nep-sbm New Economics Papers
on Small Business Management
Issue of 2014‒06‒14
seventeen papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior and Universidade de Lisboa

  1. The Dynamics of Employment Growth: New Evidence from 18 Countries By Chiara Criscuolo; Peter N. Gal; Carlo Menon
  2. Beyond product innovation; improving innovation policy support for SMEs in traditional industries By Wintjes R.J.M.; Douglas D.; Fairburn J.; Hollanders H.J.G.M.; Pugh G.
  3. The impact of innovation support programmes on SME innovation in traditional manufacturing industries: an evaluation for seven EU regions By Radicic D.; Pugh G.; Hollanders H.J.G.M.; Wintjes R.J.M.
  4. Institutional environment, human capital, and firm growth: Evidence from Vietnam By Thomas Gries; Ha van Dung
  5. The effect of foreign and domestic patents on total factor productivity during the second half of the 20th century By Antonio Cubel; Vicente Esteve; Maria Teresa Sanchis; Juan A. Sanchis-Llopis
  6. The Return to R&D and Seller-buyer Interactions: A Quantile Regression Approach By Westerberg, Hans Seerar
  7. Global Engagement and the Occupational Structure of Firms By Heyman, Fredrik; Sjöholm, Fredrik; Davidson, Carl; Matusz, Steven; Chun Zhu, Susan
  8. Universities and Smart Specialisation By Louise KEMPTON; John Goddard; John Edwards; Fatime B. Hegyi; Susana Elena-Pérez
  9. Firm Dynamics and Assortative Matching By Leland D. Crane
  10. The Role of Government Institutions for Smart Specialisation and Regional Development By Andres RODRIGUEZ-POSE; Marco DI CATALDO; Alessandro RAINOLDI
  11. Efficiency of Research and Innovation Systems for Economic Growth and Employment By Edquist, Charles
  12. Morphogénèse d'un dispositif institutionnel d'accompagnement de l'innovation dans les PME impliquant un tandem étudiant/chercheur By Olivier Coussi; Anne Krupicka
  13. Knowledge, innovation and space By Karlsson, Charlie; Johansson, Börje; Kobayashi, Kiyoshi; Stough, Roger R.
  14. Acceso al conocimiento público universitario en España: patrones geográficos By Azagra-Caro,Joaquín M.
  15. Farm size and growth in field crop and dairy farms growth in France, Hungary and Slovenia By Zoltan Bakucs; Stefan Bojnec; Imre Ferto; Laure Latruffe
  16. A Policymakers Guide to Transnational Learning in Smart Specialisation By Åge Mariussen; Inger Midtkandal; Ruslan Rakhmatullin
  17. What Makes Cities More Productive? Evidence on the Role of Urban Governance from Five OECD Countries By Rudiger Ahrend; Emily Farchy; Ioannis Kaplanis; Alexander C. Lembcke

  1. By: Chiara Criscuolo; Peter N. Gal; Carlo Menon
    Abstract: Motivated by the on-going interest of policy makers in the sources of job creation, this paper presents results from a new OECD project on the dynamics of employment (DynEmp) based on an innovative methodology using firm-level data (i.e. national business registers or similar sources). It demonstrates that among small and medium sized enterprises (SMEs), young firms play a central role in creating jobs, whereas old SMEs tend to destroy jobs. This pattern holds robustly across 17 OECD countries and Brazil, extending recent evidence found in the United States. The paper also shows that young firms are always net job creators throughout the business cycle, even during the financial crisis. During the crisis, entry and post-entry growth by young firms were affected most heavily, although downsizing by old firms was responsible for most job losses. The results also highlight large cross-country differences in the growth potential of young firms, pointing to the role played by national policies in enabling successful firms to create jobs.
