nep-sbm New Economics Papers
on Small Business Management
Issue of 2009‒10‒31
ten papers chosen by
Joao Carlos Correia Leitao
Polytechnic Institute of Portalegre and Technical University of Lisbon

  1. Product and Process Innovation and the decision to Export: Firm-level evidence for Belgium By Ilke VAN BEVEREN; Hylke VANDENBUSSCHE
  2. Impact of Economic Crises on Innovation Activity: Firm Level Evidence from Patent Data By Martinsson, Gustav; Lööf, Hans
  3. Alliance-based Network View on Chinese Firms' Catching-up: Case Study of Huawei Technologies Co.Ltd By Zhang, Ying
  4. Education and Entrepreneurial Choice: An Instrumental Variables Analysis By Jörn H. Block; Lennart Hoogerheide; Roy Thurik
  5. O papel da produção de conhecimento tecnológico na internacionalização das empresas industriais brasileiras By Luiz Alberto Esteves
  6. International Trade, Foreign Direct Investment, and Technology Spillovers By Wolfgang Keller
  7. Interpreting the Early Stages of the Self-service Revolution in Europe: the Modernization of Food Retailing in Spain, 1947-1972 By Maixe-Altes, J Carles
  8. India Transformed? Insights from the Firm Level 1988-2005 By Laura Alfaro; Anusha Chari
  9. Fits and Misfits: Technological Matching and R&D Networks By Cowan, Robin; Jonard, Nicolas; Sanditov, Bulat
  10. Internationalization of Chinese firms in Europe By Zhang, Ying; Filippov, Sergey

