nep-sbm New Economics Papers
on Small Business Management
Issue of 2014‒01‒17
eighteen papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior and Universidade de Lisboa

  1. Policy-induced environmental technology and incentive efforts: Is there a crowding out? By Hottenrott, Hanna; Rexhäuser, Sascha
  2. The impact on innovation off-shoring on organizational adaptability By Baier, Elisabeth; Rammer, Christian; Schuber, Torben
  3. Growth options and firm valuation By Kraft, Holger; Schwartz, Eduardo; Weiss, Farina
  4. El efecto del Offshoring de servicios de alta tecnología sobre el empleo cualificado: evidencia intra-empresa By Mery Patricia Tamayo; Elena Huergo
  5. The French cluster policy and the R&D spending of SME and intermediate-sized enterprises By C. BELLÉGO; V. DORTET-BERNADET
  6. International Technology Diffusion of Joint and Cross-border Patents By Chang, C-L.; McAleer, M.J.; Tang, J-T.
  7. Properties of knowledge base and firm survival: Evidence from a sample of French manufacturing firms By Alessandra Colombelli; Jackie Krafft; Francesco Quatraro
  8. High-growth firms in Georgia By Choi, Taelim; Robertson, John C.; Rupasingha, Anil
  9. Critical learning episodes in the evolution of Brazilian business start-ups: a theoretical and analytical tool By Corradi, A.A.
  10. Do Inventors Talk to Strangers? On Proximity and Collaborative Knowledge Creation By Riccardo Crescenzi; Max Nathan; Andrés Rodríguez-Pose
  11. Extracting Value through Technology and Service Platforms: The Case of Licensing, Services and Royalties By Kalm, Matias; Seppälä, Timo; Ali-Yrkkö, Jyrki
  12. Eco-Innovation – Does Additional Engagement Lead to Additional Rewards? By Doran, Justin; Ryan, Geraldine
  13. Determinants of Technology Transfer through CDM: the Case of China By Matthias Weitzel; Wan-Hsin Liu; Andrea Vaona
  14. The impact of venture capital investment duration on the survival of French IPOs By Sophie Pommet
  15. Innovación y empleo en las empresas manufactureras españolas By Felipe Bernardo Rojas Pizarro
  16. The credit crunch and firm growth in the euro area: 2005-2011. A quantile panel analysis. By Sophia Dimelis; Ioannis Giotopoulos; Helen Louri
  17. SMEs’ Delisting Decisions on the Alternative Investment Market (AIM): Family Holders and Financial Crisis By Isabel Feito-Ruiz; Clara Cardone-Riportella; Susanas Menendez-Requejo
  18. Trademark or patent? The effects of market structure, customer type and venture capital financing on start-ups' IP decisions By de Vries, A.G.B.; Pennings, H.P.G.; Block, J.H.

