nep-sbm New Economics Papers
on Small Business Management
Issue of 2012‒04‒23
eleven papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Innovation strategies and employment in Latin American firms By Crespi, Gustavo; Zuniga, Pluvia
  2. Employment effect of innovation: microdata evidence from Bangladesh and Pakistan By Waheed, Abdul
  3. Properties of knowledge base and firm survival: Evidence from a sample of French manufacturing firms By Alessandra Colombelli; Jackie Krafft; Francesco Quatraro
  4. Open innovation, contracts, and intellectual property rights: an exploratory empirical study By Hagedoorn, John; Ridder, Ann-Kristin
  5. Entrepreneurship, stages of development, and industrialization By Ács, Zoltan J.; Naudé, Wim
  6. Lock-in or lock-out? How structural properties of knowledge networks affect regional resilience? By Joan Crespo; Raphaël Suire; Jérôme Vicente
  8. Foreign acquisition and the performance of New Zealand firms By Richard Fabling; Lynda Sanderson
  9. International entrepreneurship and technological capabilities in the Middle East and North Africa By Brach, Juliane; Naudé, Wim
  10. Time series for main variables on the performance of Dutch SMEs By Ton Kwaak; Werner Liebregts
  11. The impact of outward FDI on the domestic perimeter of manufacturing groups By Alexandre Gazaniol

  1. By: Crespi, Gustavo (Competitiveness and Innovation Division, Institutions for Development Department, Inter-American Development Bank); Zuniga, Pluvia (UNU-MERIT/MGSoG, University of Maastricht)
    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: innovation, employment, external R&D, Latin America, innovation surveys
    JEL: O12 O14 O31 O33 O40 J21
    Date: 2012
  2. By: Waheed, Abdul (UNU-MERIT/MGSoG, Maastricht University)
    Abstract: The analysis of the impact of innovation on employment growth is an important topic for policy makers, because (un)employment is an important social topic, and the effects of innovation on employment are often poorly understood. Despite the significant importance of this relationship, very few studies on this topic for developing countries are yet available compared with developed ones. This paper contributes to this scanty literature by investigating the employment effect of innovation for two South Asian developing countries: Bangladesh and Pakistan. We further analyze whether this relationship shows country-specific and industry-specific differences. Finally, we investigate whether complementarity between process and product innovation exists or which effect (displacement or compensation) of one particular innovation type dominates the other, in order to influence employment. One of the striking findings of our analysis is that both product and process innovation spur employment in this region as a whole, regardless of low-tech and high-tech industries, even after controlling for a number of firm-specific characteristics. Moreover, although both innovation types also have significantly positive impacts on employment growth of all Bangladeshi and of all Pakistani firms separately, they are important factors for employment growth of only high-tech Bangladeshi firms and of only low-tech Pakistani firms. Moreover, we observe a strong complementarity between both innovation types in order to stimulate employment. Contrary to the most previous studies, we witness an insignificantly negative effect of labour cost on employment change, perhaps owing to the availability of labour force to hire at cheaper rates compared with developed countries. We notice that some of the innovation determinants exert different influences across industries and across both countries. The same is the case for the determinants of employment growth.
    Keywords: Bangladesh, Employment growth, Pakistan, Product innovation, Process innovation Process innovation
    JEL: J23 O31 O33
    Date: 2012
  3. By: Alessandra Colombelli (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia Antipolis (UNS)); Jackie Krafft (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia Antipolis (UNS)); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia Antipolis (UNS))
    Abstract: The paper analyzes the effects of the properties of firms' knowledge base on the survival likelihood of firms. Drawing upon the analysis of the patterns of co-occurrence of technological classes in patent applications, we derive the coherence, variety and cognitive distance indexes, accounting respectively for technological complementarity, differentiation and (dis)similarity in the firms' patent portfolios. The results of our analysis are in line with the previous literature, showing that innovation enhances the survival likelihood of firms. In addition, we show that the search strategies at work in the development of firms' knowledge base matter in reducing the likelihood of a failure event. Knowledge coherence and variety appear to be positively related to firms' survival, while cognitive distance exerts a negative effect. We conclude that firms able to exploit the accumulated technological competences have more chances to be successful in competing durably in the market arena, and derive some policy implications concerning the role of public intervention in the orientation of search efforts in local contexts.