    Keywords: Business dynamics, employment growth, small businesses, business demography, startups, great recession, job creation and destruction
    JEL: D22 L26 E24 L25
    Date: 2014–06
  2. By: Wintjes R.J.M.; Douglas D.; Fairburn J.; Hollanders H.J.G.M.; Pugh G. (UNU-MERIT)
    Abstract: Innovation support measures in the EU are mostly designed to support product innovation in RD intensive sectors. To increase the still considerable contribution to regional employment and competitiveness from SMEs in traditional manufacturing industries a broader innovation policy mix is more appropriate. This paper draws data from a survey of more than 300 SMEs from seven regions within the European Union, as well as case studies, to address the question How can innovation policy interventions be improved to support SMEs in traditional manufacturing industries more effectively We claim that innovation support should be sensitive to the way SMEs in traditional manufacturing sectors innovate and grow. We find that product innovation and support used for product innovation is less likely to generate growth, than support used for process innovation. Also support used for marketing innovations and organizational innovations are of particular importance - together with internationalization, design and cooperation. The increasingly selective application procedures applied are not the most efficient to generate impact, since those who are supported and those who are supported more frequently, are the ones who are most likely to take the same innovative steps anyhow, irrespective of policy support.Keywords Innovation, SMEs, traditional sectors, low-tech, policy evaluation, manufacturing, process innovation
    Keywords: Search; Learning; Information and Knowledge; Communication; Belief; Industry Studies: Manufacturing: General; Industrialization; Manufacturing and Service Industries; Choice of Technology; Innovation and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Technological Change: Choices and Consequences; Diffusion Processes; Technological Change: Government Policy;
    JEL: O38 O33 D83 L60 O14 O31 O32 O33
    Date: 2014
  3. By: Radicic D.; Pugh G.; Hollanders H.J.G.M.; Wintjes R.J.M. (UNU-MERIT)
    Abstract: This study investigates the impact of innovation support programmes on SME innovation in traditional manufacturing industries in seven EU regions. Recent literature identifying sources of potential government failure in innovation policy suggests that the effects of public support measures to increase private innovation may be disappointing. Our results are consistent with this hypothesis, yet also suggest a direction for policy reform to overcome government failure and, thereby, to increase the potential additionality of innovation support programmes. Innovation support programmes in the EU typically adopt a cream skimming selection strategy namely, programme managers systematically select firms on the basis of observable characteristics conducive to innovation. The econometric analysis of a new survey database reported in this paper suggests that cream skimming leads to firms being selected for programme participation that benefit less than would randomly selected firms. The policy corollary is that, subject to due diligence checking, allocation of innovation support by lottery should give rise to greater programme additionality than does the prevalent cream skimming approach. We conclude with some practical guidelines for allocation by lottery, which were developed for a recently launched innovation support programme for SMEs. Key words innovation; SMEs; traditional manufacturing industry; public innovation support; government failure; evaluation
    Keywords: Semiparametric and Nonparametric Methods: General; Multiple or Simultaneous Equation Models: Truncated and Censored Models; Switching Regression Models; Management of Technological Innovation and R&D; Technological Change: Government Policy;
    JEL: O32 O38 C14 C34
    Date: 2014
  4. By: Thomas Gries (University of Paderborn); Ha van Dung (University of Paderborn)
    Abstract: In this paper, we investigate the impacts of the institutional environment and the entrepreneur’s education on firm growth in Vietnam. Using a firm-level dataset, we obtain a balanced panel data from 2006 to 2009 for 37,788 registered enterprises from a unique data set. We analyze the effects of the institutional factors on the growth of firms using the system GMM analysis. We find that in accordance to recent theoretical literature, higher level of institutional factors such as business support service, land access, time costs, and informal charges will promote firm growth in both employment and capital. Furthermore the impacts of institutional factors are more significant in capital growth of firms. In addition to the insight, we look at the impacts of entrepreneur’s education on firm growth. We use the fixed effects estimation method and obtain the results supporting the hypothesis that higher level of entrepreneur’s education will associate with a higher growth of firms.
    Keywords: firm growth, institutional factors, human capital, entrepreneurship, capital structure.
