nep-sbm New Economics Papers
on Small Business Management
Issue of 2011‒12‒13
seventeen papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Technological innovation persistence : Literature survey and exploration of the role of organizational innovation By Christian Le Bas; Caroline Mothe; Thuc Uyen Nguyen-Thi
  2. The cognitive and geographical composition of ego-networks of firms – and how they impact on their innovation performance By Tom Broekel; Ron Boschma
  3. R&D Drivers in Young Innovative Companies By García-Quevedo, José; Pellegrino, Gabriele; Vivarelli, Marco
  4. Regional dispersion of cooperation activities as success factor of innovation oriented SME By Stoetzer, Matthias-Wolfgang; Pfeil, Silko; Kaps, Katharina; Sauer, Thomas
  5. Matthew effects and R&D subsidies: knowledge cumulability in high-tech and low-tech industries By Francesco Crespi; Cristiano Antonelli
  6. Knowledge spillovers and productivity in Italian manufacturing firms By Aldieri, Luigi
  7. Employment Generation, Firm Size and Innovation: Microeconometric Evidence from Argentina By Sheila de Elejalde; David Giuliodori; Rodolfo Stucchi
  8. Innovation, Firm Size, Technology Intensity, and Employment Generation in Uruguay: The Microeconometric Evidence By Diego Aboal; Paula Garda; Bibiana Lanzilotta; Marcelo Perera
  9. Cooperation and innovative performance of firms: Panel data evidence from the Czech Republic, Norway and the United Kingdom By Martin Srholec
  10. The impact of classes of innovators on Technology, Financial Fragility and Economic Growth By Stefania VITALI; Gabriele TEDESCHI
  11. Characteristics of Regional Industry-specific Employment Growth – Empirical Evidence for Germany By Matthias Duschl; Thomas Brenner
  12. Assessing the Impact of Public Support on Innovative Productivity By Alessandra Catozzella; Marco Vivarelli
  13. The complementary effects of proximity dimensions on knowledge spillovers By Emanuela Marrocu; Raffaele Paci; Stefano Usai
  14. Industrial dynamics and economic geography: a survey By Koen Frenken; Elena Cefis; Erik Stam
  15. Credit Access for Small and Medium Firms: Survey Evidence for Ireland By Lawless, Martina; McCann, Fergal
  16. Resilience and Potential in Maritime Clusters By Cooke, Philip
  17. Inward FDI and firm-specific advantages of Indian manufacturing industries By Mishra, Bikash Ranjan

  1. By: Christian Le Bas (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Caroline Mothe (IREGE, University of Savoie, France); Thuc Uyen Nguyen-Thi (CEPS/INSTEAD, 3 av de la Fonte, 4364 Esch-sur-l'Alzette, Luxembourg)
    Abstract: In this paper, we will review the literature on technological innovation persistence and provide a general theoretical framework to analyze the main determinants of this innovative behavior. Moreover, no previous empirical study has taken into account organizational innovation practices as possible determinants of innovation persistence. We will therefore include them, as previous studies have shown the interaction effects between the two types of innovation, and produce empirical results on technical innovation persistence. A multinomial probit model was used to estimate the likelihood of belonging to each of the three longitudinal innovation profiles. Results confirm the differentiated impact of determinants on process and technological innovation persistence, and the effect of R&D intensity, R&D cooperation and competition intensity. As hypothesized, we also found that organizational innovation is a determinant factor for innovation persistence and, more generally speaking, for technological innovation, in particular organizational practices such as knowledge management and external partnerships.
    Keywords: Persistance; Innovation; Technologie; Organisationnelle innovation; R&D
    JEL: O30
    Date: 2011
  2. By: Tom Broekel; Ron Boschma
    Abstract: Firms’ embeddedness into knowledge networks has received much attention in the literature. However, little is known about the composition of firms’ ego-networks with respect to different types of proximities. Based on survey data of 295 firms in eight European regions, we show that the ego-networks of firms systematically differ in their geographical and cognitive embeddedness. We find that firms’ innovation performance is stimulated if the firm primarily links to technologically related firms as well as technologically similar organizations. Connecting with organizations at different geographical levels yields positive effects as well.
