nep-sbm New Economics Papers
on Small Business Management
Issue of 2012‒05‒29
nine papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Projection of R&D-intensive enterprise growth to the year 2020: Implications for EU policy? By Pietro Moncada-Paternò-Castello; Peter Voigt
  2. Motives for inter-firm cooperation on R&D and innovation: empirical evidence from Argentine and Spain By Edwards-Schachter, Mónica; Anlló, Guillermo; Castro-Martínez, Elena; Sánchez-Barrioluengo, Mabel & Fernández De Lucio, Ignacio
  3. Job Creation Effects of R&D Expenditures: Are High-tech Sectors the Key? By Francesco Bogliacino; Mariacristina Piva; Marco Vivarelli
  4. The Servitization of European Manufacturing Industries By Dachs, Bernhard; Biege, Sabine; Borowiecki, Marcin; Lay, Gunther; Jäger, Angela; Schartinger, Doris
  5. The trilogy of knowledge spillovers in French regions: a history of nature, channels and boundaries By Olivier Brossard; Inès Moussa
  6. European Cooperative R&D And Firm Performance By Luis Aguiar; Philippe Gagnepain
  7. Are technological gatekeepers constraining my cluster? Unfolding the paradox of gatekeepers resilience across cluster life cycle stages By Jose-Luis Hervas-Oliver
  8. Does R&D intensity influence leverage? Evidence from Indian firm-level data By Ghosh, Saibal
  9. Business cycles and investment in intangibles: evidence from Spanish firms By Paloma López-García; José Manuel Montero; Enrique Moral-Benito

  1. By: Pietro Moncada-Paternò-Castello (JRC-IPTS); Peter Voigt (JRC-IPTS)
    Abstract: The paper investigates how sector composition and the magnitude of R&D investment in the EU may differ in 2020 in comparison to the past, if a selection of top R&D-investing SMEs were assumed to be on a fast growth track while the top R&D-investing large-scale companies continue to grow as before. The background of this research objective is the emerging focus on SMEs – and in particular the fast-growing among them – with regard to the "Europe 2020" policy strategy. The study relies on the sample of top R&D-investing firms as given by the latest available "EU Industrial R&D Investment Scoreboard" editions, building there from an unbalanced panel. Scenarios were developed by distinguishing SMEs' assumed growth paths vs. that of large scale companies. A linear prediction model has been used to calculate the scenario simulations. Overall, the study indicates that if one expects the (R&D-intensive) small firms to be a driving force for a substantial structural change in the EU economy, from being driven by medium-tech sectors towards a high-tech based economy, it requires either a significant longer-term horizon of the assumed fast growth track than the simulated 10 years, or small firms' growth figures which even exceed the assumed annual 30% (as in the most optimistic scenario). Neither case appears to be particularly realistic. Hence, we need more top R&D investors in Europe to further intensify their engagement in R&D (increasing volume and R&D intensity) as well as numerous small firms that start and/or significantly increase their existing R&D activities and thus seek to become large firms and (global) leading R&D investors. Accordingly, a broad R&D and innovation (policy) strategy is needed with policy interventions which also target well all these options; i.e. stimulating firm growth and R&D and innovation-intensity across firm-sized classes.
    Keywords: SME, company growth, industrial dynamics, structural change, R&D/ innovation policy, Barcelona target, Europe 2020
    JEL: L11 L25 R38
    Date: 2012–01
  2. By: Edwards-Schachter, Mónica; Anlló, Guillermo; Castro-Martínez, Elena; Sánchez-Barrioluengo, Mabel & Fernández De Lucio, Ignacio
    Abstract: Motives and determinants supporting inter-firm technological cooperation have been extensively investigated in developed countries but scarcely addressed in developing countries. This paper addresses these issues, investigating empirically several factors influencing the likelihood to cooperate on R&D and innovation between Argentine and Spanish firms, their strategic motives and firms characteristics which influence cooperation. We draw upon data collected through a survey of 104 firms and complementary information gathered from 19 in-depth interviews, combining both qualitative and quantitative methodology. Results of a multinomial regression and the interviews show that the probability to cooperate increases with the firm size and exportation activities and decrease with the firm age whereas, opposite to literature findings, technological intensity of the firm is a non-significant variable. While for Argentine firms the principal motives are cost reduction and the possibilities for improving learning and capabilities, access to new knowledge for technological development and the search for market opportunities are the principal motives for firms located in Spain. Results of interviews also indicates that firm-specific motives and expectations may differ considerably according the activity sector, with relevant implication for norms and regulation policies in each country.