    JEL: O12 O16
    Date: 2014–06
  5. By: Antonio Cubel; Vicente Esteve; Maria Teresa Sanchis; Juan A. Sanchis-Llopis
    Abstract: This paper analyses the relationship between total factor productivity (TFP) and innovation-related variables during the second half of the 20th century. We perform this analysis for several European countries (France, Germany, the United Kingdom, and Spain) and the U.S., extending Coe and Helpman’s (1995) empirical specification to include human capital. We use a new dataset of patents data for the past 150 years to calculate the stock of knowledge using the perpetual inventory method. Our time series empirical analysis confirms the heterogeneous relationship between innovation variables (domestic stock of knowledge, imports of knowledge, and human capital) and productivity. Our results reveal the extent to which observed differences in technology adoption patterns and the levels of endowment of such resources can explain differences in TFP dynamics across countries. The estimated coefficients confirm the considerable gap that still exists between the European countries and the U.S. in innovation-related variables. Furthermore, we obtain a finding that may have important implications for innovation policies: the higher the level of investment in human capital, the higher the level of investment in domestic innovation, and the higher the response of TFP to a 1% increase in any of the aforementioned variables.
    Keywords: OECD,international technology diffusion, patents, productivity, cointegration
    Date: 2014–05
  6. By: Westerberg, Hans Seerar (Ratio institute)
    Abstract: In this paper we analyze whether a firm’s return to its R&D stock is affected by seller-buyer interactions. We suggest that firms that are in close contact with their customers will be relatively more sensitive to their customers’ needs, and therefore adjust their R&D activities accordingly. This, in turn, will boost sales and increase the return to R&D. To the extent that seller-buyer interactions are costly, large and productive firms will have an advantage in overcoming such costs. We test these hypotheses using a fixed effects quantile regression framework. Results suggest that large firms active in industries characterized by frequent seller-buyer interactions have a higher return to R&D than other firms.
    Keywords: firm behavior; firm performance; production and organizations; firm size; diversification and scope
    JEL: D22 D29 L25 O32
    Date: 2014–06–09
  7. By: Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Sjöholm, Fredrik (Lund University); Davidson, Carl (Michigan State University); Matusz, Steven (Michigan State University); Chun Zhu, Susan (Michigan State University)
    Abstract: Engagement in foreign markets can have an impact on firm organization and on the type of occupations that a firm needs. We examine the effect of globalization on the occupational mixes using detailed Swedish data that cover all firms and a representative sample of the labor force for 1997-2005. We find a robust relationship between a firm’s degree of international integration and its occupational mix. Multinationals, which are the most globally engaged firms, have a distribution of occupations skewed toward more skilled occupations. Non-multinational exporters have a distribution of occupations less skewed toward skilled compared to multinationals, but more skewed toward skilled occupations compared to Swedish non-exporters (which are the least globally engaged). Moreover, firms tend to have an even more skill intensive distribution of occupations when they mainly export to far away markets, or when they export differentiated goods. Our results are little changed (1) when we control for firm size, productivity, capital intensity, and firm age, (2) when we control for offshoring and R&D expenditures; (3) when we use alternative methods to rank occupations, or (4) when we conduct alternative robustness tests. In addition, the results are very similar for manufacturing and non-manufacturing, and for foreign and Swedish multinationals. We interpret our results using a decomposition motivated by recent theoretical models of selection into exporting and FDI.
    Keywords: Occupational mix; Globalization; Multinational Enterprises
    JEL: F10 F20
    Date: 2014–05–27
  8. By: Louise KEMPTON (Newcastle University); John Goddard (Newcastle University); John Edwards (European Commission – JRC - IPTS); Fatime B. Hegyi (European Commission – JRC - IPTS); Susana Elena-Pérez (European Commission – JRC - IPTS)
    Abstract: Universities have a potentially pivotal role to play in the social and economic development of their regions. They are a critical ‘asset’ of the region; even more so in less favoured regions where the private sector may be weak or relatively small, and has low levels of research and development activity. Evidence shows that the successful mobilisation of the resources of a university can have a disproportionately positive effect on regional economies and achievement of comprehensive regional strategies. Universities can therefore play a key role by contributing to the design and implementation of S3 in a local learning and capacity building process. However there are some key underpinning principles that make smart specialisation distinctive from previous iterations of regional innovation strategy development, and it will be necessary to understand the implications of these for the actors in the process, including universities.
