nep-sbm New Economics Papers
on Small Business Management
Issue of 2010‒10‒30
thirteen papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Does history matter for the relationship between R&D, Innovation and Productivity? By Elena Huergo; Lourdes Moreno
  2. Comparative Survival Analysis of Firms: the case of the Portuguese North region By Elsa Sarmento; Alcina Nunes
  3. Effectiveness of Public R&D Subsidies in East Germany – Is it a Matter of Firm Size? By Janina Reinkowski; Björn Alecke; Timo Mitze; Gerhard Untiedt
  4. An investigation of the relation between cooperation and the innovative success of German regions By Tom Broekel; Matthias Buerger; Thomas Brenner
  5. Innovation and Employment: A firm level analysis with European R&D Scoreboard data By Francesco Bogliacino
  6. Small and Medium Enterprises in Japan: Surviving the Long-Term Recession By Shuji Uchikawa
  7. Which firms want PhDs? The effect of the university-industry relationship on the PhD labour market By José García-Quevedo; Francisco Mas-Verdú; José Polo-Otero
  8. Regionale Innovationssysteme der EU im Prozess der Globalisierung By Christian, Dreger; Georg, Erber
  9. Supporting Women Entrepreneurs in Tunisia By Drine, Imed; Grach, Mouna
  10. Listen to the market: Do its complexity and signals make companies more innovative By Ana Pérez-Luño; Jesus Cambra-Fierro
  11. Internationalization strategy and performance of small and medium sized enterprises By Jonas Onkelinx; Leo Sleuwaegen
  12. Can Belgian firms cope with the Chinese dragon and the Asian tigers ? The export performance of multi-product firms on foreign markets By Filip Abraham; Jan Van Hove
  13. Sources of Regional Resilience in the Danish ICT Sector By Jacob Rubæk Holm; Christian Richter Østergaard

  1. By: Elena Huergo; Lourdes Moreno
    Abstract: This paper analyzes the relationship between R&D expenditures, innovation and productivity growth, taking into account the possibility of persistence in firms’ behaviour. We study this relationship for a sample of Spanish manufacturing firms between 1990 and 2005, estimating a model with four equations: participation in technological activities, R&D intensity, the generation of innovations and the impact of these technological outputs on total factor productivity growth. Our results reflect the existence of true state dependence both in the decision of R&D investment and in the production of innovations. The omission of this persistence leads to an overestimation of the current impact of innovations on productivity growth. However, the presence of persistence in technological inputs and outputs entails current R&D activities having long–run effects on a firm’s productivity.
    Keywords: CDM model, productivity growth, persistence in R&D and innovation.
    JEL: D24 L6 O3
    Date: 2010–10–21
  2. By: Elsa Sarmento (Departamento de Economia e Gestão Industrial, Universidade de Aveiro); Alcina Nunes (Instituto Politécnico de Bragança, Departamento de Economia e Gestão)
    Abstract: This study approaches the survival ability of firms in the North region of Portugal from 1985 to 2007, allowing regional and national comparisons through the application of non-parametric and semi-parametric methods. This analysis is based on the creation of a specific entrepreneurship database, based on Quadros de Pessoal, where the methodology of Eurostat/OECD´s “Manual of Business Demography Statistics” was applied to. In the North, firms close earlier on during their infancy as their median duration is below the median duration of firms located in the rest of the country. The high turbulence of firm turnover is pointed out as a fundamental determinant of the survival probabilities of firms in this region.