    Keywords: ego-networks, geographical proximity, innovation performance, knowledge networks, technological relatedness
    JEL: B15 R11 R12
    Date: 2011–08
  3. By: García-Quevedo, José (University of Barcelona); Pellegrino, Gabriele (University of Barcelona); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: This paper examines the determinants of young innovative companies' (YICs) R&D activities taking into account the autoregressive nature of innovation. Using a large longitudinal dataset comprising Spanish manufacturing firms over the period 1990-2008, we find that previous R&D experience is a fundamental determinant for mature and young firms, albeit to a smaller extent in the case of the YICs, suggesting that their innovation behaviour is less persistent and more erratic. Moreover, our results suggest that firm and market characteristics play a distinct role in boosting the innovation activity of firms of different age. In particular, while market concentration and the degree of product diversification are found to be important in fostering R&D activities in the sub-sample of mature firms only, YICs' spending on R&D appears to be more sensitive to demand-pull variables, suggesting the presence of credit constraints. These results have been obtained using a recently proposed dynamic type-2 tobit estimator, which accounts for individual effects and efficiently handles the initial conditions problem.
    Keywords: R&D, innovation, Young Innovative Companies (YICs), dynamic type-2 tobit estimator
    JEL: O31
    Date: 2011–11
  4. By: Stoetzer, Matthias-Wolfgang; Pfeil, Silko; Kaps, Katharina; Sauer, Thomas
    Abstract: In this paper, we analyze the relationships between different types of innovation and collaboration, given the varying geographical distance of the latter. The study is based on the data of the research project 'KompNet 2011 - Factors determining the success of regional innovation networks', which examines the innovation activities of small and medium-sized enterprises (SME) in and closely around Jena (Thuringia). The aim of this paper is to explore to what extent spatial reach of collaboration linkages determines innovation orientation and innovative behavior. That means: Innovation performance could be positively related to (a) to a high intensity of local collaboration, (b) the intensity of international collaboration or (c) neither regional nor (inter)national collaborations. In a first step we summarize the relevant literature which comprises aspects of our central subject under investigation. We additionally discuss the necessity of keeping in mind several control variables for theoretical and empirical reasons. In the following we present descriptive analyses relating to the regional reach of collaboration in general, the impact of collaboration on innovation and the links between the regional reach of cooperation and different forms of innovation, i.e. product, process, marketing and organizational innovation. In a final step we discuss the results of several regression models. We observe that there is no significant influence of the geographical variables on the innovative performance of SME. Therefore our findings suggest that innovative firms rely on collaboration partners at a variety of spatial distances. The results also show a significant and positive influence of the intensity of competition on the innovativeness of firms in all models. Furthermore product- and process innovations are created by firms with intensive cooperative activities to scientific institutions, while a wide variety of cooperation partners and a strong focus on quality leadership turns out to be important for the development of marketing- and organizational innovations. --
    Keywords: cooperation,geographical reach,innovation,intensity of competition,marketing innovation,organizational innovation,process innovation,product innovation,quality leadership,regional dispersion,SME,spatial distance
    JEL: D85 L10 O31 R12
    Date: 2011
  5. By: Francesco Crespi; Cristiano Antonelli
    Abstract: The paper explores the causes and effects of persistence in the discretionary allocation of public subsidies to R&D activities performed by private firms in high-tech and low-tech industries. It applies the distinction between virtuous Matthew-effects and vicious Matthew-effects. The former qualifies the persistence in the discretionary allocation of public subsidies in terms of sheer reputation based upon previous awards. The latter is identified by the role of the accumulation of competence stemming from past grants in current R&D activities. Virtuous Matthew effects are found in high-tech industries where knowledge cumulability is higher. In traditional industries, vicious Matthew effects prevail for the lower levels of knowledge cumulability. Here reputation-Matthew-effects can lead to substitution of private funds with public ones. The empirical analysis is based on Transition Probability Matrices, probit regressions and Propensity Score Matching on around 700 Italian firms in the years 1998-2003.