    Keywords: European Universities, European cohesion policy, Structural Funds, Smart Specialisation
    Date: 2014–05
  9. By: Leland D. Crane
    Abstract: I study the relationship between firm growth and the characteristics of newly hired workers. Using Census microdata I obtain a novel empirical result: when a given firm grows faster it hires workers with higher past wages. These results suggest that productive, fast-growing firms tend to hire more productive workers, a form of positive assortative matching. This contrasts with prior research that has found negligible or negative sorting between workers and firms. I present evidence that this difference arises because previous studies have focused on cross-sectional comparisons across firms and industries, while my results condition on firm characteristics (e.g. size, industry, or firm fixed effects). Motivated by the empirical findings I develop a search model with heterogeneous workers and firms. The model is the first to study worker-firm sorting in an environment with worker heterogeneity, firm productivity shocks, multi-worker firms, and search frictions. Despite this richness the model is tractable, allowing me to characterize assortative matching, compositional dynamics and other properties analytically. I show that the model reproduces the positive firm growth-quality of hires correlation when worker and firm types are strong complements in production (i.e. the production function is strictly log-supermodular).
    Keywords: Assortative Matching, Firm Growth, Wages, Unemployment, Vacancies, Search Theory, Microdata
    JEL: E24 J31 J63 J64
    Date: 2014–05
  10. By: Andres RODRIGUEZ-POSE (London School of Economics); Marco DI CATALDO (London School of Economics); Alessandro RAINOLDI (European Commission – JRC - IPTS)
    Abstract: Research and innovation strategies for smart specialisation (RIS3) are trying to introduce a new vision of innovation policy in European regions. However, the success of RIS3 policy measures is closely dependent on the capacity of regional government institutions to act as coordinators or facilitators of the interventions. The way in which institutional mechanisms govern innovation processes and provide incentives for the interaction between regional actors remains a largely unexplored area of scientific research. This policy note discusses the importance of sound institutional frameworks for the effectiveness of smart specialisation, presenting an econometric study that investigates the link between government institutions and innovation. The empirical results confirm the key role played by governance structures for technological advances at the regional level, suggesting that the greatest gains in innovative capacity from institutional reforms would be obtained in peripheral territories where the initial level of government quality is lower. This analysis has important implications for the identification of the necessary pre-requisites for successful RIS3 strategies in EU regions.
    Keywords: European cohesion policy, Structural Funds, smart specialisation, Innovation Union, Regional Policy, Institutional Framework, Coordination, Governance Structures
    Date: 2014–03
  11. By: Edquist, Charles (CIRCLE, Lund University)
    Abstract: The concept of a holistic innovation policy is defined in this paper, and it is discussed what it is, why it is relevant and how it can be implemented. One of the main conclusions is that the innovation policies in European countries are still linear (and not holistic), in spite of the fact that the linear view has been completely abandoned by innovation researchers – and replaced by a systemic view on innovation processes. Why innovation policy is still linear is also discussed. Further it is noted that a considerable number of EU Member States have created public organizations (Councils) for innovation and/or research policy placed above ministries and usually chaired by the Prime Minister. The role and character of these bodies is discussed. The empirical results are based on a questionnaire sent to 23 EU Member States, out of which 19 (83%) responded. The work with this report was carried out for the European Research and Innovation Area Committee (ERAC) of the European Commission (DG RTD).
