nep-sbm New Economics Papers
on Small Business Management
Issue of 2012‒02‒27
seven papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Intra-organizational integration and innovation: organizational structure, environmental contingency and R&D performance By You-Na Lee; John P. Walsh
  2. R&D and Innovation Activities and the Use of External Numerical Flexibility By William Addessi; Enrico Saltari; Riccardo Tilli
  3. LBOs and innovation: the French case By Anne-Laure Le Nadant; Frédéric Perdreau
  4. The Impact of Foreign Liabilities on Small Firms: Firm-Level Evidence from the Korean Crisis By Yun Jung Kim; Linda L. Tesar; Jing Zhang
  5. Boosting Innovation and Productivity in Enterprises: What Works? By Ruane, Frances; Siedschlag, Iulia
  6. Firm and industry effects on firm profitability: an empirical analysis of KSE By Raza, Syed Ali; Farooq, M. Shoaib; Khan, Nadeem
  7. Establishment Exits in Germany: The Role of Size and Age By Fackler, Daniel; Schnabel, Claus; Wagner, Joachim

  1. By: You-Na Lee; John P. Walsh
    Abstract: It is widely thought that intra-firm integration has a positive effect on organizational performance, especially in environments characterized by complex and uncertain information. However, counter arguments suggest that integration may limit flexibility and thereby reduce performance in the face of uncertainty. Research and development activities of a firm are especially likely to face complex and uncertain information environments. Following prior work in contingency theory, this paper analyzes the effects of intra-organizational integration on manufacturing firms’ innovative performance. Based on a survey of R&D units in US manufacturing firms and patent data from the NBER patent database, we examine the relation between mechanisms for linking R&D to other units of the firm and the relative innovativeness of the firm. Furthermore, we argue that the impact of integration may vary by the importance of secrecy in protecting firms’ innovation advantages. We find that intra-firm integration is associated with higher self-reported innovativeness and more patents. We also find some evidence that this effect is moderated by the appropriability regime the firm faces, with the benefits of cross-functional integration being weaker in industries where secrecy is especially important. These results both support and develop the contingency model of organizational performance.
    Keywords: Innovation; Organizations; Contingency theory;
    Date: 2012–02
  2. By: William Addessi; Enrico Saltari; Riccardo Tilli
    Abstract: We study the impact of R&D and innovation on the use of external numerical flexibility (ENF). R&D and innovation imply both a higher average and a higher volatile productivity. We investigate this ambiguous effect on the firm preference for using ENF in two steps. First, we use a simple model to show that a first-order stochastic dominance shift in the distribution function increases the probability of hiring permanent workers, while a second-order shift has ambiguous effects. Next, using a dataset based on a survey of Italian manufacturing firms, we run logit regressions to estimate the effect of R&D and innovation on the probability of employing a fixed-term or a TWA worker, finding a positive and always significant effect. We also consider internal and external R&D and different types of innovation. Results show that the former has a positive effect while the latter depends on the type of innovation.
    Keywords: Flexible employment, Labor contracts, Research and Development, Innovation.
    JEL: J41 O33
    Date: 2011–11
  3. By: Anne-Laure Le Nadant (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen); Frédéric Perdreau (COACTIS - Université Lumière - Lyon II : EA4161 - Université Jean Monnet - Saint-Etienne)
    Abstract: A long-standing controversy is whether LBOs generate economic efficiencies through a superior governance framework, or whether LBO funds are driven by short-term profit motives and sacrifice long-term growth to boost short-term performance. Using a propensity score methodology, this paper provides an empirical analysis of the innovative efforts of a sample of 89 French manufacturing firms that underwent a buyout between 2001 and 2005. The matching estimates (average treatment on the treated, ATT) of the effect of LBOs on firm level of innovation expenditures in 2006 show no significant differences between LBO targets and comparable companies that did not go through an LBO. In contrast, we find significant effects of LBOs on both service innovation and marketing innovations in design and packaging and product promotion.
    Keywords: Buyouts, Innovation, Private Equity Firms.
    Date: 2011–11–19
  4. By: Yun Jung Kim (University of Michigan); Linda L. Tesar (University of Michigan and NBER); Jing Zhang (University of Michigan)
    Abstract: Using Korean firm-level data on publicly-listed and privately-held firms together with firm exit data, we find strong evidence of the balance-sheet effect for small firms at both the intensive and extensive margins. During the crisis, small firms with more short-term foreign debt are more likely to go bankrupt, and experience larger sales declines conditional on survival. The extensive margin accounts for a large fraction of small firmsÕ adjustment during the crisis. Consistent with many studies in the literature, large firms with larger exposure to foreign debt paradoxically have better performance during the crisis at both the intensive and extensive margin.
    Keywords: financial crisis, firm-level data, balance-sheet effects, Korean economy
    JEL: F32 F34 E44
    Date: 2011–12
  5. By: Ruane, Frances; Siedschlag, Iulia
    Abstract: A return to economic growth and higher employment requires growth in the number and sustainability of Irish enterprises. Innovation at enterprise level is essential for sustainability and competitiveness and plays a major role in increasing overall productivity. Understanding the determinants of enterprise innovation and how it affects productivity is important for designing effective innovation policies. The tight fiscal constraints and the urgency of achieving successful outcomes require that government policies aimed at enhancing enterprise innovation and raising productivity need to be very effective. This paper draws on recent international theoretical and empirical literature based on enterprise level data to explore four questions: Does innovation contribute to higher productivity? Which types of enterprises invest in innovation? Which enterprises have higher innovation expenditure per employee? Which types of enterprises are more likely to innovate successfully? We then look at what these findings imply for policy in relation to indigenous enterprises, whether the current policy mix is appropriate and how it might become more effective.
    Keywords: Productivity
    Date: 2011
  6. By: Raza, Syed Ali; Farooq, M. Shoaib; Khan, Nadeem
    Abstract: The study meant to explore the external and internal factors which influence firm’s profitability i.e. “Firm and Industry Effects on Firm Profitability”. In this research ROA and ROE has taken as profitability measure and their dependency has checked with firm effect, industry effect and market share. Data has extracted from “Balance Sheet Analysis of Joint Stock Companies Listed on the Karachi Stock Exchange Volume-II 2004-2009” which is state bank of Pakistan publications and it represents six year financial statements of the firms. By using Regression analysis technique result has found which represent that all three independent factor i.e. firm effect, industry effect and market share are significant with ROA and ROE.
    Keywords: Return on Assets (ROA); Return on Equity (ROE); market share
    JEL: E62
    Date: 2011–07–04
  7. By: Fackler, Daniel (University of Erlangen-Nuremberg); Schnabel, Claus (University of Erlangen-Nuremberg); Wagner, Joachim (Leuphana University Lüneburg)
    Abstract: Using comprehensive data for West Germany, this paper investigates the determinants of establishment exit. We find that between 1975 and 2006 the average exit rate has risen considerably. In order to test various "liabilities" of establishment survival identified in the literature, we analyze the impact of establishment size and put a special focus on differences between young and mature establishments. Our empirical analysis shows that the mortality risk falls with establishment size, which confirms the liability of smallness. The probability of exit is substantially higher for young establishments which are not more than five years old, thus confirming the liability of newness. There also exists a liability of aging since exit rates first decline over time, reaching a minimum at ages 15 to 18, and then rise again somewhat. The determinants of exit differ substantially between young and mature establishments, suggesting that young establishments are more vulnerable in a number of ways.
    Keywords: firm exits, Germany
    JEL: L2
    Date: 2012–02

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