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on Entrepreneurship |
| By: | Giorgio Barba Navaretti (University of Milan and LdA); Giacomo Calzolari (European University Institute, CEPR and LdA); Gianmarco Ottaviano (Bocconi University, London School of Economics, CEP, CEPR and LdA); Alberto Franco Pozzolo (University of Molise and LdA) |
| Abstract: | One of the key aims of the CMU is easing the access of SMEs to credit and capital markets. This paper examines the role of SMEs in the European economy and their financial structure. It looks at the potential effects of the CMU, by specifically focusing on the informational market failures affecting SMEs finance. A fully integrated European Capital market will be beneficial to SMEs, and the European economy, if it does entice adequate large-scale technologies and actions to solve market failures related to informational issues. Otherwise, it may generate core-periphery outcomes, with peripheral regions and weakers SMEs further excluded from crucial sources of finance. |
| Date: | 2019–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:449&r=all |
| By: | Santarelli Enrico; Tran Hien |
| Abstract: | The aim of this paper is to find which of two theories of capital structure—trade-off theory or pecking order theory—best explains the capital structure decision of non-state firms during the post-transition process in Viet Nam. We also investigate the effect of human capital, institutional quality, and their interaction on the capital structure decision. For empirical evidence, we use a unique database provided by the CIEM-DANIDA project covering around 2,000 micro, small, and medium-sized enterprises in Viet Nam for each year from 2003 to 2014. We estimate our empirical models by employing the System Generalized Method of Moments estimator.Our findings suggest that the capital structure of Vietnamese firms is a balance between the trade-off theory and the pecking order theory. On one hand, accessing formal debts is extremely tough for young and non-state firms; they bootstrap themselves out of financial constraints by stretching and making the most of their internal resources and assets. On the other hand, those with access to formal sources take advantage of leverage tools from using formal loans to exploit the tax benefits against the costs of financial distress.Other noteworthy findings include: (i) profitability and debt tax shields are no longer significantly important when entrepreneurs adopt informal debt financing; (ii) high-quality institutions with transparent and fair credit rationing rules will enable firms to reduce their reliance on debt financing; and (iii) while human capital encourages entrepreneurs to obtain more loans, its interaction with institutional quality deters debt financing and favours other financial sources. |
| Keywords: | Pecking order theory,Trade-off theory,Capital Structure,Debts,Institutional quality,Human capital |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2018-66&r=all |
| By: | Newman Carol; O’Toole Conor; Kinghan Christina |
| Abstract: | In this paper, we explore the relationship between firm growth, access to finance, and the efficiency of capital allocation in Viet Nam over the period 2005–2015. Using data from the UNU-WIDER Viet Nam SME survey, we test whether firms with higher marginal returns to capital are more or less likely to get access to financing. This is a key test of how efficiently the financial system is functioning.We also test whether credit supply constraints are hindering capital allocation by limiting the investment and employment activities of firms with the highest marginal return on capital. A number of findings emerge. We find that high return investors, with the greatest marginal return on capital, have a lower likelihood of having formal finance (loans outstanding with formal credit institutions).We find evidence that rejected credit applications are limiting investment activity but not employment, particularly for firms with higher investment efficiency. This suggests a link between firm growth and a suboptimal allocation of credit. |
| Keywords: | Access to credit,Investment and access to finance,SME |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2018-67&r=all |
| By: | Chieu Trinh; Nguyen Tam |
| Abstract: | Slack resources are usually identified as an endogenous motivation for firms’ innovation. Still, it is crucial to assess the importance of slack in supporting innovation, especially in different institutional contexts.Therefore, the paper investigates the relationship by exploring a longitudinal dataset of 15,589 observations from about 2,500 surveyed manufacturing small and medium enterprises (SMEs) in Viet Nam. The analysis reveals that slack resources promote innovation in different ways.While the financial slack harms the efforts of introducing innovation, the presence of human resource slack encourages firms to engage more in innovation activities resulting in the introduction of new products or business processes.We further found that for firms located in a more favourable business environment the impact of human resource slack on innovation is less pronounced whereas the negative impact of financial slack is lessened. The above results enrich the current literature on the relationship between slack and innovation within an institutional context in emerging economies. |
