nep-sbm New Economics Papers
on Small Business Management
Issue of 2010‒09‒25
eight papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Emergence of firms: a sociogeographic demand side perspective By Hellerstedt, Karin; Wennberg, Karl
  2. Succession in private firms as an entrepreneurial process – A review and suggestions of new research avenues By Wennberg, Karl; Nordqvist, Mattias; Bau’, Massimo; Hellerstedt, Karin
  3. Like milk or wine: Does firm performance improve with age? By Alex Coad; Agustí Segarra; Mercedes Teruel
  4. Localisation strategies of firms in wind energy technology development By Perrot, Radhika; Filippov, Sergey
  5. The affective roots of resource heterogeneity: How founders' emotion regulation helps create social resources in startups By Zott, Christoph; Huy, Quy
  6. Business model innovation: Creating value in times of change By Amit, Raphael; Zott, Christoph
  7. Knowledge in cities By Todd Gabe; Jaison R. Abel; Adrienne Ross; Kevin Stolarick
  8. Clustering the Winners: the French Policy of Competitiveness Clusters By Lionel Fontagne; Pamina Koenig; Florian Mayneris; Sandra Poncet

  1. By: Hellerstedt, Karin (Jönköping International Business School); Wennberg, Karl (The Ratio Institute and Stockholm School of Economics)
    Abstract: This paper presents an analysis of regional start-up rates in the knowledge intensive services and high-tech industries. To supplement prevailing frameworks focusing mainly on supply-side economic factors, we integrate insights from economic geography and population ecology to the entrepreneurship literature as to present a theoretical framework that captures both supply-and demand-side factors, with a specific emphasis on the demand side. Using a rich multi-level data material on all knowledge intensive start-ups across the 286 Swedish municipalities between 1994 and 2002, the empirical analysis focuses on how characteristics of the economic milieu of regions influence firm births. We find that economically affluent regions dominate entrepreneurial activity in terms of firm births, yet a number of much smaller rural region revealed high levels of start ups. Both economic and sociological variables such as knowledge spillovers from universities and firm R&D, and the political regulatory regime within the municipality, exhibit strong influences on firm births. These patterns points to strong support for the notion that ‘the geographic connection’ is important for analyzing entrepreneurial processes.
    Keywords: Firm birth; Geography; Entrepreneurship
    JEL: M13 R11 R23
    Date: 2010–09–14
  2. By: Wennberg, Karl (The Ratio Institute and Stockholm School of Economics); Nordqvist, Mattias (Jönköping International Business School); Bau’, Massimo (University of Udine); Hellerstedt, Karin (Jönköping International Business School)
    Abstract: In considering firm succession as the acts of both entrepreneurial exit and entry, this paper adds to work that seeks to integrate entrepreneurship and family business research. We provide a comprehensive literature review of succession research over the past 35 years and identify seven thematical clusters within which succession can be understood as a distinct part of the entrepreneurial process, and three areas of particular interest for future research seeking to advance the literatures on entrepreneurship, family firms, and governance in private firms. The paper explores theoretical, conceptual, and methodological ways of integrating these findings into the research on entrepreneurship and family business.
    Keywords: Family firms; Succession; Entrepreneurship
    JEL: L26 M13
    Date: 2010–09–14
  3. By: Alex Coad (Max Planck Institute of Economics, Evolutionary Economics Group, Kahlaische Strasse 10, D-07745 Jena, Germany); Agustí Segarra (Universitat Rovira i Virgili, Grup de Recerca d’Indústria i Territori, Avda. Universitat 1, 43204 Reus, Spain); Mercedes Teruel (Universitat Rovira i Virgili, Grup de Recerca d’Indústria i Territori, Avda. Universitat 1, 43204 Reus, Spain)
    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
    JEL: L25 L20
    Date: 2010–09
  4. By: Perrot, Radhika (UNU-MERIT); Filippov, Sergey (Delft University of Technology)
    Abstract: This paper looks at the localisation strategies of multinational companies in wind energy sector in the emerging countries of China and India. It seeks to explain why western multinationals are localising new manufacturing and R&D facilities in emerging economies such as China and India, and how local knowledge and capabilities are being increasingly integrated into global technology and manufacturing networks of multinationals. It explores the reasons behind the localisation of multinational companies that helps them gain strategic access to wind energy technological capabilities in emerging economies. It examines the case of the company Vestas in expanding wind energy cluster of Tianjin in China and Chennai in India. At the strategic level, it explains the importance of the role of local capabilities and skills in the global production networks of multinationals. At the policy level, the discussions leading from the case focuses on the concrete steps necessary to integrate technology and innovation more closely into development of sustainable energy markets in developing countries.
