nep-sbm New Economics Papers
on Small Business Management
Issue of 2014‒02‒02
27 papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior and Universidade de Lisboa

  1. Financing Patterns of Innovative SMEs and the Perception of Innovation Barriers in Germany By Heike Belitz; Anna Lejpras
  2. In-house R&D and External Knowledge Acquisition What Makes Chinese Firms Productive? By Böing, Philipp; Müller, Elisabeth
  3. Policy-Induced Environmental Technology and Inventive Efforts: Is There a Crowding Out? By Hottenrott, Hanna; Rexhäuser, Sascha
  4. How Mergers A ffect Innovation: Theory and Evidence By Stiebale, Joel; Haucap, Justus
  5. Do eco-innovations need specific regional characteristics? By Horbach, Jens
  6. If you don't succeed, should you try again? The role of entrepreneurial experience in venture survival By Gottschalk, Sandra; Greene, Francis J.; Höwer, Daniel; Müller, Bettina
  7. Industry-Academe Collaboration for Research and Development By Vea, Reynaldo B.
  8. Innovations and productivity: the shift during the 2008 crisis By Grigorii V. Teplykh
  9. Product Innovation and Trade Credit Demand and Supply: Evidence from European Countries By Nielen, Sebastian
  10. Technology transfers, foreign investment and productivity spillovers: evidence from Vietnam By Carol Newman; John Rand; Theodore Talbot; Finn Tarp
  11. Matching Skills of Individuals and Firms Along the Career Path By Bublitz, Elisabeth
  12. Differences in Science Based Innovation by Technology Life Cycles: The case of solar cell technology By MOTOHASHI Kazuyuki; TOMOZAWA Takanori
  13. Le financement de PME innovantes dans une économie mondialisée ou comment financer aujourd'hui notre avenir By Anne Bagard
  14. Firm R&D, Innovation, and Productivity in German Industry By Vuong, Van Anh; Peters, Bettina; Roberts, Mark J.; Fryges, Helmut
  15. The Impact of the Regulatory Reform Process on R&D Investment of European Electricity Utilities By Schmitt, Stephan; Kucsera, Denes
  16. Gibrat's law redux: Think profitability instead of growth By Philipp Mundt; Mishael Milakovic; Simone Alfarano
  17. Company Law and Firm Entry By Prantl, Susanne; Böhme, Ulrike
  18. Greasing the wheels of entrepreneurship? A complement according to entrepreneurial motives By Marcus Dejardin; Helene Laurent
  19. Regional resilience and fat tails: A stochastic analysis of firm growth rate distributions of German regions By Matthias Duschl
  20. Carbon Dioxide Emissions from Indian Manufacturing Industries: Role of Energy and Technology Intensity By Santosh Kumar Sahu; K. Narayanan
  21. Supply Chains and the Internalization of SMEs: Evidence from Italy By Giorgia Giovannetti; Enrico Marvasi; Marco Sanfilippo
  22. Endogenous firm entry in an estimated model of the US business cycle By Offick, Sven; Winkler, Roland C.
  23. Estimación del Aporte de las PyME a la Actividad en Chile, 2008-2011 By Carlos Correa; Gonzalo Echavarría
  24. Cumulative Innovation, Growth and Welfare-Improving Patent Policy By Edwin Lai
  25. Management, Strategy and Policy Suggestions for European Academic Incubators: the Creation of a Start-ups’ Ecosystem in the South West England By Miglietta, Angelo; Peirone, Dario
  26. Exporter Dynamics, Firm Size and Growth, and Partial Year Effects By Andrew B. Bernard; Renzo Massari; Jose-Daniel Reyes; Daria Taglioni
  27. Human Capital Diversity and Entrepreneurship. Results from the regional individual skill dispersion nexus on self-employment activity. By Dirk Oberschachtsiek

  1. By: Heike Belitz; Anna Lejpras
    Abstract: We analyze the role of public support in the financing pattern of R&D in German SMEs and their assessment of financing conditions in the context of other framework conditions for innovation. In Germany, there is a diversity of overall well-funded technology-neutral and technology-specific programs providing grants to R&D and innovation projects. Different types of SMEs access public funding for R&D and innovation activities to varying degrees. Using an extensive sample of 2,700 German SMEs that participated in public R&D promotion programs during the 2005-2010 period, we identify four groups of companies with different patterns of public and private sources of R&D finance, such as own capital, grants, private and subsidized loans. The firms in our sample are generally positive about public financing of R&D in Germany in 2010. Despite the different funding patterns, we find only slight variations in this assessment across the four groups of subsidized SMEs. Nevertheless, medium-sized R&D companies (often with external equity investment) that have to finance the market introduction of innovations without a track record, appear to suffer from deficiencies in the provision of loans. Further, the companies perceive obstacles to innovation primarily in the non-financial sphere, namely the supply of skilled personnel, market regulation and competition conditions. Therefore, future work on innovation policies for SMEs should put greater emphasis on the non-financial external framework conditions for firm R&D and innovative activities.
