nep-sbm New Economics Papers
on Small Business Management
Issue of 2013‒06‒09
fourteen papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Innovative start-up patenting: a new approach towards identification and determinants By Tina Wolf
  2. Industry - and firm-specific factors of innovation novelty By Natália Barbosa; Ana Paula Faria; Vasco Eiriz
  3. Born to be alive? The survival of innovative and non-innovative French micro start-ups By Tristan Boyer; Regis Blazy
  4. Firm R&D units and outsourcing partners: A matching story By Barge-Gil, Andrés; Conti, Annamaria
  5. Technological Diversification and Innovation Performance By Thomas Bolli; Martin Wörter
  6. Horizontal and Vertical Technology Spillovers from FDI in Eastern Europe By Cristina Jude
  7. R&D, Patenting and Growth: The Role of Public Policy By Ben Westmore
  8. Intangible Investment and Firm Value in Japan (Japanese) By TAKIZAWA Miho
  9. Productivity Dynamics and R&D Spillovers in the Japanese Manufacturing Industry: An empirical analysis based on micro-level data (Japanese) By IKEUCHI Kenta; YoungGak KIM; KWON Hyeog Ug; FUKAO Kyoji
  10. What drives firm growth? The role of demand and TFP shocks By Fabiano Schivardi; Andrea Pozzi
  11. Measuring Total Factor Productivity at the Firm Level using OECD-ORBIS By Peter N. Gal
  12. Entrepreneurship and Human Capital: Empirical study using a survey of entrepreneurs in Japan By BABA Ryota; MOTOHASHI Kazuyuki
  13. Measuring Credit Constraints for Irish SMEs By O'Toole, Conor; Gerlach, Petra; O'Connell, Brian
  14. Teaching KAIZEN to Small Business Owners: An Experiment in a Metalworking Cluster in Nairobi By Yukichi Mano; John Akoten; Yutaka Yoshino; Tetsushi Sonobe

  1. By: Tina Wolf (Friedrich Schiller University Jena, DFG RTG 1411 The Economics of Innovative Change)
    Abstract: There already exists broad literature investigating small and innovative firms in many respects. However, there have been few attempts to assess this group of firms' propensity to patent or its patenting activities. This paper intends to fill that gap. By applying a new approach to account for young and innovative companies' patents, this paper avoids an undercounting of small firm patenting, which has been a feature of most of the earlier studies. A data set is used that comprises information on R&D, capital stock, state promotion etc for 534 Thuringian firms in their first three business years. The results of the zero-inflated negative binomial regression analysis suggest that patenting is an activity of science-oriented, cooperative young firms that are conducting R&D even before the firm has been launched.
    Keywords: entrepreneurship, technological innovation, patenting, firm performance, research and development
    JEL: L25 L26 Q55
    Date: 2013–05–27
  2. By: Natália Barbosa (Universidade do Minho - NIPE); Ana Paula Faria (Universidade do Minho - NIPE); Vasco Eiriz (Universidade do Minho - Departamento de Gestão)
    Abstract: This paper investigates the underlying factors that might shape the firm’s choices with respect to degrees of innovation novelty. Using a sample of 2983 firms observed under the Portuguese Community Innovation Survey, we assess the relative relevance of a set of firm- and industry-specific factors in explaining firms’ choices about incremental or radical innovation. The results indicate that both the firm’s idiosyncratic historical factors giving rise to heterogeneous R&D capabilities and the industry context have power to shape the firm’s innovation choices, even though firm-specific factors appear to be more powerful. The estimated impacts on firm’s innovation novelty are, nonetheless, significantly moderated by the type of firm and industry.
    Keywords: Radical and incremental innovation, competitive environment, R&D capabilities.
    JEL: L21 L10
    Date: 2013
  3. By: Tristan Boyer; Regis Blazy
    Abstract: Based on French data describing the characteristics of the entrepreneurs and their project, this paper studies the differences between the determinants of survival for innovative and non-innovative micro-enterprises. We show that the survival of innovative and non-innovative enterprises is linked to personal criteria such as age, gender, minority, professional experience and financing sources. Our results also highlight the positive effect of not being alone in the start-up design phase, whereas being involved in a business network after the start-up period has no significant influence. The survival time of innovative enterprises, which is significantly lower than that of the non-innovative ones, seems adversely influenced by the entrepreneur’s previous management experience. Finally, when considering both innovative and non-innovative start-ups, there appears to be a type of “pecking order” as bank financing has a much more positive effect on survival than a personal one, albeit when focusing solely on innovative ones this difference does not exist.
    Keywords: entrepreneur, innovation, micro-enterprise, survival, pecking order.
