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on Entrepreneurship |
| By: | Golebiowska-tataj Daria; Reimeris Ramojus (European Commission - JRC) |
| Abstract: | In the era of global geopolitical shifts, innovation and entrepreneurship are essential to Europe’s resilience, competitiveness, and strategic autonomy. This paper focuses on increase Europe’s competitiveness through instruments feeling innovation and entrepreneurial culture. The paper analyzes the position of European Union at national and regional level according to various global innovation indexes. It examines how to leverage the power of key innovation regions in Europe and how to tap on the potential of the most dynamic innovation hubs in Central and Eastern Europe. The authors examine quantitative databased and present two cases of Paris and Vilnius. The analysis leads to a conclusion that European innovation policy needs to reexamine innovation instruments which are not sufficiently focused on competitiveness and invest more in such instruments as for example the European Innovation Council. On the other hand, the most dynamic innovation ecosystems in CEE regions should be better networked with the leading hubs and used to test new policy approaches. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc142615 |
| By: | Andreas Dibiasi; Katharina Erhardt |
| Abstract: | This paper studies heterogeneous firm responses to a sudden trade-induced profitability shock -- the 2015 Swiss franc appreciation. Using firm-level investment data and a novel measure of exposure, we document that this trade shock causes large and persistent investment declines among affected firms. Examining heterogeneous responses among firms with similar exposure, we find that differences in responsiveness are not explained by economic fundamentals but are strongly linked to firm age and managerial experience. Younger firms and those led by less experienced managers react substantially more strongly. We argue that these empirical patterns are consistent with a model of Bayesian learning, in which firms update their beliefs about profitability over time. The results provide important insights into the long-lasting effects of trade shocks on business dynamism, capital investment, and local employment. |
| Keywords: | trade shocks, firm-level investment, exchange rate shocks |
| JEL: | F14 D22 G31 L25 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12098 |
| By: | Manuela Magalhâes (Universidad de Málaga); Jesús Rodríguez-López (Universidad Pablo de Olavide) |
| Abstract: | Spanish aggregate productivity was negatively correlated with the business cycle from 2000 to 2014, but this correlation later turned positive between 2015 and 2019. In this paper, we ask if this change is related to financial restrictions and firm creation and destruction in Spain. Using firm- level administrative data, we reach the following conclusions. First, during the 2000–07 expansion, low-productivity firms with access to financial resources were able to continue operating; in turn, this led to a crowding-out of financial resources, and forced high-productivity but financially vulnerable firms to close. We find that on average exiting firms were significantly larger and more productive than entering firms, a situation that entailed productivity losses in this period. Second, following the tightening of credit conditions after 2008, we find a more efficient selection at both exit and entry margins: exiting firms were less productive than entering firms. Both findings help explain, at least in part, the change in the productivity-GDP correlation. Finally, in a counterfactual exercise we quantify the effects of type-I selection errors, i.e., the closure of productive but financially vulnerable firms: had market selection not presented type-I errors, relative total factor productivity at the exit margin would have been 3% to 6.5% higher, while gains in relative labor productivity would have ranged between 27% and 46%. |
| Keywords: | Firm exit and entry, business cycle, cleansing effects, miss-selection, firm survival. |
| JEL: | E23 E32 E44 G32 L11 L25 L60 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pab:wpaper:25.02 |
| By: | Rossmann, Felix; Greitens, Jan; Knoll, Lisa |
| Abstract: | Sustainable finance regulations and initiatives across Europe have predominantly targeted large corporations, while small and medium-sized enterprises (SMEs) are increasingly drawn into the framework, often facing challenges such as resource constraints and complex documentation requirements. To capture the dynamics of this field, a European survey conducted in 2025 with responses mainly from German and Austrian companies examined SME engagement with sustainable finance. The findings show a rising share of SMEs investing in sustainability in comparison to the preceding study in 2023, with internal funding as the dominant source. Where external financing is used, it is primarily activated on publicly supported bank loans, whereas capital markets remain largely irrelevant for SMEs. While a connection between sustainability data collection and sustainable investment exists, many SMEs invest without systematically collecting data. These results highlight the continued centrality of traditional banking relationships as the main external financing channel for SMEs, which could serve to enable and facilitate capital flows toward sustainability rather than prescribe or direct them. |
| Keywords: | Sustainable Finance, Small and Medium-sized Enterprises, Sustainability Investment, Sustainability Reporting, Bank Financing |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cfswop:325834 |
| By: | Siavash Mohades; Giulia Piccillo; Maria Savona; Tania Treibich |
| Abstract: | This paper studies the role of capacity utilisation in explaining investment behaviour in Italian SMEs and large firms. We propose a framework in which firms with high capacity utilisation are more likely to invest in maintaining a buffer against future shocks. Using firm-level data from the Bank of Italy’s Survey of Industrial and Service Firms (2002–2024), we empirically examine how deviations from a sector-specific target capacity utilisation influence investment decisions, accounting for the roles of uncertainty and financial constraints. Our findings reveal that Italian firms with high growth potential- those at the so-called “growth window” (Coad et al., 2021)- are more likely to invest. This result is primarily driven by large firms, while SMEs do not seem to respond strongly to the presence in such growth windows. Furthermore, we find that uncertainty does not deter investment among firms operating at high capacity, but instead stimulates investment in firms with low capacity utilisation. These insights have significant implications for industrial policy that targets support to firms at critical decision points in their growth trajectory. |
