nep-sbm New Economics Papers
on Small Business Management
Issue of 2011‒10‒15
twenty papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. The impact of R&D on employment in Europe: a firm-level analysis By Francesco Bogliacino; Mariacristina Piva; Marco Vivarelli
  2. What type of innovative firms acquire knowledge intensive services and from which suppliers? By José García-Quevedo; Francisco Mas-Verdú; Daniel Montolio
  3. Innovation and Corporate Dynamics: A Theoretical Framework By Jakub Growiec; Fabio Pammolli; Massimo Riccaboni
  4. Il ruolo dell'età della dimensione nella crescita occupazionale delle PMI Italiane. By Marco Corsino; Roberto Gabriele; Sandro Trento
  5. The Impact of Cultural Diversity on Innovation: Evidence from Dutch Firm-Level Data By Ozgen, Ceren; Nijkamp, Peter; Poot, Jacques
  6. R&D and knowledge dynamics in university-industry relationships in biotech and pharmaceuticals: An agent-based model By Triulzi, Giorgio; Scholz, Ramon; Pyka, Andreas
  7. Growth of Incumbent Firms and Entrepreneurship in Vietnam By E. Santarelli; H. T. Tran
  8. Patterns of business creation, survival and growth : evidence from Africa By Klapper, Leora; Richmond, Christine
  9. The Relationship Between Strategic Choices and Performance in Italian Food SMEs: A Resource-based Approach By Carraresi, Laura; Mamaqi, Xhevrie; Albisu, Luis Miguel; Banterle, Alessandro
  10. Firm start-up strategies and performance in France: Survival and growth By Jean Bonnet, University of Caen Basse-Normandie - CREM-CNRS; Nicolas Le Pape, University of Caen Basse-Normandie - CREM-CNRS; Teresa Nelson, Simmons College School of Management - Boston
  11. ENTREPRENEURSHIP: EXPLORING THE KNOWLEDGE BASE By Hans Landström; Gouya Harirchi; Fredrik Åström
  12. Research output from university-industry collaborative projects By Albert Banal-Estañol; Inés Macho-Stadler; David Pérez-Castrillo
  13. New Business Start-ups and the Business Cycle By Coles, Melvyn G; Kelishomi, Ali Moghaddasi
  14. Organizational Characteristics and Performance of Export Promotion Agencies: Portugal and Ireland compared By Maria Inês Veloso Ferreira; Aurora A.C. Teixeira
  15. Multi-product firms and business cycle dynamics By Antonio Minniti; Francesco Turino
  16. Knowledge cluster formation as a science policy: lessons learned By Evers, Hans-Dieter
  17. Ten Years of Global Entrepreneurship Monitor: Accomplishments and Prospects By José Ernesto Amoros; Niels Bosma; Jonathan Levie
  18. R&D investment responses to R&D subsidies: A theoretical analysis and a microeconometric study By Klette, Tor Jakob; Møen, Jarle
  19. Looking East, looking West: Penang as a knowledge hub By Gerke, Solvay; Evers, Hans-Dieter
  20. Simulating the Spillover Benefits from R&D by a small producer country embedded in a Network: Aquaculture R&D in Germany By Guettler, Stefan; Seidel-Lass, Linda; Mueller, Rolf A.E.

  1. By: Francesco Bogliacino (European Commission, Joint Research Center - Institute for Perspective Technological Studies, Sevilla & Centro de Estudios Para America Latina y el Caribe-Universidad EAFIT, Rise Group); Mariacristina Piva (Università Cattolica, Milano and Piacenza); Marco Vivarelli (Università Cattolica, Milano and Piacenza & SPRU-University of Sussex & IZA, Bonn)
    Abstract: The aim of this paper is to test the employment effect of business R&D expenditures, using a unique longitudinal database covering 677 European manufacturing and service firms over the period 1990-2008. Main result from the whole sample dynamic LSDVC (Least Squared Dummy Variable Corrected) estimate is the labour-friendly nature of companies’ R&D, the coefficient of which turns out to be statistically significant, although not very large in magnitude. However, the positive and significant job creation effect of R&D expenditures is detectable in services and high-tech manufacturing but absent in the more traditional manufacturing sectors. This means that we should not expect positive employment effects from increasing R&D in the majority of industrial sectors. This evidence should be kept in mind by European innovation policy makers having employment as one of their specific aims.
