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on Small Business Management |
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Issue of 2014‒08‒16
fourteen papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | Peter van der Zwan |
| Abstract: | This paper focuses on SMEs – firms with 250 employees at most – and the proportion of their requested loan that is granted by the bank. Financial data for SMEs in 38 European countries for 2011 are used (SMEs’ Access to Finance survey) to test the relationship between ownership structure and innovation on the one hand and loan application success on the other hand. The set of control variables includes firm age, firm size, past firm growth, expected firm growth, and sector orientation. Focusing on the determinants of access to finance is important because restricted access could hinder firm growth. It turns out that SMEs that are part of a business group and SMEs with a multiple ownership structure have higher probabilities of receiving the requested bank loan than SMEs with a single owner. There is some evidence that female owned business have more success regarding their loan applications than male owned businesses. Furthermore, SMEs that adopt product or process innovations are less likely to receive the requested loan than SMEs that do not display innovative behavior. The robustness of these findings across several model specifications is shown and the implications of the findings are discussed. |
| Date: | 2014–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201404&r=sbm |
| By: | Tiago Soares (FEP-UP, School of Economics and Management, University of Porto); Samuel Pereira (FEP-UP, School of Economics and Management, University of Porto); Elísio Brandão (FEP-UP, School of Economics and Management, University of Porto) |
| Abstract: | R&D expenditures made by companies, and governmental policies oriented for the promotion of these expenditures in the private sector, are nowadays considered variables that have an impact on firms’ growth in the medium term. This study aims at understanding the simultaneous influence of R&D investment and R&D tax incentives on firms’ growth, for different technological and knowledge-intensity industries. For that, a panel data of 1127 firms belonging to 35 different industries from 21 OECD countries, during the period between 2003 and 2012, was used. The results of the econometric estimation confirm, as foreseen in the literature, the positive effect for firms’ net sales growth of their investment in R&D and of tax policies that benefit the firms which perform these types of activities, particularly in high-tech firms. The results also returned a positive effect of R&D intensity in firms’ growth in the period before crisis (2003 - 2007) and a negative and significant crossover effect of R&D tax credits and R&D intensity in firms’ growth for the period before crisis. The two factors remain insignificant in crisis period, suggesting that other factors gained a more powerful explanation of a firm’s growth in that period. |
| Keywords: | R&D investment, R&D tax credits, firm’s growth |
| JEL: | H20 H30 H81 O32 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:540&r=sbm |
| By: | Saul Estrin; Seçil Hülya Danakol; Paul Reynolds; Utz Weitzel |
| Abstract: | This paper explores the effects of foreign direct investment, measured by mergers and acquisitions, on domestic entrepreneurial entry. We use a micro‐panel of more than two thousand individuals disaggregated by industry in seventy countries including both developed and developing economies, 2000‐2009. The theory yields ambiguous predictions about the relationship between FDI and entrepreneurship; positive spillovers via dissemination of technology or negative because of crowding out. Our empirical analysis is conducted at three levels of aggregation. We find the relationship between FDI and domestic entrepreneurship in aggregate and intra‐industry to be negative. Policies need to consider how to counteract this effect. |
| Keywords: | Foreign direct investment, entrepreneurship, new firm entry, spillovers |
| JEL: | F23 M13 L26 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1268&r=sbm |
| By: | Priit Vahter (University of Tartu, Estonia); James H. Love (Aston Business School); Stephen Roper (Warwick University Business School) |
| Abstract: | Traditionally, literature on open innovation has concentrated on analysis of larger firms. We explore whether and how the benefits of openness in innovation are different for small firms (less than 50 employees) compared to medium and large ones. Using panel data over a long time period (1994-2008) from Irish manufacturing plants, we find that small plants have on average significantly lower levels of openness, a pattern which has not changed significantly since the early 1990s. However, the effect of ‘breadth’ of openness (i.e. variety of innovation linkages) on innovation performance is stronger for small firms than for larger firms. For small firms (with 10-49 employees) external linkages account for around 40 per cent of innovative sales compared to around 25 per cent in larger firms. Small plants also reach the limits to benefitting from openness at lower levels of breadth of openness than larger firms. Our results suggest that small firms can gain significantly from adopting an open innovation strategy, but for such firms appropriate partner choice is a particularly important issue. |
| Keywords: | open innovation, SMEs, boundary-spanning linkages, learning effects, Ireland |
| JEL: | O31 O32 L25 |
| Date: | 2013–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:enr:rpaper:0012&r=sbm |
| By: | Chiara Piccardo (Università di Genova); Anna Bottasso (Università di Genova); Luigi Benfratello (Università di Napoli Federico II and CSEF) |
