nep-sbm New Economics Papers
on Small Business Management
Issue of 2012‒04‒10
eight papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico By Bruhn, Miriam; Karlan, Dean; Schoar, Antoinette
  2. Stock Options and Productivity (Japanese) By MORIKAWA Masayuki
  3. Strategy innovation as business model reconfiguration By Leonardo Buzzavo
  4. R&D Expenditures and the Global Diversification of Export Sales By Christopher F Baum; Mustafa Caglayan; Oleksandr Talavera
  5. Offshoring of Japanese Small and Medium Enterprises (Japanese) By KWON Hyeog Ug
  6. Small Business Social Responsibility and the Missing Link: The Local Context. By Mara Del Baldo; Paola Demartini
  7. Biotechnology innovation for inclusive growth : a study of Indian policies to foster accelerated technology adaptation for affordable development By Vijayaraghavan, K.; Dutz, Mark A.
  8. Spill-over effects of foreign direct investment: an econometric study of Indian firms By Bikash Ranjan Mishra, Dr.

  1. By: Bruhn, Miriam (World Bank); Karlan, Dean (Yale University); Schoar, Antoinette (MIT)
    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 illicit 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.
    JEL: D21 D24 L20 M13 O12
    Date: 2012–02
  2. By: MORIKAWA Masayuki
    Abstract: This paper analyzes the relationship between the use of stock options and productivity by employing firm-level panel data from the Basic Survey of Japanese Business Structure and Activities. According to the analysis, the use of stock options has a positive impact on firm productivity. Productivity steadily increases after the adoption of stock options. In addition, we found suggestive evidence that R&D investment increases after the introduction of stock options. These results imply that the deregulation on the use of stock options in 1997 and the subsequent legal reforms have had positive contributions to the productivity performance of Japanese firms.
    Date: 2012–01
  3. By: Leonardo Buzzavo
    Abstract: Strategy innovation gained popularity during the 1990s as a notion applying to firms that reinvented competition in an industry. Throughout the 2000s business model innovation drew much of the spotlight. The key traits of both these concepts (and how they relate to each other) are often implicit or unclear. Through a literature review and by applying the key elements to some innovative firms for illustrative purposes, this paper discusses the emergence of the notion of strategy (and business model) innovation aiming to bridge these concepts while identifying their basic constituents. Successful firms manage to envision and implement new combinations along different routes, but always exploiting the complementarities through self-reinforcing mechanisms. Finally, the paper argues that strategy innovation triggers the need to broaden the interpretative schemes in the field of strategy, as it resembles more an art than a science.
    Keywords: Strategy; Innovation; Business Model
    Date: 2012–03
  4. By: Christopher F Baum (Boston College; DIW Berlin); Mustafa Caglayan (University of Sheffield); Oleksandr Talavera (Durham Business School, Durham University)
    Abstract: We empirically examine the role of diversification in export markets on firm-level R&D activities. In our investigation we allow for heterogeneous behavior across firms and industries. To properly treat the incidence of R&D as a variable with a sizable concentration of zeroes, we produce Tobit and Generalized Linear Model (GLM) estimates. Our results provide strong evidence that export sales diversification across different regions induces firms to increase R&D expenditures, as they must innovate and develop new products to maintain a competitive edge over their rivals. When we split the data into durable versus nondurable firms, we observe that this effect is mainly operational among firms in the durable goods sector.
    Keywords: R&D investment, Export diversification, Foreign direct investment, Cash holdings
    JEL: G21 G32 C24
    Date: 2012–03–30
  5. By: KWON Hyeog Ug
    Abstract: This paper uses firm-level data to examine the determinants and impacts of offshoring of small and medium enterprises (SMEs) in Japan, comparing results with those for larger firms from existing studies. The results of this paper can be summarized as follows. First, offshoring of Japanese SMEs is largely determined by the time preference and overseas experience of the chief executive officer (CEO) and not by the productivity level. In fact, existing studies using data for larger firms found mixed results on the effect of productivity on offshoring decisions. Second, while intra-firm offshoring does not seem to improve productivity, arm's-length offshoring has a positive effect. This is opposite to the result using data for larger firms. Finally, offshoring of SMEs does not significantly affect the level of domestic employment, while it leads to a higher demand for more educated workers. This result is consistent with results for larger firms.
