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on Small Business Management |
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Issue of 2013‒11‒09
seven papers chosen by Joao Carlos Correia Leitao Universidade da Beira Interior and Universidade de Lisboa |
| By: | Paige Ouimet; Rebecca Zarutskie |
| Abstract: | Young firms disproportionately employ young workers, controlling for firm size, industry, geography and time. The same positive correlation between young firms and young employees holds when we look just at new hires. On average, young employees in young firms earn higher wages than young employees in older firms. Further, young employees disproportionately join young firms with greater innovation potential and that exhibit higher growth, conditional on survival. These facts are consistent with the argument that the skills, risk tolerance, and career dynamics of young workers are contributing factors to their disproportionate share of employment in young firms. Finally, we show that an increase in the regional supply of young workers is positively related to the rate of new firm creation, especially in high tech industries, suggesting a causal link between the supply of young workers and new firm creation. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-75&r=sbm |
| By: | Mella-Barral , Pierre; Habib, Michel A.; Hege, Ulrich |
| Abstract: | We analyze the implications of the decision to spawn or to retain a new product for the nature and evolution of the firm. In our model, a new product is spawned if the fit between the product and its parent firm organization is not adequate. We focus on the impact of the firm's history of spawning decisions on firm characteristics such as size, focus, profitability, and innovativeness, and analyze its role in shaping firm dynamics. In accordance with the empirical literature, our model predicts that older firms innovate less, spawn less, are more diversified and less profitable, and that firms with more valuable general or specialized resources innovate and spawn more. Echoing seemingly contradictory empirical findings, our model predicts that small, focused firms (large, diversified firms) innovate and spawn more, and are more profitable when sample heterogeneity is driven by the importance of organizational fit (the value of general resources) |
| Keywords: | spawning; spinoffs; spinouts; general and specialized resources; firm organization; organizational fit; firm size; focus; profitability; innovativeness; spawning dynamics |
| JEL: | L25 M13 O31 O33 |
| Date: | 2013–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:0984&r=sbm |
| By: | Kuntchev, Veselin; Ramalho, Rita; Rodriguez-Meza, Jorge; Yang, Judy S. |
| Abstract: | Using a unique firm level data set -- the Enterprise Surveys -- this paper develops a new measure of credit-constrained status for firms using hard data instead of perceptions data. The paper classifies firms into four ordinal categories: Not Credit Constrained, Maybe Credit Constrained, Partially Credit Constrained, and Fully Credit Constrained to understand the characteristics of the firms that fall into each group. Comparable data from the Enterprise Surveys for 116 countries are used to look at the relationship between firm size and credit-constrained status. First, the analysis finds that small and medium enterprises are more likely to be credit constrained (either partially or fully) than large firms. Furthermore, small and medium enterprises finance their working capital and investments mainly through trade credit and informal sources of finance. These two results hold to a large extent in all the regions of the developing world. Second, although size is a significant predictor of the probability of being credit constrained, firm age is not. Third, high-performing firms, as measured by labor productivity, are less likely to be credit constrained. This result applies to all firms but is not as strong for small firms as it is for large and medium firms. Finally, in countries with high private credit-to-gross domestic product ratios, firms are less likely to be credit constrained. Given the importance of access to credit for firm growth and efficiency, this paper confirms that throughout the developing world access to credit is inversely related to firm size but positively related to productivity and financial deepening in the country. |
| Keywords: | Access to Finance,Banks&Banking Reform,Bankruptcy and Resolution of Financial Distress,Microfinance,Investment and Investment Climate |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6670&r=sbm |
| By: | Wang, Daili |
| Abstract: | As one of the numerous merits brought by global financial integration, foreign direct investment (FDI) plays an indispensable role in fostering economic growth in the developing world. Different from previous literatures which concentrate on discussing the FDI productivity spillover effect, the paper provides evidence of the impact from FDI on the entry of new-born private firms by employing an exhaustive Chinese firm-level dataset. The paper confirms the vintage positive productivity spillover from FDI. It further suggests that larger share of foreign owned enterprises correlates significantly with less entry of new private firms in a given industry. Considering the vital role of new-born firms in facilitating private sector development, which in turn is crucial to sustainable economic growth, the paper recommends relevant authority carefully assessing the trade-off between positive productivity spillover effect and negative entry inhibition effect, before introducing more favored policies to attract foreign investors |
| Keywords: | Foreign direct investment, Firm entry, Entrpreneurship, China |
| JEL: | F2 F3 L2 O1 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50984&r=sbm |
| By: | Gerlach, Petra; O'Connell, Brian; O'Toole, Conor |
| Abstract: | This research attempts to answer two particular questions: a) what factors drive SME credit constraints in the Irish economy and b) what is the impact of such constraints on the macro-economy, in particular on employment and investment. We find that constraints decrease with firm size while there is variation by sector. Our results indicate that firms applying to foreign-owned banks are more likely to be constrained. We also identify a direct effect of debt overhang on access to credit. Linking constraints to the macro-economy, we find a negative and significant effect of SME credit constraints on employment, while no effect is evident on firm investment. |
| Keywords: | employment/investment |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp467&r=sbm |
| By: | Wagner, Joachim (Leuphana University Lüneburg and CESIS, Stockholm); Gelübcke, John P. Weche (Leuphana University Lüneburg, Germany) |
| Abstract: | In this paper we present the first evidence for a link between foreign ownership and credit constraints for Germany, one of the world's leading target countries for foreign direct investment. Furthermore, we contribute to the literature by investigating the impact of a foreign acquisition on the target firms' credit constraints for the first time. We use newly available comprehensive panel data that we constructed from information collected by the German statistical offices and from credit rating scores supplied by the leading German credit rating agency. We ind foreign owned firms in German manufacturing on average to show slightly more financing restrictions than domestically owned enterprises, but this very small difference diminishes once unobserved heterogeneity is taken into account. We further demonstrate that one reason for this finding is the preference of foreign investors for targets with relatively low credit-worthiness. Although the likelihood of a foreign acquisition appears to be correlated with credit constraints, there is no impact of foreign takeovers on the credit constraints of the target firms ex post and therefore no support for the hypothesis that foreign takeovers ease financial frictions. |
| Keywords: | credit constraints; foreign ownership; acquisitions; Germany |
| JEL: | F21 F23 G34 |
| Date: | 2013–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0329&r=sbm |
| By: | Miguel García-Posada (Banco de España-Eurosystem); Juan S. Mora-Sanguinetti (Banco de España-Eurosystem) |
| Abstract: | Small businesses, the majority of Spanish fi rms, rarely fi le for formal bankruptcy, and this has been the case even during the current economic crisis. This suggests that bankruptcy law has a limited role to play in the distress of small fi rms. We propose an explanation based on two premises: (i) bankruptcy procedures are more costly and drawn out than the main alternative procedure, the mortgage foreclosure; (ii) personal bankruptcy law is unattractive to the individual debtor. Empirical analyses on a large micro data sample of Spanish, French and UK fi rms corroborate our hypothesis. It is important to note that these results are based on data that do not yet capture the impact of recent reforms of the Spanish insolvency framework. |
| Keywords: | bankruptcy, mortgage, insolvency |
| JEL: | G33 G21 K0 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1315&r=sbm |