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on Small Business Management |
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Issue of 2009‒09‒05
twelve papers chosen by Joao Carlos Correia Leitao Polytechnic Institute of Portalegre and Technical University of Lisbon |
| By: | Gottschalk, Sandra; Müller, Kathrin; Niefert, Michaela |
| Abstract: | This paper analyzes empirically the determinants of new born firms' initial size. As survival prospects of young firms tend to be linked to a firm's start-up size, a better understanding of the factors influencing start-up size is crucial. Most of the rare literature on initial firm size focuses on industry characteristics. We contribute to the understanding of the determinants of initial firm size by analyzing firm specific factors such as founders' human capital composition and entry strategies. We find that in addition to industry effects start-up size is considerably influenced by the human capital of firm founders. We distinguish between generic and specific human capital. Generic human capital refers to the general knowledge acquired through formal education and professional experience and usually coincides with a higher personal wealth. Specific human capital comprises competences that can be directly applied to the entrepreneurial job. For generic human capital we find that having a university degree has a positive influence on start-up size. The same applies for general working experience proxied by the founder's age. For the specific human capital components we find that successful entrepreneurial experience and managerial experience gained in dependent employment support a higher start-up size. Altogether, specific human capital tends to have a larger impact on initial size than generic human capital. Entry strategies are expected to have a crucial influence on start-up size, because objectives of market entry largely determine the resources a firm requires. We distinguish between different types of entry strategies. On the one hand, we look at entry strategies based on innovation. We measure innovation by a variable which indicates if a firm carries out continuous R&D. On the other hand, entry is classified according to the main motive of the founders for firm formation. We conclude that different motives are accompanied by diverse entry strategies. The four main groups of entry strategies are independency entrepreneurship, opportunity entrepreneurship, spin-out entrepreneurship and necessity entrepreneurship. The results indicate that firms conducting R&D continuously start larger than others when measuring initial employment in full-time equivalents. We do not observe a significant effect on start-up size measured in head counts. This suggests that R&D tasks are mostly carried out by fulltime employees and to a lesser extent by persons working part-time for the firm. Further, firms with entry strategies based on the exploitation of new market opportunities as well as spin-out entrepreneurship exhibit a higher initial size while start-ups established from necessity appear to start at a smaller scale. |
| Keywords: | firm start-up size,human capital,firm foundation |
| JEL: | L11 L26 J24 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09030&r=sbm |
| By: | Zimmermann, Jörg; Grimpe, Christoph; Sofka, Wolfgang |
| Abstract: | Young firms with the ability to internationalize early and decisively have received much attention in recent academic discussion. However, relatively little is known about the underlying processes that enable them to skip several stages of the internationalization process. We contribute to this research stream by establishing theoretical links with the emerging open innovation paradigm of firms optimizing their R&D activities by interconnecting them with external partners such as leading customers, universities or specialized suppliers. Based on a sample of more than 2,500 firms in Germany we contrast young and mature firms with regard to the effect of open innovation strategies on internationalization performance. Our results show that both the breadth and depth of search strategies for external knowledge help young firms to enter international markets. Once they have entered these markets, though, the drivers for success seem to shift from general knowledge sourcing to targeted and specific ones. |
| Keywords: | New ventures,internationalization,innovation,search strategies,entrepreneurship |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09017&r=sbm |
| By: | Sofka , Wolfgang; Grimpe, Christoph |
| Abstract: | Searching for external knowledge has frequently been characterized as crucial for firm success. However, little is known about how the direction of search strategies influences innovation performance. In this paper, we argue that firms need to specialize their search strategy and that its effectiveness is moderated by R&D investments and potential knowledge spillovers from a firm's environment. Based on a sample of more than 5,000 firms from five European countries, our results show that being open for innovation generally pays off. However, both moderating factors have a crucial role to play: On the one hand, in-house R&D investments are most effective when combined with a market-oriented search strategy. On the other hand, a technologically advanced environment requires firms to reach out to scientific knowledge sources in order to access novel knowledge and to enhance innovation performance. We develop targeted management recommendations based on these results. |
| Keywords: | Open innovation,search strategies,innovation management |
| JEL: | L60 O32 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09016&r=sbm |
| By: | Czarnitzki , Dirk; Toole, Andrew A. |