    Keywords: Innovation, employment, manufacturing, services, LSDVC
    JEL: O33
    Date: 2011
  2. By: José García-Quevedo (University of Barcelona & IEB); Francisco Mas-Verdú (Universitat Politècnica de Valencia & IEB); Daniel Montolio (University of Barcelona & IEB)
    Abstract: Knowledge intensive services (KIS) and, in particular, R&D services contribute significantly to innovation in firms. The objective of this paper is to find out which characteristics of firms explain the acquisition of R&D services and to analyse whether there are differences depending on the typology of the supplier (universities, technology centres and consulting firms). Three main conclusions emerge from the econometric estimations. Firstly, the results show that size and age matter in the decision to buy R&D services, but these characteristics of firms do not have any particular influence in the decision to choose a specific supplier. Secondly, our results are consistent with the relevance that the literature gives to human capital in absorbing external knowledge. The variables used to control for human skills have a positive effect on the decision to buy R&D services. On the contrary, the estimates of other variables that capture internal knowledge base suggest that there is a substitution process between internal R&D activities and acquiring R&D services. Thirdly, innovation policy has a significant influence on the decision to acquire R&D services.
    Keywords: Knowledge intensive services; R&D services; universities; technology centres; consulting firms; innovation policy
    JEL: L84 O32 L24
    Date: 2011
  3. By: Jakub Growiec; Fabio Pammolli; Massimo Riccaboni
    Abstract: We provide a detailed analysis of a model of innovation and corporate dynamics that encompasses the Gibrat’s Law of Proportionate Effect and the Simon growth process as particular instances. The predictions of the model are derived in terms of (i) firm size distribution, (ii) the distribution of firm growth rates, and (iii-iv) the relationships between firm size and the mean and variance of firm growth rates. We test the model against data from the worldwide pharmaceutical industry and find its predictions to be in good agreement with empirical evidence on all four dimensions.
    Keywords: Business firm size; firm growth distribution; Gibrat's Law; Pareto distribution; lognormal distribution, size-variance relationship.
    JEL: C49 L11 L25 L65
    Date: 2011–08
  4. By: Marco Corsino; Roberto Gabriele; Sandro Trento
    Abstract: This paper empirically investigates gross job flows and the growth patterns of continuing limited liability companies in Italy over the period 1996-2004, using original data on work forces and other characteristics of the firm. The descriptive analysis reveals that the magnitude of gross job flows among small and medium-sized companies in Italy is lower than what observed in Anglo-Saxon countries, but it is consistent with evidence for the Euro area. Alongside, the magnitude of job flows significantly shrunk in the aftermath of the economic downturn in 2001: firms fared worse than in the late nineties and the labour market became less efficient in allocating job opportunities. The econometric analysis shows that size negatively affects firms’ net employment growth, even though the negative correlation vanishes among companies with more than 24 employees. The impact of age on growth is complex: new ventures and firms that are at most 14 years old outperform the average firm in the sample. On the contrary, age does not have any bearing on the growth of units aged 15 years and more, and it even represents a burden among the oldest firms in the sample.
    Keywords: Gross job flows, firm growth, firm size, firm age
    JEL: J62 L25 L60
    Date: 2011–07
  5. By: Ozgen, Ceren (VU University Amsterdam); Nijkamp, Peter (VU University Amsterdam); Poot, Jacques (University of Waikato)
    Abstract: Due to the growth in international migration in recent decades, the workforce of firms in host countries has become considerably more diverse, both demographically and culturally. It is an important question for firms and for governments to ask whether there are some productivity-enhancing externalities gained from this growing diversity within firms. In recent years migration research has demonstrated positive economic impacts of cultural diversity on productivity and innovation at the regional level. However, there is a dearth of research on the links between innovation and migrant diversity at the firm level. In this paper we construct and analyse a unique linked employer-employee micro-dataset of 4582 firms, based on survey and administrative data obtained from Statistics Netherlands. Excluding firms in the hospitality industry and other industries that employ low-skilled migrants, we use the local number of restaurants with foreign cuisines and the historical presence of migrant communities as valid instruments of endogenous migrant settlement. We find that firms in which foreigners account for a relatively large share of employment are somewhat less innovative. However, there is strong evidence that firms that employ a more diverse foreign workforce are more innovative, particularly in terms of product innovations.
