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on Small Business Management |
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Issue of 2010‒08‒06
seven papers chosen by Joao Carlos Correia Leitao University of Beira Interior and Technical University of Lisbon |
| By: | Tseveen Gantumur; Andreas Stephan |
| Abstract: | To quickly adapt to technological change and developments, and thus remain competitive, firms increasingly resort to the use of external technology. This paper investigates whether and to what extent the acquisition of external disembodied technology affects the efficiency and productivity in innovation of technology acquiring firms. Using the stochastic frontier analysis combined with a difference-in-difference matching approach and firm-level panel from the German Innovation Survey for the period 1992-2004, we find that manufacturing firms that acquire disembodied technology experience more growth in innovative productivity than non-acquiring firms do. Thus, this study provides evidence on complementarity between internal and external R&D in innovation production, which is attributed by increasing returns to R&D scale and increasing technical efficiency. Moreover, we find that firm size significantly contributes to innovative efficiency and productivity of external technology acquirers. |
| Keywords: | Technology acquisition, innovative efficiency, innovative productivity, SFA, Difference-in-difference matching |
| JEL: | O30 L24 L25 L60 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1035&r=sbm |
| By: | Michael Peneder (WIFO) |
| Abstract: | Proposing a novel research design for firm-level impact studies, I investigate the effects of venture capital financing on corporate performance by applying a two-stage propensity score matching on Austrian micro-data. Controlling for differences in industry, location, legal status, size, age, credit rating, export and innovation behaviour, the findings (i) assert the financing function of venture capital, showing that recipients lacked access to satisfactory alternative sources of capital; (ii) identify selection effects, where venture capital is invested in firms with high performance potential; and finally (iii) confirm the value adding function in terms of a genuine causal impact of venture capital on firm growth, yet not on innovation output. |
| Keywords: | venture capital, entrepreneurship, firm growth, propensity score matching |
| Date: | 2010–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2010:i:363&r=sbm |
| By: | Alex Coad; Agustà Segarra; Mercedes Teruel |
| Abstract: | Our empirical literature review shows that little is known about how firm performance changes with age, presumably because of the paucity of data on firm age. For Spanish manufacturing firms, we analyse the firm performance related to firm age between 1998 and 2006. We find evidence that firms improve with age, because ageing firms are observed to have steadily increasing levels of productivity, higher profits, larger size, lower debt ratios, and higher equity ratios. Furthermore, older firms are better able to convert sales growth into subsequent growth of profits and productivity. On the other hand, we also found evidence that firm performance deteriorates with age. Older firms have lower expected growth rates of sales, profits and productivity, they have lower profitability levels (when other variables such as size are controlled for), and also that they appear to be less capable to convert employment growth into growth of sales, profits and productivity. |
| Keywords: | firm age, firm growth, LAD, financial structure, vector autoregression Length 31 pages |
| JEL: | L25 L20 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2010-06&r=sbm |
| By: | Russell Thomson (Melbourne Institute of Applied Economic and Social Research, and Intellectual Property Research Institute of Australia, The University of Melbourne); Paul H. Jensen (Melbourne Institute of Applied Economic and Social Research, and Intellectual Property Research Institute of Australia, The University of Melbourne) |
| Abstract: | Existing empirical evidence suggests that public subsidies and fiscal incentives have a positive effect on the amount of private R&D expenditure. However, most studies have failed to address the possibility at least some of this increase may simply reflect the fact that R&D workers are being paid higher wages. Such an omission may imply that past research has over-estimated the effectiveness of R&D tax concessions. In the absence of widely-available R&D deflators, we consider the impact of a range of public subsidies on the number of fulltime equivalent workers employed in R&D (i.e., researchers) in the business sector. Our findings strongly support the effectiveness of both direct subsidies and fiscal incentives. |
| Keywords: | innovation policy, R&D tax credits, R&D investment |
| JEL: | O38 H25 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2010n11&r=sbm |
| By: | Lim, Hank (Asian Development Bank Institute); Kimura, Fukunari (Asian Development Bank Institute) |
