nep-sbm New Economics Papers
on Small Business Management
Issue of 2014‒03‒15
eleven papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior and Universidade de Lisboa

  1. Patents as Quality Signals? The Implications for Financing Constraints on R&D By Dirk Czarnitzki; Bronwyn H. Hall; Hanna Hottenrott
  2. National or international public funding? Subsidies or loans? Evaluating the innovation impact of R&D support programmes By Huergo, Elena; Moreno, Lourdes
  3. Knowledge Licensing in a Model of R&D-driven Endogenous Growth By Vahagn Jerbashian
  4. Business ICT Adoption and Open Access: The Example of SMEs at Industrial Parks in the Netherlands By Bert Sadowski
  5. Evaluation of Small Business Innovation Research Programs in Japan By Inoue, Hiroyasu; Yamaguchi, Eiichi
  6. Economic growth and crime against small and medium sized enterprises in developing economies By Islam, Asif
  7. The Impact of Multinationals' Overseas Expansion on Employment at Suppliers at Home: New evidence from firm-level transaction relationship data for Japan By ITO Keiko; TANAKA Ayumu
  8. European market integration and the determinants of firm localization: The case of Poland By Gehringer, Agnieszka; Krenz, Astrid
  9. R&D networks: theory, empirics and policy implications By Michael D. König; Xiaodong Liu; Yves Zenou
  10. Waste, Recycling and Entrepreneurship in Central and Northern Europe, 1870-1940 By Geoffrey G. Jones; Andrew Spadafora
  11. SME Financing in Japan during the Global Financial Crisis: Evidence from Firm Surveys By Ono, Arito; Uesugi, Iichiro

  1. By: Dirk Czarnitzki; Bronwyn H. Hall; Hanna Hottenrott
    Abstract: Information about the success of a new technology is usually held asymmetrically between the research and development (R&D)-performing firm and potential lenders and investors. This raises the cost of capital for financing R&D externally, resulting in financing constraints on R&D especially for firms with limited internal resources. Previous literature provided evidence for start-up firms on the role of patents as signals to investors, in particular to Venture Capitalists. This study adds to previous insights by studying the effects of firms’ patenting activity on the degree of financing constraints on R&D for a panel of established firms. The results show that patents do indeed attenuate financing constraints for small firms where information asymmetries may be particularly high and collateral value is low. Larger firms are not only less subject to financing constraints, but also do not seem to benefit from a patent quality signal.
    JEL: G32 O31 O32 O38
    Date: 2014–02
  2. By: Huergo, Elena; Moreno, Lourdes
    Abstract: The objective of this study is to compare the effect of different types of public support for R&D projects on firms’ technological capabilities. We distinguish be-tween low-interest loans and subsidies and between national and European sup-port. Using data on 2,319 Spanish firms during the period 2002-2005, we estimate a multivariate probit to analyse the determinants of firms’ participation in public R&D programmes and, later, the impact of this participation on firms’ technologi-cal capabilities using different indicators. The results provide evidence of the ef-fectiveness of all treatments for improving firms’ innovative performance. Specif-ically, although the three kinds of public aid stimulate the intensity of R&D in-vestment, the highest impact corresponds to soft credits. In addition, national sub-sidies have a higher impact on internal R&D intensity than EU grants, but the op-posite relation is found as regards total R&D intensity. With respect to innovation outputs, apart from the indirect effect of public support by stimulating R&D in-tensity, we also find evidence of a direct effect of participation in the CDTI credit system and in the European subsidy programme on the probability of obtaining product innovations and applying for patents.
    Keywords: Soft loans, R&D subsidies, impact assessment
    JEL: H81 L2 L52 O3
    Date: 2014–03–07
  3. By: Vahagn Jerbashian (Facultat d'Economia i Empresa; Universitat de Barcelona (UB))
    Abstract: In this paper I present an endogenous growth model where the engine of growth is in-house R&D performed by high-tech firms. I model knowledge (patent) licensing among high-tech firms. I show that if there is knowledge licensing, high-tech firms innovate more and economic growth is higher than in cases when there are knowledge spillovers or there is no exchange of knowledge among high-tech firms. However, in case when there is knowledge licensing the number of high-tech firms is lower than in cases when there are knowledge spillovers or there is no exchange of knowledge.
