nep-sbm New Economics Papers
on Small Business Management
Issue of 2009‒08‒02
twenty papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. High-Growth Entrepreneurial Firms in Africa: A Quantile Regression Approach By Goedhuys, Micheline; Sleuwaegen, Leo
  2. Early International Entrepreneurship in China: Extent and Determinants By Naude, Wim; Rossouw, Stephanie
  3. Designing Composite Entrepreneurship Indicators: An Application Using Consensus PCA By Avanzini, Diego B.
  4. How Do Young Innovative Companies Innovate? By Pellegrino, Gabriele; Piva, Mariacristina; Vivarelli, Marco
  5. Entrepreneurship, Development, and the Spatial Context Retrospect and Prospect By Nijkamp, Peter
  6. The Interplay of Human and Social Capital in Entrepreneurship in Developing Countries: The Case of Keywords: social capital, human capital, entrepreneurship, developing countries By Rooks, Gerrit; Szirmai, Adam; Sserwanga, Arthur
  7. Measuring Entrepreneurship in Developing Countries By Desai, Sameeksha
  8. Employee Education, Information and Communication Technology, Workplace Organization and Trade: A Comparative Analysis of Greek and Swiss Enterprises By Spyros Arvanitis; Euripidis N. Loukis
  9. When to Start a New Firm?: Modelling the Timing of Novice and Serial Entrepreneurs By Gries, Thomas; Naude, Wim
  10. How Do Different Motives for R&D Cooperation Affect Firm Performance? – An Analysis Based on Swiss Micro Data By Spyros Arvanitis
  11. Entrepreneurship and Welfare By Tamvada, Jagannadha Pawan
  12. Inter-firm dependency and employment inequalities : Theoretical hypotheses and empirical tests By Corinne Perraudin; Héloïse Petit; Nadine Thevenot; Bruno Tinel; Julie Valentin
  13. The Size Variance Relationship of Business Firm Growth Rates. By Massimo Riccaboni; Fabio Pammolli; Sergey V. Buldyrev; Linda Ponta; H. Eugene Stanley
  14. Innovation as an emerging system property : an agent based model By Antonelli Cristiano; Ferraris Gianluigi
  15. The ‘Transaction Cost Approach’ and the Performance of the Belgian Dairy Co-operatives Before 1940 By Peter Van Der Hallen
  16. A Comparison of Firm-level Innovation Cooperation in Five European Countries By Spyros Arvanitis; Thomas Bolli
  17. A Theory of Firm Decline By Gian Luca Clementi; Thomas F. Cooley; Sonia Di Giannatale
  18. The Joys and Burdens of Multiple Legal Frameworks for Social Entrepreneurship. Lessons from the Belgian Case By Astrid Coates; Wim Van Opstal
  19. Do Some Enterprise Zones Create Jobs? By Jed Kolko; David Neumark
  20. Entrepreneurship, Economic Growth and Policy in Emerging Economies By Thurik, Roy

  1. By: Goedhuys, Micheline; Sleuwaegen, Leo
    Abstract: This paper studies the growth performance of a large set of entrepreneurial firms in ten manufacturing sectors of eleven Sub-Saharan African countries. The focus of the paper is on identifying those entrepreneurs. attributes and firm characteristics that tend to generate a significant number of high-growth firms in these countries. To this end, we use a quantile regression, which provides a more complete estimation of the growth distribution of firms conditional on different attributes. The results indicate that especially firms that engage in product innovation, have their own transport means and are connected to the internet through their own website are characterized by higher growth rates and display a more skewed distribution to the right, hosting a higher number of high-growth firms. The effect of the last two variables, which relate to distance-bridging modes of infrastructure, points to the self-reinforcing growth effects.