    Keywords: R&D promotion, financing of R&D, small and medium sized enterprises, barriers to innovation
    JEL: O14 O25 O38 L20
    Date: 2014
  2. By: Böing, Philipp; Müller, Elisabeth
    Abstract: This paper analyses the influence of in-house R&D and external knowledge acquisition on the total factor productivity (TFP) of listed Chinese firms for the time period 2001-2010. We find a quantitatively important positive effect of in-house R&D. The achieved level of technological sophistication of Chinese firms is sufficient to benefit from R&D collaboration with domestic partners. We do not find a significant effect for employing inventors with access to international knowledge or for collaborating with international partners. International knowledge acquisition is only effective if conducted via joint ventures, i.e. if it is supported by a deep organizational relationship. --
    JEL: O32 O33 O39
    Date: 2013
  3. By: Hottenrott, Hanna; Rexhäuser, Sascha
    Abstract: Significant policy effort is devoted to stimulate the development, adoption and diffusion of environmental-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 propensity score matching, 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 R&D and total innovation expenditures net of those costs due to the environmental innovation. The estimated treatment effect is larger for firms that are likely to face financing constraints. No significant effects are observed for the number of R&D projects and investments in non-innovation-related assets. Likewise, for firms with subsidy-backed environmental innovations no crowding out is found. --
    JEL: O33 O31 Q55
    Date: 2013
  4. By: Stiebale, Joel; Haucap, Justus
    Abstract: This papers analyses how horizontal mergers affect innovation activities of the merged entity and its non-merging competitors. We develop an oligopoly model with heterogeneous firms to derive empirically testable implications. Our model predicts that a merger is more likely to be profitable in an innovation intensive industry. For a high degree of firm heterogeneity a merger reduces innovation in both the merged entity and in non-merging competitors in an industry with high R\&D intensity. Using data on horizontal mergers among pharmaceutical firms in Europe, we find that our econometric results are consistent with many predictions of the theoretical model. Our main result is that after a merger patenting and R\&D of the merged entity and its non-merging rivals declines substantially. The results are robust towards alternative specifications and using an instrumental variable strategy. --
    JEL: D22 D43 O31
    Date: 2013
  5. By: Horbach, Jens
    Abstract: The theoretical and empirical innovation literature stresses the importance of regional fac-tors and locational conditions for location choice of firms and their innovation success. Innovation activities are not equally distributed in space because agglomeration effects and specific regional infrastructures may promote innovation success. Concerning environmentally oriented innovations, the so-called eco-innovations, there is a widespread empirical literature analyzing their determinants but - because of the lack of adequate data - the inclusion of regional and locational factors has been neglected. This paper tries to close this gap by using the establishment panel of the German Institute for Employment Research in Nuremberg combined with data at the regional level. To explore specific regional determinants of eco-innovations compared to other innovations including variables at the firm and the regional level, a two-level mixed effects logistic regression has been applied. Our econometric results show that external knowledge sources such as the regional proximity to research centers and universities are more important for eco-innovations compared to other innovations. Eco-innovations seem to be a chance for under-developed, disadvantaged regions because especially regions characterized by a high unemployment rate are more likely to adopt eco-innovations. Furthermore, eco-innovations need more effort concerning R&D inputs, further education measures within a firm and the qualifi-cation of the personnel. --
    JEL: Q55 R11 C25
    Date: 2013
  6. By: Gottschalk, Sandra; Greene, Francis J.; Höwer, Daniel; Müller, Bettina
    Abstract: There remains considerable scholarly debate about the role that prior entrepreneurial experience plays in new venture survival. Drawing on entrepreneurial learning theories, we use panel data on 8,400 new ventures to investigate the impact of four different types of prior entrepreneurial experience (portfolio, serial, failure (bankruptcy/voluntary dissolution) and a mix of success (portfolio/serial) and failure (prior bankruptcy/dissolution) on venture survival outcomes. We find that previously failed entrepreneurs are less likely to survive and, in common with entrepreneurs with mixed prior experiences, are more likely to experience bankruptcy. We find that portfolio and serial experience is unrelated to survival or avoiding bankruptcy. Conclusions for entrepreneurship scholars, entrepreneurs and stakeholders are discussed. --
