nep-sbm New Economics Papers
on Small Business Management
Issue of 2009‒07‒28
fifteen papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. Innovation and productivity in SMEs. Empirical evidence for Italy By Bronwyn H. Hall; Francesca Lotti; Jacques Mairesse
  2. The Cultural Dimensions of the Vietnamese Private Entrepreneurship By Quan-Hoang Vuong; Tran Tri Dung
  4. Linking Entrepreneurial Strategy and Firm Growth By J. BRUNEEL; B. CLARYSSE; M. WRIGHT
  5. Competition, imitation, and technical change : quality vs. variety By Cusolito, Ana
  6. Entrepreneurial intentions: The influence of organizational and individual factors By Lee, Lena; Wong, Poh Kam; Foo, Maw Der; Leung, Aegean
  7. The Effects of External and Internal Strikes on Total Factor Productivity By Ferreira, Pedro; Galvao, Antonio
  8. The euro and firm restructuring By Matteo Bugamelli; Fabiano Schivardi; Roberta Zizza
  9. Endogenous Technology Sharing in R&D Intensive Industries By Clark, Derek J.; Sand, Jan Yngve
  10. Firm growth, European industry dynamics and domestic business cycles By Harald Oberhofer
  11. Innovative Sales, R&D and Total Innovation Expenditures: Panel Evidence on their Dynamics By Raymond Wladimir; Mohnen Pierre; Palm Franz; Schim van der Loeff Sybrand
  12. The Incentive to Invest in Environmental-Friendly Technologies: Dynamics Makes a Difference By Davide Dragone; Luca Lambertini; Arsen Palestini
  13. Producer Services and Manufacturing Productivity: Evidence from Japan Industrial Productivity Database By Kiyoyasu Tanaka
  14. Analysis of Innovation and Energy Profiles in the Turkish Manufacturing Sector By Okay, Nesrin; Konukman, Alp Er S.; Akman, Ugur

  1. By: Bronwyn H. Hall (Department of Economics, University of California at Berkeley); Francesca Lotti (Bank of Italy); Jacques Mairesse (CREST (ENSAE, Paris))
    Abstract: Innovation in SMEs exhibits some peculiar features that most traditional indicators of innovation activity do not capture. Therefore, in this paper, we develop a structural model of innovation which incorporates information on innovation success from firm surveys along with the usual R&D expenditures and productivity measures. We then apply the model to data on Italian SMEs from the “Survey on Manufacturing Firms” conducted by Mediocredito-Capitalia covering the period 1995-2003. The model is estimated in steps, following the logic of firms’ decisions and outcomes. We find that international competition fosters R&D intensity, especially for high-tech firms. Firm size, R&D intensity, along with investment in equipment enhances the likelihood of having both process and product innovation. Both these kinds of innovation have a positive impact on firm’s productivity, especially process innovation. Among SMEs, larger and older firms seem to be less productive.
    Keywords: R&D, innovation, productivity, SMEs, Italy
    JEL: L60 O31 O33
    Date: 2009–06
  2. By: Quan-Hoang Vuong (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels.); Tran Tri Dung (Dan Houtte, Vuong & Partners, Hanoi, Vietnam.)
    Abstract: In this essay, we explore cultural impacts on the private entrepreneurship in the post-Doi Moi Vietnam. Some important aspects of the traditional cultural values of the Vietnamese society are explored in conjunction with the socio-economic changes over the past two decades. Traditional cultural values continue to have strong impacts on the Vietnamese society, and to a large extent to adversely affect the entrepreneurial spirit of the community. Typical constraints private entrepreneurs face may have roots in the cultural facet as legacy of the Confucian society, such as relationship-based bank credit. Low quality business education is both victim and culprit of the long-standing tradition that looks down on the role of private entrepreneurship in the country.
    Keywords: Culture; Confucian values; Confucianism; Entrepreneurship; Market economy; Rent seeking; Vietnam
    JEL: A14 E00 L14 L26 M21 P20 P31 Z10 Z13
    Date: 2009–07
    Abstract: We expand and test Ajzen’s Theory of Planned Behavior (TPB) to explain the transfer of an entrepreneurial venture upon exit. Our results confirm TPB: transfer intentions and perceived control over the transfer are the main drivers of the likelihood to transfer. In addition, contextual business characteristics complement TPB in explaining transfer outcomes. While intangibility of firm assets directly impacts transfer outcomes, business viability is partially mediated via transfer intentions. These results shed more light on the role of implicit planning in transfer decisions and help to better understand contextual factors impacting the process of entrepreneurial exits.
    Keywords: entrepreneurial exit, exit process, transfer decision, Theory of Planned Behavior
    Date: 2009–04
    Abstract: The growth of young, technology-based firms has received considerable attention in the literature given their importance for the generation and creation of economic wealth. Taking a strategic management perspective, we link the entrepreneurial strategy deployed by young, technology-based firms with firm growth. In line with recent research, we consider both revenue and employment growth as they reflect different underlying value creation processes. Using a unique European dataset of research-based spin-offs, we find that firms emphasizing a product and hybrid strategy are positively associated with growth in revenues. The latter strategy also has a positive influence on the creation of additional employment. Contrary to expectation, however, we find that firms pursuing a technology strategy do not grow fast in employment. Our study sheds new light on the relationship between entrepreneurial strategy and firm growth in revenues and employment.