    Keywords: Innovation; Innovation Policy; Holistic innovation policy; Research policy; The linear view; Systems of innovation
    JEL: L38 M38 O25 O31 O32 O33
    Date: 2014–06–02
  12. By: Olivier Coussi (CEREGE - CEntre de REcherche en GEstion - Université de Poitiers : EA1722 - Institut d'Administration des Entreprises (IAE) - Poitiers); Anne Krupicka (CEREGE - CEntre de REcherche en GEstion - Université de Poitiers : EA1722 - Institut d'Administration des Entreprises (IAE) - Poitiers)
    Abstract: Nous étudions les facteurs qui ont favorisé la création d'un dispositif sociotechnique d'accompagnement de l'innovation au sein des PME d'une région française. Nous examinons les conditions qui ont permis l'émergence d'une telle démarche entrepreneuriale au sein d'une CCI Territoriale, et plus particulièrement les proximités de ressources qui ont façonné le réseau d'acteurs de ce dispositif institutionnel. Celui-ci a été initié par un porteur externe qui, soutenu et contraint par un ensemble de facteurs, a construit un réseau sociotechnique pour l'accompagnement des projets d'innovation associant un étudiant, un chercheur et la PME.
    Keywords: accompagnement de l'innovation des PME ; entreprenariat en secteur public ; théorie de la traduction ; proximités de ressources
    Date: 2014–05–15
  13. By: Karlsson, Charlie (CESIS, Jönköping International Business School); Johansson, Börje (CESIS, Jönköping International Business School); Kobayashi, Kiyoshi (Kyoto University); Stough, Roger R. (George Mason University)
    Abstract: This paper provides an overview of relevant topics in contemporary research concerned with global, national, regional and local knowledge and innovation dynamics. In particular, we highlight how the global scene is changing in the contemporary world economy that we char-acterize as a knowledge economy. We show how knowledge and knowledge dynamics is driving innovation in the large urban agglomerations in the old and in new industrialized countries with their concentrations of abilities and resources and their superior intra-regional and international geographical proximities. In relation to the large urban agglomerations we stress the role of (i) density and proximity externalities, (ii) the physical and cultural resource base of large cities, and (iii) the interactive dynamics related to learning and creativity.
    Keywords: Knowledge; innovation; space; agglomeration; proximity; learning; creativity; social networks
    JEL: O30 R11
    Date: 2014–06–11
  14. By: Azagra-Caro,Joaquín M.
    Abstract: Resumen - Las referencias bibliográficas contenidas en los documentos de patente son una fuente de información sobre el acceso al conocimiento público con que se justifica o ataca la novedad de la invención. En vez de la distinción habitual entre referencias por tipo de literatura citada, se aborda otra más original, por tipo de institución citada, y se pone el acento en las universidades. El acceso al conocimiento público universitario en España comparte tendencias europeas: está altamente internacionalizado y se accede sobre todo a universidades estadounidenses. Presenta algunas idiosincrasias, como el acceso relativamente infrecuente al Instituto Tecnológico de Massachussets; y la elevada frecuencia de citas a universidades holandesas e israelíes. Además, se accede a universidades de la propia región mucho más que en otros estados miembros (sobre todo en comunidades distintas de Madrid). Respecto al acceso de otros países de la UE27, Alemania cita relativamente poco a las universidades españolas y la única citada por encima de la media europea es la Autónoma de Madrid. Se ofrece a los gestores de política algunas recomendaciones para influir sobre alguna de estas características de acuerdo con ciertos criterios de deseabilidad. Abstract - References in patent documents are sources of information about access to public knowledge to claim novelty or lack of novelty in the invention. The usual distinction breaks references down by type of cited literature but we do it by type of cited institution –more original. We focus on universities and compare Spain with the European Union 27 at national, regional and institutional levels. Spanish and European university public knowledge is similar: it is highly internationalised and American universities are the most accessed. Spain presents some idiosyncrasies: sporadic access to the Massachusetts Institute of Technology, frequent to Dutch and Israeli universities. Access to universities from the same region occurs more often than in other Member States (due mainly to regions other than Madrid). Access to Spanish universities is relatively low from Germany, and the only one cited above the European average is the Autonomous University of Madrid. We give policymakers some recommendations to modify these characteristics according to some desirability criteria.
