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on Small Business Management |
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Issue of 2012‒03‒28
fourteen papers chosen by Joao Carlos Correia Leitao University of Beira Interior and Technical University of Lisbon |
| By: | Gustavo Crespi; Pluvia Zuñiga |
| Abstract: | This study examines the impact of innovation strategies on employment growth in four Latin American countries (Argentina, Chile, Costa Rica, and Uruguay) using micro-data for manufacturing firms from innovation surveys. Building on the model proposed by Harrison et al. (2008), we relate employment to three innovation strategies: make only (R&D), buy only (external R&D, licensing of patents and know-how, technical assistance, and other external innovation activities) and make and buy (mixed strategy). Firms that conduct in-house innovation activities ("make only") have the greatest impact on employment; the "make and buy" strategy comes in second. Similar results are found for small firms. These results highlight the importance of fostering in-house technological efforts not only for innovation per se, but also to promote growth in firm employment. The impact of "make only" strategies is greater in high-tech industries, whereas "make only" and "make and buy" have a similar impact on employment in low-tech industries. Finally, the study provides evidence of the mechanisms through which innovation strategies affect employment. The findings show that innovation strategies enhance technological innovation, but their impact differs between product and process innovation. Product innovation is mainly motivated by in-house technology investments, followed by mixed strategies, whereas process innovation is basically driven by "buy" strategies. |
| Keywords: | Economics :: Productivity, Economics :: Economic Development & Growth, Private Sector :: SME, Science & Technology :: Research & Development, Science & Technology :: New Technologies, innovation, employment, external R&D, Latin America, innovation surveys, CTI, IFD, RG-K1164 |
| JEL: | O12 O31 O33 O40 J21 O14 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:63978&r=sbm |
| By: | Dessí, Roberta |
| Abstract: | Innovative start-ups and venture capitalists are highly clustered, benefiting from localized spillovers: Silicon Valley is perhaps the best example. There is also substantial geographical variation in venture capital contracts: California contracts are more 'incomplete'. This paper explores the economic link between these observations. In the presence of significant spillovers, it becomes optimal for an innovative start-up and its financier to adopt contracts with fewer contingencies: these contracts maximize their ability to extract (part of) the surplus they generate through positive spillovers. This relaxes ex-ante financing constraints and makes it possible to induce higher innovative effort. |
| Keywords: | incomplete contracts; innovation; spillovers; venture capital |
| JEL: | D82 D86 G24 L22 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8731&r=sbm |
| By: | Fryges, Helmut; Kohn, Karsten; Ullrich, Katrin |
| Abstract: | We investigate the interdependence of debt financing and R&D activities of young firms. Using micro-level data of the KfW/ZEW Start-up Panel, our estimation results show that firm characteristics are more important than personal characteristics of the founders for explaining young firms' leverage, whereas firm characteristics and human capital of both founders and employees heavily influence R&D intensity. Applying a bivariate Tobit model, we find that there is a positive interdependent relationship between the share of loan financing and R&D intensity. A higher share of loan financing allows for more R&D in young firms and, at the same time, a higher R&D intensity allows for a higher loan share. This relationship cannot be detected by merely estimating single-equation models for R&D intensity and debt financing. -- |
| Keywords: | innovation financing,capital structure,start-ups,KfW/ZEW Start-up Panel,Germany |
| JEL: | G32 O32 L26 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:12016&r=sbm |
| By: | Christophe CARRINCAZEAUX (GREThA, CNRS, UMR 5113); Frédéric GASCHET (GREThA, CNRS, UMR 5113) |
| Abstract: | This article aims at assessing the diversity of regional innovation systems and their economic performances within Europe. We propose to adapt the Social Systems of Innovation and Production (SSIP) framework developed by Amable, Barré and Boyer (1997) at the regional level by identifying specific arrangements of each part of the innovation and production system. A key feature of this approach is the concept of complementary institutions, allowing a limited number of viable and stable configurations to be identified. Three key features of European regions are investigated using this framework: the diversity of regional SSIPs, the interplay of regional and national determinants of such systems, and the impact of SSIPs on regional performance. We identify a typology of regional configurations resulting from the combination of scientific, technological, educational and industrial indicators, using multivariate data analysis. We then test the existence of specific regional growth regimes. The results highlight a persistently high level of diversity of regional configurations, notably among knowledge intensive regions, but also show that national institutional settings remain of fundamental importance in shaping a number of regional configurations. A final conclusion relates to the weak correlation observed between the structural characteristics of regions and their performances over the 2003-2007 period: regional performance remains primarily shaped by national trends. Overall, the paper questions the regional dimension of these “systems”. |
| Keywords: | Regional innovation systems, knowledge, regional growth, institutions |
| JEL: | R11 O43 O18 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2012-06&r=sbm |
| By: | Rahobisoa Herimalala (UFR de sciences économiques et de gestion, Université de Caen Basse-Normandie, CREM-CNRS, UMR 6211); Olivier Gaussens (UFR de sciences économiques et de gestion, Université de Caen Basse-Normandie, CREM-CNRS, UMR 6211) |