    JEL: L26
    Date: 2013–05
  4. By: Barge-Gil, Andrés; Conti, Annamaria
    Abstract: We present a theory that examines the optimal match between firm R&D units and external partners for projects that involve problem solving. We have a firm selecting an external partner conditional on the learning costs of its internal R&D unit. We show that there exists a matching equilibrium with property that external partners with low learning costs for a project work with R\&D units that also have low learning costs for the same project. Empirically, we use a dataset of Spanish R\&D firms and relate their share of R&D outsourcing to universities to the composition of their R&D units, described by the presence of staff with a PhD. Our main finding is that, controlling for endogeneity, firms that employ R\&D staff with a PhD outsource relatively more to universities than to firms. We interpret this result as evidence that R&D units with relatively low learning costs for basic projects tend to match with external partners, universities, with relatively low learning costs for the same projects.
    Keywords: Firm R&D Units; Outsourcing; External Partners; Optimal Matching
    JEL: D23 O32 L24
    Date: 2013–05
  5. By: Thomas Bolli (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Wörter (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: This paper analyzes the impact of technological diversity on innovation inputs and success using Swiss firm-level panel data. While we do not find any impact of diversity on R&D intensity, we confirm a positive impact of diversity on patent applications as suggested by the literature. However, since patent applications reflect an intermediate innovation input rather than output, we extend the analysis to the share of sales generated by new products. We find a significant negative effect of diversity on the sales share of new products. Hence, technologically more specialized firms have a lower propensity to patent and greater shares of new products. We find neither a direct nor indirect effect of diversity on the sales share generated by improved products. These results suggest that specialization pays-off through more drastic innovations that yield greater market success through a passing monopoly status.
    Keywords: patent applications, innovative sales share, new products, improved products, technological diversity
    JEL: O3
    Date: 2013–06
  6. By: Cristina Jude (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans, FSEGA - Babes Bolyai University Cluj Napoca - Universitatea Babeş-Bolyai, Cluj-Napoca)
    Abstract: The aim of our paper is to empirically estimate the direction and magnitude of technological spillovers from FDI using a plant level dataset of Romanian firms for the period 1999-2007. We use the Levinsohn Petrin (2003) methodology in order to estimate total factor productivity and compute several measures of spillover effect based on time varying Input-Output tables. We find local suppliers to benefit from positive backward spillovers while local clients are negatively affected by forward spillovers. Using several measure of absorptive capacity like human capital or R&D does not change our results. On the other hand, a large technological gap favors the capture of technological spillovers. Labor mobility is the only significant horizontal spillovers. We also find that labor mobility changes direction according to different human capital levels. We finally show that local firms buying inputs from FDI suppliers are negatively affected by a second order vertical spillover.
    Keywords: FDI, spillovers, technology transfer, total factor productivity, absorptive capacity
    Date: 2012–08–31
  7. By: Ben Westmore
    Abstract: This paper uses panel regression techniques to assess the policy determinants of private sector innovative activity – proxied by R&D expenditure and the number of new patents – across 19 OECD countries. The relationship between innovation indicators and multifactor productivity (MFP) growth is also examined with a particular focus on the role of public policies in influencing the returns to new knowledge. The results establish an empirical link between R&D and patenting, as well as between these measures of innovation intensity and MFP growth. Innovation-specific policies such as R&D tax incentives, direct government support and patent rights are found to be successful in encouraging the innovative activities associated with higher productivity growth. However, direct empirical evidence of the positive effects of these policies on productivity is less forthcoming. A pervasive theme from the analysis is the importance of coupling policies aimed at encouraging innovation or technological adoption with well designed framework policies that allow knowledge spillovers to proliferate. In particular, the settings of framework policies relating to product market regulation, openness to trade and debtor protection in bankruptcy provisions are found to be important for the diffusion of new technologies.<P>R&D, brevets et croissance : le rôle des politiques publiques<BR>Ce document utilise des techniques de régression en panel pour évaluer les déterminants politiques de l'activité d'innovation du secteur privé – représentée par les dépenses de R & D et le nombre de brevet - à travers 19 pays de l'OCDE. La relation entre les indicateurs de l'innovation et la croissance de la productivité multifactorielle (PMF) est également analysée avec une attention particulière sur le rôle des politiques publiques pour influencer les rendements de nouvelles connaissances. Les résultats établissent un lien empirique entre la R & D et les brevets, ainsi qu'entre ces mesures de l'intensité de l'innovation et la croissance de la PMF. Des politiques spécifiques d'innovation telles que des incitations fiscales pour la R & D, le soutien direct de l'État et les droits de brevet sont avérées efficaces pour encourager les activités innovantes associées à une plus forte croissance de la productivité. Toutefois, les preuves empiriques directes des effets positifs de ces politiques sur la productivité sont plus rares. Un thème récurrent de l'analyse est l'importance du couplage des politiques visant à encourager l'innovation ou l'adoption technologique avec des politiques-cadres bien conçues qui permettent une plus large diffusion des connaissances. En particulier, les paramètres des politiques-cadres relatives à la réglementation des marchés de produits, l'ouverture au commerce et à la protection du débiteur dans les dispositions de la faillite sont jugés importants pour la diffusion des nouvelles technologies.
