nep-sbm New Economics Papers
on Small Business Management
Issue of 2015‒01‒26
eighteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  2. Universities' Role as Knowledge Sources for Product Innovations By Kohei Nishikawa; Daisuke Kanama
  3. Relations between innovation activities and exports in food and agriculture firms By Alarcón, Silverio; Sánchez, Mercedes
  4. SMEs, financial constraints and growth By Ryan Banerjee
  5. Does agglomeration matter everywhere?: new firm location decisions in rural and urban markets By Artz, Georgeanne M.; Kim, Younjun; Orazem, Peter
  6. Intangible assets and firm-level productivity By Crass, Dirk; Peters, Bettina
  7. Mobility of ideas for innovation: The role of inventor-specific knowledge flows By Koski, Heli; Pajarinen, Mika
  8. Why Do SMEs Not Borrow More from Banks? Evidence from the People's Republic of China and Southeast Asia By Wignaraja, Ganeshan; Jinjarak, Yothin
  9. Isolation and Innovation – Two Contradictory Concepts? Explorative Findings from the German Laser Industry By M. Kudic; Wilfried Ehrenfeld
  10. Technological parks and the innovation activity of enterprises in the industrial networks – developed regions vs. the intermediate ones By Jadwiga Goraczkowska
  11. An Innovation Policy Framework: Bridging the Gap between Industrial Dynamics and Growth By Braunerhjelm, Pontus; Henrekson, Magnus
  12. Capacities and Absorptive Barriers for International R&D Spillovers through Intermediate Inputs By Neil Foster-McGregor; Johannes Pöschl; Robert Stehrer
  13. The Firm Size Effect On Performance Due To Intangible Resources By Mariia A. Molodchik; Carlos Jardon; Angel Barajas
  14. Organizational Citizenship Behaviors in Small and Medium Enterprises in the Context of Leadership Behavior By Kararti, Tuncay; Yuksekbilgili, Zeki
  15. Invisible Women: Entrepreneurship, Innovation and Family Firms in France during Early Industrialization By B. Zorina Khan
  16. Persistence of various types of innovation analysed and explained By Karlsson, Charlie; Tavssoli, Sam
  18. Cyclical Reallocation of Workers Across Large and Small Employers By Henry Hyatt; Erika McEntarfer; John Haltiwanger

  1. By: Paola Cardamone; Valeria Pupo (Dipartimento di Economia, Statistica e Finanza, Università della Calabria)
    Abstract: This paper utilizes the Efige data (2007-2009) to identify the determinants of university-industry cooperation in five European countries (France, Germany, Italy, Spain, UK). We use a probit model for firm level data which incorporates variables of innovation activities and traditional determinants of R&D cooperation. The results of analysis support the view that the relationships between firms and universities have a high degree of heterogeneity. Traditionally evaluated firm variables, such as age, exporting, belonging to a sector, process innovation, are significant in only some countries. There are also common patterns: the probability of cooperating with universities increases for innovative firms and firms with R&D capacity in almost all countries. Policies in support of R&D and size are also an important factor.
    Date: 2015–01
  2. By: Kohei Nishikawa; Daisuke Kanama
    Abstract: This study verified innovation objectives for Japanese SMEs' access to university knowledge the effects of university knowledge on innovation outcomes. The analysis found the following three points. First, Japanese SMEs do not access university knowledge strategically according to innovation objectives but decide whether to use university knowledge in consideration of such factors as proactive R&D spending, financial constraints on innovations and the effectiveness of legal means to secure profit from innovations. Next, product innovations for "improving product or service quality," "expanding product or service lineups," "replacing existing products or services" and "exploring new markets" can lead to financial successes without university knowledge, rather than with such knowledge. Finally, the utilization of university knowledge does not necessarily lead to greater technological capabilities. In Japan, science, technology and innovation policy has strongly encouraged university-industry collaboration from later 1990¡¯s aiming to support innovation activities for SMEs. The results of this study do not confirm the total effects of the policy. Length: 38 pages
  3. By: Alarcón, Silverio; Sánchez, Mercedes
    Abstract: The paper examines the innovation and export strategies of Spanish food and agriculture firms. It is based on a sample of these firms selected by PITEC for the period 2003-2010. The results show the key role of internal innovation efforts in international commercial activity. This highlights the importance of the capacity to absorb internal innovation efforts. Furthermore, process innovation has a greater effect than product innovation on the internationalization strategy, both for the agricultural and the food firms.