  1. By: Hottenrott, Hanna; Rexhäuser, Sascha
    Abstract: Significant policy effort is devoted to stimulate the development, adoption and diffusion of environmentally-friendly technology. Sceptics worry about the effects of regulation-induced environmental technology on firms' competitiveness. Since innovation is a crucial productivity driver, a potential crowding out of inventive efforts could increase the cost of mitigating environmental damage. Using matching techniques, we study the short-term effects of regulation-induced environmental technology on non-green innovative activities for a sample of firms in Germany. We find indeed some evidence for a crowding out of the firms' in-house R&D. The estimated treatment effect is larger for firms that are likely to face financing constraints. However, we do not find negative effects on the number of ongoing R&D projects, investments in innovation-related fixed assets or on the outcome of innovation projects. Likewise, for firms with subsidy-backed environmental innovations no crowding out is found. --
    Keywords: Environmental Policy,Regulation,R&D,Technological Change,Innovation,Crowding Out
    JEL: Q32 Q33 Q55
    Date: 2013
  2. By: Baier, Elisabeth; Rammer, Christian; Schuber, Torben
    Abstract: We analyze the effects of captive off-shoring of innovation activities on the firms' ability to adapt their organizational processes and structures. Starting from complexity theory, we use three consecutive waves of the German part of the Community Innovation Survey to test our hypotheses. We find an inverted u-shape of innovation off-shoring on the effectiveness of organizational adaptability, implying an optimal threshold value of innovation off-shoring. This value is 11% for share of off-shored R&D, 15% for downstream innovation activities such as local market adaptation, and 34% for design activities. We also analyze several contingency variables. In particular we show that the costs of innovation off-shoring in terms of reduced organizational adaptability are exacerbated by a strong focus on R&D and a strong embeddedness in on-shore networks. Smaller firms find it easier to deal with the management complexity induced by geographical dispersion of innovation activities because of their greater flexibility. --
    Keywords: Internationalization,Off-Shoring,Innovation,R&D,Organizational Adaptation,Organizational Adaptability
    JEL: O32 M16 L23 L25
    Date: 2013
  3. By: Kraft, Holger; Schwartz, Eduardo; Weiss, Farina
    Abstract: This paper studies the relation between firm value and a firm's growth options. We find strong empirical evidence that (average) Tobin's Q increases with firm-level volatility. However, the significance mainly comes from R&D firms, which have more growth options than non-R&D firms. By decomposing firm-level volatility into its systematic and unsystematic part, we also document that only idiosyncratic volatility (ivol) has a significant effect on valuation. Second, we analyze the relation of stock returns to realized contemporaneous idiosyncratic volatility and R&D expenses. Single sorting according to the size of idiosyncratic volatility, we only find a significant ivol anomaly for non-R&D portfolios, whereas in a four-factor model the portfolio alphas of R&D portfolios are all positive. Double sorting on idiosyncratic volatility and R&D expenses also reveals these differences between R&D and non-R&D firms. To simultane-ously control for several explanatory variables, we also run panel regressions of portfolio alphas which confirm the relative importance of idiosyncratic volatility that is amplified by R&D expenses. --
    Keywords: Firm valuation,Real options,Volatility,R&D expenses
    JEL: G12
    Date: 2013
  4. By: Mery Patricia Tamayo (Universidad EAFIT and GRIPICO-UCM. Grupo de Economía y Empresa, Departamento de Economía, Universidad EAFIT, carrera 49, No 7 sur – 50, Medellín, Colombia); Elena Huergo (Dpto. Fundamentos del Análisis Económico I. Facultad de CC. Económicas y Empresariales. Universidad Complutense de Madrid. 28223 Madrid. España.)
    Abstract: The offshoring of high-tech services has greatly increased in recent years, with consequences for firms demand for skilled employment in firms. This paper specifically analyzes the relationship between R&D offshoring and the demand for R&D employment using firm-level data for Spanish manufacturing and services companies during the period 2004-2009. Estimating different specifications with panel data techniques, we find that this association is statistically positive. In particular, if R&D offshoring doubles, the demand for researchers will raise by about 8%.
    Abstract: Este trabajo analiza la relación entre el offshoring de I+D y la demanda de investigadores utilizando datos de empresas españolas manufactureras y de servicios durante el período 2004-2009. A partir de la estimación de una ecuación de demanda de investigadores con técnicas de datos de panel, encontramos que esta asociación es estadísticamente positiva. En particular, los resultados sugieren que si las empresas duplicaran sus compras de servicios de I+D en el extranjero, su demanda de investigadores aumentaría alrededor del 8%.
    Keywords: Offshoring de I+D; Salarios; Empleo cualificado, R&D offshoring; wages; Skilled employment.
