nep-sbm New Economics Papers
on Small Business Management
Issue of 2013‒07‒05
ten papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Age or Size? Determinants of Job Creation By Lawless, Martina
  2. Firm Resources’ Entanglement Determines ITS Absorptive Capacity: A Review Towards A New Reconceptualization By Hammady Ahmed DINE RABEH
  3. Financial Fragility and the Distribution of Firm Growth Rates By Giulio Bottazzi; Angelo Secchi
  4. The impact of consulting services on small and medium enterprises: evidence from a randomized trial in Mexico By Bruhn, Miriam; Karlan, Dean; Schoar, Antoinette
  5. Time to BRIC it? Internationalization of European family firms in Europe, North America and the BRIC countries By Vivien D. Procher; Diemo Urbig; Christine Volkmann
  6. Capital Constraints and the Performance of Entrepreneurial Firms in Vietnam By Hien Thu Tran; Enrico Santarelli
  7. The implementation of research and development policy in European and Asian countries By Reiljan, Janno; Paltser, Ingra
  8. What Affects the Main Engine of Growth in the European Economy? Industrial Interconnectedness and Differences in Performance of Business Services Across the EU25 By Maciej Sobolewski; Grzegorz Poniatowski
  9. Entry regulation and formalization of microenterprises in developing countries By Bruhn, Miriam; McKenzie, David
  10. Does Services Liberalization Affect Manufacturing Firms' Export Performance? Evidence from India By Maria Bas

  1. By: Lawless, Martina (Central Bank of Ireland)
    Abstract: Small firms have often been identified as drivers of job creation, although the evidence on their contribution to net employment growth has been disputed. This paper shows that job turnover and firm growth vary systematically across firm size groups and that smaller firms do indeed make an important contribution to new job creation. There is a significant caveat, however; we find that it is not firm size per se that is driving these results but rather firm age. The considerable overlap between the two properties, as young firms overwhelmingly tend to be small, has perhaps led to much of the effect of firm age being misattributed to size. We show that younger firms are consistently more dynamic than older firms and this holds across all size classes, not just amongst smaller firms. In addition, a relationship between lagged employment and firm growth is found to exist only for young firms.
    Date: 2013–04
  2. By: Hammady Ahmed DINE RABEH (Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO)
    Abstract: The capability of a company to absorb external information is crucial for companies, since knowledge is largely considered as a highly valuable source of competitive advantage. Accordingly, an increasing number of publications dealing with this issue have been performed. A plethora of academic works about absorptive capacity (hereinafter ACAP) indicates a need for reviewing it since there is no common agreement about a unique definition and measurement of the same. This paper, aims at shedding a new light on the state of art of absorptive capacity, offering at the same time a certain reconceptualization which may give a new insight towards a new re-dimensionalization of the ACAP construct. Such approaching is rooted in firm’s resources and capabilities, emphasizing the financial aspect, which has almost been neglected in prior researches about this issue.
    Keywords: absorptive capacity, innovation management, reconceptualization
    JEL: O32 O31
    Date: 2013–06
  3. By: Giulio Bottazzi; Angelo Secchi
    Abstract: Analyzing a comprehensive database of limited liability manufacturing firms this paper investigates the relation between a firm's financial situation and its conditional expected growth rate. Specifically, using quantile regressions, we obtain a quantitative characterization of this relation for different quantiles of the growth rates distribution. We find that simple location-shift models, as for instance the OLS, provide a poor and potentially misleading representation of the growth-finance relation. Indeed, the vast majority of the explanatory variables considered are associated with modifications in the support of the growth rates distribution (scale-effect), even when the relation of the same variables with the expected growth is negligible. Moreover, we show that financial conditions impact differently on the growth dynamics of young and old firms. Finally, our investigations reveal that the results obtained with quantile regressions appear robust with respect to possible mispecifications of the empirical model.
    Keywords: Firm growth, Quantile regression, Financial constraints, Firm size dis- tribution, Credit risk ratings
    Date: 2013–06–24
  4. By: Bruhn, Miriam; Karlan, Dean; Schoar, Antoinette
    Abstract: Using a randomized evaluation with 432 Mexican small and medium enterprises, this paper shows that access to management consulting led to better firm performance: one-year results show positive effects on return-on-assets and total factor productivity. Owners also had large increases in"entrepreneurial spirit"(an entrepreneurs'managerial confidence index). Using Mexican social security data, the analysis finds a large increase in the number of employees and total wage bill several years after the program. The paper documents large heterogeneity in the specific managerial practices that improved as a result of the consulting, but there is no singular mechanism as a panacea for all firms.
    Keywords: Access to Finance,E-Business,Microfinance,Economic Theory&Research,Business in Development
    Date: 2013–06–01
  5. By: Vivien D. Procher (Jackstaedt Center of Entrepreneurship and Innovation Research, Schumpeter School of Business and Economics, University of Wuppertal); Diemo Urbig (Jackstaedt Center of Entrepreneurship and Innovation Research, Schumpeter School of Business and Economics, University of Wuppertal); Christine Volkmann (Jackstaedt Center of Entrepreneurship and Innovation Research, Schumpeter School of Business and Economics, University of Wuppertal)
    Abstract: For a sample of 1243 European companies, we analyse the link between firm type and foreign direct investment (FDI) locations. We find substantial empirical evidence that being a family firm does not only affect the overall propensity for FDI but that this effect is also specific to target regions. Overall, family firms invest more than managerial-led firms, particularly in Europe and North America. Furthermore the BRIC countries Brazil, Russia, India and China do not constitute a homogenous attractiveness cluster for FDI.
