in this way, to facilitate the discovery of innovations. To that end, the paper transfers theory on Online Social Networks (OSNs) to the ESN context. It finds that employees’ trusting and risk beliefs are associated with their information disclosure. Additionally, the paper reveals that a company’s group and development culture influence these beliefs, with error aversion culture transmitting the effect of development culture. Innovation diffusion relates to the distribution of a novel product, process, or business model across a group of target users. It is important to better understand the diffusion of digital innovations as companies often lack knowledge about why new offerings are rejected, which limits their chances of counteracting the underlying issues. Furthermore, digital technologies impact the innovation diffusion by blurring industry boundaries and facilitating competition. Papers C and D of this thesis investigate the diffusion of digital innovations in the context of data-driven business models. This context is especially affected by new competition arising across previous boundaries and, thus, necessary to analyze as diverse organizations have high incentives to utilize their data in new ways. Paper C analyzes which dimensions substantially differentiate between distinct data-driven business models. For this purpose, it leverages practitioners’ perceptions of business models obtained from a start-up database. Based on three identified dimensions, the paper creates a taxonomy that classifies the business models into eight ideal-typical categories. The number of business models present in each category provides insights into their diffusion. By offering basic knowledge about the nature of data-driven business models, the paper can be used as a foundation for future research that seeks to dig deeper into this new field and for companies that aim at developing data-driven business models. Paper D investigates how individuals evaluate data-driven services that are offered by highly diverse companies. Based on a qualitative study, the paper shows that individuals’ perception of fit between a service and its provider is crucial for their evaluations. It also reveals the dimensions that influence this perception. Additionally, it explores the consequences that come with a perception of fit. Using these results, the paper offers a new perspective on individuals’ service evaluations, which is vital to the diffusion of the services as well as the associated business models and helps organizations in developing and promoting data-driven services.
    Date: 2019
  10. By: Schubert, Torben (CIRCLE, Lund University); Tavassoli, Sam (RMIT University)
    Abstract: The effects of diversity in management teams on firm innovation have become an important topic in strategic management. With a few exceptions, however, the literature has focused on diversity in Top Management Teams (TMTs), while the role of lower management levels, particularly in Middle Management Teams (MMTs), has usually been neglected. In this paper, we intend to fill this gap by explicitly differentiating between the effects of diversity in TMTs and MMTs. By matching various firm-level and individual-level datasets, we compiled a linked employer-employee panel dataset for Sweden for the period 2004–2012. Focusing on measures of educational diversity, we find that the effects differ considerably between MMTs and TMTs. TMTs diversity determines whether firms engage in innovation activities at all (strategic decision), while MMTs diversity affects the actual outcome of innovation processes (successful product innovations and their degree of market novelty).
    Keywords: Product innovation; diversity; middle management; top management; firm performance
    JEL: M12 M14 O30
    Date: 2019–02–12

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