    Keywords: immigration, innovation, cultural diversity, knowledge spillovers, linked employer-employee data, Netherlands
    JEL: F22 O31
    Date: 2011–10
  6. By: Triulzi, Giorgio; Scholz, Ramon; Pyka, Andreas
    Abstract: In the last two decades, University-Industry Relationships have played an outstanding role in shaping innovation activities in Biotechnology and Pharmaceuticals. Despite the growing importance and the considerable scope of these relationships, there still is an intensive and open debate on their short and long term effects on the research system in life sciences. So far, the extensive literature on this topic has not been able to provide a widely accepted answer. This work introduces a new way to analyse University-Industry Relationships (UIRs) which makes use of an agent-based simulation model. With the help of simulation experiments and the comparison of different scenario results, new insights on the effects of these relationships on the innovativeness of the research system can be gained. In particular, focusing on knowledge interactions among heterogeneous actors, we show that: (i) universities tend to shift from a basic to an applied research orientation as a consequence of relationships with industry, (ii) universities' innovative capabilities benefit from industry financial resources but not so much from cognitive resources of the companies, (iii) biotech companies' innovative capabilities largely benefit from the knowledge interaction with universities and (iv) adequate policies in terms of public basic research funding can contrast the negative effects of UIRs on university research orientation. --
    Keywords: University-Industry Relationships,Knowledge Dynamics,University Patenting,Technology Transfer,Agent-Based Modelling
    Date: 2011
  7. By: E. Santarelli; H. T. Tran
    Abstract: This paper analyzes the relationship between the performance of incumbent firms and the net entry of new firms by combining different theoretical views of entrepreneurship. It shows that new knowledge and ideas created but not commercialized by incumbents are an important source of entrepreneurial opportunities for nascent firms. Different regression models to treat dynamics and endogeneity issues are applied to test the research hypothesis that growth of incumbent firms in a region will stimulate start-up activities by creating new profit opportunities for potential entrepreneurs. Vietnam’s regional micro-data from 2000 to 2008 are used for this test. Four controlling indicators – entrepreneurial demand, market structure, regional economic environment, and market innovativeness – are found to exert a statistically significant effect on new entries.
    JEL: L25 L26 O53 R12
    Date: 2011–09
  8. By: Klapper, Leora; Richmond, Christine
    Abstract: The authors study firm dynamics using a novel database of all formally registered firms in Cote d'Ivoire from 1977 to 1997, which account for about 60 percent of gross domestic product. First, they examine entry and exit patterns and the role of new and exiting firms versus incumbents in job creation and destruction. They find that while the rate of job creation at new firms is quiet high -- at 8 percent on average -- the number of jobs added by new firms is small in absolute terms. Next, they examine survival rates and find that the probability of survival increases monotonically with firm size, but manufacturing and foreign-owned firms face higher likelihoods of exit compared with service oriented and domestically owned firms. They find that higher growth of gross domestic product increases the probability of firm survival, but this is a broad impact with no firm size disproportionately affected. In robustness checks, they find that after 1987 size is no longer a significant determinant of firm survival for new entrants, suggesting that the operating environment for firms changed. Finally, they find that trade and fiscal reform episodes raised the probability of firm exit and attenuated the survival disadvantages faced by smaller firms, but exchange rate revaluation and pro-private sector reforms did not significantly lower the likelihood of exit.