    Keywords: Entrepreneurship, Firm Dynamics, Survival, Regional Analysis
    JEL: E30 E32 C22
    Date: 2010–09
  3. By: Janina Reinkowski; Björn Alecke; Timo Mitze; Gerhard Untiedt
    Abstract: This paper analyses the impact of public subsidies on private sector research and development (R&D) activity for East German firms. Using propensity score matching, our empirical results indicate that subsidized firms indeed show a higher level of R&D intensity and a higher probability for patent application compared to non-subsidized firms for our sample year 2003. On average we find an increase in the R&D intensity of about 3.7 percentage points relative to non-subsidized firms. The probability for patent applications rises by 21 percentage points. These results closely match earlier empirical results for East Germany. Given the fact that the East German innovation system is particularly driven by small and medium sized enterprises (SME), we put a special focus on the effectiveness of the R&D subsidies for this latter subgroup. Here no previous empirical evidence is available so far. Our findings indicate that policy effectiveness also holds for private R&D activity of SMEs, where the highest increase in terms of R&D intensity is estimated for micro businesses with up to 10 employees.
    Keywords: Propensity score matching; R&D subsidies; East Germany; SME
    JEL: C14 C21 O32 O38
    Date: 2010–09
  4. By: Tom Broekel; Matthias Buerger; Thomas Brenner
    Abstract: Concepts like regional innovation systems, innovative milieu, and learning regions emphasize the positive contribution of intra-regional cooperation to firmsÕ innovation performance. Despite substantial numbers of case studies, the quantitative empirical evidence for this claim is thin. Using data on the co-application and co- invention of patents for 270 German labor market regions the study shows that intra- regional cooperation intensity and regional innovation efficiency are associated. In contrast to the negative influence of inter-regional cooperation, medium levels of intra-regional cooperation stimulate regional innovation efficiency.
    Keywords: regional innovation efficiency, cooperation intensity, collaboration, regional cooperation
    JEL: O18 R11 O31
    Date: 2010–10
  5. By: Francesco Bogliacino (JRC-IPTS)
    Abstract: In this article, we analyse the microeconomic relationship between innovation and employment, using company data from R&D Scoreboard for Europe covering 2000-2008. We estimate a reduced form equation in which R&D can account for both product and process innovation. The existence of non constant elasticities is assessed, due to the combination of efficient scale and decreasing return to R&D: in our empirical estimates the scale effect tends to prevail for a given R&D intensity generating an increasing relationship between total turnover and employment. Our results have important implications for policymakers: R&D and innovation supporting policies should be correctly tailored and monitored since the results depend on the characteristics of the firms benefited. By the same token, calibration of general equilibrium models aimed at quantifying the employment impact of R&D and innovation policies should take into account that the average elasticity can be a very rough approximation. We claim that our results support the position that R&D and innovation policies should be tailored towards favouring entry by knowledge intensive firms, instead of supporting existing actors.
    Keywords: Technological change, corporate R&D, employment, panel data
    JEL: O33 J20
    Date: 2010–09
  6. By: Shuji Uchikawa
    Abstract: The relationship between large enterprises (LEs) and small and medium enterprises (SMEs) in Japan has undergone major changes during the long-term recession since 1991. While SMEs still play the important role of supplying parts and components to LEs through subcontracting, many LEs have started to reduce the number of their suppliers and the components they use in manufacturing. While efficient SMEs selected by LEs were able to expand their businesses, inefficient SMEs lost customers. The regression results in this study suggest that the decrease in number of establishments—specifically, the exit of inefficient SMEs—might improve total factor productivity growth rates. The traditional business model of being dependent on certain LEs and doing business within the cluster is not functioning as well as it used to. Heavy dependence on certain industries and highly segmented and specialized production processes prevent the clusters from adjusting to the new business environment. Some SMEs are still able to create new business by taking advantage of more flexible divisions of labor. SME policies must encourage diversification and collaboration that cut across traditional industry groupings to form a flexible division of labor. [ADBI Working Paper 169]
    Keywords: large enterprises, small and medium enterprises, SMEs, productivity, business environment, labor
    Date: 2010
  7. By: José García-Quevedo (Barcelona Institute of Economics (IEB) and Dpt. of Political Economy and Public Finance, University of Barcelona); Francisco Mas-Verdú (Dpt. of Economics and Social Sciences, Universidad Politécnica de Valencia and Barcelona Institute of Economics (IEB)); José Polo-Otero (CYD Foundation and Barcelona Institute of Economics (IEB))
    Abstract: PhD graduates hold the highest education degree, are trained to conduct research and can be considered a key element in the creation, commercialization and diffusion of innovations. The impact of PhDs on innovation and economic development takes place through several channels such as the accumulation of scientific capital stock, the enhancement of technology transfers and the promotion of cooperation relationships in innovation processes. Although the placement of PhDs in industry provides a very important mechanism for transmitting knowledge from universities to firms, information about the characteristics of the firms that employ PhDs is very scarce. The goal of this paper is to improve understanding of the determinants of the demand for PhDs in the private sector. Three main potential determinants of the demand for PhDs are considered: cooperation between firms and universities, R&D activities of firms and several characteristics of firms, size, sector, productivity and age. The results from the econometric analysis show that cooperation between firms and universities encourages firms to recruit PhDs and point to the existence of accumulative effects in the hiring of PhD graduates.