| Abstract: | Innovation in small and medium-sized enterprises (SMEs) is a source of regional development and enables enterprises to improve their competitiveness. However, the intensification of innovation effort depends upon a better understanding of the innovation process, in particular the assessment of its innovation capacity to process its resources and various activities in efficient manner into better results. This paper deals with innovation process modeling and innovation measurement, in order to provide answers to these recurrent questions of the entrepreneurs in these SMEs. Thus, first we propose a model of innovation process as a collective design process that involves the interplay of two categories of activities, such as exploratory activities and value oriented activities, centered on the entrepreneur. Then from this model, we evaluate: (a) the innovation capacity from the process activities and too the outputs of innovation process; (b) the X-(in)efficiency using multiobjective (MOLP) data envelopment analysis (DEA) model of innovation processes. Through MOLP-DEA method, we decompose the X-inefficiency in technical inefficiency and congestion to highlighting the miss-use or the under-utilization of innovation capacity, as resources of process. Finally we measure X-inefficiency by an overall index taking into account of all aspects of inefficiency as the enhanced DEA Russell graph efficiency measure. For the empirical analysis, we use the data from a representative random sample formed by 80 innovative enterprises of regional SMEs of Normandy in France. The results show that most of innovation processes are X-inefficient in SMEs of Normandy. This X-inefficiency is more characterized by the congestion problem than the technical inefficiency. That shows the difficulties of some entrepreneurs to implement the rules and standards of interplay between some activities. |
| Keywords: | Innovation Process, X-Efficiency, Multiobjective Linear Programming, Data Envelopment Analysis, Russell measure |
| JEL: | C61 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:201215&r=sbm |
| By: | Bruhn, Miriam; Karlan, Dean S.; Schoar, Antoinette S |
| Abstract: | We test whether managerial human capital has a first order effect on the performance and growth of small enterprises in emerging markets. In a randomized control trial in Puebla, Mexico, we randomly assigned 150 out of 432 small and medium size enterprises to receive subsidized consulting services, while the remaining 267 enterprises served as a control group that did not receive any subsidized training. Treatment enterprises were matched with one of nine local consulting firms and met with their consultants once a week for four hours over a one year period. Results from a follow-up survey, conducted after the intervention, show that the consulting services had a large impact on the performance of the enterprises in the treatment group: monthly sales went up by about 80 percent; similarly, profits and productivity increased by 120 percent compared to the control group. We also see a significant increase in the entrepreneurial spirit index for the treatment group, a set of questions designed to elicit the SME owners’ confidence in their ability to manage their business and deal with any future difficulties. However, we do not find any significant increase in the number of workers employed in the treatment group. |
| Keywords: | enterprise growth; entrepreneurship; managerial capital |
| JEL: | D21 D24 L20 M13 O12 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8887&r=sbm |
| By: | Reinhold Kosfeld (University of Kassel); Jorgen Lauridsen (Southern University of Denmark) |
| Abstract: | More recently, there has been a renewed interest in cluster policies for supporting industrial and regional development. By virtue of the linkage between growth and innovation, R&D intensive industries play a crucial role in cluster development strategies. Empirical cluster research has to contribute to the understanding the process of cluster formation. Some experiences with the use of local spatial methods like local Moran’s Ii and Getis-Ord Gi tests in pattern recognition are already available. However, up to now the utilisation of spatial scan techniques in detecting economic clusters is largely ignored (Kang, 2010). In this paper, the performance of the above-mentioned local spatial methods in identifying German R&D clusters is studied. Differences in cluster detection across the tests are traced. In particular, the contribution of Kulldorff’s spatial scan test in detecting industry clusters is critically assessed. |
| Keywords: | Spatial Clusters, R&D Intensive Industries, Local Spatial Methods, Spatial Scan Test |
| JEL: | R12 R15 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201214&r=sbm |
| By: | Andersson, Martin (CIRCLE, Lund University); Klepper, Steven (Carnegie Mellon University) |
| Abstract: | We analyze the rate of formation, the characteristics, and the performance of different types of new firms in Sweden over a decade. Comparisons to Denmark, Brazil, and the U.S. suggest that the environment for new firm formation in Sweden is not markedly different than elsewhere. In line with previous studies, spinoffs of incumbents perform better than other types of new firms, particularly if their parent firm continues to operate. A novel findings is that the rate of employment growth of spinoffs is greater the larger the size of their parent, which contrast sharply with findings for firms with a single owner. |
| Keywords: | Sweden; spinoffs; new firm formation; entrepreneurship; performance; employment growth |
| JEL: | J60 M13 |
| Date: | 2012–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2012_004&r=sbm |
| By: | Halldin, Torbjörn (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | This paper investigates whether born global firms perform differently compared to other newly founded manufacturing firms. A rigorous quantitative treatment of born global firms has been absent in the international entrepreneurship literature. The quantitative focus of the paper adds to this literature. To a simple OLS estimation is added a matching approach in order to circumvent the absence of counterfactual for born global firms had they not chosen to pursue a born global strategy. Measuring performance five years after firm foundation, born global firms are found to have higher growth in employment and sales per employee but no such effect is found when performance is measured by profitability or labor productivity. For robustness purposes, similar results are found when the analysis is augmented to include a wider spread of born global firm definitions and having performance measured three to seven years subsequent to firm foundation. |