    Keywords: Knowledge coherence; variety; cognitive distance; firms' survival
    Date: 2012–04–06
  4. By: Hagedoorn, John (UNU-MERIT/MGSoG, and Department of Organization & Strategy, School of Business and Economics, Maastricht University); Ridder, Ann-Kristin (Department of Organization & Strategy, School of Business and Economics, Maastricht University)
    Abstract: Our exploratory empirical study, based on a series of in-depth interviews and a survey of firms, searches for answers on a number of questions that deal with the role of formal contracts and intellectual property rights in the context of open innovation. We find that firms active in open innovation have a strong preference for the governance of their open innovation relationships through formal contracts. These contracts are relevant from both a control and a process monitoring perspective. Also, despite the open nature of open innovation, firms still see intellectual property rights as highly relevant to the protection of their innovative capabilities. In a first attempt to explain this preference for intellectual property rights by open innovation firms, we find the degree of openness of firms, their legalistic attitude, and the competitive dynamics of their product market environment to be related to this preference.
    Keywords: open innovation, contracts, intellectual property rights
    JEL: K11 K12 L24
    Date: 2012
  5. By: Ács, Zoltan J. (George Mason University, School of Public Policy); Naudé, Wim (UNU-MERIT/MGSoG, University of Maastricht)
    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
    JEL: O32 L52 L53 M13
    Date: 2012
  6. By: Joan Crespo (University of Toulouse, LEREPS); Raphaël Suire (University of Rennes 1 - CREM (UMR 6211 CNRS)); Jérôme Vicente (University of Toulouse, LEREPS, Toulouse Business School)
    Abstract: The paper develops an evolutionary framework of regional resilience with a primary focus on the structural properties of local knowledge networks. After a presentation of the network-based rationales of growth and structuring of clusters, we analyze under which structural conditions a regional cluster can mix short run competitiveness without compromising long run resilience capabilities. We show that degree distribution (the level of hierarchy) and degree correlation (the level of structural homophily) of regional knowledge networks are suited properties for studying how clusters succeed in combining technological lock-in and regional lock-out. We propose a simple model of cluster structuring in order to highlight these properties, and discuss the results on a policy-oriented analysis. We conclude showing that policies for regional resilience fit better with ex ante regional diagnosis and targeted interventions on particular missing links, rather than expost myopic applications of policies based on an unconditional increase of network relational density.
    Keywords: Resilience, clusters, degree distribution, assortativity, regional policy
    JEL: B52 D85 O33 R11 R12
    Date: 2012–03
  7. By: Raquel Meneses (Faculdade Economia Porto); Carlos Brito (Faculdade Economia Porto)
    Abstract: The competitive and organizational behavior of new firms has changed dramatically. Firms do not need to be big to internationalize, International New Ventures (INV) are a reality. But, they are characterized by the liability of newness and the liability of smallness. Since the nineties, scholars have devoted considerable attention to this phenomenon, but no one explains how these companies can overcome these constraints and internationalize. In this context, this paper uses a multilevel analysis, resulting in a more integrative framework. This approach extends the literature including, at the same time, the firm perspective (following the studies developed in Uppsala and the RBV), the organizational network approach and the international entrepreneur perspective. It has three units of observation and one of analysis. To understand INV dynamics it seems very important to observe, study and relate firm with network and entrepreneur. This research finds out that the entrepreneur plays a particularly important role in these new companies, ill-equipped (of relations, resources and knowledge), but the entrepreneur does not act in a vacuum; he is part of a firm integrated in a network. To internationalize early firms must use indirect knowledge, resources and history from organizational networks and from the entrepreneur.
    Keywords: Internationalization, born global, networks, international new ventures
    JEL: M16
    Date: 2012–04
  8. By: Richard Fabling; Lynda Sanderson (Reserve Bank of New Zealand)
    Abstract: This paper examines the firm-level determinants of foreign acquisitions of New Zealand companies, and the consequences for both the purchased firms and the workers within those firms. We follow a combined propensity score matching and difference-in-differences approach to identify and address endogenous selection of acquisition targets. The results suggest that foreign firms tend to target high-performing New Zealand companies. Acquired firms then exhibit higher growth in average wages and output, relative to similar domestic firms, but do not appear in general to increase their productivity or capital intensity. We find no evidence of differential survival rates for recently acquired foreign firms.