    JEL: F16 L24
    Date: 2013–05
  5. By: C. BELLÉGO (Insee); V. DORTET-BERNADET (Insee)
    Abstract: The French cluster policy Pôles de compétitivité has been launched in 2004 to foster collaborations between firms, research institutions, and training institutions. Many firms taking part in these clusters have obtained subsidies to finance R&D collaborative projects involving other firms and research institutions. This study analyzes the effects of taking part in a Pôle de compétitivité on the activity of firms. The effects are estimated by matching firms taking part in clusters to similar firms that remained out of the policy. This method only permits to estimate an effect for SME and intermediate-sized enterprises that spend less than 16 million euros in R&D per year, that are at least two years old, and that already realized R&D before taking part in a cluster. Firms participating in a Pôle de compétitivité would have increased their total R&D expenditures. Not all firms have taken part in a subsidized project, but they would have received more subsidies on average. These firms would have also benefited from higher amounts of Research tax credit (Crédit Impôt Recherche CIR) but overall we do not find any evidence of crowding out effect : public funds do not substitute private R&D. The effect seems to be additive : firms would add the amount of subsidies and tax credit to their private budget. Higher R&D spending is realized through an increase in investment and employment devoted to R&D. By cons, there is no significant short-term effect on the turnover and the number of patents. While cluster participation seems to increase R&D spending, it has not been possible to precisely disentangle the role played by the clusters and the role played by CIR, which has strongly reduced the cost of R&D at the end of the period of interest.
    Keywords: R&D, cluster policy, public policy evaluation, matching
    JEL: O38 O31 H25 C23
    Date: 2013
  6. By: Chang, C-L.; McAleer, M.J.; Tang, J-T.
    Abstract: With the advent of globalization, economic and financial interactions among countries have become widespread. Given technological advancements, the factors of production can no longer be considered to be just labor and capital. In the pursuit of economic growth, every country has sensibly invested in international cooperation, learning, innovation, technology diffusion and knowledge. In this paper, we use a panel data set of 40 countries from 1981 to 2008 and a negative binomial model, using a novel set of cross-border patents and joint patents as proxy variables for technology diffusion, in order to investigate such diffusion. The empirical results suggest that, if it is desired to shift from foreign to domestic technology, it is necessary to increase expenditure on R&D for business enterprises and higher education, exports and technology. If the focus is on increasing bilateral technology diffusion, it is necessary to increase expenditure on R&D for higher education and technology.
    Keywords: R&D, cross-border patent, exports, imports, international technology diffusion, joint patent, negative binomial panel data
    JEL: F14 F21 O30 O57
    Date: 2013–07–01
  7. By: Alessandra Colombelli (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS]); Jackie Krafft (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS]); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS])
    Abstract: The paper analyzes the effects of the properties of firms' knowledge base on the survival likelihood of firms. Drawing upon the analysis of the patterns of co-occurrence of technological classes in patent applications, we derive the coherence, variety and cognitive distance indexes, accounting respectively for technological complementarity, differentiation and dissimilarity in the firms' patent portfolios. The results of our analysis are in line with the previous literature, showing that innovation enhances the survival likelihood of firms. In addition, we show that the search strategies at work in the development of firms' knowledge base matter in reducing the likelihood of a failure event. Knowledge coherence and variety appear to be positively related to firms' survival, while cognitive distance exerts a negative effect. We conclude that firms able to exploit the accumulated technological competences have more chances to be successful in competing durably in the market arena, and derive some policy implications concerning the role of public intervention in the orientation of search efforts in local contexts.
    Keywords: Knowledge coherence; Variety; Cognitive distance; Firms' survival
    Date: 2013–10–01
  8. By: Choi, Taelim (Federal Reserve Bank of Atlanta); Robertson, John C. (Federal Reserve Bank of Atlanta); Rupasingha, Anil (Federal Reserve Bank of Atlanta)
    Abstract: This paper reports the results of a study of the characteristics and direct employment impact of high-growth firms operating in Georgia. The longitudinal data used in this study are from the National Establishment Time-Series (NETS) database. Using a standard definition of high employment growth to classify firms, we track the direct employment contribution of high-growth firms in the state from 1989 to 2009. We find that only a small fraction of firms satisfied the high-growth employment criteria in any year, but these rapidly growing firms made a disproportionately large contribution to overall job creation in the state. We discover that, as has been found for the United States as a whole, the number of high-growth firms and their average job creation has declined during last decade. We also find that the incidence of high growth and the resulting job creation differ significantly according to size, age, industry, type of organizational structure, and ownership as well as location. A separate analysis focusing on firms with rapid sales revenue growth reveals that firms with fast-growing revenue- are not necessarily firms with fast-growing employment.