    Date: 2009–04
  5. By: Cusolito, Ana
    Abstract: Some researchers have documented that the path of development is remarkably related to the pattern of sectoral diversification. Others have highlighted the relation between productive specialization and economic progress. This paper explores the role of product market competition and intellectual property rights protection in the pattern of sectoral diversification. The paper confirms the insight of the innovation literature, that competition induces firms to specialize and upgrade the quality of existing goods. However, it reveals a new force, called the imitation effect, through which competition biases technical change toward product diversification. The paper shows that if knowledge spillovers increase with imitation, or the degree of product substitution is high, weak protection of property rights encourages firms to create low-quality goods, thereby directing technical change toward diversification. The predictions are tested with data on Italian firms'innovation activity. They are found to be consistent with observed behavior.
    Keywords: Education for Development (superceded),Economic Theory&Research,E-Business,Markets and Market Access,Labor Policies
    Date: 2009–07–01
  6. By: Lee, Lena; Wong, Poh Kam; Foo, Maw Der; Leung, Aegean
    Abstract: An individual's intent to pursue an entrepreneurial career can result from the work environment and from personal factors. Drawing on the entrepreneurial intentions and the person–environment (P–E) fit literatures, and applying a multilevel perspective, we examine why individuals intend to leave their jobs to start business ventures. Findings, using a sample of 4192 IT professionals in Singapore, suggest that work environments with an unfavorable innovation climate and/or lack of technical excellence incentives influence entrepreneurial intentions, through low job satisfaction. Moderating effects suggest that an individual's innovation orientation strengthens the work-environment to job-satisfaction relationship; selfefficacy strengthens the job-satisfaction to entrepreneurial intentions relationship.
    Keywords: Entrepreneurial intentions Job satisfaction Self-efficacy
    JEL: L26 M13
    Date: 2009
  7. By: Ferreira, Pedro; Galvao, Antonio
    Date: 2009–10
  8. By: Matteo Bugamelli (Bank of Italy); Fabiano Schivardi (University of Cagliari and EIEF); Roberta Zizza (Bank of Italy)
    Abstract: We test whether and how the adoption of the euro, narrowly defined as the end of competitive devaluations, has affected member states’ productive structures, distinguishing between within and across sector reallocation. We find evidence that the euro has been accompanied by a reallocation of activity within rather than across sectors. Since its adoption, productivity growth has been relatively stronger in country-sectors that once relied more on competitive devaluations to regain price competitiveness. This effect is robust to potential omitted-variable bias and correlated effects. Firm-level evidence from Italian manufacturing confirms that low-tech businesses, which arguably benefited most from devaluations, have been restructuring more since the adoption of the euro. Restructuring has entailed a shift of business focus from production to upstream and downstream activities, such as product design, advertising, marketing and distribution, and a corresponding reduction in the share of blue collar workers.
    Keywords: euro, devaluations, productivity growth, firm restructuring, skill intensity
    JEL: F33 J24 L16 O47
    Date: 2009–06
  9. By: Clark, Derek J.; Sand, Jan Yngve
    Abstract: This paper analyses the endogenous formation of technology sharing coalitions with asymmetric firms. Coalition partners produce complementary technology advancements, although each firm determines its R&D investment level non-cooperatively and there is no co-operation in the product market. We show that the equilibrium coalition outcome is either one between the two most efficient firms, or a coalition with all three firms. The two-firm coalition is the preferred outcome of a welfare maximising authority if ex ante marginal cost is sufficiently high, and the three-firm coalition is preferred otherwise. Furthermore, we show that the equilibrium outcomes result in the lowest total R&D investment of all possible outcomes. Aircraft engine manufacturing provides a case study, and indicates the importance of anti-trust issues as an addition to the theory.
    Keywords: R&D, endogenous coalitions, asymmetric firms
    JEL: L11 L13
    Date: 2009
  10. By: Harald Oberhofer
    Abstract: Based on the empirical firm growth literature and on heterogeneous (microeconomic) adjustment models, this paper empirically investigates the impact of European industry fluctuations and domestic business cycles on the growth performance of European firms. Since the implementation of the Single market program (SMP) the EU 27 member states share a common market. Accordingly, the European industry business cycle is expected to become a more influential predictor of European firms' behavior at the expense of domestic fluctuations. Empirically, the results of a two-part model for a sample of European manufacturing firms reject this hypothesis. Additionally, subsidiaries of Multinational Enterprises (MNEs) constitute the most stable firm cohort throughout the observed business cycle.