| Keywords: | Slack,SMEs,Stewardship theory,Institutional economics,Behavioural Theory,Innovation,Institutional economics theory |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2018-78&r=all |
| By: | Tran Thi; La Hai |
| Abstract: | Using unbalanced panel data from the small and medium enterprise surveys in Viet Nam in 2005, 2007, 2009, 2011, 2013, and 2015, this paper investigates factors associated with informality in Viet Nam. We assume that household businesses, especially the top tier firms, become formal either because they perceive benefits of formalization such as an increase in the household performance, or because they want to escape bribes and harassment.Using the random effects model with controlling for the pre-formalization trends, our results show that productive household businesses stay informal because net costs from tax payment may surpass net benefits from formalization. Moreover, government controls do not promote formalization, especially among the ‘upper’ tiers of informal households.Our findings raise a suspicion of collusion corruption between informal households in the top tiers and government tax officials. This opens room for future qualitative and quantitative studies to investigate collusion corruption as a determinant of informality in developing countries. |
| Keywords: | Formal and informal,Household business,Informal sector |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2018-64&r=all |
| By: | Newman Carol; Tarp Finn; Narciso Gaia |
| Abstract: | How can development programmes reach out to remote communities? This paper presents experimental evidence on the impact of a role models intervention that aims to inspire ethnic minority households to start businesses and diversify income sources.The experiment took place in three provinces of the Northern highlands of Viet Nam. The research design enables us to disentangle the extent to which role models shift behaviour by providing information or inspiration.We find that despite successful implementation of the intervention, which was powered to detect reasonably small effects, and a high level of compliance, the role model intervention did not impact on income, livelihoods, or other welfare outcomes. This points to the difficulties involved in using role models to induce behavioural change in contexts where populations are severely marginalized and face a variety of binding constraints. |
| Keywords: | Role models,Rural areas,ethnic minorities,Entrepreneurship |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2018-185&r=all |
| By: | Le Son |
| Abstract: | The identification of potential innovation efforts plays an important role in evaluating the innovation process. The innovation efforts of firms in developing countries might be different to those of Western enterprises.This paper evaluates innovation processes in developing countries, especially the relationship between innovation efforts and outcomes. Instead of capturing only investment in research and development as in Western firms, the innovation efforts of firms in developing countries include investments in in-house research and development, technology acquisition, and other informal innovation activities.This research develops a mechanism to capture all innovation efforts based on firms’ characteristics, market features, and business environment. A predicted value of innovation investment is created which is intended to capture observed and latent innovation efforts.The results show that predicted innovation investment triggers innovation outcomes (jointly, product and process innovation outcomes) in the context of Vietnamese small- and medium-sized enterprises. |
| Keywords: | Small and medium enterprises,Developing countries,Innovation |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2019-7&r=all |
| By: | Hansen Henrik; Rand John; Tarp Finn; Trifkovi? Neda |
| Abstract: | Using data from a new survey of small and medium-sized enterprises in Myanmar, we analyse enterprise demand for formal credit and the extent to which they are constrained in the formal credit market. We account for firms self-selecting out of the credit market in Myanmar.Our data contain information about individual firm owner/manager gender, managerial capacity, and attitude towards risk. We use this information to test whether the allocation of scarce loanable funds is systematically associated with these attributes. It emerges that managerial capacity and risk attitudes are positively associated with the probability of firms demanding credit, while firms with female owner/managers have lower probabilities of demanding credit. On the supply side we find no discernible links to any of the three traits, whereas firm’s size and age have substantial impacts on the probability of obtaining credit. As such, the allocation of credit could improve |
| Keywords: | Personality traits,SMEs,Access to credit,formal credit,Gender |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2019-20&r=all |
| By: | Neha Soni; Enakshi Khular Sharma; Narotam Singh; Amita Kapoor |