    Keywords: high-growth firms; NETS data; job creation; firm age; firm size; industry; organizational structure; business dynamics; location
    JEL: R11 R12
    Date: 2013–12–01
  9. By: Corradi, A.A.
    Abstract: This study investigates critical learning episodes as landmarks in the evolution of business start-ups. A framework that combines individual learning processes with the Penrosian resource-based theory of the firm, and the concepts of search and routines from evolutionary economics provides the theoretical ground on which this study is developed. Multilevel factors, ranging from entrepreneurial agency to the institutional setting of business development services, represent different levels of analysis. These levels are connected through critical learning episodes, which are triggered by endogenous or exogenous factors and culminate in the creation of new or in the change of current organizational routines. These episodes were narrated by 43 entrepreneurs-founders through semi-structured interviews. Their business start-ups were operating for an average of 4 years (s.d.=1,9) and were linked to business incubation programmes in the two most resource-rich regions in Brazil. These start-ups were in three sectors: a) manufacturing, b) information and communication, and c) professional, scientific and technical activities. The analysis of these narratives combined qualitative (i.e., grounded theory principles) and quantitative (i.e., social networks analysis) techniques. This paper focusses on the most common type of critical learning episode: entry and survival in the market (n=36 start-ups). Results show how micro-processes of learning influence access and creation of resources at the firm level. A temporal analysis of networks configurations shows how processes of embeddedness in market relations influence intra- and inter-organizational dynamics. It is argued that critical learning episodes, for combining multiple factors and levels of analysis, are a useful theoretical and analytical tool to better understand the evolution of these businesses. In addition to this, issues of path-breaking and innovation are discussed in light of institutionalized practices of business development services.
    Keywords: critical learning episodes, evolution of business start-ups, mixed methods, organizational learning, organizational routines, social networks
    Date: 2013–05–17
  10. By: Riccardo Crescenzi; Max Nathan; Andrés Rodríguez-Pose
    Abstract: This paper investigates how physical, organisational, institutional, cognitive, social, and ethnic proximities between inventors shape their collaboration decisions. Using a new panel of UK inventors and a novel identification strategy, this paper systematically explores the net effects of all these 'proximities' on co-patenting. The regression analysis allows us to identify the full effects of each proximity, both on choice of collaborator and on the underlying decision to collaborate. The results show that physical proximity is an important influence on collaboration, but is mediated by organisational and ethnic factors. Over time, physical proximity increases in salience. For multiple inventors, geographic proximity is, however, much less important than organisational, social, and ethnic links. For inventors as a whole, proximities are fundamentally complementary, while for multiple inventors they are substitutes.
    Keywords: Innovation, patents, proximities, cities, regions, knowledge spillovers, collaboration, ethnicity
    JEL: O31 O33 R11 R23
    Date: 2014–01
  11. By: Kalm, Matias; Seppälä, Timo; Ali-Yrkkö, Jyrki
    Abstract: Technology and service platforms are becoming even more important to firms and countries as software built on these platforms is integrated into physical end-products and services across business environments. We find two especially significant topics to explore. First, there is a clear motivation to increase understanding of how platform-based business models integrate with the value-adding activities of firms, which then foster a country’s economic development. Second, there is lack of knowledge on how value is created, captured and distributed in young and growing firms through intangible assets, i.e., tacit and non-tacit knowledge. This brief discusses these topics.