    Keywords: Innovation; R&D subsidies; Matthew effects; past dependence; path dependence
    JEL: H25 H32 L52
    Date: 2011–10
  6. By: Aldieri, Luigi
    Abstract: In this paper we analyze the relationship between R&D spillovers and productivity. To this aim, we use data from 9th and 10th “Indagine sulle imprese manifatturiere” (IMM) surveys carried out by Capitalia. These two surveys, which cover the period 2001-2006, contain both quantitative and qualitative information on a large sample of Italian firms. The main contribution of this paper is to stress the importance of replacing the traditional high-tech/low-tech industries with a classification more suitable to capture the nature of new technologies. Indeed, the industry data are summarised in a particular taxonomy, according to Pavitt methodology: Supplier dominated, Scale intensive, Specialized suppliers and Science based. This taxonomy accounts for differences in the knowledge intensity and innovative activities within sectors. The estimation method takes into account the endogeneity of regressors and simultaneity issue regarding firms’ decision to invest in R&D. The results provide evidence of higher productivity in R&D intensive industries and this can be interpreted as the signal of the relevance of spillover effects.
    Keywords: Industry taxonomies; R&D; Productivity; Spillovers
    JEL: D62 C23 D24 O3
    Date: 2011–11–25
  7. By: Sheila de Elejalde; David Giuliodori; Rodolfo Stucchi
    Abstract: This paper provides evidence about the relationship between innovation and employment in Argentina. In particular, it quantifies the impact of different types of innovations (process or product innovations) on employment growth and skill composition (skilled-unskilled labor) and the impact of different innovation strategies (buy or make) on employment growth, and analyzes whether these impacts depend on firm size or technology intensity. To answer these questions a model proposed in Harrison, Jaumandreu, Mairesse, and Peters (2008) was estimated using an IV approach with data from the Innovation Surveys for Argentina for the period 1998-2001. The results suggest that product innovations have a positive impact on employment growth while process innovations have no significant impact on employment growth. In addition, there is some evidence that product innovations are skill-biased, and that a mixed innovative strategy of make and buy has a larger impact on employment growth than a buy-only strategy. Finally, similar impacts for small firms but differential impacts for low-tech and high-tech sectors were found.
    Keywords: Science & Technology :: New Technologies, Labor :: Workforce & Employment, Economics :: Production & Business Cycles, Economics :: Productivity, Innovation, skilled-unskilled labor, employment and innovation, firm size, employment generation, job positions, microeconometrics, Argentina
    JEL: D2 J23 L1 O31 O33
    Date: 2011–10
  8. By: Diego Aboal; Paula Garda; Bibiana Lanzilotta; Marcelo Perera
    Abstract: The aim of this paper is to analyze the relationship between innovation and employment, in terms of both its quantity and quality, in Uruguay. The effect of product and process innovation on employment growth and on employment composition in terms of skills was studied, using data from manufacturing firms' innovation surveys, matched against economic activity surveys. The impact of different innovation strategies was also analyzed, particularly producing technology vs. sourcing technology externally. The results revealed that product innovation is associated with employment growth. There is (weaker) evidence that process innovation displaces labor. Product innovation is not more complementary to skilled than to unskilled labor. Producing technology in-house has the biggest positive impact on employment, followed by the make-and-buy strategy. Similar results are found for small firms and firms belonging to the low- and high-tech sectors. Interviews carried out with innovation agents support the view that in general innovation does not lead to job losses and that it generates greater demand for a more qualified labor force.
    Keywords: Science & Technology :: New Technologies, Labor :: Workforce & Employment, Labor :: Labor Policy, job losses, innovation, unemployment, innovation strategies, firm size, employment quantity and quality, innovation surveys, job positions, vacancies
    JEL: D2 J23 L1 O31 O33
    Date: 2011–10
  9. By: Martin Srholec (Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: Using panel micro data obtained from merging several waves of Community Innovation Survey in the Czech Republic, Norway and the United Kingdom, we estimate dynamic random effects tobit models, in which the innovation output given by sales of innovative products is the function of the cooperative behaviour of firms and their other observed characteristics, while accounting for unobserved heterogeneity. The results indicate that the capacity of firms to build on external domestic linkages is what matters most for the innovation output. And that foreign external linkages lead to superior innovation performance only in combination with the domestic ones. Also the results suggest that the positive effect of domestic cooperation is driven by linkages to education, research and scientific institutions, even though these types of partners tend to be used by firms noticeably less frequently for cooperation on innovation than their suppliers and customers.