| Abstract: | <p>Production networks and the regional division of labor have been established in East Asia resulting in massive vertical intra-industry trade in parts and components within the region. This phenomenon is known as cross-border production sharing or the fragmentation of production processes into many stages across different countries. New development strategies claim that participation in international production and distribution networks is the key to accelerating economic development in the era of globalization. This process suggests that vertical input-output linkages between local firms and multinational corporations are the most powerful channels to accelerate technology transfers and spillovers. <p>Given the trends of globalization and economic integration in East Asia, there is significant potential for the small and medium enterprise (SME) sector to increase its contribution to the region's development through greater participation in global value chains. However, multiple market failures exist with regard to the development of SMEs and local entrepreneurship. These risks can be mitigated by proper policy measures such as strengthening technological and human resource capabilities through better networking and facilitating access to financing for SMEs. Despite many distortions and inefficiencies in implementing regional economic integration schemes in East Asia, there are many cumulative positive effects contributing to the emerging trend internationalization of SMEs in the region. This process can be significantly strengthened by creating a positive business environment through the standardization of products and services, rules and regulations, and a seamless market infrastructure in the region. |
| Keywords: | internationalization SMEs; regional development policies; regional market failure |
| JEL: | D20 |
| Date: | 2010–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0231&r=sbm |
| By: | Giulio Bottazzi; Angelo Secchi; Federico Tamagni |
| Abstract: | The ability of firms to access external financial resources represents a key factor influencing several dimensions of firms’ dynamics. However, while recent qualitative evidence suggests the existence of heterogeneous and asymmetric reactions of firms to financing constraints (FC) problems, the literature on the empirics of size-growth dynamics focuses on the effects of FC on average growth rate and on the long term evolution of the firm size distribution. In this paper we extend the analysis to a wider range of possible FC effects on firm growth dynamics, including its autoregressive and heteroskedastic structure and the degree of asymmetry in growth shocks distribution. We measure FC with an official credit rating index, which directly captures the borrowers’ opinion about firm’s financial soundness deciding, in turn, the availability and cost of its external resources. Our broader investigation reveals that FC significantly affect firm’s performance and operate through several channels. In the short run, they reduce expected firm growth rate, induce anti-correlation in growth shocks and a milder dependence of growth rates volatility on size, and also operate through asymmetric “threshold effects”, either preventing potentially fast growing firms from enjoying attractive growth opportunities, or further deteriorating the growth prospects of already slow growing firms. The subdiffusive nature of the growth process of constrained firms is compatible with the observed differences in their size distribution. |
| Keywords: | Financial constraints, Firm size distribution, Firm growth, Risk rating, Asymmetric exponential power distribution |
| JEL: | C14 D21 G30 L11 |
| Date: | 2010–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2010/99&r=sbm |
| By: | Di Addario, Sabrina (Bank of Italy); Vuri, Daniela (University of Rome Tor Vergata) |
| Abstract: | We analyze empirically the effects of urban agglomeration on Italian college graduates’ work possibilities as entrepreneurs three years after graduation. We find that each 100,000 inhabitant-increase in the size of the individual’s province of work reduces the chances of being an entrepreneur by 0.2-0.3 percent. This result holds after controlling for regional fixed effects and is robust to instrumenting urbanization. Province’s competition, urban amenities and dis-amenities, cost of labor, earning differentials between employees and self-employed workers, unemployment rates and value added per capita account for 40 percent of the negative urbanization penalty. Our result cannot be explained by the presence of negative large-city differentials in returns to education either. In fact, as long as they succeed in entering the largest markets, young entrepreneurs are able to reap-off the benefits of urbanization externalities: every 100,000-inhabitant increase in the province's population raises entrepreneurs' net monthly income by 0.2-0.3 percent. |
| Keywords: | labor market transitions, urbanization |
| JEL: | R12 J24 J21 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5098&r=sbm |