| Abstract: | This paper sheds additional light on the relationship between firm level innovative capacity and export intensity. By drawing from the recent literature on exporters' heterogeneity, we apply quantile regression techniques to a sample of Italian firms in order to verify whether the effect of innovative capacity – measured by R&D expenditures – varies along the conditional distribution of the export intensity, after controlling for censoring and potential endogeneity of the innovation variable. We confirm that R&D expenditures positively affect export intensity and we find that such effect has a bell shaped pattern along its conditional distribution: firms characterized by export intensity of about 60% can take highest advantage from investing in R&D activity. Overall results prove to be robust to several specification checks and suggest not only that firms innovative capacity helps to explain heterogeneity in export intensity performance, but also that its positive effect differs across the export to sales ratio distribution. |
| Keywords: | Exports, R&D, quantile regression, endogeneity, distance to the frontier |
| JEL: | F14 O32 D22 C31 C36 |
| Date: | 2014–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:371&r=sbm |
| By: | Kühnhausen, Fabian |
| Abstract: | In this paper, I evaluate the impact of innovative activity of financial agents on their fragility in a competitive framework. There exist a vast array of concerns about the interconnection of financial innovations, financial distress of firms and financial crises provided by theoretical arguments. I build on these and assess empirically the causal link between a financial agents' innovativeness and stability. Using a unique data set on financial innovations in the USA between 1990 and 2002, I show that a larger degree of innovation negatively (positively) affects firm stability (fragility) after controlling for the underlying firm characteristics. The results are robust against different modifications of innovation measures and against different fragility parameters indicating profitability, activity risk and risk of insolvency. |
| Keywords: | Incentives to Innovate; Financial Innovation; Fragility |
| JEL: | G01 G2 L11 O31 |
| Date: | 2014–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:21173&r=sbm |
| By: | Hind El Makrini |
| Abstract: | We study the export performance of firms from developing countries based on the resource based view (RBV) of a firm. Drawing on the extant literature review, we found firm size, research and development (R&D) expenditure, advertising expenditure and business group affiliation to be important factors of export performance. A quantitative design was particularly used in this study. A two-stage least square estimation (G2SLS) was employed on a sample of 168 Moroccan SMEs over a period of four years from 2009 to 2013. Morocco is an illustrative case of a developing country where export performance studies are very limited. The findings suggest that export sales and domestic sales are interdependent and influence each other. R&D expenditure and business group affiliation have positive and significant impacts on export sales, while advertising expenditure has a negative and significant influence on export sales. The study has useful managerial implications for academics, practitioners and public policy makers, providing guidelines and interesting recommendations for a better export performance. |
| Keywords: | Developing economies, Export performance, Moroccan SMEs, Resource-based View (RBV), Two-stage least square estimation (G2SLS). |
| Date: | 2014–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-431&r=sbm |
| By: | Kevin Levillain (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Blanche Segrestin (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Armand Hatchuel (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris) |
| Abstract: | Venture Capital is generally thought to be a key link in the complex chain of financing for young innovative firms. By helping them at critical stages of innovation development, it would help an economy to leverage its public research and sustain its growth. However, recent research reveals that the performance of VC funds, both internal (profitability) and external (growth), does not reach the expectations. In this paper, we aim to show that paradoxically, the theoretical model of VC conveyed by the literature does not take the management of innovation into account, and makes unrealistic assumptions on the composition of project portfolios. Conversely, based on interviews with some VC funds managers, we show that actual funds can invent alternative management models, for example based on the structuration of ecosystems for the start-ups, the development of "external valuation" mechanisms, or the creation of synergies between financed projects. |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00969096&r=sbm |
| By: | Drivas, Kyriakos; Economidou, Claire; Karkalakos, Sotiris |
| Abstract: | This paper studies the effects of spatial concentration of innovation activity on local production of patents in the US. In doing so, we augment the standard knowledge production function with a structure that allows for spatial effects, accounting along with bilateral also for multilateral influences across states. Our findings corroborate with past evidence on the important role of state’s own R&D stock and human capital in producing new inventions. In addition, external knowledge, via spatial interactions, is also a purveyor of local innovation production. The effect is stronger when we consider spatial influences from all states, in particular from the most innovative ones, and to a lesser extent from close neighboring states. Finally, spillovers are more likely to occur between states with similar technological specialization, which share common technological knowledge and pour similar technological effort. |