| Keywords: | capacity utilisation, investment, uncertainty, financial constraints, firm growth |
| JEL: | D20 D22 D24 D81 E32 L11 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12108 |
| By: | Kerola, Eeva; Norring, Anni |
| Abstract: | We use confidential loan-level data from the European Central Bank to investigate how changes in the countercyclical capital buffer requirement in Germany affect lending to firms. We find evidence showing that tightening the countercyclical capital buffer leads German banks to reduce the volume of corporate loans and increase the price of new loans. These effects take place immediately after the announcement, given 12 months before the change was implemented. Importantly, we find that the reduction in credit availability notably affects small and medium-sized enterprises, which experience both a significant decrease in available credit and an increase in credit costs. In contrast, large firms are not affected. |
| Keywords: | Macroprudential policy, Countercyclical capital buffer, Loan level data |
| JEL: | E58 G21 G28 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofrdp:325482 |
| By: | Weber, Jan David |
| Abstract: | Firms are not abstract, profit-seeking units as often assumed in neoclassical models, but historically situated, socially embedded, and organizationally adaptive entities. Firms evolve through continuous interaction with their environment, shaped by routines, bounded rationality, and the co-development of institutions and technologies. This comprehensive lens provides a richer understanding of firm behavior, accounting for the observed diversity across firms, the persistence of structural asymmetries, and the heterogeneous conditions under which firms grow, stagnate, or exit the market. These firm-level dynamics unfold within markets that are themselves evolving systems. Rather than tending toward a stable equilibrium, markets are shaped by feedback loops, path dependencies [path dependency], and innovation-driven competition. Entry and exit, firm growth, and shifts in market structure are not merely responses to price signals but outcomes of learning processes, strategic interactions, and institutional arrangements [Institutions]. As a result, market outcomes reflect complex adaptive dynamics rather than simple allocative efficiency. In this view, successful industrial policy is not limited to correcting market failures or achieving short-term efficiency gains. Rather, industrial policy is a dynamic and systemic process. This process contributes to long-term learning, structural transformation, and the strategic capacities of economies. Effective policies must therefore be reflexive, transparent, and collaborative, evolving alongside the systems they intend to shape. |
| Keywords: | Firm Size, Industrial Policy, Firm Activity |
| JEL: | D83 L11 O25 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifsowp:325500 |
| By: | Horn, Andreas; Berkmüller, Ruth; Bokelmann, Monika; Gerk, Alexander-Michael; Heldmann, Jan; Knauer, Miriam; Naji, Fatah; Rath, Simon; Sperling, Franziska; Wagner, Johanna |
| Abstract: | Sustainability and non-financial risk management are becoming increasingly im-portant for German companies due to climate change and new regulations. However, it is un-clear how well companies of varying sizes are prepared to handle the increasing pressure to adapt. While large companies are obliged to publish a sustainability report due to regulatory requirements such as the CSRD, there is no direct obligation for SMEs. Nevertheless, due to external pressure from stakeholders and information requirements of large companies, SMEs increasingly have to address the issue of sustainability. This raises the question as to how far large companies and SMEs have progressed in implementing sustainability, how the costs and benefits of this adaptation process can be compared and what differences can be identified be-tween the two company sizes. Our study is based on a June 2023 survey of 120 companies and provides an overview of the current state of sustainability management in German companies. Further, our results show that large companies have a broader understanding of sustainability than SMEs. In addition, most large companies already implement and report on sustainability measures. Overall, we observe that there is a link between understanding sustainability, imple-menting sustainability measures and sustainability reporting. |
| Abstract: | Nachhaltigkeit und das Management nichtfinanzieller Risiken gewinnen für deutsche Unternehmen aufgrund des Klimawandels und neuer Vorschriften zunehmend an Bedeutung. Es ist jedoch unklar, wie gut Unternehmen unterschiedlicher Größe auf den zuneh-menden Anpassungsdruck vorbereitet sind. Während große Unternehmen aufgrund regulatori-scher Anforderungen wie der CSRD zur Veröffentlichung eines Nachhaltigkeitsberichts ver-pflichtet sind, gibt es für KMU keine direkte Verpflichtung. Dennoch müssen sich KMU auf-grund des externen Drucks von Stakeholdern und der Informationspflichten großer Unterneh-men zunehmend mit dem Thema Nachhaltigkeit auseinandersetzen. Dies wirft die Frage auf, wie weit große Unternehmen und KMU bei der Umsetzung von Nachhaltigkeit fortgeschritten sind, wie die Kosten und Nutzen dieses Anpassungsprozesses verglichen werden können und welche Unterschiede zwischen den beiden Unternehmensgrößen festgestellt werden können. Unsere Studie basiert auf einer Umfrage unter 120 Unternehmen vom Juni 2023 und gibt einen Überblick über den aktuellen Stand des Nachhaltigkeitsmanagements in deutschen Unterneh-men. Darüber hinaus zeigen unsere Ergebnisse, dass große Unternehmen ein umfassenderes Verständnis von Nachhaltigkeit haben als KMU. Außerdem setzen die meisten großen Unter-nehmen bereits Nachhaltigkeitsmaßnahmen um und berichten darüber. Insgesamt beobachten wir einen Zusammenhang zwischen dem Verständnis von Nachhaltigkeit, der Umsetzung von Nachhaltigkeitsmaßnahmen und der Nachhaltigkeitsberichterstattung. |
| Keywords: | Sustainability, ESG Risk, Understanding of Sustainability, Sustainability Measures, Sustainability Reporting, Cost-Benefit Analysis |
| JEL: | C83 M14 M41 P28 Q01 Y1 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bayfat:2025-01 |