    Keywords: renewables, multinational companies, emerging economies
    JEL: F23 L72 O32 Q20 Q42
    Date: 2010
  5. By: Zott, Christoph (IESE Business School); Huy, Quy (INSEAD)
    Abstract: Where do firms' heterogeneous resources come from? Our qualitative, inductive study of nascent firms over seven years revealed that founders' differential use of emotion regula-tion behaviors can explain differential creation of social resources at the firm level. We found that founders' emotion regulation behaviors cluster around three themes: (1) the founder's temporal perspective (short-term versus long-term); (2) the nature of founder benefits (economic versus emotional rewards); and (3) the target of founder attention (self versus others). We theorize that founders' emotion regulation behaviors according to these themes influence the incentives of founders and stakeholders and thereby enable the creation of valuable and difficult-to-imitate social resources for their ventures. Social re-sources include discretionary support provided by founders and stakeholders, as well as founder persistence and stakeholder willingness-to-help. Our study contributes to the strategy literature by showing empirically the link between specific emotion regulation behaviors and the emergence of resource heterogeneity at the firm level. It specifically contributes to resource-based theory by separating the theory's main assumptions and outcomes, reducing concerns about potential tautology.
    Keywords: Resource heterogeneity; resource-based view; emotion regulation; entrepreneurship;
    Date: 2010–07–19
  6. By: Amit, Raphael (The Wharton School); Zott, Christoph (IESE Business School)
    Abstract: We highlight business model innovation as a way for general managers and entrepreneurs to create and appropriate value, especially in times of economic change. Business model innovation, which involves designing a modified or new activity system, relies on recombining the existing resources of a firm and its partners, and it does not require significant investments in R&D. We offer managers and researchers a conceptual primer on business model innovation emphasizing the importance of system-level thinking.
    Keywords: Business model; innovation; activity system; design; value creation;
    JEL: L22 L26 M10
    Date: 2010–07–17
  7. By: Todd Gabe; Jaison R. Abel; Adrienne Ross; Kevin Stolarick
    Abstract: This study identifies clusters of U.S. and Canadian metropolitan areas with similar knowledge traits. These groups—ranging from Making Regions, characterized by knowledge about manufacturing, to Thinking Regions, noted for knowledge about the arts, humanities, information technology, and commerce—can be used by analysts and policymakers for the purposes of regional benchmarking or comparing the types of programs and infrastructure available to support closely related economic activities. In addition these knowledge-based clusters help explain the types of regions that have levels of economic development that exceed, or fall short of, other places with similar amounts of college attainment. Regression results show that Engineering, Enterprising, and Building Regions are associated with higher levels of productivity and earnings per capita, while Teaching, Understanding, Working, and Comforting Regions have lower levels of economic development.
    Keywords: Regional economics ; Productivity ; Manufacturing industries ; Education - Economic aspects ; Professional employees
    Date: 2010
  8. By: Lionel Fontagne; Pamina Koenig; Florian Mayneris; Sandra Poncet
    Abstract: In 2005 the French government launched a policy of competitiveness clusters, giving subsidies for innovative projects managed locally and collectively by firms, research centers and universities. This paper proposes an ex-ante analysis of the outcome of the selection process that took place before the implementation of the subsidies program, in order to assess whether the policy ended up in choosing winners or losers. We first ask how the clusters have been selected, and then focus on the selection of firms within the clusters, using export and productivity as a measure of performance. Our main conclusion is that public authorities have chosen the winners during the two-step selection procedure. Export premium, beyond what individual characteristics would predict, is however most visible within the category of clusters having no international ambition, where heterogeneity among firms is the largest.
    Keywords: Competitiveness; clusters; international trade; firm selection
    JEL: F1 F14
    Date: 2010–09

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