    Keywords: R&D, product innovation, process innovation, internationalization, agrifood firms, Research and Development/Tech Change/Emerging Technologies,
    Date: 2014–08
  4. By: Ryan Banerjee
    Abstract: The SME sector is often hailed as an important engine of economic growth. But recent research suggests that young rather than small firms are the main contributors to employment growth. This paper shows that young firms are also key contributors to profit growth across advanced economies. It them examines the impact of financial constraints on profitability across the age distribution of SMEs. We find that start-ups which report finance as their greatest constraint receive smaller new loans and evidence that financing constraints reduce start-up profitability. We do not find a similar relationship for older SMEs in pre-crisis data. Therefore, policy initiatives which ease financing constraints for start-ups could play an important role in boosting economic growth. However, following the protracted financial crisis in Europe, we also find that financial constraints reduced profitability in the cohort of more mature firms that were start-ups just before the financial crisis.
    Keywords: firm age, firm size, SMEs, financial constraints, economic growth
    Date: 2014–12
  5. By: Artz, Georgeanne M.; Kim, Younjun; Orazem, Peter
    Abstract: We test whether commonly used measures of agglomeration economies encourage new firm entry in both urban and rural markets.  Using new firm location decisions in Iowa and North Carolina, we find that measured agglomeration economies increase the probability of new firm entry in both urban and rural areas.  Firms are more likely to locate in markets with an existing cluster of firms in the same industry, with greater concentrations of upstream suppliers or downstream customers, and with a larger proportion of college-educated workers in the local labor supply.  Firms are less likely to enter markets with no incumbent firms in the sector or where production is concentrated in relatively few sectors.  The same factors encourage both stand-alone start-ups and establishments built by multi-plant firms.  Commuting decisions exhibit the same pattern as new firm entry with workers commuting from low to high agglomeration markets.  Because agglomeration economies are important for rural firm entry also, policies encouraging new firm entry should focus on relatively few job centers rather than encouraging new firm entry in every small town.
    Keywords: firm entry; education; specialization; local monopoly; industrial diversity; upstream and downstream firms; stand-alone versus expansion start-ups
    JEL: L26 M13 R11
    Date: 2014–07–05
  6. By: Crass, Dirk; Peters, Bettina
    Abstract: Firms invest huge amounts into intangible assets. This paper explores to which extent different kinds of intangible assets are conducive to firm-level productivity. Our study contributes to the literature by simultaneously comparing productivity effects of innovative capital, human capital, branding capital and organizational capital and testing whether complementarity or substitutability exists between different intangible assets. Using panel data for the period 2006-2010, our econometric estimates confirm strong positive productivity effects of human capital and branding capital. Results for innovative capital are found to be mixed. While R&D has a strong positive impact on productivity, design & licences and patents show only weak productivity enhancing effects. The same holds for organizational capital. We furthermore detect several complementarities among different kind of intangible assets. Our results are robust to various parametric (OLS, FE) and non-parametric (Olley and Pakes, Levinsohn and Petrin) productivity estimation methods.
    Keywords: Intangible capital,productivity,R&D,marketing,firm-specific human capital,organizational capital,patents,trademarks
    JEL: O33 C23 J24 L22
    Date: 2014
  7. By: Koski, Heli; Pajarinen, Mika
    Abstract: Our data from 351 innovating firms for the years 2001–2012 generally suggest that patentable ideas are strongly linked to the mobility of individual inventors, or that the knowledge flows transmitted are sticky inventor-specific. In other words, the larger the knowledge pool of an inventor entering (leaving) the firm, the more the firm’s innovation performance increases (decreases). However, our separate estimations for six different technology classes suggest that this does not apply for all technologies. Our data indicate that the knowledge flows are mobile inventor-specific for chemicals and pharmaceuticals and mechanical engineering such that the mobility of an inventor to a firm increases its innovation performance but the mobility of an inventor from a firm does not affect its innovation performance. We further find that particularly innovation coopetition (i.e., collaboration with a firm’s competitors) is an important source of knowledge spillovers. Furthermore, the magnitude of overall localized innovation activity positively relates to the firm’s innovation performance providing support for agglomeration externalities.
