nep-sbm New Economics Papers
on Small Business Management
Issue of 2013‒04‒13
eighteen papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Knowledge spillovers and economic performance of firms located in depressed areas: does geographical proximity matter? By Liliana Araújo; Sandra T. Silva; Aurora A.C. Teixeira
  2. Do entrepreneurs matter? By Becker, Sascha O.; Hvide, Hans K
  3. Sorting out the impact of cultural diversity on innovative firms. An empirical analysis of Dutch micro-data By Ceren Ozgen; Thomas de Graff
  4. Knowledge cumulability and complementarity in the knowledge generation function By Antonelli Cristiano; Colombelli Alessandra
  5. Drivers of Firm Growth: Micro-evidence from Indian Manufacturing By Nanditha Mathew
  6. Towards an Efficient Use of R&D – Accounting for Heterogeneity in the OECD By Cullmann, Astrid; Zloczysti, Petra
  7. Are Academic Spin-Offs necessarily New Technology-Based firms? By Dina Cunha; Sandra T. Silva; Aurora A.C. Teixeira
  8. Skill Structure and Technology Structure: Innovation and Growth Implications By Pedro Mazeda Gil; Oscar Afonso; Paulo Brito
  9. Introducing the University of Applied Science in the technology transfer process By Lehmann, Erik E.; Starnecker, Alexander
  10. The Division of Policy Research and Analysis at the National Science Foundation: Its Support of Research on the Returns to R&D By Hall, Michael J.; Layson, Stephen K.; Link, Albert N.
  11. Intermediate input markets, ICT and innovation in Germany: A firm level analysis By Cerquera, Daniel; Klein, Gordon J.
  12. Credit rationing or overlending:Who is right ? By Jean Bonnet; Sylvie Cieply; Marcus Dejardin
  13. How does FDI affect corporate tax revenue of the host country? By Huu Thanh Tam Nguyen; Manh Hung Nguyen; Aditya Goenka
  14. Entrepreneurship or Survival? Caste and Gender of Small Business in India By Ashwini Deshpande; Smriti Sharma
  15. Impacts of a Micro-Enterprise Clustering Program on Firm Performance in Ghana By Jörg Peters; Maximiliane Sievert; Christoph Strupat
  16. Determinants of international technology transfer: an empirical analysis of the Enterprise Europe Network By Ana Carina Araújo; Aurora A.C. Teixeira
  17. Trademark or patent? The effects of market structure, customer type and venture capital financing on start-ups' IP decisions By De Vries, G.A.; Pennings, H.P.G.; Block, J.H.
  18. The entrepreneur in economic theory: from an invisible man toward a new research field By Vera Catarina Rocha

  1. By: Liliana Araújo (Faculdade de Economia, Universidade do Porto); Sandra T. Silva (CEF.UP, Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto, OBEGEF)
    Abstract: Extensive literature on the contribution of knowledge spillovers to growth and development at the regional level exists but these studies mainly features regions characterised by a high level of economic development. This paper assesses the importance of knowledge spillovers for firms located in relatively small, peripheral and economically depressed areas. Based on both primary (direct surveys to 257 firms) and secondary data, we concluded that the more relevant knowledge spillovers for firms located in a depressed region of northern Portugal (Vale do Ave) are inter-regional and international. This suggests that the contacts established with sources of knowledge from outside the region under analysis and abroad are crucial for the performance of firms. Despite the innovative intra-industry environment impacts positively on the economic performance of firms, our results convey that in such peripheral and depressed region geographical proximity is not critical for the firms’ economic performance.
    Keywords: Depressed areas; Evolutionary Economic Geography; Knowledge Spillovers, Innovation.