| Abstract: | Is there a trade-off of scholarly research productivity when faculty members found or join for-profit firms? This paper offers an empirical examination of this question for a subpopulation of biomedical academic scientists who received research funding from the U.S. National Institutes of Health (NIH). In this study, we are able to distinguish between permanent versus temporary employment transitions by entrepreneurial faculty members and examine how their journal article publication rates change using individual-level panel data. We find that the biomedical scientists who eventually choose to found or join a for-profit firm were more productive during their careers in academe than a randomly selected control group of their NIH peers. When they pursue entrepreneurship in the private sector, however, their scholarly productivity falls. Those entrepreneurial faculty members who return to academe are not as productive as they were before their entrepreneurial experience in terms of journal publications. |
| Keywords: | academic entrepreneurship,SBIR,NIH,biomedical research,life scientist productivity |
| JEL: | O38 O31 L53 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09022&r=sbm |
| By: | Squicciarini, Mariagrazia |
| Abstract: | The paper focuses on the role of Science Parks (SPs) as seedbeds of innovation. It investigates whether and to what extent locating inside a science park relates to the innovative output of tenant firms. The simple assessment methodology proposed relies on count data models, uses patents as innovation performance indicators, and exploits original data regarding the Finnish science parks, their main characteristics, and the data of 252 SP tenant firms, including their patenting activity over the period 19702002. Among other results, the study suggests that both within and among SPs interaction and spillover effects exist, and points out the way in which they relate to firms' innovative output. Results are robust to controlling for the existence of innovation lags. Parks' first mover disadvantages also emerge, as well as non-negligible matching phenomena whereby firms' and parks' characteristics matter jointly. |
| Keywords: | Science Parks,knowledge spillovers,innovation,patents,firm performance |
| JEL: | L29 O32 O38 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:200932&r=sbm |
| By: | Cassiman, Bruno; Veugelers, Reinhilde; Zuniga, Pluvia |
| Abstract: | This paper examines the diversity of the types of links of firms to science and their effect on innovation performance for a sample of Belgian firms. While at the industry level links to science are highly related to the R&D intensity of the sector, we show that there exists considerable heterogeneity in the type of links to science at the firm level. Overall, firms with a science link enjoy superior innovation performance, in particular with respect to innovations that are new to the market. At the invention level, our findings confirm that patents from firms engaged in science are more frequently cited and have a broader technological and geographical impact, but we show that it is crucial to distinguish between direct science links at the invention level and indirect science links at the firm level to encounter these distinct positive effects of science links. |
| Keywords: | Innovation,cooperation,patents,forward citation,science,industrial innovation |
| JEL: | O32 O34 L13 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:200930&r=sbm |
| By: | Giovanni Dosi; Richard R. Nelson |
| Abstract: | This work prepared for B. Hall and N. Rosenberg (eds.) Handbook of Innovation, Elsevier (2010), lays out the basic premises of this research and review and integrate much of what has been learned on the processes of technological evolution, their main features and their effects on the evolution of industries. First, we map and integrate the various pieces of evidence concerning the nature and structure of technological knowledge the sources of novel opportunities, the dynamics through which they are tapped and the revealed outcomes in terms of advances in production techniques and product characteristics. Explicit recognition of the evolutionary manners through which technological change proceed has also profound implications for the way economists theorize about and analyze a number of topics central to the discipline. One is the theory of the firm in industries where technological and organizational innovation is important. Indeed a large literature has grown up on this topic, addressing the nature of the technological and organizational capabilities which business firms embody and the ways they evolve over time. Another domain concerns the nature of competition in such industries, wherein innovation and diffusion affect growth and survival probabilities of heterogeneous firms, and, relatedly, the determinants of industrial structure. The processes of knowledge accumulation and diffusion involve winners and losers, changing distributions of competitive abilities across different firms, and, with that, changing industrial structures. Both the sector-specific characteristics of technologies and their degrees of maturity over their life cycles influence the patterns of industrial organization ? including of course size distributions, degrees of concentration, relative importance of incumbents and entrants, etc. This is the second set of topics which we address. Finally, in the conclusions, we briefly flag some fundamental aspects of economic growth and development as an innovation driven evolutionary process. |
| Keywords: | Innovation, Technological paradigms, Technological regimes and trajectories, Evolution, Learning, Capability-based theories of the firm, Selection, Industrial dynamics, Emergent properties, Endogenous growth |
| Date: | 2009–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2009/07&r=sbm |
| By: | Aschhoff, Birgit |