    Keywords: innovation R&D, inter-firm cooperation, motives for cooperation, funding program
    JEL: O31 O32 L22
    Date: 2012–05–18
  3. By: Francesco Bogliacino (JRC-IPTS); Mariacristina Piva (Università Cattolica de Milano); Marco Vivarelli (Università Cattolica de Milano)
    Abstract: In this paper we assess the job creation effect of R&D expenditures, using a unique longitudinal database of 677 European companies over the period 1990-2008. We estimate a dynamic labour demand specification using a Least Squares Dummy Variable Corrected (LSDVC) technique. The labour-friendly nature of R&D emerges from the empirical analysis on the overall sample. However, this positive significant effect corresponds to the high-tech sector and services, while the effect is not significant for traditional manufacturing. The results support the policy agenda of promoting structural change in European economies.
    Keywords: innovation, employment, manufacturing, services, LSDVC
    JEL: O33
    Date: 2011–12
  4. By: Dachs, Bernhard; Biege, Sabine; Borowiecki, Marcin; Lay, Gunther; Jäger, Angela; Schartinger, Doris
    Abstract: This paper provides new evidence for the servitization of European manufacturing – the trend that manufacturing firms increasingly offer services along with their physical products. We employ input-output data as well as data from a company survey to give a comprehensive picture of servitization across countries and industries. The share of services in the output of manufacturing industries increased in the large majority of European countries between 1995 and 2005 and between 2000 and 2005. Service output of manu-facturing, however, is still small compared to the output of physical products. The highest service shares are found in small countries with a high degree of openness and R&D intensity. EU-12 Member States have lower shares of service output compared to the EU-15. There is a strong link between servitization and technological innovation at different levels. Countries with the highest shares of services on manufacturing output have also the highest R&D intensities at the aggregate level. The service output of these countries consists predominantly of knowledge-intensive services. Highly innovative sectors reveal also the highest share of firms that offer services and the highest turnover generated with services. Examples are electrical and optical equipment, machinery, or the chemical and pharmaceutical industry. At the firm level, we find a U-shaped relationship between firm size and service output, which indicates that small, but also large manufacturing firms have advantages in servitization. Producers of complex, customized products tend to have a higher share of services in output than producers of simple, mass-produced goods. Moreover, firms which have launched products new to the market during the last two years are more likely to realize higher shares of turnover from services compared to companies which launched no products new to the market.
    Keywords: Servitization; structural change; manufacturing; input-output tables; innovation; knowledge-intensive services
    JEL: L16 O30
    Date: 2012–05
  5. By: Olivier Brossard; Inès Moussa
    Abstract: We suggest three theoretical propositions on the nature, channels and boundaries of knowledge spillovers, and we test them with knowledge production functions estimated on French NUTS 3 regions over 2002–2008. Several novelties are introduced. First, we quantify external R&D to complement the usual internal R&D variable and assess the effect of knowledge nature on knowledge spillovers. Second, we construct several measures of the quantity and quality of regional knowledge diffusion channels and introduce them in our knowledge production functions. Third, we test several spatial panel specifications to assess robustness and evaluate the geographical boundaries of various types of knowledge spillovers. All methods converge to provide evidence for the following: 1) spillovers from internal R&D are larger than spillovers from external R&D; 2) the quantity and quality of regional knowledge transmission channels are important determinants of regional innovation; and 3) industrial and technological diversity produce positive knowledge externalities, not only locally but also in the neighbourhood of French regions.