    Keywords: Innovation; cooperation; performance; micro data; Community Innovation Survey
    Date: 2011–11
  10. By: Stefania VITALI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Gabriele TEDESCHI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)
    Abstract: In this paper, we study innovation processes and technological change in an agent-based model. By including a behavioral switching among heterogeneous innovative firms, which can endogenously change among three different classes (single innovators, collaborative innovators and imitators) on the base of their R&D expenditures, the model is able to replicate, via simulations, well known industrial dynamic and growth type stylized facts. Moreover, we focus the analysis on the impact of these three innovation categories on micro, meso and macro aggregates. We find that collaborative companies are those having the highest positive impact on the economic system. The model is then used to study the effect that different innovation policies have on macroeconomic performance.
    Keywords: Computational economics, business cycle, innovation policy, technology,
    JEL: C63 E32 E6 O3 O4
    Date: 2011–12
  11. By: Matthias Duschl (Department of Geography, Philipps University Marburg); Thomas Brenner (Department of Geography, Philipps University Marburg)
    Abstract: Regional growth dynamics significantly deviate from a normal process. Using industry-specific employment data for German regions, we find that the asymmetric Subbotin distribution is able to account properly for extreme positive and especially negative growth events. This result confirms previous studies on growth rates of firms and countries and fills an important research gap at the meso-level of regions. Furthermore, we show that regional growth patterns emerge to a considerable degree from the aggregation of micro-level firm growth rates distributions and that the knowledge intensity of the respective industries increases the regions’ risk of being effected by extreme growth events.
    Keywords: regional employment growth, stochastic characteristics, asymmetric Subbotin distribution, extreme negative growth events
    JEL: C46 C50 R11
    Date: 2011–12
  12. By: Alessandra Catozzella (DISCE, Università Cattolica del Sacro Cuore); Marco Vivarelli (DISCE, Università Cattolica del Sacro Cuore)
    Abstract: Previous policy evaluation literature mainly aimed at estimating the additional effect of public support on either firms’ innovative inputs or innovative outputs. This paper is an attempt to move one step further, combining the two (input and output) dimensions of innovation into a unique efficiency perspective. To this aim, the impact of public support on the ratio between innovative sales and innovative expenditures (innovative productivity) is estimated using a sample of firm-level data drawn from the third Italian Community Innovation Survey (CIS). A bivariate endogenous switching model has been developed in order to free the analysis of any ex ante sources of sample selection and firm heterogeneity, at the same time getting rid of the two sources of endogeneity potentially affecting the results, i.e. the possible simultaneity between subsidy allocation and the qualitative composition of the innovative output, as well as the endogeneity of public support with respect to innovative performance. Results show that innovative productivity is negatively affected by the public support ; far from ‘doing better’ as a result of government intervention, supported firms appear to exhaust their advantage through merely increasing their innovative expenditures.
    Keywords: innovation subsidy; policy evaluation; product innovation; bivariate endogenous switching model
    JEL: O32 O38
    Date: 2011–11
  13. By: Emanuela Marrocu; Raffaele Paci; Stefano Usai
    Abstract: The purpose of this paper is to analyse the effect of various proximity dimensions on the innovative capacity of 276 regions in Europe within a knowledge production function model, where R&D and human capital are included as the main internal inputs. We combine the standard geographical proximity with the institutional, technological, social and organizational ones to assess whether these externalities are substitutes or complements in channelling knowledge spillovers. Results show that all proximities have a significant complementary role in generating an important flow of knowledge across regions, with the technological closeness playing the most relevant role.