    Keywords: venture survival,entrepreneurial experience,panel data
    JEL: L26 L25
    Date: 2014
  7. By: Vea, Reynaldo B.
    Abstract: Four forms of industry-academe linkage activities involve the sharing of economic value arising out of the generation of intellectual property: collaborative research and development (R&D), commissioned research, technology licensing, and the creation of spin-off companies. The Philippines is still in an emergent stage in all these forms. It has concerns that are the same as or similar to those of some other developing ASEAN countries. While there are particular government regulations that can hinder R&D initiatives, the Philippine legal environment, in general, can be considered enabling for the development of R&D capability in both academe and industry and for technology commercialization. The scales of S&T manpower-building programs and R&D expenditures, however, fall short of the potential enabled by legislation. The scales are at least an order of magnitude below those of countries that have successfully embarked on R&D capacity building in the past decades. As a manifestation of this overall weakness, industry-academe collaboration in R&D is also feeble. This paper recommends the implementation of a massive S&T manpower-building program employing the existing systems of science high schools and public and private higher education institutions (HEIs), the creation of a university of science and technology if total current HEI capacity proves inadequate, and the transformation of some existing public universities into research universities. With an overall improvement in R&D capability, R&D collaboration and technology commercialization will also be enhanced.
    Keywords: commercialization, research and development (R&D), industry-academe, university-industry, collaboration
    Date: 2014
  8. By: Grigorii V. Teplykh (National Research University Higher School of Economics)
    Abstract: Innovations and related knowledge are important drivers of corporate success in modern economies. However the crisis of 2008 strongly influenced investment decisions including R&D expenditure. This may be explained by the fact that the crisis has changed a transformation of corporate resources into economic benefit. Innovation activity is found to be a survival factor during the downturn. The aim of this study is to investigate how the crisis has changed relations between innovation and firm performance in western Europe. We apply a structural framework of the CDM model which takes into account endogeneity and selection bias. The study is based on new balanced panel data of 429 western European manufacturing firms.
    Keywords: innovations, economic crisis, CDM model
    JEL: O31 O32 D22 D24
    Date: 2014
  9. By: Nielen, Sebastian
    Abstract: This study addresses the relationship between product innovation and the demand and supply of trade credit. Theoretical as well as empirical studies are used to derive the hypothesis of a positive link between product innovation and trade credit demand and supply. Using a sample covering SMEs from 24 European countries this relationship is tested empirically. Basically the estimation results confirm that introducing a product innovation is positively related with demand and provision of trade credit for SMEs. Innovative firms have a higher probability to face credit constraints and therefore have a higher probability to demand for trade credit. On the other hand suppliers have an incentive to provide trade credit especially to innovative customers because they have an easier access to information about the growth potential of innovative SMEs compared to banks. --
    JEL: G32 O31 L20
    Date: 2013
  10. By: Carol Newman (Institute for International Integration Studies, Trinity College Dublin and Department of Economics, Trinity College Dublin); John Rand (Department of Food and Resource Economics, University of Copenhagen); Theodore Talbot (Department of Economics, University of Copenhagen); Finn Tarp (UNU-WIDER, Helsinki and Department of Economics, University of Copenhagen)
    Abstract: This paper provides new evidence on the relationship between foreign direct investment (FDI) and the productivity of domestic firms. Using a specially designed survey on a sample of over 7,500 manufacturing firms in Vietnam we uncover some of the mechanisms that explain productivity spillovers from FDI through vertical linkages along the supply chain. Our results suggest that domestic firms experience more productivity spillovers through forward linkages from foreign-input suppliers to domestic input users than through backward linkages from foreign customers to domestic producers of inputs. Productivity externalities from upstream sectors are associated with joint venture foreign investors while downstream sectors experience direct technology transfers from upstream wholly foreign owned investors. Spillovers from FDI through backward linkages are also detected but only when competition from imported intermediates is controlled for and are associated with innovations and technology investments made by firms.