    Keywords: quantile regression, high-growth firms, firm growth, Africa
    Date: 2009
  2. By: Naude, Wim; Rossouw, Stephanie
    Abstract: We use data on 3,948 Chinese firms obtained from the World Bank.s Investment Climate Private Enterprise Survey to investigate early international entrepreneurship (international new ventures) in China. The extent of early international entrepreneurship in China is significant: 65 per cent of the exporting firms start export operations within three years. Foreign shareholders within the firm and an entrepreneur with previous exporting experience are noted to significantly increase the probability that a firm internationalizes early. However, we find marked differences in the behaviour of indigenous and foreign-invested firms. Thus, while business networks are significant for firms wishing to export indirectly and for older indigenous firms, it is noted to delay the internationalization process of indigenous firms. Also, for an indigenous firm, the greater the foreign experience of its entrepreneur, the less likely it is to start exporting early.
    Keywords: entrepreneurship, internationalization, international new ventures, exports, China
    Date: 2009
  3. By: Avanzini, Diego B.
    Abstract: Existing indicators of entrepreneurial activity (such as the Global Entrepreneurship Monitor, Entrepreneurship Barometer, FORA.s Entrepreneurship Index, OECD and Economic Commission.s sets of indicators, among others) and several variables that have been considered good proxies for entrepreneurship during the last decades seem to be unsuitable to capture the complex relationship among economic, social, and demographic factors driving entrepreneurial activity.In order to suggest a consistent methodology for measuring entrepreneurship, we review some of the most well-known theoretical dimensions of entrepreneurship and a selection of associated indicators is proposed. Indicators and measures are grouped under theoretical categories and a set of entrepreneurship indicators is constructed using multivariate statistical analysis (Consensus PCA based on NIPALS, with an extension of Probability PCA for dealing with missing values) for a panel of developed and developing countries.
    Keywords: entrepreneurship, index, principal components analysis
    Date: 2009
  4. By: Pellegrino, Gabriele (Università Cattolica del Sacro Cuore); Piva, Mariacristina (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: This paper discusses the determinants of product innovation in young innovative companies (YICs) by looking at in-house and external R&D and at the acquisition of external technology in embodied and disembodied components. These input-output relationships are tested on a sample of innovative Italian firms. A sample-selection approach is applied. Results show that in-house R&D is linked to the propensity to introduce product innovation both in mature firms and YICs; however, innovation intensity in the YICs is mainly dependent on embodied technical change from external sources, while − in contrast with the incumbent firms − in-house R&D does not play a significant role.
    Keywords: R&D, product innovation, embodied technical change, CIS 3, sample selection
    JEL: O31
    Date: 2009–07
  5. By: Nijkamp, Peter
    Abstract: Entrepreneurship has been a topical issue in the business administration literature, but in the past decade a wave of interest can be observed on the role of entrepreneurship in the economic growth literature. This paper aims to highlight the various contributions to the entrepreneurship literature from the perspective of regional economic development. After a broad overview, particular attention is given to the regional action space of entrepreneurs, including their social and spatial network involvement. The paper concludes with a future research agenda.
    Keywords: entrepreneurship, regional growth, action space, networks, SME, virtual organization, innovation
    Date: 2009
  6. By: Rooks, Gerrit; Szirmai, Adam; Sserwanga, Arthur
    Abstract: This paper discusses the characteristics and determinants of entrepreneurial behaviour in Uganda. It is based on a recent survey of urban and rural entrepreneurs, executed in May 2008. The main dependent variables are business success, gestation activities and innovative performance. The paper focuses in particular on the interplay of human and social capital in determining entrepreneurial performance. A prominent question in the literature is whether human capital and social capital act as complements or substitutes in furthering entrepreneurial dynamism.We find that Ugandan enterprises are predominantly very small and not very dynamic. Most enterprises are young, with little or no growth of employment since start-up. Only a very small subset of sample entrepreneurs could be classified as entrepreneur in the dynamic
    Date: 2009
  7. By: Desai, Sameeksha
    Abstract: This paper discusses the difficulties associated with measuring entrepreneurship in developing countries. Three important dichotomies in the research on entrepreneurship are discussed: formal-informal, legal-illegal, and necessity-opportunity. Several common measures of entrepreneurship are outlined along with their relevance to developing countries, including self-employment, Global Entrepreneurship Monitor data, World Bank Group Entrepreneurship Survey data and OECD data. The implications of the current understanding of entrepreneurship are discussed with respect to institutions and economic development.