    JEL: R11 B52 D80 O3
    Date: 2013–03
  2. By: Becker, Sascha O.; Hvide, Hans K
    Abstract: In the large literature on firm performance, economists have given little attention to entrepreneurs. We use deaths of more than 500 entrepreneurs as a source of exogenous variation, and ask whether this variation can explain shifts in firm performance. Using longitudinal data, we find large and sustained effects of entrepreneurs at all levels of the performance distribution. Entrepreneurs strongly affect firm growth patterns of both very young firms and for firms that have begun to mature. We do not find significant differences between small and larger firms, family and non-family firms, nor between firms located in urban and rural areas, but we do find stronger effects for founders with high human capital. Overall, the results suggest that an often overlooked factor -- individual entrepreneurs -- plays a large role in affecting firm performance.
    Keywords: entrepreneurship; firm performance; human capital
    JEL: D21 D24 G39 J23 L11 L25
    Date: 2013–01
  3. By: Ceren Ozgen (Department of Spatial Economics, VU University Amsterdam and bTinbergen Institute, Amsterdam,); Thomas de Graff (aDepartment of Spatial Economics, VU University Amsterdam)
    Abstract: An increasing amount of research in the migration literature shows a positive association between migrant diversity and rm productivity. However, the potential bias due to unobserved heterogeneity remains a challenge. In this paper we analyse the impact of cultural diversity on firm innovativeness, while using finite mixture modeling to control for observed and unobserved heterogeneity. Recent availability of microdata has enabled us to construct a linked employee- employer dataset through merging datasets on both workers and firms. We explore the possible ways of firm-level knowledge exchange among the employees with different cultural backgrounds and its impact on firms' product and process innovations. We find that workforce diversity is beneficial for innovativeness in capital-intensive sectors. It also positively impacts large firms that operate in high-level services, manufacturing, mining and R&D sectors, that are predominantly located in the non-urban areas in the Netherlands. In labour and land intensive sectors, the impact of cultural diversity on innovativeness is inconclusive.
    Keywords: Cultural diversity, innovativeness, (un-)observed heterogeneity, finite mixture modeling, migration
    JEL: J15 J21
    Date: 2013–04
  4. By: Antonelli Cristiano; Colombelli Alessandra (University of Turin)
    Abstract: This paper explores the role of external knowledge and internal stocks of knowledge in the generation of new technological knowledge. It relies on the notion of recombination and brings together three concepts: the appreciation of current expenses in R&D activities; the analysis of the role of the stock of knowledge composition; the identification of the role of external knowledge available in the regional proximity. The empirical section is based upon a panel of companies listed on the main European financial markets for the period 1995–2006. The econometric analysis considers patents as a measure of the knowledge out put and, on the right hand side, next to R&D expenditures, the stock of knowledge internal and external to each firm. The results confirm that the stock of internal knowledge and the access to external knowledge play a key role in assessing the actual capability of each firm to generate new knowledge.
    Date: 2013–02
  5. By: Nanditha Mathew
    Abstract: The paper presents micro evidence on firm dynamics for enterprises in Indian Manufacturing sectors on the grounds of Prowess database provided by the Centre for Monitoring Indian Economy (CMIE) covering the period 1991-2010. The parameterization of the distributions of growth exhibit high level heterogeneity displayed among firms even within the same sector, which widens over time. The transition probabilities matrix reveals the coexistence of firms with very different characteristics and performance within sectors. Given the wide heterogeneities, the paper resorts to quantile regression to identify the differential effect of regressors at different deciles of the conditional distribution.
    Keywords: Firm Dynamics, AEP Distribution, Heterogeneity, Quantile Regression.
