nep-sbm New Economics Papers
on Small Business Management
Issue of 2010‒12‒11
eight papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Innovation in symbolic industries: the geography and organisation of knowledge sourcing By Martin, Roman; Moodysson, Jerker
  2. Heterogeneous Exits: Evidence from New Firms By Kato, Masatoshi; Honjo, Yuji
  3. Innovation, R&D Investment and Productivity in Chile By Roberto Alvarez; Claudio Bravo-Ortega; Lucas Navarro
  4. Business Survival in Portuguese Regions By Alcina Nunes; Elsa de Morais Sarmento
  5. Evaluation of the Norwegian R&D tax credit scheme By Ådne Cappelen, Erik Fjærli, Frank Foyn, Torbjørn Hægeland, Jarle Møen, Arvid Raknerud and Marina Rybalka
  6. Who leads Research Productivity Change? Guidelines for R&D policy makers By Jiménez-Sáez, Fernando; Zabala, Jon Mikel; Zofío, José L.
  7. Spatial social-networking externality and firm location: a simulation model of Chile By Marcelo Lufin; Daisuke Nakamura
  8. The importance of values in family-owned frms By Ceja, Lucia; Agulles, Remei; Tapies, Josep

  1. By: Martin, Roman (CIRCLE, Lund University); Moodysson, Jerker (CIRCLE, Lund University)
    Abstract: This paper deals with geographical and organisational patterns of knowledge flows in the media industry of southern Sweden, an industry that is characterised by a strong ‘symbolic’ knowledge base. Aim is to address the question of the local versus the non-local as the prime arena for knowledge exchange, and to examine the organisational patterns of knowledge sourcing with specific attention paid to the nature of the knowledge sourced. Symbolic industries draw heavily on creative production and a cultural awareness that is strongly embedded in the local context; thus knowledge flows and networks are expected to be most of all locally configured, and firms to rely on informal knowledge sources rather than scientific knowledge or principles. Based on structured and semi-structured interviews with firm representatives, these assumptions are empirically assessed through social network analysis and descriptive statistics. Our findings show that firms rely above all on knowledge that is generated in project work through learning-by-doing and by interaction with other firms in localised networks. The analysis contributes to transcending the binary arguments on the role of geography for knowledge exchange which tend to dominate the innovation studies literature.
    Keywords: knowledge base; cultural industry; regional innovation system; network analysis; Sweden
    JEL: O30
    Date: 2010–12–01
  2. By: Kato, Masatoshi; Honjo, Yuji
    Abstract: This paper explores heterogeneous exits-bankruptcy, voluntary liquidation, and merger-by focusing on new firms. Using a sample of approximately 16,000 firms founded in Japan during 1997-2004, we examine the determinants of new-firm exit according to forms of exit. Regarding industry-specific characteristics, our findings indicate that new firms in capital-intensive and R&D-intensive industries are less likely to go bankrupt. In industries characterized by large amounts of capital and low price-cost margins, new firms are more likely to exit through voluntary liquidation and merger. Region-specific characteristics, such as regional agglomeration and unemployment rate, have significant effects on the hazards of exit, and their effects vary across different forms of exit. Moreover, we provide evidence that firm-specific characteristics, such as the number of employees, and entrepreneur-specific characteristics, such as educational background and age, play significantly different roles in determining each form of exit.
    Keywords: New firm, exit, bankruptcy, voluntary liquidation, merger, competing risks proportional hazards model
    Date: 2010–10
  3. By: Roberto Alvarez; Claudio Bravo-Ortega; Lucas Navarro
    Abstract: This paper uses two sources of information and different methodologies to analyze the causal effect of product and process innovation on productivity in the Chilean manufacturing industry during the past decade. In general, the evidence suggests there is not a contemporaneous effect of product innovation on productivity, but there is a positive effect of process innovation. This notsignificant effect of product innovation contrasts with evidence of studies for other countries. However, the results show the presence of lagged effects product innovation on productivity two years after innovation. Compared with the case of developed countries, this evidence might be consistent with a very slow process of “learning by doing” on the part of Chilean firms with regard to mastering new technologies. These slow and frequently uncertain gains in productivity could help to explain the low levels of investment in research and development (R&D) activities by Chilean firms.
    Keywords: Productivity, Innovation, Investment, Research and development, Chile
    JEL: D24 D92
    Date: 2010–10
  4. By: Alcina Nunes (Escola Superior de Tecnologia e Gestão do Instituto Politécnico de Bragança e GEMF, Faculdade Economia Universidade de Coimbra, Portugal); Elsa de Morais Sarmento (Departamento de Economia e Gestão da Universidade de Aveiro, Portugal)
    Abstract: This work addresses the post-entry performance of employer enterprises for seven regions in Portugal, at the NUT II level, by investigating the structural characteristics of survival, using non-parametric and semi-parametric methods, during the period 1985 to 2007. The last decades of the 20th century were characterized by a period of creative destruction in Portugal. In particular, regions such as Norte, Algarve and Madeira show the highest growth rates in enterprise births, deaths and firm churn. After 2000, firms´ births and deaths get relatively less turbulent. In the non-parametric analysis, we identify statistically significant disparities among regions. Norte has the lowest survival rate and Centro holds the longest surviving firms and the survival gap between the former two regions gets amplified over time. Concerning the semi-parametric analysis, firm’s current size dimension is a strong determinant for the probability of survival, particularly in the Norte and Açores. In industries characterized by high entry rates at the moment of a firm’s birth, post-entry survival becomes harder, especially in the south and in the Portuguese archipelagos, the regions with the lowest number of active employer enterprises. A higher entry rate combined with fast growth rates for any given industry also generates a shorter duration of firms. Manufacturing is the sector where more firms are more likely to abandon the market, particularly in Madeira and Norte. But it is turbulence, given by the sum of firms´ entry and exit rates that exhibits the most significant effect on survival. For every region, except for the Açores, where there is no statistical significance, those that have the highest record of firm turbulence, also display the lowest business survival probabilities. Turbulence decreases severely the survival probabilities of firms located in Madeira and Norte and to a lesser extent in the Algarve.