    Date: 2010–03
  8. By: Christian, Dreger; Georg, Erber
    Abstract: The global competition in innovation has significantly intensified over the past decades. New large countries like China, India, Brazil and Russia are challenging the traditional incum-bents like the US, Europe and Japan in this area. By accelerating the integration of the previ-ously predominant national innovation systems towards a European Innovation Union the European Commission is aiming to make significant progress as part of the 2020 strategy. By creating regional innovation clusters, by further international enhancing respective networks with other global innovation centres globally and further specialization of regional innova-tion locations the available capacities in Europe should better utilized and further strength-ened. As a part of the 7th EU-Framework Program the project „Intangible Assets and Re-gional Growth” has made significant contributions through academic research. In particular the creation of innovative milieus in regional innovation systems and the attraction and fur-ther qualification of human capital are key drivers for the success of such locations.
    Keywords: Regional Innovation Systems; Innovation Policy; Globalisation
    JEL: O38 O33 O32
    Date: 2010–10–25
  9. By: Drine, Imed; Grach, Mouna
    Abstract: Whether policy support should be designed differently for women entrepreneurs is a particularly relevant question. To answer this, and to inform the design of policies to provide appropriate support for women entrepreneurs, the paper compares male and female perceptions of typical entrepreneurship support services, such as government provision of information, training and funding. The focus is on Tunisia, a developing country characterized by high level of unemployment, particularly of women. Based on a survey of 50 men and 50 women entrepreneurs in the regions of Sfax, Sousse and Tunis, our results suggest that existing support services are inadequate for promoting female entrepreneurship. Accordingly we discuss support measures specifically designed for women entrepreneurs.
    Keywords: entrepreneurship, gender, women entrepreneurs, Africa
    Date: 2010
  10. By: Ana Pérez-Luño (Department of Business Administration, Universidad Pablo de Olavide); Jesus Cambra-Fierro (Department of Business Administration, Universidad Pablo de Olavide)
    Abstract: This paper analyzes four modes of innovation that differ in their scope of newness – innovation generation and adoption–, and in their degree of change –radical and incremental innovations. Building a theoretical model based on the Market Orientation (MO) and contingency theory literatures and utilizing a unique sample of innovating firms, we find that MO positively influence the number incremental generation and adoption of innovations. We also find that environmental complexity moderates the relationship between MO and radical and incremental innovation generation and adoption. That is, we have found that high environmental complexity enhances the introduction of radical and incremental internally generated innovations and harms the introduction of incremental innovation adoptions for market oriented firm. These findings add to the innovation and MO literatures. Our results also have important implications for both commercial activities and R&D policies adopted by firms.taking place in this sector enhances its potential as a showcase for processes of anticipation and adaptation to the environment. In addition, the paper aims to shed some light on the question of whether strategy potentially moderates the MO-performance link. Finally, the principal implications of our findings are discussed.