    JEL: C14 D22 L10 L25 L60
    Date: 2013–03–01
  6. By: Cullmann, Astrid; Zloczysti, Petra
    Abstract: Expenditures devoted to research and development (R&D) are scarce and thus need to be used as efficiently as possible given the financial constraints countries are facing. This paper assesses the relative efficiency of R&D expenditures for 26 OECD member countries and 2 non-member countries. As countries differ in their national innovation systems and states of economic development and industrialization, e.g. transition economies in Eastern Europe vs. Asian countries vs. Anglo-Saxon countries, the measurement of R&D efficiency needs to consider differences in the technology of knowledge production. The existing empirical literature on R&D efficiency mainly builds on a homogeneous technology frontier neglecting the importance to account for country-specific heterogeneity. This paper models technological differences in knowledge production among countries using a stochastic frontier model for panel data. Applying a latent class model for SFA, we find empirical evidence for two technological classes, a `capital-intensive' and a `labor-intensive' one. Assuming a common knowledge production technology, as has been done so far in the empirical literature, thus results in biased efficiency estimates.
    Keywords: innovation; knowledge production function; latent classes; R&D efficiency; stochastic frontier analysis
    JEL: C40 O31 O57
    Date: 2013–02
  7. By: Dina Cunha (Faculdade de Economia, Universidade do Porto); Sandra T. Silva (Faculdade de Economia, Universidade do Porto, CEF.UP); Aurora A.C. Teixeira (Faculdade de Economia, Universidade do Porto, CEF.UP; INESC Porto, OBEGEF)
    Abstract: New Technology-Based Firms (NTBFs) have gained increasing economic relevance, supported by the recognition that they play an important role in national economies in the appearance of both new, high technology products and of new and emerging industries. Despite their economic importance, a number of alternative definitions for NTBFs are referred to in the literature, many of them adjusted to the aim of the study or the sample under observation. Such a lack of conceptualization reflects the variety of perspectives and interests of researchers, and has led to the need for a coherent framework to study NTBFs. Agreement has yet to be reached on which are the key characteristics of NTBFs. This lack of consensus in the conceptualization of NTBFs hinders the adequate applicability of the concept or a comparison among the different existing studies. Based on a sample of 30 Academic Spin- Offs (ASOs), and applying the criteria inferred conceptually, it was possible to conclude that, contrary to common wisdom, not all ASOs are NTBFs. Additionally, the ASOs classified as NTBFs, according to our criteria, differ significantly from the other ASOs, presenting a higher level of invested capital, higher R&D and internationalization intensity, and founding teams with a higher concentration of individuals with management capabilities.
    Keywords: New technology-based firms; Academic Spin-offs; Portugal
    JEL: O30 O32
    Date: 2013–01
  8. By: Pedro Mazeda Gil (Faculdade de Economia, Universidade do Porto); Oscar Afonso (Faculdade de Economia, Universidade do Porto); Paulo Brito (ISEG, Universidade Técnica de Lisboa)
    Abstract: This paper builds an endogenous growth model of directed technical change with vertical and horizontal R&D and scale effects at the industry level to study an analytical mechanism that is consistent with the observed cross-country pattern in the skill structure, the technology structure and economic growth. We calibrate the model in order to uncover the effect of the skill structure on economic growth by studying how the former affects the technology structure. We find that the small positive elasticity of the economic growth rate regarding the ratio of high- to low-skilled workers that is empirically observed is explained by the combination of moderate levels of the market complexity costs related to vertical R&D and high entry costs in the high- vis-à-vis the low-tech sectors, which dampen the positive direct effect of the absolute productivity advantage of the high-skilled workers on growth
    Keywords: high-tech, low-tech, scale effects, skills, directed technical change
    JEL: O41 O31
    Date: 2012–09
  9. By: Lehmann, Erik E.; Starnecker, Alexander