    Keywords: labor mobility, knowledge spillovers, patents, innovation
    JEL: J62 D22 D62 L2 O3
    Date: 2015–01–05
  8. By: Wignaraja, Ganeshan (Asian Development Bank Institute); Jinjarak, Yothin (Asian Development Bank Institute)
    Abstract: This study examines the relationship between firm characteristics and borrowing from commercial banks by small and medium-sized enterprises (SMEs) in the People's Republic of China (PRC) and five Southeast Asian economies (Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam). Analysis of microdata from enterprise surveys highlights key aspects of SME finance since the global financial crisis, including sources of credit, lender types, and collateral types. First, SMEs typically resort to internal sources rather than external finance (including borrowing from banks) and trade credit. Second, when it comes to external finance, SMEs typically use informal non-bank credit sources more than banks. Third, there is a positive and significant association between bank borrowing and certain characteristics of SMEs, notably financial audits, firm age, and export participation. Fourth, personal assets of SME owners tend to matter more as collateral for SME borrowing from banks than other collateral types. Improving credit guarantee systems, enhancing monitoring and credit scoring by banks, and widening the scope of collateral are possible ways to facilitate increased bank borrowing by SMEs.
    Keywords: credit access; firm-level survey; collateral; credit guarantees; smes
    JEL: D22 E44 F14 L16 O14
    Date: 2015–01–13
  9. By: M. Kudic; Wilfried Ehrenfeld
    Abstract: We apply a network perspective and study the emergence of core-periphery (CP) structures in innovation networks to shed some light on the relationship between isolation and innovation. It has been frequently argued that a firm’s location in a densely interconnected network area improves its ability to access information and absorb technological knowledge. This, in turn, enables a firm to generate new products and services at a higher rate compared to less integrated competitors. However, the importance of peripheral positions for innovation processes is still a widely neglected issue in literature. Isolation may provide unique conditions that induce innovations which otherwise may never have b een invented. Such innovations have the potential to lay the ground for a firm’s pathway towards the network core, where the industry’s established technological knowledge is assumed to b e lo cated. The aim of our paper is twofold. Firs tly, we propose a new CP indicator and apply it to analyze the emergence of CP patterns in the German laser industry. We employ publicly funded Research and Development (R&D) cooperation pro ject data over a period of more than two decades. Secondly, we explore the paths on which firms move from isolated p ositions towards the core (and vice versa). Our exploratory results op en up a number of new research questions at the intersection between geography, economics and network research.
    Keywords: innovation networks, core-p eriphery, laser industry
    JEL: C45 D85 O31 O32
    Date: 2015–01
  10. By: Jadwiga Goraczkowska (Uniwersytet Zielonogorski, Poland)
    Abstract: Currently, technological parks constitute the most organisational and conceptually developed type of innovation centres and entrepreneurship. This results in the fact that they can be encountered in all highly developed countries in the world. They are also formed in the catching-up countries. However, one should consider whether the stimulation of innovation in the countries, which are not based on knowledge through institutional solutions used in the developed countries will turn out to be effective. Because between these countries there is a technological gap. The aim of the article was therefore to determine, using the probit modelling, the direction and strength of technological parks on the innovation activity. The study covered two provinces: Silesian, which is one of the most developed regions in Poland and Pomeranian with the intermediate industrial system. The influence of technological parks on innovation was determined based on the survey conducted in 1453 industrial enterprises. The main conclusions are brought down to the following theses: (1) using the technological parks increases the chance for the implementation of new solutions by enterprises, (2) parks to a greater extent stimulate the innovation activity in the developed province, (3) enterprises entering in the cross-regional network relations favours the selection of the technological park as the catalyst for innovation processes.