    Keywords: entrepreneurship, economic development, data, institutions
    Date: 2009
  8. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Euripidis N. Loukis (University of the Aegean, Department of Information and Communication Systems Engineering, Karlovassi/Samos, Greeece)
    Abstract: This paper aims at investigating empirically at the firm level the effect of the use of modern information and communication technologies (ICT), and also of two other factors, the adoption of new forms of workplace organization and trade (export) activities, on the demand for employees with different levels of (vocational) education. The study is based on firm-level data collected through a common questionnaire from firms’ samples of similar composition (concerning firm sizes and industries) in Greece and Switzerland; from these data econometric models of similar specification have been constructed for both countries. The results of multivariate analysis show that the intensive use of ICT correlates positively with the employment shares of high-educated personnel and negatively with the ones of the loweducated personnel. These findings are consistent with the hypothesis of ‘skill-biased technical change’. Further, the intensive use of “employee voice”-oriented organizational practices correlates positively with the employment shares of high-educated employees in both countries, and also negatively with the employment share of low-educated ones only for the Swiss firms. The results for the “work design” organizational practices are more ambiguous. Thus, there is only partial confirmation of the hypothesis of skilled-biased organizational change. Finally, we found some evidence in favour of the trade effect (export activities) only for the Swiss firms. Our results show both similarities and differences in the above aspects between Greece and Switzerland and indicate that national context characteristics affect the relationship of the demand for employees with different levels of (vocational) education with ICT use, adoption of new forms of workplace organization and trade.
    Keywords: labour demand, labour skills, information technology, workplace organization
    JEL: J23 J24
    Date: 2009–07
  9. By: Gries, Thomas; Naude, Wim
    Abstract: The success of new start-up firms often depends on timing. It is valuable for the potential entrepreneur to wait for the right moment before starting a new firm. In this paper we provide a theoretical model to determine the optimal time for starting a new firm. We integrate insights from the real option theory with the theory on entrepreneurial market entry. An important and novel feature of our model is that it allows the start-up timing decisions of novice and serial entrepreneurs to be distinguished.
    Keywords: entrepreneurship, serial entrepreneurship, start-ups, real options, stochastic optimal control
    Date: 2009
  10. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Starting point of our analysis is the empirical fact that firms pursue different goals when getting engaged in R&D collaborations, often more than one goal at the same time. Given that firms are driven by different motives for R&D cooperation, the aim of this article is to investigate the differences related to different motives with respect (a) to the factors influencing the likelihood of R&D cooperation as postulated by theory; and (b) to the impact of R&D cooperation on firm innovativeness and firm productivity. On the whole, distinguishing various cooperation motives appears to be fruitful because it allows more differentiated insights with respect to the importance of factors determining cooperation that would remain hidden behind the overall variable “R&D cooperation yes/no”. Not only R&D cooperation in general but also cooperation driven by each of the seven motives considered in this paper correlate positively with the sales share of innovative products. With respect to innovativeness the characterization of cooperation by the driving motive did not add much more insights that it could be gained through the overall variable ‘R&D cooperation yes/no’. Technology-motivated collaborative activities show a weaker tendency to positive direct effects on productivity than cost-motivated cooperation. In this case, the distinction of several cooperation motives yields some additional insights as compared to the overall cooperation variable.
    Keywords: R&D cooperation, absorptive capacity, incoming spillovers, innovation
    JEL: O30
    Date: 2009–07
  11. By: Tamvada, Jagannadha Pawan
    Abstract: We examine returns to entrepreneurship using a standard measure of welfare, the per capita consumption xpenditure. Using quantile regressions, we find welfare hierarchy in occupations. The results suggest that, across the welfare distribution, entrepreneurs who employ others have the high-test returns in terms of consumption, while those entrepreneurs who work for themselves, that is, self-employed individuals, have slightly lower returns than the salaried employees. However, self-employment entails higher returns than casual labour and an escape from poverty.