    Keywords: Foreign direct investment, productivity spillovers, technology transfers, absorptive capacity, Vietnam
    JEL: D22 F21 O12 O3
  11. By: Bublitz, Elisabeth
    Abstract: This paper presents an analytical setup that makes predictions for the relationships between firm and occupation specific human capital and job switches. The predictions are then tested using the task based approach. The results, based on data for Germany, show that the degree to which firm knowledge is portable depends on skill similarities between the firms. In case of job switches, less experienced workers travel longer skill distances between firms than more experienced workers. Firm and occupational skill distances, that is firm and occupation specific knowledge, both are negatively related to wages in a new job, although the relative importance differs by qualification level. The share of workers in the same occupational group within the firm, occupational intensity, can reflect switching motivations of workers. Occupational intensity decreases with experience and is negatively associated with wages. --
    JEL: J24 J62 J31
    Date: 2013
  12. By: MOTOHASHI Kazuyuki; TOMOZAWA Takanori
    Abstract: This paper analyzes the role of university research in industrial innovation by different phases of the technology life cycle (TLC) and by patent analysis of solar cell technology. It is found that, in the early phase of TLC, the role of academic research is to broaden the technology scope to provide a variety of technologies to the market. Industry can be benefited directly from universities as a source of new technology. In contrast, in the later phase of TLC where both product and process innovation are important, university industry collaboration (UIC) patents are greater in patent quality as measured by normalized forward citation. In addition, scientific paper citations and the experience of UIC by firms' inventors are beneficial to high impact inventions. Therefore, the impact of academic research comes into play in a more indirect way, using scientific knowledge embodied by industry researchers in the later phase of TLC.
    Date: 2014–01
  13. By: Anne Bagard (IAE Grenoble - Institut d'Administration des Entreprises - Grenoble - Université Pierre-Mendès-France - Grenoble II)
    Abstract: L'investissement des firmes dans la recherche et le développement (R&D) est la clé pour une croissance économique pérenne. Notre étude a pour but d'analyser la façon dont ces entreprises innovantes se financent et si, en France, le mode de financement de ces structures primordiales pour notre avenir économique est performant. De l'étude des différentes phases d'investissement et des différents acteurs nous déduirons que le problème de performance du système français ne vient pas de la R&D française dont le niveau est très bon, mais de la faible part de capital‐amorçage et de capital‐développement français. Après comparaison avec d'autres systèmes et notamment celui des États‐Unis, les solutions suivantes apparaissent opportunes pour la performance du système de financement de la R&D : soutien fiscal aux Business Angels, une amélioration de l'accès au marché primaire et une ouverture du capital de ces sociétés innovantes aux fonds de pension et aux assurances.