    Abstract: After WWII, the German Economy increased rapidly, often described as the Deutsche Wirtschaftswunder. Within a short period, Germany reached the status of unemployment and human capital gets the critical factor and resource in shaping economic growth. While the bottle neck with blue collar workers was solved by an active immigration policy by attracting people from Italy, Turkey or Greece, the lack of white collar workers and engineers still remained. Public universities at this time weren't still unable to provide the quantity of well-educated people in particular in the natural sciences. In particular the high opportunity costs of time made public universities less attractive compared to an early carrier within the industry. In the mid of the 1960s the German government decided to adapt a well-known concept from the theory of the firm - division of labor to provide high skilled employees. A new type of university was created, the so called Universities of Applied Sciences. Public Universities are focused on basic research, while Universities of Applied Sciences (UAS) provide the economy with applied research and education. While the time spend at public universities often exceeded a couple of years before getting graded, the study program at UAS was mainly limited to 3 years (6 semesters). After the Bologna Reform, Bachelor and Master programs of UAS and public universities are treated equally. In the last decade, this division of labor between UAS and public universities was mainly focused on an additional way, the role of each type of university within the technology transfer process. While the role of public universities and their role within the technology transfer processes is intensively studied (Hülsbeck, Lehmann & Starnecker, 2012) the impact of UAS remains rather under researched. Although they are quite successful in their cooperation with the industry and are nevertheless a bone back in the university-industry relationships, there exists almost anecdotal evidence on this type of universities. This paper tries to shed some lights on this type of universities which could be a role model in particular for countries and regions where small and medium sized firms dominate the industrial landscape. --
    Date: 2013
  10. By: Hall, Michael J. (University of North Carolina at Greensboro, Department of Economics); Layson, Stephen K. (University of North Carolina at Greensboro, Department of Economics); Link, Albert N. (University of North Carolina at Greensboro, Department of Economics)
    Abstract: The U.S. National Science Foundation’s (NSF’s) Division of Policy Research and Analysis (PRA) supported academic research related to, among many other things, measurement of the returns to private and public R&D, during the early 1980s. The findings from this body of research became a foundation for a number of technology and innovation policies promulgated in the aftermath of the U.S. productivity slowdown in the 1970s, and, as we suggest in this paper, a foundation for many contemporary technology and innovation policy initiatives. We argue that there are lessons to be learned from PRA’s successes from its sponsorship of research in this area, and we suggest one possible area of future emphasis for NSF’s on-going Science of Science and Innovation Policy (SciSIP) program.
    Keywords: Division of Policy Research and Analysis; National Science Foundation; Returns to R&D; Technology; Innovation; Science of Science and Innovation Policy
    JEL: O31 O32 O38
    Date: 2013–04–05
  11. By: Cerquera, Daniel; Klein, Gordon J.
    Abstract: This paper studies the impact of the adoption of ICT on the economic performance at the firm level, considering explicitly the interaction of adopting firms within the intermediate input market in Germany. The paper identifies and quantifies the importance of adoption externalities and knowledge spillovers inherent in the introduction of ICT. The results show that the adoption of ICT at the firm level is positively affected by the use of ICT downstream and upstream (i.e. by a firm's clients and suppliers). Moreover, the use of ICT upstream(i.e. by a firm's suppliers) negatively affects the extend of IT outsourcing at the firm level, suggesting a substitution effect between inputs provided by suppliers with an intense use of ICT and a firm's demand for external IT services. The paper also finds that the use of ICT within the intermediate input markets positively affects the efficiency of internal processes by increasing the cost reductions generated by the introduction of process innovations. --
    Keywords: Information and Communication Technologies,General Purpose Technologies,Intermediate Input Markets,Innovation,Firm Level Data
    JEL: D22 L25 O32
    Date: 2013
  12. By: Jean Bonnet (Normandie University, Caen, Faculty of Economics and Business Administration - CREM CNRS UMR6211, France); Sylvie Cieply (Normandie University, Caen, Institut Banque-Assurance - CREM CNRS UMR6211, France); Marcus Dejardin (Université Catholique de Louvain and University of Namur, CERPE, Belgium)
    Abstract: There is a widespread belief in both academic literature and policy circles that small firms are unable to obtain sufficient banking loans.This idea finds a strong theoretical support in credit rationing theory, as initiated by Stiglitz and Weiss (1981). However, this is vigorously challenged by De Meza and Webb (1987, 2000) suggesting contrastingly that firms can benefit from an excess of credit. This empirical article is the first to test these two theories using data on the access to credit for new French businesses during the mid 1990s. Our results show that credit rationing was not highly spread among French new firms. The story described by De Meza and Webb (1987) appears to be a much more realistic model. Finally, we identify factors closely associated with credit rationing and overlending.