    Keywords: productivity growth, innovation, public policy, intangible assets, politiques publiques, croissance de la productivité multifactorielle (PMF), innovations, immobilisations incorporelles
    JEL: L20 O30 O40
    Date: 2013–05–22
  8. By: TAKIZAWA Miho
    Abstract: Corporate-owned assets can be broadly divided into tangible (buildings, structures, etc.) and intangible (knowledge, technology, human resource, etc.). In recent years, efforts have been widely made to construct a quantitative assessment (visualization) of the latter. According to Hulten and Hao (2008), this paper tries to measure two intangible assets—research and development (R&D) stock and organization capital—and investigates their effect on firms' value. Accordingly, it turns out that firms' accumulation of intangible assets positively influences their value in Japan. Moreover, this paper estimates the investment function which makes Tobin's q an explanatory variable including intangible assets. As a result, the coefficient of Tobin's q is positive and significant. This implies that taking into account of intangible assets is important in modeling capital investment action.
    Date: 2013–05
  9. By: IKEUCHI Kenta; YoungGak KIM; KWON Hyeog Ug; FUKAO Kyoji
    Abstract: Recent studies on productivity dynamics analysis using plant-level data found that major sources of the decline in aggregate productivity growth is due to the negative exit effect, in which the productivity level of exiting plants is higher than the industry average, and the total factor productivity (TFP) of small plants has stagnated. Using matched data of the Census of Manufactures and the Report on the Survey of Research and Development for 1987 and 2007, we examine two issues by focusing on regional economics. First, we decompose the aggregate productivity growth in Japan's manufacturing sector and prefectural level to investigate in which prefecture did negative effects occur. We found that a large negative exit effect occurred in manufacturing plants agglomerations such as Tokyo, Osaka, and Kanagawa after 1995. Second, we analyze the effect of research and development (R&D), private R&D spillovers, and public R&D spillovers on productivity growth in the Japanese manufacturing sector. Our findings are as follows. (1) The effect of R&D spillovers from other firms is attenuated by distance. (2) The effect of R&D spillovers across firms has remarkably declined since the late 1990s by exits of plants which belong to R&D intensive firms in the agglomerations. This means that the exits by such plants bring simultaneously the negative exit effect and stagnation of TFP growth in small plants. (3) The effect of public R&D spillovers is more likely to decline. This is caused by the reduction of R&D in public research organizations since the late 1990s.
    Date: 2013–05
  10. By: Fabiano Schivardi (University of Cagliari); Andrea Pozzi (Einaudi Institute for Economics and Fina)
    Abstract: We disentangle the contribution of unobserved heterogeneity in idiosyncratic demand and productivity to firm growth. We use a model of monopolistic competition with Cobb-Douglas production and a dataset of Italian manufacturing firms containing unique information on firm-level prices to reach three main results. First, demand is at least as important for firm growth as productivity. Second, firms' responses to shocks are lower than those predicted by our frictionless model, suggesting the existence of adjustment frictions. Finally, the deviation is more substantial for TFP shocks. We provide direct evidence that sluggish price adjustment influences responses to shocks, magnifying the effect of market appeal and dampening that of TFP. Moreover, organizational rigidity within the firm also contributes to reducing the response to TFP shocks, while it has no effects on that to demand shocks. These findings emphasize the importance of considering both dimensions of unobserved heterogeneity. They also imply that it is more difficult to fully adjust to TFP shocks.