| Abstract: | The fast pace of artificial intelligence (AI) and automation is propelling strategists to reshape their business models. This is fostering the integration of AI in the business processes but the consequences of this adoption are underexplored and need attention. This paper focuses on the overall impact of AI on businesses - from research, innovation, market deployment to future shifts in business models. To access this overall impact, we design a three-dimensional research model, based upon the Neo-Schumpeterian economics and its three forces viz. innovation, knowledge, and entrepreneurship. The first dimension deals with research and innovation in AI. In the second dimension, we explore the influence of AI on the global market and the strategic objectives of the businesses and finally, the third dimension examines how AI is shaping business contexts. Additionally, the paper explores AI implications on actors and its dark sides. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1905.02092&r=all |
| By: | Lota Dabio Tamini; Aristide B. Valéa |
| Abstract: | Canadian small and medium-sized firms face two major challenges, namely, that of innovation in supporting their growth and improving their competitiveness and that of access to international markets. The objective of this study is to analyze the impact of research and Development (R&D) investment on the export performance of Canadian agri-food companies and on that of related sectors, namely, the textile and clothing sector and the manufacture of leather goods and similar products. We used impact assessment methods to analyze the effects of firms' innovation activities on their export performance. First, we analyzed explanatory factors for R&D expenses; second, we analyzed the impact of R&D on extensive (market access) and intensive (trade value) margins of trade. In doing so, we used Statistics Canada's National Accounts Longitudinal Microdata File (NALMF) for 2010 to 2015, which is coupled with the Trade by Exporter Characteristics (TEC) database. The size of firms and their support from the Canadian government affect their propensity to invest in R&D, the value of R&D expenses and their intensity, as measured from the ratio of R&D to sales of goods and services. Overall, our results show that investment in R&D has a positive impact on the export performance of agri-food SMEs. Les petites et moyennes entreprises (PME) canadiennes font face à deux grands enjeux soit celui de l’innovation afin notamment de soutenir leur croissance et améliorer leur compétitivité et celui de l’accès aux marchés internationaux. Le présent projet de recherche a pour objectif d’analyser l’impact des investissements en recherche et développement (R&D) sur les performances à l’exportation des entreprises agroalimentaires canadiennes et de celles de secteurs connexes soit les industries du textile et des vêtements et de la fabrication de produits du cuir et produits analogues. Les méthodes d’évaluation d’impact seront utilisées pour analyser les effets des activités d’innovation des entreprises sur leurs performances à l’exportation. Dans un premier temps, les facteurs explicatifs des investissements en R&D sont analysé. Puis nous analysons les effets des investissements en R&D sur les marges extensive (accès aux marchés) et intensive (valeur du commerce). Nous utilisons le Fichier de micro données longitudinales des comptes nationaux (NALMF) de Statistique Canada pour la période de 2010 à 2015 qui est couplé au fichier du programme de Commerce selon les caractéristiques des exportateurs (TEC). La taille des entreprises et l’appui du gouvernement canadien sont déterminants dans la probabilité d’investir dans la R&D ainsi que le montant de ces investissements et son intensité mesurée par le ratio du montant investit sur les ventes totales de biens et services des PME agroalimentaires. |
| Keywords: | Research and development,Agri-food,Small and medium-sized firm,Extensive margin of international trade,Intensive margin of international trade, Recherche et développement,Agroalimentaire,Petites et moyennes entreprises,Marge extensive du commerce international,Marge intensive du commerce international |
| JEL: | F14 Q16 Q17 |
| Date: | 2019–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2019s-09&r=all |
| By: | Demenet Axel; Hoang Quynh |
| Abstract: | Is the lack of ‘managerial capital’, alongside human and financial capital, a constraint on the growth of firms in developing countries? The evidence on this is still mixed, especially among small and medium enterprises.This paper uses a panel of Vietnamese small and medium enterprises to investigate this question. We build a multidimensional measure of managerial capital, combining both practices and attitudes, and link it with consistent estimates of firm-level productivity and mark-up. Even though bias may still affect the estimation of the overall influence of managerial capital on productivity, we show that there is a positive and significant association.Changes in management practices allow firms to be more efficient. Furthermore, we compare this association by firm size, and show that managerial capital is arguably as important for micro and small firms as it is for medium firms. Finally, it appears that the indicators related to ‘entrepreneurial attitudes’ play a more important role than elementary business skills. |
| Keywords: | Small and medium enterprises,Informal sector (Economics),Entrepreneurship |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2018-69&r=all |