    Keywords: Credit Rationing, Overlending, Asymmetric information, New business
    JEL: L26 M13 D82 G21
    Date: 2013–03
  13. By: Huu Thanh Tam Nguyen (Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne); Manh Hung Nguyen (Toulouse School of Economics (LERNA-INRA), Hanoi WRU); Aditya Goenka (Department of Economics, National University of Singapore)
    Abstract: This paper investigates the effect of foreign direct investment (FDI) on the welfare of the host country through the process of corporate tax rate determination. Based on a theoretical model that allows for the entry of heterogenous multinational firms, we show that the impact of FDI on government revenue will depend on the competition effect and the technological spillovers. We argue that the competition effect reduces production of domestic firms and thereby lowers the level of corporate tax revenue while the technological spillovers can have positive or negative welfare effects depending on the absorptive capacity of local firms. The degree to which FDI contribute to government revenue in the host country depends also on the demand creation effect and technological transfer cost.
    Keywords: FDI, corporate tax revenue
    JEL: F15 F23
    Date: 2013
  14. By: Ashwini Deshpande (Department of Economics, Delhi School of Economics, Delhi, India); Smriti Sharma (Department of Economics, Delhi School of Economics, Delhi, India)
    Abstract: We use unit-level data from the registered manufacturing segment of the Third and Fourth rounds of the Indian Micro, Small and Medium Enterprises (MSME) census data for 2001-2 and 2006-7 respectively, to understand the changes in involvement and dynamics not only of Dalits (officially, Scheduled Castes, or SCs), but also of other marginalized groups, specifically Adivasis (officially, Scheduled Tribes, or STs) and women, in this sector. We empirically estimate the growth rates for these enterprises and analyse the determinants, including caste and gender of the enterprise owner. We find clear and persistent caste and gender disparities in virtually all enterprise characteristics in the registered manufacturing MSME sector. The share of SC-ST ownership has declined over the period, SC-ST enterprises tend to be smaller, more rural than urban, have a greater share of owner-operated (single employee) units. The inter-state variation in share of ST-SC businesses reveals that with the exception of the tribal majority north-eastern states, SC and ST businesses are under-represented as compared to their share in state populations. The sectoral mix varies considerably by rural-urban location as well as by the caste and gender of the owner. The traditional stigmatizing association with leather-work continues to be one of the top five business activities for SCs and not for other caste groups. The gender-caste overlap indicates that the share of female-owned and female-managed enterprises is significantly greater among SC-ST-owned enterprises, than those owned by Others, and especially by Hindu upper-castes.The majority of the MSME workforce is employed in non-SC-ST owned firms. Also, there is evidence of homophily in OBC and upper-caste-owned firms, suggesting that the rise in Dalit entrepreneurship is key to increasing Dalit employment in the small business sector. While it is significant that there is now an emerging section of Dalit entrepreneurs, we find that most Dalit businesses occupy a very different place in the production chain, viz., that they are engaged in the bottom-of-the-ladder, low productivity, survival activities, as can be seen from our estimates of their lower rate of growth, after controlling for other characteristics. Thus, we find that entrepreneurship as a vehicle for social mobility for Dalits is yet to become a reality for India.
    Date: 2013–03
  15. By: Jörg Peters; Maximiliane Sievert; Christoph Strupat
    Abstract: Widely considered as an important backbone of economies in developing countries, micro- and small enterprises face several constraints in doing business in Ghana. The creation of industrial zones (IZ) with improved access to infrastructure and secured land tenure is a potential remedy to promote local economic development. In this paper, we assess the effects of an intervention on business performance that establishes or upgrades IZs for micro- and small enterprises in Ghana based on firm-level data on 227 enterprises. Lacking reliable baseline data and an appropriate control group, we use retrospective questions to reconstruct the situation before the intervention. Furthermore, in order to account for general changes in the local economic environment, we examine regional agricultural market development over time. The results show that the establishment of IZs leads to the creation of new firms, but for existing firms that relocated to the IZs the effects on firm performance are negative.
