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on Small Business Management |
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Issue of 2014‒07‒05
seven papers chosen by Joao Carlos Correia Leitao Universidade da Beira Interior and Universidade de Lisboa |
| By: | Masayuki Morikawa |
| Abstract: | This paper, using Japanese firm-level data, presents findings about innovative activities in the service sector and the role of patents and trade secrets on innovation. According to the analysis, first, service firms have fewer product innovations than do manufacturing firms, but the productivity of innovative service firms is very high. Second, service firms have a low propensity for holding patents, but their holding of trade secrets is comparable to that of the manufacturing firms. Third, patents and trade secrets have positive relationships with product innovations, and the effects are quantitatively similar in magnitude, in both the manufacturing and the service sectors. On the other hand, a positive relationship between trade secrets and process innovations is found only in the manufacturing sector. These results suggest a pivotal role of the law protecting trade secrets on innovation and productivity growth in the service sector. |
| Keywords: | innovation, service sector, patent, trade secret |
| JEL: | O31 O34 L80 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2014-48&r=sbm |
| By: | Roberto Álvarez; Andrés Zahler |
| Abstract: | In this paper we analyze changes in the export mix of Chilean firms, looking particularly at differences between large firms and SMEs. To do that, we use detailed information of exported products by firms during the period 1995-2005. Our econometric results, which look at the impact of export product churning on firm performance, are heterogeneous by type of change in export mix and by firm size. In general, export mix changes are associated with improvements on productivity, although our results suggest that this positive effect is only for SMEs. In terms of employment and sales, we find that export product churning has positive effect on large firms and lower - and in some case negative - on SMEs. It seems that changes in export mix are more important for firm growth in large firms, but not in terms of productivity. In contrast, SMEs can have a higher potential for productivity improvement through export product churning but this does not translate necessarily in significant increase in sales and employment. |
| Keywords: | Integration & Trade, Productivity, SME, Small and Medium Size Enterprises (SMEs), Firm performance, Export mix, Large firms, New products, Product mix |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:85354&r=sbm |
| By: | Oscar M. Valencia |
| Abstract: | R&D intensity for small firms is high and persistent over time. At the same time, small firms are often financially constrained. This paper proposes a theoretical model that explains the coexistence of these two stylized facts. It is shown that self-financed R&D investment can distort the effort allocated to different projects in a firm. In a dynamic environment, it is optimal for the firm to invest in R&D projects despite the borrowing constraints. In addition, this paper shows that beyond a certain threshold, effort substitution between R&D and production appears. When transfers from investor to entrepreneur are large enough, R&D intensity decreases with respect to financial resources. Conditional on survival, the more innovative and financially constrained firms are, faster they grow and exhibit higher volatility. |
| Keywords: | Moral Hazard, Endogenous Borrowing Constraints, Technological Change. |
| JEL: | O41 D86 |
| Date: | 2014–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:col:000094:011840&r=sbm |
| By: | ARATA Yoshiyuki |
| Abstract: | How a firm grows is one of the important themes in industrial organization literature. Recent empirical studies have demonstrated that the distribution of firms' growth rates is not Gaussian as predicted by the celebrated Gibrat's law (Gibrat, 1931), but rather is quite well fitted by the Laplace distribution. These findings challenge the existing theoretical models and also our understanding of the mechanism of firm growth. To explain the empirical distributions, we consider the firm growth dynamics in the framework of the L�vy process and infinitely divisible distributions. Our analysis shows that the growth of a firm does not result from the accumulation of small shocks as the existing models assume. Instead, it is characterized by a handful of large shocks to the firm, i.e., jumps. The result has important implications for our understanding of the nature of innovations. |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:14033&r=sbm |
| By: | Chakraborty, Shankha; Thompson, Jon; Yehoue, Etienne |
| Abstract: | We study the cultural process through which a society inculcates an entrepreneurial spirit. People work for a guaranteed wage or operate a firm whose return depends on business expertise. The latter is culturally acquired, within the family or outside, and people may choose an occupation different from the one they were socialized into. We show that a cultural bias towards safer occupations from colonial and post-colonial policies leads to stagnation where entrepreneurs do not upgrade technology because of their proficiency with existing methods. An aggregate productivity shock can tip this economy towards growth where cultural inertia gives way to technological progress led by established businesses. A human capital shock where existing business expertise is less useful, in contrast, causes growth through the emergence of a new class of entrepreneurs. In either case culture ceases to be destiny. We relate the theory to historical and recent episodes. |
| Keywords: | entrepreneurship, culture, human capital, colonization, growth |
| JEL: | D10 F54 L26 O30 Z10 |
| Date: | 2014–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:56892&r=sbm |
| By: | Johannes Van Biesebroeck |
| Abstract: | While many studies explain the correlation between firm-level productivity and export status entirely by better firms self-selecting into exporting, a few studies find evidence of reverse causation. Especially in developing or ransition economies, exporters seem to improve performance after they start selling internationally. We provide evidence that the realization of scale conomies is one possible explanation for such a learning-by-exporting effect. Exporting enables small firms to expand output and exploit all scale economies that the production technology allows. With access to finance problems and weak contract enforcement at home, domestic expansion of SMEs is constrained by the necessity of awarding trade credit to new clients. We show that small firms with a lot of outstanding trade credit expand sales the most following export market entry. This is especially true if they operate in industries with higher scale economies or if they are located in provinces with weaker institutions. The same type of firms also enjoy the largest productivity gains immediately following export market entry. |
| Keywords: | Integration & Trade, SME, Productivity, Investment, SMEs, Export market entry, Small firms, Export market, New exporters, Trade credit |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:85355&r=sbm |
| By: | Andrew B. BERNARD; Andreas MOXNES; SAITO Yukiko |
| Abstract: | Firms operate in complex supplier-customer networks that potentially range over long distances. However, the effects of supplier networks and supplier location on firm performance are largely unknown. This paper characterizes the domestic production network in Japan using detailed buyer-supplier data on over 950,000 firms. Beyond describing the characteristics of the Japanese production network, the paper examines the geographic features of the network links. Greater geographic distance plays an important role in reducing the probability of buyer-seller relations between pairs of firms. For a given firm, greater distance is associated with better performance measures of suppliers and customers. Geography, the density, and the quality of network connections are strongly correlated with downstream (customer) firm performance. Labor productivity, credit score, and size of a downstream firm are positively correlated with features of its upstream supply base including the number of suppliers and their average performance. In addition, geographic proximity of a firm's suppliers is associated with improved firm performance. The paper also provides the first evidence on the relationship between supplier network connections and downstream firm outcomes. Firm performance is better when its suppliers have more suppliers of their own. However, firm performance is lower when its suppliers are connected to more downstream customers. |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:14034&r=sbm |