    Keywords: Knowledge Licensing, Intra-firm R&D, Competitive Pressure,Endogenous Growth.
    JEL: O30 O41 L16
    Date: 2014
  4. By: Bert Sadowski
    Abstract: Information and Communication Technologies (ICT) provide small- and medium-sized enterprises (SMEs) with an option to create and exploit strategic opportunities. Prior investment in ICT infrastructure can lead to follow-up decisions to adopt new ICT services, but there is no guarantee that SMEs will also use emerging strategic opportunities in adopting these services. In this context, the paper examines whether or not the adoption of advanced ICT infrastructure and advanced ICT services by SMEs has been inter-related and was depending on number of firm-specific, market-specific and location-specific factors. In contrast to previous studies, the focus is on the extent to which the adoption of ICT infrastructure and ICT services has been driven by expectations about open access by SMEs. Open access was conceptualized as expectations by these companies about cheaper prices in the future, better quality of service and more competition on the infrastructure. The research uses data from a survey undertaken among 247 SMEs on different industrial parks in the Netherlands in February 2011. The results of the analysis show that SMEs value open access factors very high with respect to their choice to opt for new ICT infrastructure and new ICT services.
    Keywords: business ICT, SME, Open Access
    Date: 2014–02
  5. By: Inoue, Hiroyasu; Yamaguchi, Eiichi
    Abstract: Subsidizing small high-technology firms is now considered to be important in stimulating economies throughout the world. This is because fast growing small firms create new markets and jobs. The Small Business Innovation Research (SBIR) program has played an important role in the United States in subsidization providing two billion dollars every year. Japan started its own SBIR program inspired by that in the United States. This paper examines the direct effects of Japan's SBIR program through the attributes of firms. First, we compared the changes in sales, employment, and the number of patents between SBIR awardees and matching firms. However, SBIR awardees did not demonstrate better performance in sales or employment. Therefore, it seems that the direct effect of Japan's SBIR program has not produced positive results. However, it did increase the number of patents. Second, we examined the overall results by using regression models. Even with control variables, these results were unchanged. Therefore, we concluded that the results were robust.
    Keywords: Small business, Research policy, Innovation, SBIR, Japan
    JEL: O2 O3
    Date: 2014–02–24
  6. By: Islam, Asif
    Abstract: Several studies have explored the relationship between economy-level crime rates or individual-level crime and economic growth. However, few studies have examined the relationship between economic growth and crime against firms. This study uses data for about 12,000 firms in 27 developing countries and finds that economic growth is negatively associated with crime. This relationship is stronger for small and medium firms than large firms. The study also explores several economy-wide factors and their influence on the growth-crime relationship for small and medium enterprises. The results are robust to various sensitivity checks.
    Keywords: Governance Indicators,Public Sector Corruption&Anticorruption Measures,Achieving Shared Growth,Population Policies,Gender and Law
    Date: 2014–02–01
  7. By: ITO Keiko; TANAKA Ayumu
    Abstract: This paper focuses on non-internationalized supplier firms and investigates how the expansion of overseas activities by their main customer firms affects their employment, utilizing a unique dataset that includes information on buyer-supplier transaction relationships for Japanese manufacturing firms for the period 1998-2007. We do not find any negative effects of top buyers' overseas expansion on domestic suppliers' employment. Instead, we find a significant positive effect. Our result implies that, contrary to fears of a potential hollowing out of domestic supporting industries, the expansion of overseas activities of customer firms has a positive impact on suppliers' employment. Expansion of overseas production by downstream firms may increase purchases from upstream firms in Japan, and this would be the case if downstream firms can increase their worldwide sales by expanding overseas production. Therefore, our result suggests that having a transaction relationship with successful downstream multinational firms that expand their global sales through overseas production is important for non-internationalized suppliers in Japan.