    Keywords: Microfinance,Environmental Economics&Policies,Labor Markets,Small Scale Enterprise,Economic Theory&Research
    Date: 2011–10–01
  9. By: Carraresi, Laura; Mamaqi, Xhevrie; Albisu, Luis Miguel; Banterle, Alessandro
    Abstract: In the context of progressive rise of the competition among firms, due to the increasing globalisation, it is interesting to understand the potential sources of competitive advantage in order to set up a successful strategy. The theory of Resource-based View used in this framework examines the connection among internal resources and strategic choices, and how the latter affect firm performance. The firm strategy is determined by available resources and capabilities which are deployed to obtain a good performance. Therefore, strategic choices act in between resources and performance. The purpose of the paper is to evaluate the relationship between strategic choices and performance achieved by food SMEs, based on a set of distinctive resources. This approach is assessed in food SMEs located in Italy, by applying a Structural Equation Model. The results of the empirical analysis showed that, in the food sector, strategic choices based on innovation, product positioning, and chain relationship development have positive effects on performance, but only if distinctive resources and capabilities are considered. Innovation plays a capital role because of its direct as well as indirect effects.
    Keywords: resource-based view, strategic choices, SMEs, food sector, structural equation modelL11, L25, L66, Q13, Agribusiness,
    Date: 2011
  10. By: Jean Bonnet, University of Caen Basse-Normandie - CREM-CNRS; Nicolas Le Pape, University of Caen Basse-Normandie - CREM-CNRS; Teresa Nelson, Simmons College School of Management - Boston
    Abstract: Essential performance outcomes of the new firm, including survival and growth, are related to financial and operational factors of the firm. We present a model that shows that firm financing via debt has some influence on types of market outreach, survival, and also growth of new firms in France. Using a robust, longitudinal dataset of the population of firms throughout the country established, continuing, and closing over the period of 2002 to 2007 (available through the French government via the SINE Survey: Système d’informations sur les nouvelles entreprises), we show that for a given indebtedness of the new firm, the entrepreneurial behavior generally improves the survival and the growth of new ventures.
    Keywords: High growth new firms, Aggressiveness, Indebtedness, Model, Performance.
    JEL: L2 C3 C41
    Date: 2011–10
  11. By: Hans Landström (CIRCLE, Lund University, Sweden); Gouya Harirchi (Department of Innovation and Organizational Economics, Copenhagen Business School, Denmark); Fredrik Åström (Lund University Libraries, Lund University, Sweden)
    Abstract: Entrepreneurship research has a long tradition and since the 1980s the field has grown significantly. In this study we identify the ‘knowledge producers’ who have shaped the field over time and their core entrepreneurship research works. A unique database consisting of all references in twelve entrepreneurship ‘handbooks’ (or stateof- the-art books) has been developed. The chapters in these handbooks were written by experts within the field, and it can be assumed that the most frequently cited references represent ‘core knowledge’ with relevance to entrepreneurship research. From our analysis, it appears that entrepreneurship is a rather changeable field of research, closely linked to disciplines such as ‘management studies’ and ‘economics’. Over time, the field has become more formalized with its own core knowledge, research specialities and an increasing number of ‘insider works’. However, it is still based on some fairly old theoretical frameworks imported from mainstream disciplines, although during the last decade we have seen the emergence of a number of new field-specific concepts and theories. We argue that to successfully develop entrepreneurship research in the future, we need to relate new research opportunities to earlier knowledge within the field, which calls for a stronger ‘knowledge-based’ focus. We would also like to see greater integration between the fields of entrepreneurship and innovation studies in the future.
    Keywords: entrepreneurship, research field, handbooks, bibliometric analysis
    Date: 2011–10
  12. By: Albert Banal-Estañol (Universitat Pompeu Fabra & City University); Inés Macho-Stadler (Universitat Autonoma de Barcelona); David Pérez-Castrillo (Universitat Autonoma de Barcelona)
    Abstract: We study collaborative and non-collaborative projects that are supported by government grants. First, we propose a theoretical framework to analyze optimal decisions in these projects. Second, we test our hypotheses with a unique dataset containing academic publications and research funds for all the academics at the major engineering departments in the UK. We find that the type of the project (measured by its level of appliedness) is increasing in the type of both the university and firm partners. Also, the quality of the project (number and impact of the publications) increases with the quality of the researcher and firm, and with the affinity in the partners’ preferences. The collaboration with firms increases the quality of the project only when the firms’ characteristics make them valuable partners.
