nep-sbm New Economics Papers
on Small Business Management
Issue of 2010‒03‒13
sixteen papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. International and domestic technology transfers and productivity growth: Firm level evidence. By Belderbos, Rene; Van Roy, Vincent; Duvivier, Florence
  2. Diversity of science linkages and innovation performance: Some Empirical Evidence from Flemish firms. By Cassiman, Bruno; Veugelers, Reinhilde; Zuniga, Pluvia
  3. The differential impact of privately and publicly funded R&D on R&D investment and innovation: The Italian case By Giovanni Cerulli; Bianca Potì
  4. Firm growth: empirical analysis By Alex Coad; Werner Hölzl
  5. Do firms benefit from being present in technology clusters? Evidence from a panel of biopharmaceutical firms. By Lecocq, Catherine; Leten, Bart; Kusters, Jeroen; Van Looy, Bart
  6. Effects of Regional Human Capital Structure on Business Entry: A Comparison of Independent Startups and New Subsidiaries in Different Industries By Kenta Ikeuchi; Hiroyuki Okamuro
  7. Does Excellence in Academic Research Attract Foreign R&D?. By Belderbos, Rene; Leten, Bart; Suzuki, Shinya
  8. R&D strategy of small and medium enterprises in India: Trends and determinants By Pradhan, Jaya Prakash
  9. Agent-based Simulation of Cooperative Innovation By Flavio Lenz-Cesar; Almas Heshmati
  10. What's the Difference?! Gender, Personality, and the Propensity to Start a Business By Furdas, Marina; Kohn, Karsten
  11. Learning At The Boundaries In An “Open Regional Innovation System”: A Focus On Firms’ Innovation Strategies In The Emilia Romagna Life Science Industry By fiorenza belussi; silvia rita sedita; alessia sammarra
  12. Technological activities and their impact on the financial performance of the firm: Exploitation and exploration within and between firms. By Belderbos, Rene; Faems, Dries; Leten, Bart; Van Looy, Bart
  13. Performance-Related Pay, Unions and Productivity in Italy: evidence from quantile regressions By Mirella Damiani; Andrea Ricci
  15. Stars War in French Gastronomy: Prestige of Restaurants and Chefs’ Careers By Gergaud, Olivier; Smeets, Valérie; Warzynski, Frédéric
  16. A Note on R&D Spillovers, Multiple Equilibria and Indeterminacy By Been-Lon Chen; Angus C. Chu

  1. By: Belderbos, Rene; Van Roy, Vincent; Duvivier, Florence
    Abstract: We examine the drivers of international and domestic technology transfer strategies of firms and the impact of these transfers on firms’ productivity performance in a sample of 440 Flemish innovating firms during 2003-2006. Technology transfers may occur through R&D contracting, purchase of licenses and know how, purchase of specialized machinery, hiring of specialized personnel, and various informal channels. Analysis of the drivers of technology sourcing strategies shows that combined technology sourcing strategies are more likely to be adopted by firms that 1) face resource limitations in their innovative effort 2) have a basic research orientation and conduct more R&D 3) successfully use various technology protection strategies to appropriate the benefits of innovation efforts 4) are engaged in international R&D collaboration. Estimates of a dynamic productivity model show that firms engaging in international knowledge sourcing strategies record substantially and significantly higher productivity growth. The largest impact is found for firms combining foreign transfer strategies with local technology acquisition, suggesting that a diverse external technology strategy combining local technologies as well as know how from abroad is most likely to improve firm performance.
    Keywords: Technology transfer; Productivity; Multinational Firms;
    Date: 2009–11–25
  2. 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;
    Date: 2009–12
  3. By: Giovanni Cerulli; Bianca Potì (CERIS-CNR, Institute for Economic Research on Firms and Growth)
    Abstract: The paper explores the impact of a specific R&D policy tool, the Italian “Fondo per le Agevolazioni della Ricerca” (FAR), on industrial R&D and technological output at firm level. Our objective is threefold: first, identifying econometrically the presence/absence of private R&D investment additionality/crowding-out within a pooled sample, in a series of firms’ subsets (by regional, dimensional, technological and other characterizations), and by taking into account the effect of single as well as a mix of policy instruments; second, exploring the output (innovation) additionality by comparing the differential impact of “privately funded” (firm own resources) and “public funded” industrial R&D expenditures on firm patent applications; third, comparing the structural characteristics of the group of firm performing additionality with that doing crowding-out, in order to appreciate which are the firm characteristics driving to the success of the policy at stake. Our results suggest that FAR has been effective in the pooled sample, although no effect emerges in some subsets of firms. In particular, while large firms seem to have been decisive for the success of this policy, small firms present a more marked crowding-out effect. Furthermore, firm growth’s strategy and capacity of effectively transform R&D input into innovation output (patents) seem to lead toward a better effect in term of additionality.
