nep-sbm New Economics Papers
on Small Business Management
Issue of 2010‒05‒08
seven papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Promoting Entrepreneurship in Developing Countries: Policy Challenges By Naudé, Wim
  2. Strategic Orientation of Outsourcing Firms:Demystifying Key Differentiators By Sharda Kirti
  3. Is Bigger Always Better ? The Effect of Size on Defaultse By Giulio Bottazzi; Federico Tamagni
  4. Cooperation with public research institutions and success in innovation: Evidence from France and Germany By Robin, Stéphane; Schubert, Torben
  5. Firm Heterogeneity, Credit Constraints, and Endogenous Growth By Jürgen Antony; Torben Klarl; Alfred Maussner
  6. Liquidity Constraints and Firm’s Export Activity By Emanuele Forlani
  7. Do bank-firm relationships influence firm internationalization? By Riccardo De Bonis; Giovanni Ferri; Zeno Rotondi

  1. By: Naudé, Wim
    Abstract: This policy brief provides some fresh perspectives on the relationship between entrepreneurship and development, and considers policy design issues. It reports on the UNU-WIDER two-year research project “Promoting Entrepreneurial Capacity”, which aimed to understand whether and how entrepreneurship matters for development, how it could derail development, how entrepreneurs function in high growth as well as in conflict environments, and how female entrepreneurship differs across countries at various stages of development.
    Keywords: Entrepreneurship, development, policy design
    Date: 2010
  2. By: Sharda Kirti
    Abstract: Despite the importance of outsourcing firms and the highly competitive nature of the outsourcing industry, there has been minimal examination of outsourcing firm strategy. This paper investigates the strategic focus of 60 outsourcing firms using empirical data collected through survey and semi-structured interviews from 226 top management team respondents. Factor and cluster analysis reveal three outsourcing firm archetypes based on their strategic orientation, namely, superachievers, quality advocates and defenders. The dominance of these archetypes also varies across business activities offered by sample firms. By delineating dimensions underlying outsourcing form strategy and by identifying archetypes of strategic orientation, the paper provides an understanding of key differentiators of outsourcing firm performance.
    Date: 2009–12–21
  3. By: Giulio Bottazzi; Federico Tamagni
    Abstract: Exploiting a large database of Italian manufacturing firms we investigate the relationships between default rate and firm size. Default events, defined as conditions of actual or likely insolvency, are a signal of deep business troubles. They are unanticipated, costly and dangerous for the firm as well as for the economy, and should be in principle avoided. Our evidence, based on data provided by a large Italian banking group, reveals that the default probability of firms increases with their size. This finding contrasts with typical results on exit events based on business registries data, and suggests to revise the common wisdom that sees the core of the industry as a safe place and its members as most valuable economic assets.
    Keywords: firm default and exit, firm size,bootstrap probit regressions.
    JEL: C14 C25 G30 L11
    Date: 2010–05–01
  4. By: Robin, Stéphane; Schubert, Torben
    Abstract: We evaluate the impact of cooperation with public research institutions on firms' inno-vative activities in France and Germany, using data from the fourth Community Innova-tion Survey (CIS4). We propose an original econometric methodology, which explicitly takes into account potential estimation biases arising from self-selection and endoge-neity, and apply it to both process and product innovation. We find a positive effect of cooperation on both types of innovation. This effect is significant in both countries, but much higher in Germany than in France. Drawing on a comparison of the institutional context of cooperation across both countries, we interpret this difference as a conse-quence of the more diffusion-oriented German science policy. Finally, our robustness checks confirm the importance of controlling for selection and endogeneity. We show that these problems can be serious, and may lead to inconsistent estimates if ne-glected. --
    Keywords: Public/private research partnerships,University/industry linkages,Innova-tiveness,Heckit procedure with endogenous regressors
    JEL: O31 O33 O38
    Date: 2010
  5. By: Jürgen Antony (CPB Netherlands Bureau for Economic Policy Analysis, The Hague, The Netherlands); Torben Klarl (University of Augsburg, Department of Economics); Alfred Maussner (University of Augsburg, Department of Economics)
    Abstract: This paper is concerned with the role of firm heterogeneity under credit constraints for economic growth. We focus on firm size, innovativeness and credit constraints in a semi-endogenous growth model reflecting recent empirical findings on firm heterogeneity. It allows for an explicit solution for transitional growth and balanced growth path productivity as well as the growth maximizing firm heterogeneity. This enables us to draw inference about the impact of key policy parameters of the model on these quantities and to draw conclusions about firm and capital market related policies.
    Keywords: firm heterogeneity, credit constraints, firm size, SME, economic growth
    JEL: E5 O31
    Date: 2010–04
  6. By: Emanuele Forlani (Université catholique de Louvain – CORE)
    Abstract: This paper will assess the importance of internal firm resources in overcoming sunk entry costs associated with export. When firms are not able to raise additional external funds for investments, they are credit-constrained, and in such a case, new exporters have to rely on their internal liquidity to pay sunk costs. Using a data set of small and medium size Italian enterprises (SMEs), we find that entry probability in the export market is affected by the level of cash stock for constrained firms. We propose a methodology used to identify a priori constrained firms, employing index analysis as used in business economics. The estimation of the Euler equation for investments confirms the fitness of our classification. In addition we find that exporters show higher liquidity if they raise the number of destinations. Finally, we do not find evidence that entry in the export market improves firm\'s financial health, while ex-ante new entrants are found to be relatively more leveraged.
    Keywords: Productivity, Credit constraints, Heterogenous firms, Trade
    JEL: C14 D24 F10 F12 F13 F19 M40
    Date: 2010–04–30
  7. By: Riccardo De Bonis (Banca d'Italia, Economics and International Relations Area); Giovanni Ferri (Universit… degli Studi di Bari); Zeno Rotondi (UniCredit Group, Head of Research and Competitors Benchmarking,, Retail Division)
    Abstract: We show that a longer relationship length with the main bank fosters Italian firms' foreign direct investment (FDI) and, weakly, production off-shoring abroad. Possibly, longer bank relationships help secure external financing for these companies, which have become more opaque because of their internationalization. In contrast, other than for smaller-sized companies, we detect no impact on firms' propensity to export, suggesting that exporting alters enterprises' financial set-up less than shifting production internationally. We also find a link between the internationalization of the main creditor bank and firm FDIs. Our evidence suggests that reexisting strong bank-firm relationships support manufacturing firms' production internationalization.
    Keywords: bank-firm relationships, export, external finance, foreign direct investments, internationalization, off-shoring
    JEL: D21 F10 F21 F23 G21
    Date: 2010–04

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