    Keywords: industry-science links, research collaborations, basic versus applied research
    JEL: O32 I23
    Date: 2011
  13. By: Coles, Melvyn G; Kelishomi, Ali Moghaddasi
    Abstract: This paper considers new business start-up activity within a stochastic equilibrium model of unemployment. The resulting job creation process is both natural and tractable, and generates equilibrium unemployment and vacancy dynamics which match the volatility and persistence observed in the data. The insight is that the standard Diamond/Mortensen/Pissarides matching framework works beautifully once the free entry of vacancies assumption is replaced by a model of business start-up activity. The approach is particularly important as it is demonstrated that a large part of net job creation in the U.S. economy can be attributed to new business start-ups.
    Keywords: aggregate dynamics; equilibrium unemployment; startups
    JEL: E24 E32 J63 J64
    Date: 2011–10
  14. By: Maria Inês Veloso Ferreira (Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto; OBEGEF)
    Abstract: Export Promotion Agencies (EPAs) have been in operation in developed countries since the beginning of the 20th century to improve the competitiveness of firms by increasing knowledge and competences applied to export market development. Some studies exists on the influence of organizational characteristics on EPAs’ performance, but, to the best of our knowledge, no studies have yet been conducted that analyze, detail and explain which of the EPAs’ organizational characteristics are associated to their differing levels of success. In the present paper we compare a laggard (Portuguese) and a highly efficient (Irish) EPA in terms of export promotion. A questionnaire was applied to the employees of the two EPAs who deal directly with firms in terms of exports promotion. Using the non-parametric test of Kruskal Wallis and factor analysis we found that there are clear differences between the agencies regarding organizational dimensions. In particular, Agência para o Investimento e Comércio Externo de Portugal (AICEP) emerges as an organization without any clear component of intentionality, being more concerned with internal matters rather than with actions directed at the market. In contrast, Enterprise Ireland (EI)’s philosophy is more market-oriented and taking the clients’ needs into consideration is a priority.
    Keywords: Export Promotion Agencies; Organizational Performance; Portugal; Ireland
    JEL: F13 D02 D23
    Date: 2011–09
  15. By: Antonio Minniti (Facoltà di Economia); Francesco Turino (Universidad de Alicante)
    Abstract: Recent empirical evidence provided by Bernard et al. (2010) and Broda and Weinstein (2010) shows that a significant share of product creation and destruction in U.S. industries occurs within existing firms and accounts for a relevant share of aggregate output. In the present paper, and consistently with this evidence, we relax the standard assumption of mono-product firms that is typically made in dynamic general equilibrium models. Building on the work of Jaimovich and Floetotto (2008), we develop an RBC model with multi-product firms and endogenous markups to assess the implications of the intra-firm extensive margin on business cycle fluctuations. In this environment, the procyclicality of product creation emerges as a consequence of strategic interactions among firms. Because of the proliferation effect induced by changes in product scope, our model embodies a quantitatively important magnification mechanism of technology shocks.
    Keywords: Multi-product Firms, Business Cycles, Firm Dynamics.
    JEL: E32 L11
    Date: 2011–09
  16. By: Evers, Hans-Dieter
    Abstract: Regional science policy aims at the creation of productive knowledge clusters, which are central places within an epistemic landscape of knowledge production and dissemination, K-clusters are said to have the organisational capability to drive innovations and create new industries. The following paper will look at Malaysia, Indonesia and Vietnam and their path towards a Knowledge-based economy. All governments have used cluster formation as one of their development strategies. Some evidence on the current state of knowledge cluster formation is provided. If the formation of a knowledge cluster has been the government policy, what has been the result? Is there an epistemic landscape of knowledge clusters? Has the main knowledge cluster really materialised? Data collected from websites, directories, government publications and expert interviews have enabled us to construct the epistemic landscape of Peninsular Malaysia and the Mekong Delta of Vietnam. Several knowledge clusters of a high density of knowledge producing institutions and their knowledge workers have been identified and described. An analysis of the knowledge output, measured in terms of scientific publications, patents and trademarks show that knowledge clusters have, indeed, been productive as predicted by cluster theory, though the internal working of clusters require further explanation.