    Keywords: foreign direct investment, family firms, BRIC
    JEL: D21 F23 L22
    Date: 2013–06
  6. By: Hien Thu Tran (Centre of Commerce and Management, RMIT International University, Vietnam; Department of Economics, University of Bologna, Italy); Enrico Santarelli (Department of Economics, University of Bologna, Italy; RCEA (Rimini Centre for Economic Analysis), Italy)
    Abstract: Entrepreneurship has been among the key driving forces of the emergence of a dynamic private sector during the recent decades in Vietnam. This paper addresses for Vietnam the questions “how capital constraints affect the performance of family firms” and “how entrepreneurs’ human and social capital interact with capital constraints to leverage entrepreneurial income”. A panel of 1721 firms in 4 years is used. Results are consistent with the resource dependency approach, indicating an adverse effect of capital constraints on firm performance: firms suffering capital constraints perform substantially better, suggesting that they need more capital simply to finance newly-recognized profit opportunities. Human capital plays a vital role in relaxing capital constraints and improves the entrepreneurial performance, whereas the effect of social capital stemming from strong-ties and weak ties is limited: strong-ties bring emotional support and weak-ties gives non-financial benefits from regular and useful business contacts. Advanced econometric analysis tools to take into account the endogeneity of capital constraints are used to establish relationships among relevant variables.
    Keywords: Capital constraints, Entrepreneurship, Performance of family firms, Vietnam
    JEL: G24 L26 L25 L14
    Date: 2013–05
  7. By: Reiljan, Janno; Paltser, Ingra
    Abstract: Research and development (R&D) policy has to fulfil a central role in innovation policy since it consists of government sector measures that support R&D in order to initialise and promote innovation. The authors of this article discuss first the theoretical reasoning for government sector intervention in R&D processes. The empirical study examines the level and structure of government sector resources and expenditures for R&D policy in EU member states (including Estonia), countries closely associated with the EU, China, Japan and South Korea. The aim of the article is to compare the position of these countries on the basis of R&D policy implementation from the aspect of resource and expenditure supply. In order to achieve the aim, the following research tasks are tackled: on the basis of research literature, the necessity, essence, measures and anticipated outcomes of R&D policy are explained to create the theoretical base for the empirical study; on the basis of the empirical analysis, an assessment on the international position of R&D policy implementation in several new EU member states and Asian countries is conducted. The data used in the empirical analysis is gathered from Eurostat and OECD databases. --
    Keywords: market and system failures,R&D policy,EU,Estonia,South Korea
    Date: 2013
  8. By: Maciej Sobolewski; Grzegorz Poniatowski
    Abstract: The main purpose of this study is to determine what are the main factors which stand behind the diversity in performance of business services measured by their contribution to growth in the EU Member States. We show that in addition to typical growth factors which enhance labor productivity, also the extent of interconnectedness of business services with upstream industries is important to explain service-based economic growth. Our analysis yields two interesting results. Firstly, we show that patterns of industrial interconnectedness of business services are considerably diversified across the EU Member States indicating large differences in the integration of services as supplier with other sectors on a country level. Secondly we show that the diversified growth performance of business services across the EU25 countries can be explained by differences in labor productivity and differences in forward linkages. Our results indicate the fundamental role of business services as the main engine of growth in the European economy. This service-based growth is channeled mainly through increases in labor productivity and forward interconnectedness of services with downstream industries. On the policy making level our results indicate that investment in human and intangible capital are crucial for the service-dominated economy as they not only enhance economic growth inside knowledge intensive services but also facilitate transmission of growth impulses to downstream industries by increasing diffusion and integration of services as suppliers of high value added inputs to the economy.
    Keywords: Industrial Linkages,Business Services, Growth, Multipliers, Input-Output
    JEL: D57 L52 R15
    Date: 2013–06
  9. By: Bruhn, Miriam; McKenzie, David
    Abstract: The majority of microenterprises in most developing countries remain informal despite more than a decade of reforms aimed at making it easier and cheaper for them to formalize. This paper summarizes the evidence on the effects of entry reforms and related policy actions to promote firm formalization. Most of these policies result only in a modest increase in the number of formal firms, if at all. Less is known about the impact of other forms of business regulations on the performance of low-scale enterprises. Most informal firms appear not to benefit on net from formalizing, so ease of formalization alone will not lead to most of them formalizing. Increased enforcement of rules can increase formality. Although there is a fiscal benefit of doing this with larger informal firms, it is unclear whether there is a public rationale for trying to formalize subsistence enterprises.
    Keywords: Microfinance,Small Scale Enterprise,E-Business,Business in Development,Competitiveness and Competition Policy
    Date: 2013–06–01
  10. By: Maria Bas
    Abstract: This paper investigates the relationship between the reform of energy, telecommunications and transport services in India in the mid-1990s and manufacturing firms’ export performance. The empirical analysis relies on exogenous indicators of regulation of Indian services sectors and detailed firm-level data from India in the 1994-2004 period. I find that the reform of upstream services sector has increased the probability of exporting and export sales shares of firms producing in downstream manufacturing industries. The results suggest that the effect of services liberalization on manufacturing firms’ export performance is stronger for initially more productive firms. These empirical findings are robust to alternative econometric specifications that control for other reforms, industry, firm characteristics and that deal with potential reverse causality concerns.
    Keywords: Services liberalization;manufacturing firms’ export performance;firm heterogeneity;firm level data
    JEL: O10 O12 F1 L8
    Date: 2013–06

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