    Keywords: Firm growth, industry dynamics, domestic business cycle, multinational enterprises, two-part model
    JEL: L11 L16 L25
    Date: 2009–07
  11. By: Raymond Wladimir; Mohnen Pierre; Palm Franz; Schim van der Loeff Sybrand (METEOR)
    Abstract: This paper studies the dynamic relationship between input and output of innovation inDutch manufacturing using an unbalanced panel of enterprise data from five waves of the Community Innovation Survey during 1994-2004. We estimate by maximum likelihood a dynamic panel data bivariate tobit with double-index sample selection accounting for individual effects.We find persistence of innovation input and innovation output, a lag effect of the former onthe latter and a feedback effect of the latter on the former. The lag effect remains significantin the high-tech sector even after four years. Firm and industry effects are also important.
    Keywords: Economics (Jel: A)
    Date: 2009
  12. By: Davide Dragone (Department of Economics, University of Bologna); Luca Lambertini (Department of Economics, University of Bologna; ENCORE, University of Amsterdam; RCEA); Arsen Palestini (Department of Economics, University of Bologna)
    Abstract: The established view on oligopolistic competition with environmental externalities has it that, since firms neglect the external effect, their incentive to invest in R&D for pollution abatement is nil unless they are subject to some form of environmental taxation. We take a dynamic approach to this issue, using a simple differential game to show that the conclusion reached by the static literature is not robust, as the introduction of dynamics shows that firms do invest in R&D for environmental-friendly technologies throughout the game, as long as R&D is accompanied by an output restriction exhibiting a distinctively collusive flavour. We also examine the social planning case and the effects of Pigouvian taxation, to show that there exists a feasible tax rate inducing profit-seeking firms to choose a combination of output and R&D such that the resulting social welfare level is the same as in the first best
    Keywords: pollution, environmental externality, R&D, differential games, social planning
    JEL: H23 L13 O31 Q55
    Date: 2009–01
  13. By: Kiyoyasu Tanaka
    Abstract: As service sectors account for a growing share of economic activity in advanced economies, economists claim that the quality and cost of producer services supplied by the service sectors are crucial in supporting the competitiveness of manufacturing firms. This paper provides an empirical assessment on this argument by exploring a link between service-sector performance and manufacturing productivity in Japan for the period 1980-2005. Assuming that an improvement in producer services is measured with errors by a price deflator growth of service outputs, I propose an estimation framework in which an observed productivity depends partly on the performance of service sectors weighted by service-input intensities. Robust to a wide range of specifications and alternative indicators of services upgrading, I find little evidence that the service sectors contributed to productivity growth of the manufacturing sector. Thus, my findings do not support the claim that the upgrading of producer services improves manufacturing competitiveness.
    Keywords: Producer Services, Service Sector, Productivity, Japan
    JEL: D24 L60 L80
    Date: 2009–07
  14. By: Okay, Nesrin; Konukman, Alp Er S.; Akman, Ugur
    Abstract: We present Turkey’s manufacturing-sector innovation data and, for the first time, analyze likely relationships among GDP growth, sectoral innovation intensities, energy consumptions, and energy-saving potentials. We detect a power-law-like relationship between the projected energy-saving potentials and realized energy consumptions of the manufacturing-sector groups. We observe that the energy consumptions of the sectors do not change significantly despite varying innovation levels during transitions from economic crisis and recovery periods. We conclude that the Turkey’s manufacturing sectors’ energy consumptions are insensitive to their innovation levels, or their innovation activities are not energy-efficiency- and energy-saving-oriented, reflecting Turkey’s past supply-oriented energy policy. The leader innovating sectors are, nevertheless, expected to contribute more to Turkey’s energy-saving and energyefficiency policies if their innovation potentials can be directed to achieve higher energy savings and energy efficiencies via government incentives within the agenda of the recent energy-efficiency and R&D laws.
    Keywords: Manufacturing sector; Innovation; Energy consumption; Energy saving potential; Energy efficiency; R&D; GDP; Turkey
    JEL: Q48 Q55 L52 O3 Q43 L60 Q4
    Date: 2009–07–19
    Abstract: An ongoing discussion in strategic management concerns the relative impact of specific strategic decisions on firm performance. In this tradition, this research analyzes the relative impact of business domain choices on firm performance. More specific, the paper at hand (a) discusses a method to assess the relative impact of firm and business definition effects on firm performance within a specific industry, and (b) demonstrates the value of this method by measuring the effect of business definition on performance within the context of a specific SME-dominated industry, namely the Belgian electrical whole sale sector. The results indicate that firm effects explain most of the variance in four performance variables but that the impact of business definition on performance could be underestimated. It turns out, according to our findings, that business membership (and thus differences in business definition) explains about 8 percent of the variance in performance between firms within the examined industry. Consequently, managers should carefully monitor and examine the business domain they are in as it directly related with the firm’s level of performance.
    Keywords: Business definition, domain choice, electrical wholesale sector, performance differences, variance decomposition
    JEL: C00 C13 D21 L10
    Date: 2009–04

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