    Keywords: innovation, industry, technological parks, network
    JEL: L60 O31 O32
    Date: 2014–12
  11. By: Braunerhjelm, Pontus (Swedish Entrepreneurship Forum); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: This paper examines policy measures that foster the creation of innovations with high inherent potential and that simultaneously provide the right incentives for individuals to create and expand firms that disseminate such innovations in the form of highly valued products. In so doing, we suggest an innovation policy framework based on two pillars: (i) the accumulation, investment, and upgrading of knowledge and (ii) the implementation of mechanisms that enable knowledge to be exploited such that growth and societal prosperity are encouraged. Knowledge is a necessary but far from sufficient condition for growth. To secure industrial dynamics and growth in the long term, institutions must be designed both to encourage sophisticated knowledge investments and to stimulate the creation, diffusion and productive use of knowledge in all sectors of the economy. We argue that the latter area has been overlooked in the policy discussion and that a coherent innovation policy framework must include tax policy, labor market regulation, savings channeling, competition policy, housing market regulation, and infrastructure to foster growth and future prosperity.
    Keywords: Entrepreneurship; Innovation; Institutions; Innovation policy; R&D; Technology transfer; University-industry relations
    JEL: J24 O31 O32 O57
    Date: 2015–01–12
  12. By: Neil Foster-McGregor (The Vienna Institute for International Economic Studies, wiiw); Johannes Pöschl (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract Trade in goods and services is likely to be an important channel for international knowledge diffusion. This paper considers the extent of R&D spillovers through intermediate inputs for a sample of up to 40 developed and developing countries. Results suggest that such spillovers are present and are economically important. We find that countries and industries initially further behind the technological frontier enjoy stronger foreign R&D spillovers. Furthermore, foreign R&D spillovers are stronger in countries with greater absorptive capacity as measured by average years of secondary schooling and R&D spending. In terms of absorption barriers, the results are mixed With the exception of regulations on temporary workers we find that stronger labour market regulation and greater union density is associated with lower foreign R&D spillovers. The evidence for other absorption barriers related to product market, financial and investment regulation provide however no evidence of low regulation encouraging foreign R&D spillovers, with - in some cases - the reverse being found to hold true. Finally, we find that stronger levels of IPR protection can limit the extent of foreign R&D spillovers, possibly by limiting the ability to copy and borrow technology from abroad.
    Keywords: R&D spillovers, intermediates trade, productivity
    JEL: F15 O14 O19
    Date: 2014–10
  13. By: Mariia A. Molodchik (National Research University Higher School of Economics); Carlos Jardon (National Research University Higher School of Economics); Angel Barajas (National Research University Higher School of Economics)
    Abstract: The paper explores the effect of firm size on the relation between intangible resources and companies’ performance (ROA). The authors identify six types of intangibles: human resources and management capabilities, innovation and internal process capabilities and customer loyalty and networking capabilities. The study provides econometric justification using a database of more than 1400 European public companies. The time period for the investigated data covers ten years from 2004 to 2013. A dummy regression analysis was applied for empirical testing. The findings revealed that the size of a company matters with regard to the employment of intangible resources and for a performance based on intangibles
    Keywords: intangibles, performance, SME, large companies, European companies, ROA, dummy regression.