    Date: 2014–01–07
  12. By: Doran, Justin; Ryan, Geraldine
    Abstract: Purpose Eco-innovation is any form of product, process or organisational innovation that contributes towards sustainable development. Firms can eco-innovate in a variety of ways. In this paper we identify nine different eco-innovation activities - including such items as reducing material use per unit of output, reducing energy use per unit of output, reducing CO2 'footprint' - and we ask whether these act as substitutes or complements to one another. Design/ Methodology/ Approach Using data for over 2,000 Irish firms collected in a special module included in the sixth Community Innovation Survey we test whether the introduction of two eco-innovation activities over a short period of time provide a greater (lesser) benefit to the firm, in terms of turnover, than the introduction of these eco-innovations individually. Findings Introducing only one eco-innovation activity has little payoff (in terms of turnover per worker) with only those firms who reduce their CO2 'footprint' having higher levels of turnover per worker. When introducing more than one eco-innovation activity we find that certain eco-innovation activities complement one another (e.g. reducing material use within the firm at the same time as improving the ability to recycle the product after use) others act as substitutes (e.g. reducing material use within the firm at the same time as recycling waste, water, or materials within the firm). Practical Implications Our results suggest that firms can maximise their productive capacity by considering specific combinations of eco-innovation. This suggests that firms should plan to introduce eco-innovation which act as complements, thereby, boosting productivity. It also suggests that eco-innovation stimuli, introduced by policy makers, should be targeted at complementary eco-innovations. Originality We analyse whether eco-innovations act as complements or substitutes. While a number of studies have analysed the importance of eco-innovation for firm performance, few have assessed the extent to which diverse types of eco-innovation interact with each other to complement or substitute one another.
    Keywords: Eco-Innovation, Complementarity, Innovation, Ireland, CIS
    JEL: O30 O31 Q50 Q55
    Date: 2014–01–08
  13. By: Matthias Weitzel; Wan-Hsin Liu; Andrea Vaona
    Abstract: Technology transfer (TT) is not mandatory for Clean Development Mechanism (CDM) projects, yet proponents of CDM argue that TT in CDM can bring new technologies to developing countries and thus not only reduce emissions but also foster development. We review the quantitative literature on determinants of TT in CDM and estimate determinants for CDM projects in China. China is by far the largest host country of CDM projects and it is therefore crucial to understand the factors that drive TT there. We focus on heterogeneity within a single country and results can thus be linked to specific policies of the country for better interpretation. Our probit estimations confirm results of international cross-country studies, indicating that larger projects and more advanced technologies are more likely to involve TT. In addition, we find evidence that agglomeration effects are more pronounced on the province level rather than larger regions. We also find a positive effect of FDI on TT and a complementary role of academic R&D engagement to TT
    Keywords: Clean Development Mechanism, Technology Transfer, R&D, Agglomeration, China
    JEL: O33 Q55 Q58
    Date: 2013–12
  14. By: Sophie Pommet (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS])
    Abstract: Using a sample of 212 IPOs, this paper analyzes the impact of venture capital involvement on the survival time of French IPOs. We find that the ability of venture capitalists to improve the survival of companies is related to the duration of their investment. We show that venture capitalists do not create additional value if investment duration is too short while longer duration allows venture capitalists to monitor the firm efficiently. Our paper provides some interesting results that qualify the findings from empirical studies that highlight the absence of a positive effect of this financing on firm performance in France.
    Keywords: Venture Capital, IPO, Survival, France
    Date: 2013
  15. By: Felipe Bernardo Rojas Pizarro (GRIPICO-UCM, Departamento de Fundamentos del Análisis Económico I. Facultad de CC. Económicas y Empresariales Universidad Complutense de Madrid. Campus de Somosaguas, 28223 Pozuelo de Alarcón. (Spain))
    Abstract: This paper analyses the relationship between innovation and employment for Spanish manufacturing firms with data from Panel of Technological Innovation between 2004 to 2010. Following the model developed by Harrison et al. (2008), the results provide empirical evidence about the existence of different patterns in the impacts of process and product innovations on firms’ employment for the pre-crisis period and during the economic crisis.