    Keywords: entrepreneurship; self-employment; welfare; developing countries; quantile regressions
    Date: 2009
  12. By: Corinne Perraudin (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, CEE - Centre d'Etudes de l'Emploi - Ministère de la recherche - Ministère chargé de l'Emploi, SAMOS - Statistique Appliquée et MOdélisation Stochastique - Université Panthéon-Sorbonne - Paris I); Héloïse Petit (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, CEE - Centre d'Etudes de l'Emploi - Ministère de la recherche - Ministère chargé de l'Emploi); Nadine Thevenot (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Bruno Tinel (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Julie Valentin (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This article highlights the importance of power relations in inter-firm relations and analyses their impact on firms' employment management practices. We show, firstly, that the use of subcontracting creates a chain of inter-firm economic dependency because it leads the principal contractor to plan and control the activities of the subcontractors. We then advance the hypothesis that this chain of dependency influences both the skill structure and wage levels. Empirical tests carried out on French data confirm that firms that subcontract outsource execution tasks and that the hierarchy of firms impacts employees' wage levels.
    Keywords: Subcontracting ; skills ; wages ; power relation
    Date: 2009–01
  13. By: Massimo Riccaboni; Fabio Pammolli; Sergey V. Buldyrev; Linda Ponta; H. Eugene Stanley
    Abstract: The relationship between the size and the variance of firm growth rates is known to follow an approximate power-law behavior σ(S) similar to S^-β(S) where S is the firm size and β(S) almost equal to 0.2 is an exponent weakly dependent on S. Here we show how a model of proportional growth which treats firms as classes composed of various number of units of variable size, can explain this size-variance dependence. In general, the model predicts that β(S) must exhibit a crossover from β(0) = 0 to β(∞) = 1/2. For a realistic set of parameters, β(S) is approximately constant and can vary in the range from 0.14 to 0.2 depending on the average number of units in the firm. We test the model with a unique industry specific database in which firm sales are given in terms of the sum of the sales of all their products. We find that the model is consistent with the empirically observed size-variance relationship.
    Keywords: patent disclosure; innovation; r&d competition
    Date: 2009–06
  14. By: Antonelli Cristiano (University of Turin); Ferraris Gianluigi
    Abstract: The paper elaborates the notion of innovation as an emerging property of complex system dynamics and presents an agent-based model of an economy where systemic knowledge interactions among heterogeneous agents are crucial for the generation of new technological knowledge and the introduction of innovations. In this approach external knowledge is an indispensable input,together with internal learning and research activities, into the generation of new knowledge. The introduction of innovations is analyzed as the result of systemic interactions among myopic agents that are credited with an extended procedural rationality that includes forms of creative reaction. The creative reaction of agents may lead to the introduction of productivity enhancing innovations. This takes place only when the structural and institutional characteristics of the system are such that agents, reacting to out-ofequilibrium conditions, can actually take advantage of external knowledge available within the innovation system into which they are embedded. Building upon agentbased simulation techniques the paper explores the effects that alternative configurations of the intellectual property right regimes play in assessing the chances to generate new technological knowledge and shows how the different architectural configurations of the structure into which knowledge interactions take place affect the rates of introduction of technological innovations. The results of the simulation model suggest that the dissemination of knowledge favors the emergence of creative reactions and hence faster rates of introduction of technological innovations.
    Date: 2009–07
  15. By: Peter Van Der Hallen (Catholic University of Leuven)
    Abstract: We see that Belgian industrial dairy production before World War II lagged the developments of other countries in the same region and of the same size such as Denmark and The Netherlands. The share of home production remained remarkably high, while within the industrial segment the number of private to co-operative creameries was high compared to the more successful countries. We argue that this is no coincidence. Co-operative creameries were better suited to deal with the problems posed by the organisation and technology of dairy production at the time. The lacklustre performance of the Belgian dairy industry was therefore connected to the underdevelopment of the co-operative sector. The co-operative spirit of Belgian farmers suffered due to some historical events such as the large scale introduction of farm cream separators and especially the outbreak of World War I. This erosion of co-operative spirit diminished the attractiveness and binding power of the co-operative creameries.