| Keywords: | Born global firms; firm performance manufacturing firms |
| JEL: | F14 L25 L26 M13 M21 |
| Date: | 2012–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0269&r=sbm |
| By: | Halldin, Torbjörn (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | This paper studies the performance of KIBS firms that are aimed for global markets from inception. Despite the increasing importance of KIBS, no previous study has investigated born global firms in this sector of the economy. Three definitions are used to categorize firms as born global. Both OLS and a nearest neighbor matching approach are implemented to find evidence of higher growth in employment and sales per employee five years after firm foundation. Finally, the findings are robust to a finer array of born global definitions and time horizons of firm performance. |
| Keywords: | Born global firms; firm performance; knowledge intensive business sector |
| JEL: | F14 L25 L26 M13 M21 |
| Date: | 2012–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0270&r=sbm |
| By: | Acs, Zoltan J. |
| Abstract: | Unlike in the past where industrial policy was either focused on creation and growth of state-owned firms or alternatively consisted merely of broadly functional policies without consideration for firm or entrepreneurial specifics, the requirement now is that future industrial policy ought to be a nuanced partnership between entrepreneurs and the state. In this paper we outline some considerations for such an industrial policy where the entrepreneur.state nexus is paramount. Moreover, we argue that such an industrial policy will need to take into consideration that the entrepreneur.state nexus is evolving, and that it depends on the stage of development of a particular country. |
| Keywords: | entrepreneurship, industrialization, structural change, industrial policy, innovation, development |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2011-80&r=sbm |
| By: | Constantine Manasakis (Department of Economics, University of Crete, Greece); Dusanee Kesavayuth (Research Institute for Policy Evaluation and Design, University of the Thai Chamber of Commerce, 126/1 Vibhavadee-Rangsit Road, Dindaeng, Bangkok, 104); Vasileios Zikos (School of Economics, University of Surrey, Guildford, Surrey, GU2 7XH, United Kingdom; and Research Institute for Policy Evaluation and Design, Univer) |
| Abstract: | We study the endogenous formation of upstream R&D networks in a vertically related industry. We find that, when upstream firms set prices, the complete network that includes all firms emerges in equilibrium. In contrast, when upstream firms set quantities, the complete network will arise but only if within-network R&D spillovers are sufficiently low, while if R&D spillovers are sufficiently high, a partial network arises. Interestingly, when upstream firms set prices, the equilibrium network maximizes social welfare, while a conflict between equilibrium and socially optimal networks is likely to occur when upstream firms set quantities. |
| Keywords: | Networks, R&D collaboration, upstream firms. |
| JEL: | L13 J50 |
| Date: | 2012–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:1201&r=sbm |
| By: | Halldin, Torbjörn (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | This paper investigates whether employee characteristics matter for firm survival. The focus of the paper is on born global firms both within the manufacturing and KIBS industries. A Cox proportional hazard model is implemented to find hazard ratios of the included employee and control variables. The results show little significance of individual employee characteristics as determinant for survival rates when born global firms are investigated. Furthermore, neither spinouts nor firms categorized as future exporters show much significance on individual characteristics. However, when the sample is extended to include the total amount of new firms, we see that individual employee characteristics matter for survival. This is especially true for measurements of education levels, which affect survival rates positively. |
| Keywords: | Born global firms; firm survival; employee characteristics; Cox proportional hazard model |
| JEL: | F14 L25 L26 M13 M21 |
| Date: | 2012–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0271&r=sbm |
| By: | Bøler, Esther Ann; Moxnes, Andreas; Ulltveit-Moe, Karen-Helene |
| Abstract: | This paper examines the interdependence between innovation and imports of intermediates, and their joint impact on productivity. We do so by developing a quantitative model with heterogeneous firms and international trade where firms can invest in R&D and source inputs internationally. Innovating firms on average become more productive, thereby enabling them to cover the fixed costs of sourcing foreign inputs, which in turn also has a benign impact on measured productivity. Using Norwegian firm-level data on R&D and trade in intermediates, we structurally estimate the model and find that both imports and R&D investment play a key role in explaining firm-level productivity growth. Moreover, the estimated returns to R&D are significantly lower after controlling for the complementarity between R&D investments and imports. We exploit the introduction of an R&D tax credit scheme in Norway in 2002, which lowered the marginal cost of R&D substantially. The estimated structural model can explain most of the observed increase in trade in intermediates as more firms started to innovate, underscoring the quantitative importance of our theoretical mechanism. Moreover, one fifth of measured productivity growth among new innovators came from increased foreign sourcing, rather than technology upgrading, illustrating how trade can amplify productivity gains. An implication of our work is that lower input trade barriers promote technological change. Hence, our work offers a new mechanism through which imports increase productivity, which may help explain why a number of studies find firm-level productivity gains associated with input trade liberalization. |
| Keywords: | Imports; innovation; intermediate inputs; productivity; R&D |
| JEL: | F10 F12 F14 O30 O33 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8884&r=sbm |