    Keywords: Recherche et développement (R&D), Capital‐investissement, innovation, France, Research and Development (R&D), private equity
    Date: 2013
  14. By: Vuong, Van Anh; Peters, Bettina; Roberts, Mark J.; Fryges, Helmut
    Abstract: This paper investigates empirically rm investment behavior in research and development (R&D). Firms make investments in R&D in order to produce innovations. These innovations in turn improve the rm s future productivity level, pro tability and incentives to invest in R&D. Using German rm-level data from the manufacturing sector, we estimate a dynamic, structural model of the rm s choice to invest in R&D and quantify the bene t and cost of engaging in R&D. We nd that among rms that engage in R&D, process and product innovations create a signi cant improvement in their productivity. The cost for performing R&D differs across rms based on their size and R&D history. We compute the bene ts of R&D investment to the rm and nd that by taking the dynamic nature of the investment into account the real return to R&D is several times higher than the one time gain in rm productivity. --
    JEL: L60 O31 O32
    Date: 2013
  15. By: Schmitt, Stephan; Kucsera, Denes
    Abstract: The aim of this paper is to give deeper insights into the impact of regulatory reforms and privatization on R&D spending of electricity utilities. Building on a panel data set including the biggest European utilities from eight EU-countries over a period from 1985 until 2010, we find a strong negative influence of privatization and also a negative overall impact of regulation on R&D investment. Nearing competition has a dampening effect on R&D spending, but once the market and regulatory framework conditions have been established, higher levels of competition positively influence R&D. Our results further indicate that the relation between competition and innovative investment can be described as inverted U-shaped. Finally, we could not find any evidence that (ownership) unbundling and incentive regulation affect R&D expenditures of the utilities. --
    JEL: L43 L51 L94
    Date: 2013
  16. By: Philipp Mundt (Department of Economics, University of Bamberg, Bamberg, Germany); Mishael Milakovic (Department of Economics, University of Bamberg, Bamberg, Germany); Simone Alfarano (Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: The basic philosophy behind Gibrat's rule of proportionate effect has been to find some common mechanism in the growth process of business firms, based on the idea that growth rates are independent of size and drawn from the same distribution. After decades of research, however, it seems fair to say that the ÒlawÓ fails to provide a universal mechanism for the growth of firms. Here we take the position that it is more plausible for GibratÕs approach to apply to firm profitability rather than firm growth, in line with the classical idea of economic competition as a dynamic process of capital reallocation. Considering a sample of more than five hundred long-lived US corporations from virtually all sectors, we compare the statistical properties of growth and profit rates over a time span of thirty years, and find that profit rates and their volatilities are independent of size, which is not true of growth rates. We also find that the empirical densities of both profitability and growth can be described by exponential power (or Subbotin) distributions, but there are pronounced differences in their parameterizations and autocorrelation structures. We argue that a recently proposed diffusion process not only reproduces the cross-sectional distribution of profit rates, but is also consistent with the empirical time series of individual firms and their autocorrelations. In the natural sciences such a situation is commonly referred to as a statistical equilibrium, while econometricians speak of ergodicity and stationarity. Our economic interpretation of this property is that all surviving firms are subject to the same competitive pressures of capital reallocation, irrespective of their industry or particular line of business. They all face the same profitability benchmark and volatility, while their idiosyncratic efforts merely have an effect on the persistence of abnormal profits. In other words, survivors have to participate in the same game and can only choose to do so at different ÒspeedsÓ. We conclude with the empirical observation that the speed of convergence from abnormal profits to the system-wide average depends negatively on firm size, diversification, and capital intensity.
    Keywords: Profit rates, diffusion process, statistical equilibrium, dynamic competition, persistence
    JEL: C16 L10 D21 E10
    Date: 2014
  17. By: Prantl, Susanne; Böhme, Ulrike
    Abstract: In this paper, we study the impact of the entry costs imposed by the German Limited Liability Company Law on firm entry. The law implies an expensive and complex incorporation process. As entrepreneurs choose between legal forms when entering the market, either a legal form with limited liability or without it, we suggest an empirical approach for identifying entry cost effects that takes this decision into account by exploiting the natural experiment in entry regulation following from German reunification. The empirical findings show, in particular, that entry costs based on the German Limited Liability Company Law cause an increase in entry size for limited liability firms. In addition, we report that the entry rate for limited liability firms, as well as the sustained entry rate, is lowered. --
    JEL: K22 L25 L26
    Date: 2013
  18. By: Marcus Dejardin (Centre de recherches en Economie Regionale et Politique Economique, UNamur); Helene Laurent (Centre de recherches en Economie Regionale et Politique Economique, UNamur)
    Abstract: The idea that corruption may, in some situations, be beneficial is widely studied within the context of growth. In the field of entrepreneurship, a unique paper by Dreher and Gassebner (2011) explicitly documents it. Their findings support the assumption that corruption “greases the wheels” of strict regulation for early-stage firms. In this article, we complement their seminal work. We provide evidence that entrepreneurs are heterogeneous in their response to the institutional environment. In particular, corruption and regulation affect entrepreneurship to different extent, according to the underlying motivation compelling an individual to open a business. Opportunity-driven entrepreneurs are much more affected by corruption and regulation than necessity-driven ones.