    Keywords: business R&D; public incentives; econometric evaluation
    JEL: O32 C52 O38
    Date: 2010
  4. By: Alex Coad; Werner Hölzl
    Abstract: Recent research has led to the empirical regularity that firm growth rate distributions are heavy tailed. This finding implies that a few firms experience spectacular growth rates and decline, but that most firms have marginal growth rates. The literature on high growth firms shows that high growth firms are the central drivers of job creation in the economy but that these firms are neither clustered in high technology sectors nor are these firms necessarily young and small. The evidence on the determinants of firm growth confirms that firm growth is difficult to predict. The finding that firm growth is well approximated by a random process does not only reflect the heterogeneity at the firm level but is also associated with the low persistence of growth rates over time.
    Keywords: firm growth Length 25 pages
    JEL: L11 L25
    Date: 2010–02
  5. By: Lecocq, Catherine; Leten, Bart; Kusters, Jeroen; Van Looy, Bart
    Abstract: This paper investigates whether firms active in biotechnology can improve their technological performance by developing R&D activities in technology clusters. Regions that host a concentration of biotechnology activity are identified as technology clusters (level of US states, Japanese prefectures and European NUTS2 regions). A fixed effect panel data analysis on a set of 59 biopharmaceutical firms (period 1995-2002) provides evidence for a positive, albeit diminishing (inverted-U shape) relationship between the number of technology clusters in which a firm is present and its total technological performance. This effect is distinct from a mere multi-location effect.
    Keywords: Cluster; Innovation; Biotechnology;
    Date: 2009–10
  6. By: Kenta Ikeuchi; Hiroyuki Okamuro
    Abstract: This paper aims to investigate the regional determinants of entry with special attention to the effects of regional human capital, using prefecture-level data from Japan. On the basis of some recent studies in the field, we investigate the effects of several regional factors on business entry, distinguishing between independent startups and new subsidiaries of existing firms on the one hand, and comparing different sectors on the other. Using pooled regional data at the prefecture level for our periods between 1996 and 2006, we estimate the impact of various regional factors, including human capital structure, on the number of independent startups and new subsidiaries for each industry sector, simultaneously. Estimation results demonstrate considerable differences between independent startups and subsidiaries as well as among different industry sectors with regard to the impact of regional human capital structure on business entry. First, the entry of independent startups in the manufacturing sector is positively related with regional human capital. Second, in contrast to our hypothesis, we found a positive relationship between regional human capital structure and the entry of new subsidiaries in the service sector. Third, the regional human capital structure is more important for regional entrepreneurship in more technology-intensive (high-tech) service industries. Considering the possible implications, we suggest that the regional policy to activate business startups should focus more on the differences between encouraging local entrepreneurship and attracting new subsidiaries, and recognize that these differences may vary even within the service sector, depending on what type of human capital is required.
    Keywords: entry, region, independent startup, subsidiary, entrepreneurial human capital
    JEL: L26 M13 R32
    Date: 2010–02
  7. By: Belderbos, Rene; Leten, Bart; Suzuki, Shinya
    Abstract: We examine the role of host countries’ academic research strengths in global R&D location decisions by multinational firms. While we expect that a firm’s propensity to perform R&D in a host country increases with the strength of local academic research, firms are expected to be heterogeneously positioned to benefit from academic research strengths due to differences in the capacity to absorb and utilize scientific knowledge. We find support for these conjectures in an analysis of foreign R&D activities in 40 host countries and 30 technology fields by 176 leading European, US and Japanese firms during the periods 1995-1998 and 1999-2002. Controlling for a wide range of host country factors, the number of relevant ISI publications by scientists based in the host country has a substantial positive impact on the propensity to conduct foreign R&D. The effect of academic research is significantly larger for firms with a stronger science orientation in R&D - as indicated by citations to scientific literature in prior patents. For host countries with a strong relevant science base, this greater responsiveness of science oriented firms more than offsets a generally greater inclination to concentrate R&D at home. The findings appear robust across a variety of specifications.
    Date: 2009–11
  8. By: Pradhan, Jaya Prakash
    Abstract: The liberalization of economic policies in the last two decades and intensifying market competition tend to be a cause of policy concern for the survival of SMEs in emerging economies like India as these firms accounts for the largest chunk of industrial units and employment. Given their limited financial and intangible resources, the promotion of R&D among SMEs has become a very important policy parameter. The aim of this paper is to contribute to the literature on Indian R&D by analyzing the trends and patterns of R&D investment by Indian manufacturing SMEs during the period 1991−2008 and exploring various factors that determine their R&D behaviour. The results show that Indian SMEs have lowest incidence of doing in-house R&D and their R&D intensities have fallen in the last decade. A number of factors that play important role in determining SME R&D have been identified based on the three steps Censored Quantile Regression and some useful policy implications are suggested for enhancing R&D activities of small firms.