| Abstract: | This study provides insights into the effects of public R&D grants on R&D input and output of firms from Germany. Previous research has shown that the allocation of R&D project grants is rather stable regarding the pool of beneficiaries. The question is whether this participation pattern can be justified by its realized effects. In addition, the impact of the grant size on the effects is investigated. Therefore, I allow to a certain extent for heterogeneous treatment effects in these two dimensions. Using a sample of about 8,500 observations, a non-parametric matching approach with multiple treatments is applied to estimate the effects of public R&D grants on firm's R&D input. The results show that particularly frequently given grants as well as medium and large grants are suitable to increase the scope of firm-financed R&D plans. For the analysis of the effects on firm's R&D output the R&D expenditures are disentangled in R&D which would have been spent in the absence of the grant and publicly induced R&D, including the grant and the effect on private R&D expenditures. Basically both types of R&D are equally productive in terms of innovative output. For the statement that a rather stable pattern of program participation leads to a lower effectiveness of the instrument no evidence has been found. |
| Keywords: | R&D,Public Subsidies,Innovative Performance,Germany |
| JEL: | C20 H32 O38 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09032&r=sbm |
| By: | Aschhoff, Birgit |
| Abstract: | This paper looks at which firms receive R&D project grants and how this public support evolves over time by considering in particular firm's previous participation. The question of the allocation of public R&D funding is becoming particularly important when it comes to identifying the effects of subsidies. Using firm-level data on German manufacturing and knowledge-intensive service firms, it turns out that participation in the funding scheme shows a rather high level of continuity. This is also confirmed by applying a multivariate approach. Firms who received funding in the past are more likely to be selected for public funding again. Moreover, a firm's size and knowledge capabilities increase the probability of entering the scheme. It is also revealed that in an analysis of the allocation of grants it is important to control for the overall supply of corresponding subsidies. |
| Keywords: | R&D,Public Subsidies,Program Participation,Germany |
| JEL: | C20 H32 O38 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:08018r&r=sbm |
| By: | Holger Görg; Henning Mühlen; Peter Nunnenkamp |
| Abstract: | In addition to firm and industry characteristics, the heterogeneity of foreign direct investment (FDI) has to be taken into account when analyzing the determinants of outward FDI. We combine two firm-specific datasets on German firms with subsidiaries and joint ventures in the Czech Republic, compared to a control group of German firms without FDI in this host country. The impact of firm and industry characteristics on FDI decisions is assessed by estimating two-step Heckman models. We find that larger, more productive and more experienced firms are more likely to invest in the Czech Republic. Firm characteristics also affect the size of FDI in manufacturing. The relevance of both firm and industry characteristics critically depends on whether FDI is horizontal or vertical |
| Keywords: | multinational enterprises, firm heterogeneity, industry characteristics, sector-specific FDI, vertical and horizontal FDI |
| JEL: | F23 L25 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1544&r=sbm |
| By: | Custódia Bastos (Faculdade de Economia da Universidade do Porto, Portugal); Suzi Ladeira (Faculdade de Economia da Universidade do Porto, Portugal); Sofia Silva (Faculdade de Economia da Universidade do Porto, Portugal) |
| Abstract: | Culture and art are emerging as the principal components of the creative industries raising their attractiveness in urban centers. Economics apparently does not have a direct connection with culture and art. However, a closer look into de reality shows that economics and arts are intrinsically related with arts benefiting from a more entrepreneurial and economic led perspectives. The proposed study details the intimate connection which is established between arts and economics by empirically analyzing the vibrant creativity cluster of Miguel Bombarda Street (MBS), situated at the centre of Porto city. This insightful and informative case further provides a pertinent account on the role of entrepreneurship in arts. Through a combination of in depth interviews to key actors and a comprehensive survey to all the firms and art galleries of MBS, the study highlights and details the emergence of MBS cluster and the reasons and players responsible for such emergence and development. Finally, based on the results we evaluate and discuss MBS cluster sustainability and how this type of projects might contribute for the renewal and boost the Porto city. |
| Keywords: | indústrias criativas; artes; clusters; empreendedorismo |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:331&r=sbm |
| By: | Anaïs Hamelin (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and LaRGE, Institut d’Etudes Politiques, Université de Strasbourg, France.) |
| Abstract: | This paper uses a very large sample of French SMEs to study growth of family owned firms. Firms range from total-family to minority control. The estimated relationship accounts for firm characteristics of size and, age, sector, and financial solvency. The results show that firms with greater family control are prone to exhibit lower rates of sales growth than feasible, given financial performance. Because firm growth is limited not by financing constraints but by family-related attitudes, increasing firm growth requires policies that shape incentives in small family businesses. |
| Keywords: | Small Business, Family control, Growth, Sustainable growth, Capital budgeting. |
| JEL: | G31 G32 M13 M21 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:09-032&r=sbm |