    Keywords: Entrepreneurship, Corruption, Regulation, Doing business, “Grease the wheels”, Opportunity-Necessity
    JEL: D73 F59 J24 L26 M13
    Date: 2014–01
  19. By: Matthias Duschl (Section Economic Geography and Location Research, Philipps-University, Marburg)
    Abstract: This paper breaks down the distributional analysis of firm growth rates to the domain of regions. Extreme growth events, i.e. fat tails, are conceptualized as an indicator of competitive regional environments which enable processes like structural adaptation or technological re-orientation. An understanding of the heterogeneous dynamics at the level of firms, the “turbulence underneath the big calm†(Dosi et al. 2012), provides a micro-funded empirical perspective on the evolutionary dimension of regional resilience. Therefore, the flexible Asymmetric Exponential Power (AEP) density is fitted to firm data for each German region during the years of economic downturn (2008-2010). Peculiarities of employment growth are explicitly taken into account by applying a new maximum likelihood estimation procedure with order statistics (Bottazzi 2012). The estimated parameters, which measure the tails’ fatness, are then related to various region-specific factors that are discussed in the literature on regional resilience. Results show that firm growth rate distributions remain asymmetric and fat tailed at the spatially disaggregated level, but their shape markedly differ across regions. Extreme growth events, i.e. firm-level turbulences, are primarily a phenomenon of economically better performing regions at the aggregate level and further intensified by the presence of a higher qualified workforce. Besides, the fatness of the tails depends on the regions’ industrial structure.
    Keywords: regional resilience, firm growth, growth rates distributions, fat tails, asymmetric exponential power, evolutionary perspective
    JEL: R11 L16 C46
    Date: 2014–01–29
  20. By: Santosh Kumar Sahu (Madras School of Economics); K. Narayanan (Institute Chair Professor and Head, Department of Humanities and Social Sciences, Indian Institute of Technology Bombay)
    Abstract: Industrial energy efficiency has emerged as one of the key issues in India. The increasing demand for energy that leads to growing challenge of climate change has resulted major issues. It is obvious that high-energy intensity leads to high carbon intensity of the economy. This paper is an attempt to compute Carbon Dioxide (CO2) emission from fossil fuel consumption for firms in Indian manufacturing sector from 2000 to 2011 by adopting the IPCC Reference Approach. The contribution of this paper lies in estimating CO2 emission at the firm level and analyzing the factors that explain inter-firm variation in CO2 emission. The results indicate that there are differences in firm-level emission intensity and they, in turn, are systematically related to identifiable firm specific characteristics. This study found size, age, energy intensity and technology intensity as the major determinants of CO2 emission of Indian manufacturing firms. In addition, capital and labour intensity of the firms are also related to the firms’ CO2 emission intensity. We conclude the short run policy implications should be aimed at encouraging firms to invest more in R&D and technology sourcing and at long run firm should be able to adapt cleaner energy to reduce CO2 emission from the fuel consumption.
    Keywords: CO2 emission, Technology intensity, Firm heterogeneity, Panel data, Indian manufacturing
    JEL: Q4 B23
    Date: 2013–09
  21. By: Giorgia Giovannetti (Dipartimento di Scienza per l'Economia e l'Impresa); Enrico Marvasi (Dipartimento di Scienza per l'Economia e l'Impresa); Marco Sanfilippo
    Abstract: This paper explores the relevance of supply chains participation on firms’ probability to internationalize. It studies whether being part of a supply chains and/or of an international network increases the likelihood to enter international markets also for smaller and less productive firms. Our results support the view that belonging to a supply chain increases small firms’ probability of exporting as well as the intensive margin of trade. However, supply chain participation does not seem to affect the extensive margin, computed as the number of foreign markets served, coherently with the view that structural limits given by the size matter. The paper also explores the possibly differential effect of the supply chain for subcontractors and firms that produce their own-branded products and shows that the latter benefit more from integration.