  1. By: Ilke VAN BEVEREN (Lessius University College, Department of Business Studies, Antwerp and UniversitŽ catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)); Hylke VANDENBUSSCHE (UniversitŽ catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), Katholieke Universiteit Leuven, LICOS Centre for Institutions and Economic Performance and ¤ CEPR.)
    Abstract: Using data from the Community Innovation Survey for Belgium in two consecutive periods, this paper explores the relationship between firm-level innovation activities and the propensity to start exporting. To measure innovation, we include indicators of both innovative effort (R&D activities) as well as innovative output (product and process innovation). Our results suggest that the combination of product and process innovation, rather than either of the two in isolation, increases a firmÕs probability to enter the export market. After controlling for potential endogeneity of the innovation activities, only firms with a sufficiently high probability to start exporting engage in product and process innovation prior to their entry on the export market, pointing to the importance of self-selection into innovation.
    Keywords: Exports, Product innovation, Process innovation, Self-selection, Firm heterogeneity
    JEL: D24 F14 L25 O31 O33
    Date: 2009–09–14
  2. By: Martinsson, Gustav (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Based on data from of 2,700 Swedish manufacturing firms, observed through the period 1997-2005, this paper shows that internal finance resources, measured by cash-flow, affect the propensity to apply for a patent as well as the number of patent applications. From a business cycle perspective, cash-flow only plays a role during and after economic contractions. In periods of economic expansion there is no significant association between internal finance and patent applications. Further, the sensitivity of patent applications to cash-flow is limited to firms with low equity-ratio. Among high equity firms the pattern of patent applications are robust over the business cycle.
    Keywords: Financing constraints; Innovation; Intellectual property rights; Firm-level panel data;
    JEL: G32 O31 O34
    Date: 2009–10–09
  3. By: Zhang, Ying (UNU-MERIT)
    Abstract: With China's rapid economic growth in recent years, many Chinese firms especially in high-tech industries have started to technically lead in the international market. In this study, we aim to uncover the root causes that lead to Chinese firms' catching up from network perspective. By taking Huawei Technologies Co. Ltd. as a case, we integrate absorptive capacity development and firm-level catching up into an alliances-based network framework. We found that network alliances with firms and universities complement each other at different catching up stages; and alliances-based network provides a springboard for Chinese firms to shorten catching up path. We argue that in Chinese context, impact of FDI on firms' performance comes into effect only if partnership is carried out; alliances with universities facilitate development of absorptive capacity at an early stage; Partnering with leading players stimulate R&D investment at a late stage and simultaneously enhance firm's innovation performance as well.
    Keywords: Strategic alliances, Network, Chinese firms, absorptive capacity, catching up
    JEL: M13 O32 O19 L24
    Date: 2009
  4. By: Jörn H. Block (Erasmus University Rotterdam, Technische Universität München); Lennart Hoogerheide (Erasmus University Rotterdam); Roy Thurik (Erasmus University Rotterdam, EIM Business and Policy Research, Zoetermeer, Max Planck Institute of Economics, Jena)
    Abstract: Education is argued to be an important driver of the decision to start a business. The measurement of its influence, however, is difficult since it is considered to be an endogenous variable. This study is the first to account for this endogeneity by using an instrumental variables approach. The effect of education on the decision to become self-employed is found to be strongly positive, much higher than the estimated effect in case no instrumental variables are used. That is, the higher the respondent's level of education, the greater the likelihood that he or she starts a business. Implications for method and practice are discussed.
    Keywords: Occupational choice; entrepreneurial choice; education; self-employment; endogeneity; instrumental variables; entrepreneurship
    JEL: C35 I20 J24 L26
    Date: 2009–10–13
  5. By: Luiz Alberto Esteves (Department of Economics, Universidade Federal do Paraná)
    Abstract: The aim of this paper is to estimate the effect of manufacturing Brazilian firms´ knowledge production on their conditional probability of internationalization. In this way, an empirical study using (i) microdata from World Bank Investment Climate, Brazil 2003 and (ii) nonlinear instrumental variables regression method is provided. Our finding suggests that manufacturing firms´ conditional probability of starting to export can be increased from 23 until 70 percent points, depending from firms’ capacity to innovate.
    Keywords: innovation; internationalization; probit; instrumental variables
    JEL: O31 F10 C35
    Date: 2009
  6. By: Wolfgang Keller
    Abstract: This paper examines how international flows of technological knowledge affect economic performance across industries and firms in different countries. Motivated by the large share of the world's technology investments made by firms that are active across borders, we focus on international trade and multinational enterprise activity as conduits for technological externalities, or spillovers. In addition to reviewing the recent empirical research on technology spillovers, the discussion is guided by a new model of foreign direct investment, trade, and endogenous technology transfer. We find evidence for technology spillovers through international trade and the activity of multinational enterprises. The analysis also highlights challenges for future empirical research, as well as the need for additional data on technology and innovation.
    JEL: F1 F2 L2 O3 O4
    Date: 2009–10
  7. By: Maixe-Altes, J Carles
    Abstract: This article explores the Americanisation of food retailing in Spain while making a running comparison with developments in Britain and more especially, within the development of self-service techniques. This international comparison helps to ascertain the evolution and modernisation of food retailing in two distinct competitive environments. The aim of this study is to understand how Americanisation and retail innovation take place in a late-comer like Spain in the early stages of the self-service revolution. The comparison between Spain and the UK facilitates how different starting points favoured differentiated entrepreneurial options which, finally led to similar positions or modes of development. The Americanization of Spanish retailing is assessed against the backdrop of developments elsewhere in Europe. New archival evidence allows us to highlight specific aspects of the path to the Spanish modernization of food distribution. In addition to American aid, there were other elements that were crucial to the modernization process, chief among these being the contacts between Spanish and European businessmen and the influence of voluntary chains of cooperation.
    Keywords: Food trade; Americanization; mass consumption; retailing revolution; business strategies; self-service; Spain; United Kingdom; Europe
    JEL: N8 L81 N84
    Date: 2009
  8. By: Laura Alfaro (Harvard Business School, Business, Government and the International Economy Unit); Anusha Chari (Department of Economics, University of North Carolina at Chapel Hill)
    Abstract: Using firm-level data this paper analyzes, the transformation of India's economic structure following the implementation of economic reforms. The focus of the study is on publicly-listed and unlisted firms from across a wide spectrum of manufacturing and services industries and ownership structures such as state-owned firms, business groups, private and foreign firms. Detailed balance sheet and ownership information permit an investigation of a range of variables such as sales, profitability, and assets. Here we analyze firm characteristics shown by industry before and after liberalization and investigate how industrial concentration, the number, and size of firms of the ownership type evolved between 1988 and 2005. We find great dynamism displayed by foreign and private firms as reflected in the growth in their numbers, assets, sales and profits. Yet, closer scrutiny reveals no dramatic transformation in the wake of liberalization. The story rather is one of an economy still dominated by the incumbents (state-owned firms) and to a lesser extent, traditional private firms (firms incorporated before 1985). Sectors dominated by state-owned and traditional private firms before 1988-1990, with assets, sales and profits representing shares higher than 50%, generally remained so in 2005. The exception to this broad pattern is the growing importance of new and large private firms in the services sector. Rates of return also have remained stable over time and show low dispersion across sectors and across ownership groups within sectors.
    JEL: O12 O14 O19 L10
    Date: 2009–10
  9. By: Cowan, Robin (UNU-MERIT, and BETA, Universite Louis Pasteur); Jonard, Nicolas (Universite du Luxembourg.); Sanditov, Bulat (UNU-MERIT, and Maastricht University)
    Abstract: This paper presents an economic model of R&D network formation through the creation of strategic alliances. Firms are randomly endowed with knowledge elements. They base their alliance decisions purely on the technological fit of potential partners, ignoring social capital considerations and indirect benefits on the network. This is sufficient to generate equilibrium networks with the small world properties of observed alliance networks, namely short pairwise distances and local clustering. The equilibrium networks are more clustered than "comparable" random graphs, while they have similar characteristic path length. Two extreme regimes of competition are examined, to show that while the competition has a quantitative effect on the equilibrium networks (density is lower with competition), the small world features of the equilibrium networks are preserved.
    Keywords: network formation, small worlds, R&D networks, strategic alliances, business clusters
    JEL: D85 O32
    Date: 2009
  10. By: Zhang, Ying (UNU-MERIT); Filippov, Sergey (UNU-MERIT)
    Abstract: Since end of the 1990s, the world has been witnessing a phenomenon of internationalisation of Chinese companies. This internationalisation is often understood through FDI inflows, whereby multinational companies establish their presence in a form of subsidiaries overseas. However, lately many companies (and Chinese firms in particular) started to use strategic alliances and M&As as a pair of tools of internationalisation. Despite the growing body of literature on this topic in the context of advanced western economies, use of strategic alliances in the internationalisation of Chinese firms remains an under-researched topic. In the paper we investigate the potential benefits for Chinese companies to internationalise through strategic alliances and M&As, and specifically in comparison to the traditional forms of outward FDI. By using the data from Thomson SDC database, we specifically focus on the Single European market as a new prospective location for Chinese companies and provide a quantitative overview of Chinese firms' alliances as well as M&As in Europe. To illustrate the optimal pattern of internalisation of Chinese firms in Europe, we additionally use a case study of Chinese automotive manufacturer Chery Automobile Co. Ltd.
    Keywords: strategic alliances, emerging economies, China, Europe, internationalisation
    JEL: F23 M10 L62 O32
    Date: 2009

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