| Keywords: | patents, innovation, knowledge production, spatial |
| JEL: | C21 O31 R12 |
| Date: | 2014–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57861&r=sbm |
| By: | Pedro Bento (West Virginia University, College of Business and Economics) |
| Abstract: | I incorporate an insight of Friedrich Hayek - that competition allows a thousand flowers to bloom, and discovers the best among them - into a model of Schumpeterian innovation. Firms face uncertainty about the optimal direction of innovation, so more innovations implies a higher expected value of the `best' innovation. The model accounts for two seemingly contradictory relationships reported in recent empirical studies - a positive relationship between competition and industry-level productivity growth, and an inverted-U relationship between competition and firm-level innovation. Notwithstanding the positive relationship between competition and growth, I find antitrust policy reduces industry-level growth. |
| Keywords: | competition, innovation, productivity growth, inverted-u, antitrust, regulation |
| JEL: | O31 O40 L41 L51 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:13-10&r=sbm |
| By: | Michel Dumont (Federal Planning Bureau; Department of general economics, Ghent University); Bruno Merlevede (CERISE, Ghent University; Department of general economics, Ghent University); Glenn Rayp (SHERPPA, Ghent University; Department of general economics, Ghent University); Marijn Verschelde (SHERPPA, Ghent University; Department of general economics, Ghent University; Faculty of Economics and Business, Katholieke Universiteit Leuven) |
| Abstract: | In this paper a semiparametric stochastic metafrontier approach is used to obtain insight into firmlevel competitiveness in Europe. We differ from standard TFP studies at the firm level as we simultaneously allow for inefficiency, noise and do not impose a functional form on the input-output relation. Using AMADEUS firm-level data covering 10 manufacturing sectors from seven EU15 countries, (i) we document substantial, persistent differences in competitiveness (with Belgium and Germany as benchmark countries and Spain lagging behind) and a wide technology gap, (ii) we confirm the absence of convergence in TFP between the seven selected countries, (iii) we confirm that the technology gap is more pronounced for smaller firms, (iv) we highlight the role of post-entry growth for competitiveness. |
| Keywords: | competitiveness, cross-country analysis, firm heterogeneity, total factor productivity, post-entry growth |
| JEL: | C14 D24 L25 M13 O33 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:201407-261&r=sbm |
| By: | Jungsoo Park (Asian Development Bank Institute (ADBI)); Yung Chul Park |
| Abstract: | This study analyzes the effects of financial liberalization on the lending behavior of banks and non-bank financial institutions (NBFIs) before and after the 1997 Asian financial crisis, using panel regressions on Republic of Korea firm-level and industry-level data of the period 1991–2007. It also develops a financial liberalization index to incorporate the multifaceted nature of financial reform. Findings show that financial liberalization has led banks and NBFIs to allocate more of their loans to small and medium-sized firms with good performance histories, thereby helping these entities to improve their total factor productivity growth. This paper does not find similar effects of financial liberalization on efficiency at large firms or at the industry level. Heavier reliance on direct financing after the crisis has not improved the productivity of large firms. |
| Keywords: | Financial Liberalization, non-bank financial institutions, Lending Behavior, firm-level and industry-level data, Financial Reform, small and medium-sized firm, Total Factor Productivity Growth |
| JEL: | G20 O40 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:eab:financ:24163&r=sbm |
| By: | Najam uz Zehra Gardezi (Lahore School of Economics, Lahore, Pakistan.) |
| Abstract: | This paper analyzes the agglomeration behavior exhibited by manufacturing firms in Punjab. Employing a unique dataset, it constructs a distance-based measure of agglomeration to verify the existence of localization economies. The M function—the industry-level measure of concentration—is regressed on a number of industry characteristics that measure the presence of positive externalities. In particular, a measure of each industry’s potential for labor pooling is used to determine whether firms that experience greater fluctuations in employment are likely to be more concentrated. The results provide evidence of the importance of labor pooling in explaining the high level of concentration within industries. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:lje:wpaper:4-2013&r=sbm |
| By: | Karen Mills (Harvard Business School, General Management Unit); Brayden McCarthy (Harvard Business School) |
| Abstract: | Small businesses are core to America's economic competitiveness. Not only do they employ half of the nation's private sector workforce - about 120 million people - but since 1995 they have created approximately two-thirds of the net new jobs in our country. Yet in recent years, small businesses have been slow to recover from a recession and credit crisis that hit them especially hard. This lag has prompted the question, "Is there a credit gap in small business lending?" This paper compiles and analyzes the current state of access to bank capital for small business from the best available sources. We explore both the cyclical impact of the recession on small business and access to credit, and several structural issues in that impede the full recovery of bank credit markets for smaller loans. |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:15-004&r=sbm |