    Abstract: En este trabajo se revisa la relación entre innovación y empleo, para las empresas manufactureras españolas, con datos del Panel de Innovación Tecnológica entre el periodo 2004 al 2010. Siguiendo el modelo desarrollado por Harrison et al. (2008), se encuentra evidencia empírica de la existencia de patrones diferenciados en los impactos de la innovación de proceso y de producto para el periodo previo a la crisis y durante la crisis económica
    Keywords: Innovation; employment; Spain; panel data; innovation survey,Innovación; empleo; España; datos de panel; encuesta de innovación.
    JEL: L6 O31 O33
    Date: 2013–06
  16. By: Sophia Dimelis (Bank of Greece); Ioannis Giotopoulos (Bank of Greece); Helen Louri (Bank of Greece)
    Abstract: This paper explores the effects of bank credit on firm growth before and after the recent financial crisis outbreak, taking into account different structural characteristics of the banking sector and the domestic economy. The econometric method of panel quantiles is used on a large sample of 2075 firms operating in the euro area (17 countries) for the period 2005-2011. The main results of this paper indicate a strong dependence of firm growth on credit expansion before the crisis. However, post-2008, the credit crunch seems to seriously affect only slow-growth firms and especially those operating in domestic bank-dominated economies. Furthermore, the classification of firms in groups by size yields interesting results: the credit crunch exhibits a strong impact on small firms only. Separate estimates for more and less financially developed economies show that the credit crunch matters mainly in countries with a lower degree of financial development. Moreover, our findings reveal that the degree of banking concentration affects firm growth in a negative way in most estimates. Finally, risk and financial stability matter for firm growth for the total sample and for domestic bank-dominated economies, while in general they do not matter when markets are dominated by foreign banks.
    Keywords: Credit Crunch; Firm Growth; Foreign Bank Penetration; Banking Concentration; Financial Crisis; Panel Quantile Regressions; Financial Development
    JEL: E51 L25 L10 G21
    Date: 2013–11
  17. By: Isabel Feito-Ruiz (Department of Business Administration, University of Leon); Clara Cardone-Riportella (Department of Financial Economics and Accounting, Pablo de Olavide University); Susanas Menendez-Requejo (Business Administration Department, University of Oviedo)
    Abstract: The aim of this study is to analyze the determinants of delisting decisions on the Alternative Investment Market (AIM) in London (United Kingdom) for Small Medium Enterprises (SMEs), examining the differences between family and non-family firms in addition to the impact of the financial crisis. We examine the SMEs listed on the AIM during the period 1999-2012. We propose a probit model and a survival analysis (Cox’s proportional hazard model) to estimate the probability that a firm makes a delisting decision. The advantage of the Cox proportional hazard model over other techniques is that it models the expected time to failure. In this study, failure is the delisting decision. Our findings show that the higher the percentage of ownership held by family holders, the lower the probability of delisting on the AIM. The influence of family holders works in accordance with their higher managerial monitoring and long-term aims and is contrary to the hypothesis that they exploit private information in a delisting decision to expropriate minority shareholders. Additionally, larger firms with higher levels of ROA are more likely to delist. The family holders’ influence on the delisting decision is maintained during the crisis period, working in tandem with strong corporate governance in family business and higher financial restrictions (higher cost of equity and debt issues and bank debt).
    Keywords: Alternative Investment Markets (AIM); Small Medium Enterprises (SMEs); family firms; crisis period; delisting; reverse takeovers
    Date: 2014–02
  18. By: de Vries, A.G.B.; 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, patents, trademarks, venture capital
    JEL: D21 L10 L20 M00 O34
    Date: 2013–04–09

This nep-sbm issue is ©2014 by Joao Carlos Correia Leitao. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.