    Keywords: SMEs; R&D; Business Groups; Foreign Firms
    JEL: L11 F23 O32 L22 O31
    Date: 2010–02–24
  9. By: Flavio Lenz-Cesar; Almas Heshmati (TEMEP, School of Industrial and Management Engineering College of Engineering, Seoul National University)
    Abstract: This paper introduces an agent-based simulation model representing the dynamic processes of cooperative R&D in the manufacturing sector of South Korea. Firms¡¯ behaviors were defined according to empirical findings on a dataset from the internationally standardized Korean Innovation Survey in 2005. Simulation algorithms and parameters were defined based on the determinants on firms¡¯ likelihood to participate in cooperation with other firms when conducting innovation activities. The calibration process was conducted to the point where artificially generated scenarios were equivalent to the one observed in the real world. The aim of this simulation game was to create a basic implementation that could be extended to test different policies strategies in order to observe sector responses (including cross-sector spillovers) when promoting cooperative innovation.
    Keywords: Collaborative R&D, Agent-base simulation, Korean innovation survey
    JEL: C15 D21 D85
    Date: 2010–01
  10. By: Furdas, Marina (University of Freiburg); Kohn, Karsten (KfW Bankengruppe)
    Abstract: Women start fewer businesses than men. The start-up rate among women in Germany falls short of males' start-up rate by one third. We scrutinize this gender gap using individual-level data from the KfW Start-up Monitor, a large-scale population survey on start-up activity in Germany. As a unique feature, the data combine socio-demographic characteristics, entrepreneurship-related attitudes, and general personality traits of both business starters and non-starters. Estimating binary choice models and employing decomposition techniques, we find that gender differences in socio-demographics alone would even be in favor of higher start-up rates among women, while the distribution of personality traits is less favorable for business start-ups among women and explains about one third of the entire gender difference. Most substantially, men opt for a start-up more often even given identical human capital and related endowments. Qualificational policies targeted towards higher educational attainments of potential entrepreneurs do thus not suffice to increase the number of female business starters.
    Keywords: entrepreneurship, gender difference, start-up propensity, decomposition analysis, KfW Start-up Monitor, Germany
    JEL: J16 L26 M13
    Date: 2010–02
  11. By: fiorenza belussi (University of Padua); silvia rita sedita (University of Padua); alessia sammarra (University of Padua)
    Abstract: The paper investigates the existence of an Open Regional Innovation System (ORIS model). This model is characterised by the firms’ adoption of an open innovation strategy, which overcomes not only the boundaries of the firms but also the boundaries of the region. Using data collected in a sample of life science firms, our research provides the evidence that the Emilia Romagna RIS has evolved towards an ORIS model, where firms’ innovation search strategy, despite being still embedded in local nets (involving several regional public research organisations - PROs), is open to external-to-the-region research networks and knowledge sources. It also shows that innovation openness influences significantly the firms’ innovative performance.
    Keywords: life science sector, learning at the boundaries, Regional Innovation Systems, networks, open innovation model
    JEL: L7 O31
    Date: 2010–02
  12. By: Belderbos, Rene; Faems, Dries; Leten, Bart; Van Looy, Bart
    Abstract: This article analyzes the financial performance consequences of technology strategies categorized along two dimensions: (1) explorative versus exploitative and (2) solitary versus collaborative. The financial performance implications of firms’ positioning along these two dimensions has important managerial implications, but has received only limited attention in prior studies. Drawing on organizational learning theory and technology alliances literature, a set of hypotheses on the performance implications of firms’ technology strategies are derived. These hypotheses are tested empirically on a panel dataset (1996-2003) of 168 R&D-intensive firms based in Japan, the US and Europe and situated in five different industries (chemicals, pharmaceuticals, ICT, electronics, non-electrical machinery). Patent data are used to construct indicators of explorative versus exploitative technological activities (activities in new or existing technology domains) and collaborative versus solitary technological activities (joint versus single patent ownership). The financial performance of firms is measured via a market value indicator: Tobin’s Q index. The analyses confirm the existence of an inverted U-shape relationship between the share of explorative technological activities and financial performance. In addition, it is observed that most sample firms do not reach the optimal level of explorative technological activities. These findings point to the relevance of creating a balance between exploitation and exploration in the context of technological activities. Moreover, they suggest that, for the majority of R&D intensive firms, reaching such a balance between exploration and exploitation implies investing additional efforts and resources in exploring new knowledge domains. The analyses also show that firms, engaging more intensively in collaboration, perform relatively stronger in explorative activities. At the same time, a negative relationship between the share of collaborative technological activities and a firm’s market value is observed. Contrary to our expectations, it is collaboration in explorative technological activities, rather than collaboration in exploitative technological activities, that leads to a reduction in firm value. These findings question the relevance of open business models for technological activities. In particular, they suggest that the potential advantages of collaboration for (explorative) technological activities (i.e. access to complementary knowledge from other partners, sharing of technological costs and risks) might not compensate for the potential disadvantages, such as the incurred increase in coordination costs and the need to share innovation rewards across innovation partners.