    Keywords: Science policy; knowledge and development; knowledge-based economy; knowledge clusters; knowledge corridors; Malaysia; Vietnam
    JEL: J38 R58 O1 G38 D83 D8 D78 E61 O3 A14
    Date: 2011–09–20
  17. By: José Ernesto Amoros; Niels Bosma; Jonathan Levie
    Abstract: In its first ten years, the Global Entrepreneurship Monitor (GEM) has had three main aims: to measure differences in the level of entrepreneurial activity between countries, to uncover factors determining national levels of entrepreneurial activity and to identify policies that would stimulate entrepreneurship. This paper reviews the theoretical and empirical contributions by the GEM consortium ten years after the presentation of its first Global Report in 1999. The evolution of GEM measures of entrepreneurship is tracked, and the quantity and quality of peer-reviewed scholarship based on GEM data and models are assessed. Prospects and recommendations for the future are noted, as GEM continues to expand and scholars outside the consortium increasingly employ GEM data in their work.
    Keywords: Global Entrepreneurship Monitor, Entrepreneurial Activity, Economic Development
    JEL: J24 L26 O11
    Date: 2011–08
  18. By: Klette, Tor Jakob (Department of Economics, University of Oslo); Møen, Jarle (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: Subsidies to the Norwegian high-tech industries have traditionally been given as "matching grants", i.e. the subsidies are targeted, and the firms have to contribute a 50 % own risk capital to the subsidized projects. Our results suggest that grants do not crowd out privately financed R&D, but that subsidized firms do not increase their privately financed R&D either. Hence, the own risk capital seems to be taken from ordinary R&D budgets. We also investigate possible long-run effects of R&D subsidies, and show that conventional R&D investment models predict negative dynamic effects of subsidies. Our data, however, do not support this claim. On the contrary, there are indications of a positive dynamic effects, i.e. temporary R&D subsidies seem to stimulate firms to increase their R&D investments even after the grants have expired. We propose learning-by-doing in R&D activities as a possible explanation for this, and present a theoretical analysis showing that such effects may alter the predictions of the conventional models. A structural, econometric model of R&D investments incorporating such learning effects is estimated with reasonable results.
    Keywords: Technology policy; R&D subsidies; matching grants; short run additionality; long run additionality; Norwegian IT-industry
    JEL: H25 H32 L53 O32 O38
    Date: 2011–09–06
  19. By: Gerke, Solvay; Evers, Hans-Dieter
    Abstract: Penang has always been a focal point, absorbing knowledge (and popular culture) from civilizations to the East and West. In modern Penang the pattern of cultural contacts has changed over time. Research institutes and universities in Penang cooperate with foreign partners to produce research papers and reports. Based on an analysis of joint research output, the changing international position of Penang as an emerging research hub will be analysed. The paper will show that international cooperation has increased considerably between 1970 and 2010, but that there has also been a remarkable shift from European, Australian and American partners to East Asian and to South Asian partners. The latter will be analysed in greater detail to show the development of Penang as an increasingly important Asian knowledge hub. One of the highlighted results of our paper will be the increasing importance of research ties across the Indian Ocean.
    Keywords: Knowledge; knowledge for development; science policy; economic development; knowledge clusters; research output; Malaysia; India; China; ASEAN
    JEL: O1 D8 A14
    Date: 2011–09–20
  20. By: Guettler, Stefan; Seidel-Lass, Linda; Mueller, Rolf A.E.
    Keywords: Research and Development/Tech Change/Emerging Technologies,
    Date: 2011

This nep-sbm issue is ©2011 by Joao Carlos Correia Leitao. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.