    Keywords: knowledge production; spillovers, proximity; human capital; weight matrix
    JEL: O31 R12 C31 O52 O18
    Date: 2011
  14. By: Koen Frenken; Elena Cefis; Erik Stam
    Abstract: We review the literature on clusters and their effects on industrial dynamics as well on various lifecycle dynamics underlying the process of cluster formation and cluster dynamics. The review shows that there is little evidence that clusters enhance firm growth and survival. In the absence of localization economies, the emergence of clusters is best understood as an evolutionary process of capability transmission between parents firms and their spinoffs. We discuss various future research avenues and call for theorising based on firm heterogeneity as well as empirical research based on common methodological standards.
    Keywords: entry, exit, cluster, localization economies, lifecycle, firm heterogeneity
    JEL: L10 L20 R10
    Date: 2011–10
  15. By: Lawless, Martina (Central Bank of Ireland); McCann, Fergal (Central Bank of Ireland)
    Abstract: The extension of credit to SMEs in Ireland has been identified as a necessary condition for economic recovery and job growth. The debate on whether the reduction in credit to this sector is caused by credit rationing by banks or a lack of credit demand on the part of SMEs has received much attention in media and policy circles. Owing to a lack of relevant available micro-data, research on this issue in Ireland has been sparse to date. The aim of this paper is to provide evidence using recently available firm-level data from the Central Statistics Office and the European Central Bank. Using the CSO data, we find a moderate decline in credit applications, coupled with a very large increase in credit rejection rates. Using firm-level production data, we find no evidence that the accepted firms have been pooled according to firm performance - more productive and fast-growing firms are as likely to be rejected as any other firm. Using the ECB data, we show that Irish firms are 15 to 18 percent more likely to be rejected for credit than a comparable Eurozone SME. We show also that Irish firms are less likely to have had decreased credit demand than other Eurozone SMEs in the 2009-10 period.
    JEL: F10
    Date: 2011–11
  16. By: Cooke, Philip (University of Wales)
    Abstract: Theoretical analysis of the relevance of the concept of path dependence for regional analysis has made progress. This has occurred on the spatial process (or regional paradigm)dimension of spatial evolution Progress has also occurred after further reflections on the roles of ‘conventions’ in understanding the ‘soft institutional’ dimension of regional regime formation and change. This adds considerably to the more common ‘institutions and organisations’ aspects of governance structures for innovation regarding the typical analytical content of regional regime and innovation system analysis. In this paper the concepts of ‘relatedness’ and ‘transversality’ capture the processes of knowledge recombination for innovation classically introduced by Schumpeter. Two live cases are presented whereby regional relatedness of industry regarding ‘green’ competences, on the one hand, and engineering and materials processing, on the other, have resulted in new clusters or cluster trajectories. The exemplar cases come from either end of Europe, Sweden, in the first instance, Italy in the second. Both clearly support the new ‘transversal’ theory of cluster emergence
    Keywords: Region; Maritime Clusters; Relatedness; Transversality
    JEL: A14 O33 R11 R58
    Date: 2011–11–30
  17. By: Mishra, Bikash Ranjan
    Abstract: The unprecedented growth of international productions and Foreign Direct Investment (FDI) flows over the last two decades has led to the upsurge in scientific investigation into the distinctive facets of FDI. Despite the considerable amount of research undertaken, it seems that there is very little comprehensive economic analysis of FDI flows with respect to Indian firms. The present study attempts to bridge this gap by answering the following research question: what are the micro-level causes of FDI inflow, i.e. what are the determinants or pull factors of FDI inflow into Indian domestic firms? In order to analyze this question the study uses a panel data structure constructed over the recent 5 years, ranging from 2006 to 2010 and covering 22 sectors in Indian Manufacturing Industries. Adoption of Fixed and Random effects estimation procedure help to identify that among a set of firm-specific factors, only technological intensity, both in-house and import along with product differentiation have negatively contributed for foreign investors’ shareholding of local firms. The export performance, age, asset size and sales volume are among other remaining firm-specific characteristics which lack effective pulling effects in attracting FDI.
    Keywords: Key words: FDI; firm-specific factors; panel data
    JEL: C23 F21 B41
    Date: 2011–12–01

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