    Keywords: Market orientation, environmental complexity, innovation
    Date: 2010–10
  11. By: Jonas Onkelinx (Vlerick Leuven Gent Management School); Leo Sleuwaegen (Vlerick Leuven Gent Management School; K.U.Leuven)
    Abstract: Focusing on the timing and geographical scope of import and export activities of Belgian small and medium sized enterprises (SMEs), the paper analyzes the importance, structural features and performance implications of firms that recently started to export following the geographical configuration of their international trade operations and their year of establishment. The analysis allows us to separate firms that started to export in the period 1998-2005 into four distinct groups: born internationals, i.e. firms which were established less than five years before their first year of exporting and exporting to less than five countries in the same region (regional focus), born globals; young firms but with a more internationally diversified export portfolio, born again globals, i.e. firms similar to born globals but established longer than five years before their first exports and traditional internationalizers, firms established more than five years before their first export operations characterized by a narrow geographical scope of their exports. We find SME export growth to be driven by a small group of born global firms, accounting for 60 per cent of the total increase in SME exports between 1998 and 2005. Analyzing the structural feature of the different types of firms, we find born globals to be more productive and characterized by a higher R&D spending and intangible asset intensity compared to other types of traders. We next test if the typology matters for the observed export performance differences across firms over time. We find that born globals grow faster in terms of export sales, have a stronger commitment to export markets and are more likely to continue exporting. Born globals also have the highest failure rate, traditional internationalizers the lowest. These findings suggest strong risk/return tradeoffs among the strategies chosen by the different types of firms. Performing a dynamic analysis of changes in trade configurations of firms over the observation period, we investigate how these changes have an impact on performance. Specific attention is paid to firms that stop importing/exporting. Especially firms that move from being exporters to become two-way traders, i.e. also starting to import goods from other countries show the most marked increases in turnover and productivity. The final part of the study analyzes the relationship between export and import activities to particular countries following the sequence in which they occur. We find that the probability to start importing from a country is 4 times higher for firms already exporting to that country than for trading SMEs without prior export experience in that country.
    Date: 2010–10
  12. By: Filip Abraham (K.U.Leuven, Centre for Economic Studies); Jan Van Hove (H.U.Brussel; K.U.Leuven)
    Abstract: Exporting firms are affected in many ways by competition on foreign markets. This paper focuses on the impact of Asian competition on the bilateral export performance of Belgian firms, controlling for firm level as well as destination-market characteristics. Export performance is measured in several ways, including the export intensity, the variety and quality of trade as well as the export intensity growth. Export performance appears to differ substantially across firms, across sectors and across destination markets. Our overall results indicate that both the export intensity and variety of Belgian firms’ exports are reduced by Asian competition. Especially the competitive pressure caused by mainland China and Hong Kong is strong. The competitive pressure is intense in labour-intensive sectors but also felt in a wide range of activities with a higher value added. Belgian exporters cope with foreign competition by following a variety-expansion or a quality-upgrading strategy.
    Keywords: multi-product firms, international trade, variety, quality, export intensity, competition, Asia
    JEL: F14 F15 L6
    Date: 2010–10
  13. By: Jacob Rubæk Holm; Christian Richter Østergaard
    Abstract: In this paper the use of the term “resilience” is discussed and a definition for use in quantitative studies of industrial evolution is suggested. Resilience is the ability of an industry in a region to exploit the possibilities arising from external events and adapt to thrive under new selection environments. An econometric analysis is undertaken to uncover the effects of the change in selection environment that the ICT industry faced from the burst of the ICT bubble in the year 2000. It is shown that some characteristics of regional industry structure are associated with growth over the whole period while other characteristics have varying effects pre and post burst. Special attention is given to the responsiveness of growth to the evolution of sales of ICT goods and services in Denmark and it is found that the industry structures that restrain growth also are the ones, which make the regional industry better able to exploit changes in sales at the national level.
    Keywords: Resilience; Business cycle; ICT sector; Regional growth
    JEL: E32 L86 R11
    Date: 2010

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