    Date: 2012–04
  6. By: Mara Del Baldo (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Paola Demartini (Department of Management and Law, University of Rome 3, Italy)
    Abstract: A further development in the socially responsible management debate my consider the following question: is SMEs’ orientation towards Corporate Social Responsibility sustained by entrepreneurs’ values and facilitated by environmental factors – that is, of an anthropological and socio-cultural nature – present in the territory where entrepreneurs and SMEs are sited? The chapter aims at proposing thoughts upon the contribution of SMEs in spreading the philosophy and practices of CSR and sustainability focusing on the importance of entrepreneurial values and the relationship with the local context to which the SMEs and entrepreneurs are profoundly rooted. In developing the research question, the analysis may be divided on two levels: one deductive and the other inductive, which correspond to the two main sections of the chapter. The first section (1-2) presents the theoretical framework by way of recalling threads of study on entrepreneurship and on business ethics centred upon behaviour, motivations and business values. The analysis then concludes by presenting a review of the international studies on the theme of the relationship between managerial culture and territory. The second section (3-4) is developed by way of a qualitative research methodology centred upon the analysis of behavior towards CSR and sustainability of a sample of SMEs belonging to the Marche Region, Italian territory “cradle” of the small-sized company and craft traditions. Empirical evidence presented, highlights how best practices of socially-oriented Marche SMEs - who are excellent examples of “convivial enterprises” strongly rooted in their territories - contribute to a model of Territorial Social Responsibility (TSR) that progresses within the particular socio-economic context of the region. The “social capital”, enriched by values, cultures and traditions tied to a specific community-space, synthesizes intangible factors that favour the development of CSR and the sustainability of SMEs. The economic model of “gentle capitalism” centred around “territorial” SMEs, which can be found in the business contexts under discussion, leans on the construction of a large consensus both within and external to the company, as well as on an environment which is neither restraint or limitation, rather it is an opportunity. The possible pathway of territorial CSR based on the culture of doing “good” in the local context, may offer a possible alternative to the often, unfortunately, short-sighted “turbo-capitalism” of the major transnational companies, which are not rooted in the area where they are located and “nomadic” in their character.
    Keywords: Corporate social responsibility, Entrepreneurial values, Local context, Small and medium enterprises, Territorial companies.
    JEL: M14
    Date: 2012
  7. By: Vijayaraghavan, K.; Dutz, Mark A.
    Abstract: This paper describes and analyzes a series of complementary policy initiatives in India to adapt and commercialize existing global biotechnologies to meet local needs in healthcare, agriculture, industry and the environment in a more affordable manner. This evolving approach has been implemented through six complementary elements, namely (1) translational research; (2) technology access through global consortia; (3) commercialization supported by public-private partnerships, broadly interpreted; (4) skills development; (5) regulation; and (6) institutional governance, including special purpose vehicles, for effective project management. The paper focuses on two public-private partnership initiatives, the Small Business Innovation Research Initiative and the Biotechnology Industry Partnership Program, which together have allocated more than US$70 million in public funding to almost 150 projects, contributing to a total public-private investment of more than $170 million over the past five years. The authors'key recommendation, to ensure effective resource use and better policy impact, is for these innovation-support initiatives to adopt more continuous monitoring with quicker feedback from learning to implementation, and more rigorous impact evaluation including approaches that allow the results of firms benefiting from support to be compared with an appropriate group of firms not benefiting from support.
    Keywords: ICT Policy and Strategies,Agricultural Knowledge&Information Systems,Rural Development Knowledge&Information Systems,E-Business,Agricultural Research
    Date: 2012–04–01
  8. By: Bikash Ranjan Mishra, Dr.
    Abstract: The channel through which the inflows of foreign direct investment (FDI) contribute to economic progress of the host economy like India can both be direct as well as indirect. Such pecuniary benefits resulting in improved productivity of local firms which cannot be fully appropriated by foreign investors are better known in the literature as spill-over effects. The paper is based on the following research question: what are the firm-level direct impact and indirect effects of FDI in India? This question is analysed with reference to a micro-level investigation which tests particularly for inter- and intra-industrial spill-overs from FDI by applying a Panel framework with Levinsohn-Petrin approach. The study envelops a rich firm-level dataset from 22 sectors of Indian Manufacturing industries and over a time period from 2006 to 2010. After controlling for firm-wise and year-wise effects, the paper finds marginal and insignificant direct impact and mixed spill-over effects of FDI inflow on the productivity of local firms.
    Keywords: FDI; spill-over effects; panel data; Levinsohn-Petrin approach
    JEL: F23 F21 C33
    Date: 2011–11

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