    Date: 2014–03
  8. By: Gehringer, Agnieszka; Krenz, Astrid
    Abstract: The paper analyses empirically the determinants of firms´ localization in Poland. We use regional data of the sixteen Polish administrative regions over the period 2003 to 2010 to examine which role agglomeration forces and other factors played in explaining the choice to operate in a certain location. Our results suggest that agglomeration economies stemming in particular from the R&D sector, as well as human capital and the infrastructure positively influence the regional localization of firms. Poland´s accession to the European Union had a positive impact for the location decision of new firms in the Polish economy. --
    Keywords: localization,agglomeration economies,knowledge externalities,Polish regions,European integration
    JEL: F14 F15 F23 R11 R12
    Date: 2014
  9. By: Michael D. König; Xiaodong Liu; Yves Zenou
    Abstract: We study a structural model of R&D alliance networks in which firms jointly form R&D collaborations to lower their production costs while competing on the product market. We derive the Nash equilibrium of this game, provide a welfare analysis and determine the optimal R&D subsidy program that maximizes total welfare. We also identify the key firms, i.e. the firms whose exit would reduce welfare the most. We then structurally estimate our model using a panel dataset of R&D collaborations and annual company reports. We use our estimates to identify the key firms and analyze the impact of R&D subsidy programs. Moreover, we analyze temporal changes in the rankings of key firms and how these changes affect the optimal R&D policy.
    Keywords: R&D networks, key firms, optimal subsidies
    JEL: D85 L24 O33
    Date: 2014–03
  10. By: Geoffrey G. Jones (Harvard Business School, General Management Unit); Andrew Spadafora (Harvard Business School)
    Abstract: This working paper examines the role of entrepreneurs in the municipal solid waste industry in industrialized central and northern Europe from the late nineteenth century to the 1940s. It explores the emergence of numerous German, Danish and other European entrepreneurial firms explicitly devoted to making a profitable business out of conserving and returning valuable resources to productive use, while maintaining public sanitation and in many cases offering nascent environmental protections. These ventures were qualitatively different from both earlier small-scale private waste traders, and the late twentieth-century integrated waste management firms, and have been neglected in an era that historians have treated as a period of municipalization. These entrepreneurs sometimes had strikingly modern views of environmental challenges and the need to overcome them. They initiated processes for sorting and recycling waste materials that are still employed today. Yet it proved difficult to combine making profits and achieving social value in accordance with the "shared value" model of today. As providers of public goods such as health and sanitation and a cleaner environment the entrepreneurs were often unable to capture sufficient profits to sustain businesses. Recycled-goods markets were volatile. There was also a tension between the constant waste stream on the collection side and a seasonal/cyclical demand for recycled products. The frequent failure of these businesses helps to explain why in more recent decades private waste companies have been associated with late entry into recycling, often trailing municipal governments and non-profit entities.
    Keywords: Environmental Entrepreneurship, business history;
    Date: 2014–03
  11. By: Ono, Arito; Uesugi, Iichiro
    Abstract: Employing data from a unique firm survey, this article examines small and medium-sized enterprise (SME) financing in Japan during the global financial crisis. The major findings of the article are two-fold. First, in terms of credit availability, loans extended by main banks were the “first line of defense” for most Japanese SMEs to deal with the crisis. In contrast, the role of trade credit provided by firms’ main suppliers was relatively limited. The Emergency Credit Guarantees (ECG) program introduced by the government in response to the crisis also helped to increase credit availability. Second, in terms of firms’ ex-post performance, loans extended by firms’ main bank and loans backed by government policy measures did not have any measurable impact. While the average profitability of firms that received these loans deteriorated more than that of firms that did not in 2009, the difference between these two groups vanished after 2010.
    Keywords: SME financing, main bank, trade credit, credit guarantees
    JEL: G21 G28 G30 G38
    Date: 2014–02

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