    JEL: F12 F24 F21
    Date: 2013
  22. By: Offick, Sven; Winkler, Roland C.
    Abstract: A recent theoretical literature highlights the role of endogenous firm entry as an internal amplification mechanism of business cycle fluctuations. The amplification mechanism works through the competition and the variety effect. This paper tests the significance of this amplification mechanism, quantifies its importance, and disentangles the competition and the variety effect. To this end, we estimate a medium-scale real business cycle model with firm entry for the U.S. economy. The parameter governing the competition and variety effect is estimated to be statistically significant. We find that firm entry substantially amplifies output by 8.5 percent. The competition effect accounts for most amplification, whereas the variety effect only plays a minor role. --
    Keywords: Bayesian estimation,Business Cycles,Competition Effect,Entry,Mark-ups,Variety Effect
    JEL: E20 E32
    Date: 2014
  23. By: Carlos Correa; Gonzalo Echavarría
    Abstract: Traditionally, in the context of Chilean development policy, sales have been the criterion to stratify firms. This criterion introduces a significant volatility to the firms that make up each stratum and difficult the comparison with other OECD countries that stratify according to the number of employees. This document compares the characterization of the formal non-financial firms under both criterions based on the annual income declaration for the period 2008-2011. The outcome show that under the number of employees criterion, micro, small and medium firms represent a larger share of the total number of firms and are responsible for a larger share of production and employment. Also, under this criterion, when compared with a sample of 23 OECD countries, Chile presents a medium-low participation of small and medium firms in the total number of firms, value added and employment.
    Date: 2013–10
  24. By: Edwin Lai (Hong Kong University of Science and Tech)
    Abstract: We construct a tractable general equilibrium model of cumulative innovation and growth, in which new ideas strictly improve upon frontier technologies, and productivity improvements are drawn in a stochastic manner. The presence of positive knowledge spillovers implies that the decentralized equilibrium features an allocation of labor to R&D activity that is strictly lower than the social planner's benchmark, which suggests a role for patent policy. We focus on a "non-infringing inventive step" requirement, which stipulates the minimum improvement to the best patented technology that a new idea needs to make for it to be patentable and non-infringing. We establish that there exists a finite required inventive step that maximizes the rate of innovation, as well as a separate optimal required inventive step that maximizes welfare, with the former being strictly greater than the latter. These conclusions are robust to allowing for the availability of an additional instrument in the form of patent length policy.
    Date: 2013
  25. By: Miglietta, Angelo; Peirone, Dario (University of Turin)
    Date: 2013–12
  26. By: Andrew B. Bernard; Renzo Massari; Jose-Daniel Reyes; Daria Taglioni
    Abstract: Two otherwise identical firms that enter the same market in different months, one in January and one in December, will report dramatically different annual sales for the first calendar year of operations. This partial year effect in annual data leads to downward biased observations of the level of activity upon entry and upward biased growth rates between the year of entry and the following year. This paper examines the implications of partial year effects using Peruvian export data. The partial year bias is very large: the average level of first-year exports of new exporters is understated by 65 percent and the average growth rate between the first and second year of exporting is overstated by 112 percentage points. This paper re-examines a number of stylized facts about firm size and growth that have motivated rapidly expanding theoretical and empirical literatures on firm export dynamics. Correcting the partial year effect eliminates unusually high growth rates in the first year of exporting, raises initial export levels, and shifts 10 percent of market entrants from below to above the median size. Revisiting an older set of facts on firm size and growth, the paper finds that correcting for partial year biases reduces the number of small firms in the firm size distribution and weakens the negative relationship between firm growth and firm size.
    JEL: C81 D22 F14 L11
    Date: 2014–01
  27. By: Dirk Oberschachtsiek (Leuphana University Lueneburg, Germany)
    Abstract: Human capital has been shown to be highly important in the venture creation process. In this study, we account for the fact that human capital on the individual and regional levels may be interrelated in affecting entrepreneurship. We use German survey data, which allow us to focus on a specific measure of human capital (diversity in task experience) and to study the individual and regional levels. Our research provides evidence for the thesis that diverse human capital increases the level of entrepreneurship activity via individual and aggregated pathways and that the price elasticity of diverse human capital in affecting business activity is low.
    Keywords: entrepreneurship capital, human capital, nascent entrepreneur, multilevel analysis
    JEL: L26 J23 J24
    Date: 2013–12

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