    Date: 2009–11
  13. By: Mirella Damiani; Andrea Ricci
    Abstract: Purpose – This study analyses the effects on productivity of Performance-Related Payments (PRP) and unions, and examines to what extent heterogeneity between firms characterises these influences. Design - For the Italian economy, the study presents firm-level quantile regressions for Total Factor Productivity (TFP) and controls for various observed characteristics of firms, worker composition and labour relations. Findings - The paper shows the significant effect of PRP and unions on the whole economy and on firms operating in the manufacturing industries. In these industries, the uniform incentive effects of PRP but the increasing impact of unions are estimated along the productivity distribution. Conversely, the role of management - significant in all sectors- is more efficacious in prospering large firms operating in services. Research limitations – The adoption of PRP schemes and the presence of unions maybe endogenous to firms’ productivity, and our estimates do not prove causal links but simply suggest correlations. Practical implications - The limited incentive effects of PRP schemes in services contribute towards explaining the slowdown in Italian productivity, whereas the role of unions is quite uniform among sectors. Originality- The paper addresses the hitherto poorly developed issue of firm heterogeneity and TFP, and offers the first Italian study of PRP and unions, which covers all dimensional classes of firms and non-agricultural sectors of the Italian economy.
    Keywords: Performance – related pay, productivity.
    JEL: J33 D24
    Date: 2010–01–01
  14. By: Gerard Llobet (CEMFI, Centro de Estudios Monetarios y Financieros); Javier Suarez (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: We assess the effects of imitation and intellectual property (IP) protection in a model of industry dynamics in which the value of IP is eroded by further innovations and imitations. Innovations result from the development of ideas engendered by entrepreneurs. We find that innovation and welfare are decreasing in the protection of IP against further innovations, while their relationship with the protection against imitations typically has an inverted-U shape (partly because imitation reduces the resistance of incumbents to innovators). We also find that the welfare gains from increasing IP protection increase if entrepreneurs are financially constrained.
    Date: 2010–02
  15. By: Gergaud, Olivier; Smeets, Valérie; Warzynski, Frédéric
    Abstract: In this paper, we analyze the careers from a sample of more than 1,000 top French chefs over more than twenty years and link it to the success or reputation of the restaurants where they have worked. This allows us to test what are the determinants of success but also to investigate the dynamics of performance and reputation, stressing the importance of the quality of apprenticeships, mentoring and entrepreneurship spirit. We find that the prestige of the restaurant where individuals work is on average declining along the career, and that the quality of apprenticeship is strongly related to the future success as chef. We also find that prices of restaurants with higher reputation are more sensitive to bad signals.
    Keywords: reputation; careeers; gastronomy
    JEL: D83 J24 L15 M50
    Date: 2010–02
  16. By: Been-Lon Chen (Institute of Economics, Academia Sinica, Taipei, Taiwan); Angus C. Chu (Institute of Economics, Academia Sinica, Taipei, Taiwan)
    Abstract: Empirical studies often find significant and positive R&D spillovers across firms. In this note, we incorporate this spillover effect into a scale-invariant quality-ladder model. We find that the modified model features multiple steady states (i) a high-R&D steady state, (ii) a low-R&D steady state and (iii) a zero-R&D steady state. As for dynamics, when R&D spillovers are small, only the zero-R&D steady state is stable, and it emerges as a no-growth trap. In this case, the economy is subject sunspot fluctuations around this trap (i.e., local indeterminacy). When R&D spillovers are large, both the zero-R&D and high-R&D steady states are stable and locally indeterminate. In this case, increasing patent breadth may cause the high-R&D steady state to become unstable and the economy to converge to the no-growth trap. Therefore, strengthening patent protection may stifle innovation through the occurrence of a bifurcation.
    Keywords: endogenous-growth model, R&D spillovers, indeterminacy, multiple equilibria, bifurcation
    JEL: O31 O41 E32
    Date: 2010–02

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