    Date: 2012
  11. By: Peter N. Gal
    Abstract: Recent OECD research has utilised harmonised cross-country firm level data to explore the contribution of public policies to cross-country differences in productivity, innovation and resource allocation. This paper describes the steps taken to and the trade-offs involved in constructing firm-level total factor productivity (TFP) measures using ORBIS, a cross-country longitudinal firm-level database available from Bureau van Dijk, an electronic publishing firm. First, it shows that not all productivity measures can be calculated using readily available variables for all countries, and presents possible solutions to this problem by using imputations for certain variables. Second, it assesses the accuracy of these imputations on a set of countries where the available data in ORBIS provides a good coverage, for a wide range of TFP measures. Indeed, an extensive comparison of the actual and the imputed values of TFP for those countries suggests that TFP measures using imputations provide a reasonable approximation for the "true" values. Furthermore, to improve representativeness, resampling weights are constructed - which help correcting for the underrepresentation of small firms - while for the sake of international comparability, industry-level PPP conversions are also applied. Finally, as a plausibility check and to illustrate the potential of the database, the paper explores the country-composition of the globally most productive firms, the forces of convergence to the productivity frontier and the impact of regulation on productivity growth, in a sample of 18 OECD countries.<P>Mesurer la productivité totale des facteurs au niveau de l'entreprise à l'aide de la base de données OCDE-ORBIS<BR>Des travaux récents de l'OCDE ont utilisé des données harmonisées d’entreprises des pays de l’OCDE afin d’étudier la contribution des politiques publiques aux différences entre pays dans la productivité, l'innovation et l'allocation des ressources. Ce document décrit les mesures prises pour et les compromis impliqués dans la construction des séries au niveau de l’entreprise, de la productivité totale des facteurs (PTF) à l'aide d’ORBIS, une base de données d’entreprises longitudinale mises à disposition par le Bureau van Dijk, une maison d'édition électronique. D'abord, il montre que toutes les mesures de la productivité ne peuvent être calculées à l'aide de variables facilement disponibles dans tous les pays, et présente d’éventuelles solutions à ce problème en utilisant des imputations pour certaines variables. Deuxièmement, il évalue l'exactitude de ces imputations sur un ensemble de pays où les données, disponibles dans ORBIS, offrent une bonne couverture pour un large éventail de mesures de la PTF. En effet, une comparaison approfondie des valeurs réelles et imputées des PTF pour ces pays suggère que les mesures de la PTF, utilisant des imputations, constituent une approximation raisonnable des valeurs «réelles». En outre, afin d'améliorer la représentativité, des poids de rééchantillonnage ont été construits – afin d’aider à corriger la sous-représentativité des petites entreprises - pour des raisons de comparabilité internationale, des conversions en PPP ont également été appliquées au niveau des industries. Enfin, comme contrôle de plausibilité et pour illustrer le potentiel de la base de données, ce document examine la composition pays des entreprises les plus productives au niveau mondial, les forces de convergence vers la frontière de la productivité et l'impact de la réglementation sur la croissance de la productivité, dans un échantillon de 18 pays de l'OCDE.
    Keywords: firm level data, productivity measurement, cross-country analysis, données sur les entreprises, mesure de la productivité, analyses comparatives entre pays
    JEL: D22 D24 O47
    Date: 2013–05–21
  12. By: BABA Ryota; MOTOHASHI Kazuyuki
    Abstract: Entrepreneurship activities are low in Japan, and it is often discussed that possible reasons are the lack of venture capital and a rigid labor market. However, it is rare to find a study that analyzes the human capital aspect of entrepreneurs based on a large scale sample survey. In this study, the characteristics of the human capital of entrepreneurs, such as education and job experience, are analyzed based on a survey of entrepreneurs conducted by the Research Institute of Economy, Trade and Industry (RIETI) in 2012. The entire process of entrepreneurship is divided into three phases—(1) planning, (2) execution, and (3) achieving success in business—and the determinants of each step, not only the education and job background, but also personal relationships with the entrepreneur and his/her personality, are investigated. It is found that broad experiences while attending universities such as extra-curriculum activities are an important factor at the planning and execution stage. In contrast, broader job experiences but within a limited number of companies can explain the probability of entrepreneurship success well. Therefore, promotion of entrepreneurship activity in Japan including forming a spin-off company requires both a variety of extra-curriculum activities experienced at universities and facilitating employees to develop broad professional experiences.
    Date: 2013–05
  13. By: O'Toole, Conor; Gerlach, Petra; O'Connell, Brian
    Keywords: qec
    Date: 2013–05
  14. By: Yukichi Mano (Hitotsubashi University, Tokyo); John Akoten (Anti-Courterfeit Agency, Nairobi); Yutaka Yoshino (World Bank, Washington D.C.); Tetsushi Sonobe (National Graduate Institute for Policy Studies)
    Abstract: In recent years, managerial capital has received attention as one of the major determinants of enterprise productivity, growth, and longevity. This paper attempts to assess the impacts of a management training program on the business performance of small enterprises in a metalworking cluster in Nairobi, Kenya. A previous study of this cluster observed that while several enterprises had successfully expanded operation, the majority had been experiencing declining profits due to increasing competition with imported products and with new entrants in the cluster. Based on the observed differences in management between successful and less successful enterprises, we designed a management training program featuring the basics of KAIZEN, an inexpensive, commonsense approach to management emphasizing the reduction of wasted work and materials, for the less successful enterprises. Although our initial intention was to use this training program as a randomized experiment, we had to abandon randomization and allow every business owner interested in the program to participate in it, due to circumstances beyond our control. This paper finds that business owners operating smaller enterprises tended to be self-selected into training participation. The training effects combined with the self-selection effect, which we estimate with panel data, were statistically significant and particularly stronger on profits than on sales revenues, while other training programs that did not teach KAIZEN had positive effects on sales revenues, not profits. As a result, the participants caught up with and overtook the non-participants in terms of average sales revenues and average profits, respectively.
    Date: 2013–05

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