    JEL: D22 F23
    Date: 2011–12
  9. By: Brach, Juliane (University of Copenhagen and German Institute of Global and Area Studies, Hamburg); Naudé, Wim (UNU-MERIT/MGSoG, University of Maastricht)
    Abstract: In this paper we investigate the extent of international entrepreneurship in Algeria, Egypt, Morocco, Oman and Syria using a dataset covering 3,281 firms. We find that weak technological capabilities constrain internationalization. Firms with ISO accreditation, an own website, and those who have introduced new technology have a higher probability of entering export markets than otherwise. Firms in high-tech sectors are more likely to export early. However with foreign shareholding this advantage of high-tech firms disappears. The results suggest that early international entrepreneurs may need to pay more in informal payments if they want to increase the share of their exports once they have entered into export markets. We derive implications for policy and further research.
    Keywords: International entrepreneurship, exports, entrepreneurial capabilities, innovation, Middle East, North Africa, MENA
    JEL: L26 L25 M16 O55 F23
    Date: 2012
  10. By: Ton Kwaak; Werner Liebregts
    Abstract: National Accounts provide detailed information on the development of the economy detailed by sector of industry. However, a disaggregation by enterprise size class is not available. The available data on the size class structure of the economy shows huge and unrealistic fluctuations and can therefore not directly be used to disaggregate the information from National Accounts. This paper reviews some methods to smooth developments shown in source data with respect to the share of small, medium-sized and large enterprises. It appears that in principle, the Hodrick-Prescott filter is most suited to fulfill this task. A modified Hodrick-Prescott filter is used. In particular, the simultaneous smoothing of interrelated series, taking into account the definitional relations existing between them, performs quite well. The methodology has been tested for two rather different sectors of industry, i.e. chemical industry (large-scaled, business-to-business oriented, capital-intensive) and retail trade (small-scaled, oriented towards consumers, labor-intensive). It appears that adjusted series, according to industry experts, give a more realistic description of historical developments than the original series do.  
    Date: 2012–03–20
  11. By: Alexandre Gazaniol (Université Paris Dauphine, LEDa UMR 225 DIAL, IRD)
    Abstract: (english) This article aims to analyze the structure and the performance of multinational firms at the group level, and to estimate the impact of outward FDI on the domestic perimeter of manufacturing groups. This empirical work anticipates a major reshape of business statistics, which does not consider Legal Entities (LEs) as the relevant unit for economic analysis. In order to construct new statistical units which enjoy some degrees of autonomy, we use a French dataset (“LiFi”) which allows gathering all French LEs which belong to the same group. We show that nearly all multinational firms in the French manufacturing sector are organized around several LEs and we describe the implications of this organizational choice in terms of market structure and performance. Following firms which invest abroad for the first time reveals that outward FDI has a positive effect on the whole domestic perimeter of groups, since value-added, employment and exports significantly increase ex-post. The growth of employment is especially high in companies dedicated to auxiliary functions so the share of employees in the manufacturing perimeter tends to decrease after the investment. _________________________________ (français) Cet article vise à analyser la structure et les performances des firmes multinationales au niveau des groupes de sociétés, et à estimer l’impact des IDE sortants sur le périmètre domestique des groupes industriels. Il s’inscrit dans une refonte des statistiques d’entreprises, qui vise à dépasser le niveau des entités juridiques pour adopter une définition économique de l’entreprise, tenant compte de son degré d’autonomie. Afin de construire de nouvelles unités statistiques jouissant d’une autonomie de décision, nous utilisons l’enquête LiFi, qui nous permet de rassembler les sociétés françaises appartenant à un même groupe. Nous montrons que presque toutes les firmes multinationales dans l’industrie manufacturière française s’organisent autour de plusieurs entités juridiques et nous décrivons les implications de ce choix organisationnel en termes de structure de marché et de performances. L’analyse en dynamique des firmes qui investissent à l’étranger pour la première fois révèle que les IDE sortants ont un impact positif sur l’ensemble du périmètre domestique des groupes, dont la valeur ajoutée, l’emploi et les exportations augmentent significativement ex-post. La croissance de l’emploi apparaît plus soutenue dans les sociétés dédiées aux fonctions en support de la production, ce qui suggère que les IDE sortants contribuent à la désindustrialisation des pays développés.
    Keywords: Multinational firms, business groups, profiling, FDI, relocations, firms performance, deindustrialization, skill upgrading.
    JEL: D22 F23 L22
    Date: 2012–04

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