    Keywords: Knowledge spillovers, innovation, R&D, clusters
    JEL: R12 R15
    Date: 2012–05
  6. By: Luis Aguiar (Departamento de Economía - Universidad Carlos III de Madrid); Philippe Gagnepain (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: The goal of this paper is to assess the impact on the performance of firms that participate in Research Joint Ventures (RJVs) funded by the Fifth European Framework Programme for Research and Technological Development (EU-FP5). A special emphasis is made on the User-friendly Information Society (IST) programme, one of the most important thematic programmes of the EU-FP5. We use the funding available to the firms as an instrumental variable to account for self-selection and estimate the Local Average Treatment Effect (LATE) of participation by considering labor productivity and profit margin as performance measures. Our results show a large and positive impact of participation on the labor productivity of the firms, whereas the effect on profit margin is weaker. When taking into account the size of the RJV, we find that the positive impact on labor productivity comes mainly from participation in large projects and that participation in smaller RJVs has a negative effect on the profit margin.
    Date: 2011
  7. By: Jose-Luis Hervas-Oliver
    Abstract: The economic geography literature assumes that large leading firms (technology gatekeepers)(TGs) with high absorptive capacity and high-intensity R&D expenditures, shape the district learning process. However, there is an absence in the literature of a dynamic analysis of the role of the TG. Instead, most of the evidence provided is set at a single point in time and considers only one stage of the cluster life cycle (CLC). This paper challenges the aforementioned assumption, and introduces into the discussion two important influences on outcomes: the type of knowledge created (whether it be continuous or radical) in the cluster by technology gatekeepers, and the stage of the cluster life cycle (CLC) at which that knowledge is created. This work addresses the roles of the TG and the CLC together, responding to the gap that not much is known about the role and the persistence of the TG dynamically across different stages of the cluster life cycle. Using qualitative longitudinal case-study research, a world-class cluster is analysed over the last twenty years. The results show that there are temporary technological gatekeepers across cluster life cycles which assume the (temporary) role of leaders when it is a question of bringing in disruptive knowledge. The study’s findings have important implications for scholars and policymakers.
    Keywords: technological gatekeepers, cluster life cycle, clusters, radical knowledge, spin-offs
    JEL: D2 R3 R11 R58 O33 L1 L2
    Date: 2012–05
  8. By: Ghosh, Saibal
    Abstract: The paper examines the association between corporate leverage and their investment in R&D. Towards this end, it develops certain testable propositions. These propositions are tested using a dataset of manufacturing firms in India covering the period 1995-2005. The estimates support the fact that firms which make high efforts on R&D investments exhibit lower leverage ratios. Additionally, the estimates reveal that the dampening effect of R&D-intensity on leverage is the highest for foreign private firms. For state-owned firms however, R&D activity appears to be positively associated with leverage.
    Keywords: R&D intensity; leverage; Tobit model; India
    JEL: O32
    Date: 2012–03–17
  9. By: Paloma López-García (Banco de España); José Manuel Montero (Banco de España); Enrique Moral-Benito (Banco de España)
    Abstract: This paper tests the opportunity-cost theory using a panel of Spanish firms during the period 1991-2010. Under this theory, productivity-enhancing activities, such as R&D investment, should increase during downturns because of the fall in their relative cost – in terms of forgone output –. This would imply that business cycles may have a (positive) long-term impact on productivity growth. In the spirit of Aghion et al. (2007) we allow the impact of the cycle on R&D to vary between firms with different access to credit, finding that credit constraints may reverse the countercyclicality of R&D, even if it is optimal for them. We go one step further and explore whether other productivity-enhancing activities, like on-the-job training and the purchase of patents, follow a similar pattern. We find that on-the-job training expenditures are countercyclical and, unlike R&D investment, credit constraints seem not to affect their cyclical behaviour. Investments in other intangibles, such as patent purchases, are found to be acyclical, also irrespective of financial constraints, which could suggest some kind of substitution between R&D and patent purchases over the cycle. Finally, complementarities between the different intangible investments and the traditional productive factors (labour and capital) are also investigated via production function estimates, in order to assess potential indirect effects of the cycle on long-run growth
    Keywords: R&D, business cycle, credit constraints, panel data
    JEL: O3 E32 D22 C23
    Date: 2012–05

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