    Keywords: Dairy Industry, Co-operatives, Creameries
    JEL: L14 N53 N54 Q13
    Date: 2009–02
  16. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Thomas Bolli (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: This paper compares the determinants and the effects of innovation cooperation on innovation performance at firm level in five European countries: Belgium, Germany, Norway, Portugal and Switzerland. In a first step we analyse cooperation agreements with national and international partners and in a second step cooperation with enterprises and research institutions. In a third step we investigate the impact of all four categories of cooperation on innovation performance.
    Keywords: national innovation cooperation, international innovation cooperation, innovation performance
    JEL: O30
    Date: 2009–07
  17. By: Gian Luca Clementi; Thomas F. Cooley; Sonia Di Giannatale
    Abstract: We study the problem of an investor who buys an equity stake in an entrepreneurial venture, under the assumption that the former cannot monitor the latter’s operations. The dynamics implied by the optimal incentive scheme is rich and quite different from that induced by other models of repeated moral hazard. In particular, our framework generates a rationale for firm decline. As young firms accumulate capital, the claims of both investor (outside equity) and entrepreneur (inside equity) increase. At some juncture, however, even as the latter keeps on growing, invested capital and firm value start declining and so does the value of outside equity. The reason is that incentive provision is costlier the wealthier the entrepreneur (the greater is inside equity). In turn, this leads to a decline in the constrained–efficient level of effort and therefore to a drop in the return to investment.
    JEL: E0 L11
    Date: 2009–07
  18. By: Astrid Coates (ISE, University of Antwerp); Wim Van Opstal (HIVA, Catholic University of Leuven)
    Abstract: In the last two decades, several innovative legal frameworks for social entrepreneurship were developed across Europe. The differential success of these innovations raise certain questions. Is the intrinsic design of these legal frameworks optimal for social enterprises? Secondly, is the attractive capacity of these legal frameworks high enough to attract both new as existing social enterprises? And lastly, have these new legal frameworks reached full maturity? If this is not the case, these changes may well impede rather than encourage the development of social enterprises. In this paper, we look at the Belgian situation where an innovative framework was introduced and where multiple legal frameworks for social entrepreneurship coexist. By means of a multi-disciplinary approach involving law and economics, we investigate the joys and burdens of having numerous legal frameworks for social enterprises. We provide an introduction to the Belgian legal environment for social entrepreneurship, and argue that the current institutional design is suboptimal. Finally, we conclude with lessons that can be learned from the Belgian case relevant for other countries and contexts.
    Keywords: legal design, social enterprise
    JEL: K22 K23 L21 L31
    Date: 2009–05
  19. By: Jed Kolko; David Neumark
    Abstract: We study how the employment effects of enterprise zones vary with their location, implementation, and administration, based on evidence from California. We use new establishment-level data and geographic mapping methods, coupled with a survey of enterprise zone administrators. Overall, the evidence indicates that enterprise zones do not increase employment. However, the evidence also suggests that the enterprise zone program has a more favorable effect on employment in zones that have a lower share of manufacturing and in zones where managers report doing more marketing and outreach activities. On the other hand, devoting more effort to helping firms get hiring tax credits reduces or eliminates any positive employment effects, which may be attributable to idiosyncrasies of California’s enterprise zone program during the period we study.
    JEL: H25 J23 J78 R12
    Date: 2009–07
  20. By: Thurik, Roy
    Abstract: Entrepreneurship has emerged as an important element in the organization of economies. This emergence did not occur simultaneously in all developed countries. Differences in growth rates are often attributed to differences in the speed with which countries embrace entrepreneurial energy. This led to the political mandate to promote entrepreneurship. Hence, a clear and organized view is needed of what the determinants and consequences of entrepreneurship are. The present contribution tries to provide this view with a particular view on emerging economies. Entrepreneurship, its drivers and its consequences can be best understood using the model of the entrepreneurial economy which explains the functioning of the modern economy. This model differs from that of the earlier managed economy. Policies in emerging economies should aim at combining the two models.
    Keywords: entrepreneurship, small firms, economic growth, economic development, policy
    Date: 2009

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