    Keywords: Project evaluation; firm clustering; micro-enterprises
    JEL: O14 O22 L69
    Date: 2013–03
  16. By: Ana Carina Araújo (AdI – Portuguese Innovation Agency); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto; OBEGEF)
    Abstract: Given that science and technology are inductors of economic development, the emergence of a knowledge-based economy creates an overlay of communications and expectations that have led to institutional restructuring based on innovative capacities. While the literature tends to concentrate on university-industry relations, this paper intends go a step further, by exploring the university-industry-government relations established in a technology transfer context. Particular attention is paid to the key factors that foster technology transfer within the triad university-industry-government in an international context, i.e., the Enterprise Europe Network (EEN). Based on 71 technological Partnership Agreements (PAs), estimation results indicate that PAs associated to partners that provide their collaborators with the appropriate training in technology transfer-related issues, present substantial past experience in international or technological projects, and participate in extensive networks, are those that achieve better performances in terms of international technology transfer. In contrast, and quite surprisingly, the EEN’s human capital endowments and absorptive capacity act as barriers to international technology transfer. A deeper analysis into this latter finding shows that high levels of formal schooling per se are not a key determinant of international technology transfer; indeed, the critical factor is instead highly educated human resources who receive complementary training in technology transfer issues.
    Keywords: International technology transfer; Triple Helix; Enterprise Europe Network
    JEL: O32 O33 O38
    Date: 2013–01
  17. By: De Vries, G.A.; Pennings, H.P.G.; Block, J.H.
    Abstract: We analyze the initial intellectual property (IP) right of 4,703 start-up entrants in the US, distinguishing between trademark and patent applications. The results show that start-ups are more likely to file for a trademark instead of a patent when entering into more competitive market structures. Further, we find that start-ups with a focus on distribution that serves end-consumers are more likely to file for a trademark and that start-ups that operate upstream and sell to other businesses are more likely to file for a patent. Lastly, the external influences on a start-up‟s management, such as the involvement of a venture capitalist (VC), affect IP applications. The increased incentive of VC-backed start-ups to become operational on the market makes them more likely to file initial IP in the form of a trademark rather than a patent. Among other factors, we control for R&D and advertising intensity in the industry and distinguish between more technical and more service-driven industries.
    Keywords: competition;intellectual property;trademarks;venture capital;patents
    Date: 2013–04–09
  18. By: Vera Catarina Rocha (CEF.UP, FEP; CIPES)
    Abstract: Mainstream economics had great difficulty in fitting entrepreneurship into its theory and for long time the theoretical firm remained “entrepreneurless”. However, from the early 20th century onwards, we identify strong attempts of key economists to recognize the role of the entrepreneur as an explanatory force of several economic phenomena. This paper analyzes the evolution of economic thought on entrepreneurship, and in particular the path through which the entrepreneur (re)entered into economic theory over the 20th century, leading to the new and increasingly independent research field Economics of Entrepreneurship. The analysis goes through the main Economics fields where the (re)discover of the entrepreneur figure was most remarkable - namely Labor Economics, Microeconomics and Industrial Organization, and Economic Growth and Development - searching for the rationality to include the entrepreneur figure into the analyses of particular economic phenomena. The study is enriched by a brief bibliometric analysis, which helps to set forth a chronological trace of the entrepreneurship research within Economics literature.
    Keywords: Entrepreneurship, Entrepreneur, Economic Thought, Labor Economics, Industrial Organization, Economic Development and Growth
    JEL: B00 J01 L26 O10
    Date: 2012–05

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