    Keywords: Duration Analysis, Firm dynamics, Entrepreneurship, Regional Analysis.
    JEL: C14 C41 L25 L26 R11
    Date: 2010–10
  5. By: Ådne Cappelen, Erik Fjærli, Frank Foyn, Torbjørn Hægeland, Jarle Møen, Arvid Raknerud and Marina Rybalka (Statistics Norway)
    Abstract: We find that the Norwegian R&D tax credit scheme introduced in 2002 mainly works as intended. The scheme is cost-effective and it is used by a large number of firms. It stimulates these firms to invest more in R&D, and, in particular, the effect is positive for small firms with little R&D experience. The returns on the R&D investments supported by the scheme are positive and generally not different from the returns to other R&D investments. We have found examples of what can be interpreted as tax motivated adjustments to the scheme, but to some extent this must be accepted as a cost to subsidy and support schemes intended for use by a large number of economic agents. This is particularly so when attempts are made to keep administrative expenditures and control routines at a low level.
    Keywords: R&D tax credit; R&D subsidies; Innovation policy; Norway
    JEL: H25 O38
    Date: 2010–12
  6. By: Jiménez-Sáez, Fernando (INGENIO (CSIC-UPV), Institute of Innovation and Knowledge Management, Univ. Polytechnic of Valencia); Zabala, Jon Mikel (CIRCLE, Lund University); Zofío, José L. (Department of Economic Analysis, Autonomous University of Madrid, Spain)
    Abstract: Relying on efficiency analysis we evaluate to what extent policy makers have been able to promote the establishment of consolidated and comprehensive research groups to contribute to the implementation of a successful innovation system for the Spanish food technology sector, oriented to the production of knowledge based on an application model. Using data envelopment analysis techniques and Malmquist productivity indices we find pervasive levels of inefficiency and a typology of different research strategies. Among these, in contrast to what has been assumed, established groups do not play the pre-eminent benchmarking role; rather, partially oriented, specialized and "shooting star" groups are the most common patterns. These results correspond with an infant innovation system, where the fostering of higher levels of efficiency and promotion of the desired research patterns are ongoing.
    Keywords: Innovation Policy; Management; Productivity Change; Malmquist Index; Distance Function
    JEL: C43 D24 O47
    Date: 2010–10–30
  7. By: Marcelo Lufin (Department of Economics, Universidad Católica del Norte); Daisuke Nakamura (Department of Economics, Universidad Católica del Norte)
    Abstract: There have already been several established approaches regarding social externalities and location decision-making of the firm. However, those usually face certain difficulties when the model is applied to the real economic system. This technical problem may be solved by testing the case of spatial structure of Chile, where particular spatial configurations characterized by extremely narrow and long geographical attributes are available. While there are various methods of investigation such as spatial econometrics and CGE models, we attempt to compose a spatial Keiretsu framework by applying numeric simulation analysis. To be precise, the simulation initially distributes firms at random across whole regions of the country in order to observe the evolution process of every individual firm together with given conditions of spatially-constrained external economies of scale, scope and complexity in each region. It is then examined the potential impact of changes in internal economies such as horizontal, lateral and vertical integrations on the efficiency of further growth with respect to expansion time and scale of firms in addition to given availability of external economies. Furthermore, sensitivity of simulation is measured to evaluate the creation of new firms as well as their evolution processes by means of repeating Monte-Carlo method. The simulation outcome may provide policy implications such as the accumulating issue of severe spatial concentration in the Metropolitan Region of the country. Finally, the analysis explores further avenues of research towards general framework of spatial social externalities
    Keywords: Firm location, social network externalities, simulation model, internal and external economies
    JEL: C51 D85 L14 O15
    Date: 2010–11
  8. By: Ceja, Lucia (IESE Business School); Agulles, Remei (IESE Business School); Tapies, Josep (IESE Business School)
    Abstract: Belief in the powerful role that values play in family-owned firms' success and well-being drove collaboration on this research project among the disciplines of management, psychology and philosophy. The goals of this research are to define the concept of values from a philosophical perspective, to empirically examine the corporate values of the world's largest family-owned firms and non-family businesses, and to study whether there are specific values that are predominant in family-owned firms. The study resulted in three main findings. First, based on the philosophical literature, we developed a definition, classification and hierarchy of values. Second, we found that within the values that were mentioned most frequently by the world's largest corporations, the top three most mentioned (i.e., integrity, respect and customers) were the same for both family-owned firms and non-family businesses. Finally, findings from the present study indicate a series of values that are characteristic of family businesses (i.e., generosity, humility, communication, service, quality, excellence, creativity and entrepreneurship). Examining these values shows interesting patterns. For example, most of them belong to the category of behavioral values. Likewise, values in the world's largest family-owned firms seem to have three main characteristics: they emphasize a collective orientation; they have a long-term perspective; and they have a sense of stewardship. Also discussed are the practical implications of the study, its limitations and areas for future research.
    Keywords: family-owned firms; values; mission; vision;
    Date: 2010–07–07

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