    Keywords: Knowledge flows, university-technology links, patents, citations
    Date: 2014–06–06
  15. By: Zoltan Bakucs (Institute of Economics. Centre for Economic and Regional Studies, Hungarian Academy of Sciences; Department of Agricultural Economics and Rural Development, Corvinus University of Budapest); Stefan Bojnec (Faculty of Management, University of Primorska); Imre Ferto (Institute of Economics. Centre for Economic and Regional Studies, Hungarian Academy of Sciences; Department of Agricultural Economics and Rural Development, Corvinus University of Budapest); Laure Latruffe (Structures et Marchés Agricoles, Ressources et Territoires, INRA)
    Abstract: The aim of this article is to investigate the relationship between size and farm growth. The existing theories of the association between size and farm growth give mixed results by countries and over time. This paper pursues a twofold objective: on one hand, to test the validity of Gibrat’s Law for French, Hungarian and Slovenian specialized dairy and crop farms during the pre- and post-accession period to the European Union membership. Dairy and crops farms are prevailing in the farming structure of these countries. Using Farm Accountancy Data Network datasets makes it necessary to avoid biases due to heterogeneous structures across the farming systems. Thus we use quantile regressions to control for farm size related heterogeneity in the samples. On the other hand, the main novelty of this paper is the comparative analysis of the relationship between farm size and farm growth between transition Hungarian and Slovenian and non-transition French farming sectors, characterized by rather different farm structures. The results reject the validity of Gibrat’s Law for crop farms in Hungary and to a lesser extent in France, and for French and Slovenian dairy farms. We provide evidence that smaller farms grew faster than larger ones over the studied period 2001-2007 for France, 2001-2008 for Hungary, and 2004-2008 for Slovenia. Conversely, the results for Slovenia suggest that the rate of growth of crop farms in terms of its land is independent from its size.
    Keywords: farm size, farm growth, Gibrat’s Law, quantile regression, taille de l'exploitation, régression quantilecroissance agricole
    Date: 2013
  16. By: Åge Mariussen (University of Vaasa, Finland); Inger Midtkandal (European Commission – JRC - IPTS); Ruslan Rakhmatullin (European Commission – JRC - IPTS)
    Abstract: Smart Specialisation (S3) is a new framework for research and innovation strategies which together with other instruments, such as Horizon 2020 is designed to pull Europe out of its current economic problems. Successful RIS3 strategies are improving and sometimes changing conditions promoting innovation, competitiveness and growth. In order to do so, RIS3 operates with six steps of planning, outlined in the S3 Guide. In discovering, promoting and implementing these improvements, transnational learning is a promising and potentially powerful tool. However, attempts to organize transnational learning may easily fail. This brief explains how it can succeed, with reference to the six steps of the S3 Guide.
    Keywords: European cohesion policy, Structural Funds, smart specialisation, transnational learning
    Date: 2014–05
  17. By: Rudiger Ahrend; Emily Farchy; Ioannis Kaplanis; Alexander C. Lembcke
    Abstract: This paper estimates agglomeration benefits based on city productivity differentials across five OECD countries (Germany, Mexico, Spain, United Kingdom, and United States). It highlights the relationship between cities’ governmental fragmentation and productivity, and represents the first empirical analysis of how metropolitan governance structures affect this relationship. The comparability of results in a multi-country setting is supported through the use of Functional Urban Areas – an internationally harmonised definition of cities based on economic linkages rather than administrative boundaries. In line with the previous literature, the analysis confirms that city productivity tends to increase with city size; doubling city size is found to be associated with an increase in productivity of between two and five percent. What is more, city productivity is positively associated with the population size of nearby cities. On the governance side, the paper finds that cities with fragmented governance structures tend to have lower levels of productivity. For a given population size, a metropolitan area with twice the number of municipalities is associated with around six percent lower productivity; an effect that is mitigated by almost half by the existence of a governance body at the metropolitan level.
    Keywords: productivity, governance, cities, agglomeration economies
    JEL: H73 R12 R23 R50
    Date: 2014–05–16

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