    JEL: O30 F L L60 L63
    Date: 2014
  14. By: Kararti, Tuncay; Yuksekbilgili, Zeki
    Abstract: The purpose of this paper is to find out “What is the effect of different types of leadership behavior on organizational citizenship behavior shown by employees within small and medium enterprises” Past literature research in the field of small and medium enterprises shows that SMEs research is related to the human research management. Most of past research about leadership behavior has been done on large organization. A little level of research about leadership behavior has been done on small and medium level enterprises. The question arises that leadership behavior on large organizational are same as in small and medium enterprises or different. Due to the personal and close relationship, short communication, informality and hierarchy structure cause the leader to behave in different way within small and medium size enterprises. These factors have a different effect by the leader toward their employees which is helpful to motivate the employees to perform beyond the requirement. It is expected that transformational leaders have a strong and positive effect on organizational citizenship behavior shown by employees as transformational leader encourage the employees in order to perform beyond the requirement. It is also expected that contingent rewarding leadership behavior have positive effect on employees to show organizational citizenship behavior because after getting reward upon their performance, they feel more motivated to perform more than the requirement. Management by exception has two categories which are active behavior and passive behavior. It is expected that management by exception active have a positive effect because he works in an active way. He can find mistakes, failure and errors before its effect and try to solve these mistakes, failure and error as soon as possible. It is expected that management by exception passive have negative behavior because passive leader waiting for mistakes, failures and errors. Trust is also an important factor between leadership behavior and employees. It is accepted that some certain degree of trust motive the employees to show organizational citizenship behavior. Next to this it also help the employees to perform beyond the requirement. The data were collected from the past researcher in order to find out results. Past research shows that when firm face serious problems or mistake, errors or any failure leader should be there in order to solve problems, mistakes, failure and error. Leader in small and medium enterprise are required to give the authority to the employees in order to solve problems themselves. Leader should also create certain level of trust which is encouraging the employees to show organizational citizenship behavior. Most of leader in small and medium enterprises do not know about their effect on employees. This research is based on past research. This research make aware the leader, how to influence the employees to show organizational citizenship behavior.
    Keywords: leadership behavior, leadership, leadership in SME
    JEL: M12 M14
    Date: 2014–07–01
  15. By: B. Zorina Khan
    Abstract: Family firms are typically associated with negative characteristics, including lower tendencies towards innovation, a higher risk of failure, and inefficiencies deriving from nepotism among family members, criticisms which are even greater when the company is handed over to a female relative. Women in business have generally been presented as petty traders and passive investors, whose entrepreneurial activities were scarce because of such restrictions as limited human capital, culture, market imperfections, and institutional biases. The French economy has similarly been faulted for the prevalence of family firms during the nineteenth century, and for disincentives for the integration of women in the business sector. These issues are explored using an extensive sample of women who obtained patents and prizes at industrial exhibitions during early industrialization. The empirical evidence indicates that middle-class women in France were extensively engaged in entrepreneurship and innovation, and that their commercial efforts were enhanced by association with family firms. Their formerly invisible achievements suggest a more productive role for family-based enterprises, as a means of incorporating relatively disadvantaged groups into the market economy as managers and entrepreneurs.
    JEL: L2 L26 N13 N8 O14 O3
    Date: 2015–01
  16. By: Karlsson, Charlie (Jönköping International Business School (JIBS), Blekinge Institute of Technology & Centre of Excellence for Science and Innovation Studies (CESIS)); Tavssoli, Sam (Blekinge Institute of Technology)
    Abstract: This paper analyses the persistency in innovation behaviour of firms. Using five waves of the Community Innovation Survey in Sweden, we have traced the innovative behaviour of firms over a ten-year period, i.e. between 2002 and 2012. We distinguish between four types of innovations: process, product, marketing, and organizational innovations. First, using Transition Probability Matrix, we found evidence of (unconditional) state dependence in all types of innovation, with product innovators having the strongest persistent behaviour. Second, using a dynamic probit model, we found evidence of “true” state dependency among all types of innovations, except marketing innovators. Once again, the strongest persistency was found for product innovators.
    Keywords: persistence; innovation; product innovations; process innovations; market innovations; organizational innovations; state dependence; heterogeneity; firms; Community Innovation Survey
    JEL: D22 L20 O31 O32
    Date: 2015–01–16
    Abstract: This paper analyzes the effect of firm size, capital intensity, profitability and agribusiness sector classification on a firm’s probability and intensity (i.e. the ratio of export sales to total sales) of exporting with a Tobit model. Our results show that Firm Size, Capital Intensity and Profitability have quite small negative effects on the export probability and intensity of U.S. agribusiness firms. In contrast, to which agribusiness sector a firm belongs show strong and robust impact on its export behavior. The agribusiness sectors we identified imply the comparative advantages of U.S. agriculture.
    Keywords: Agribusiness, Export, Profitability, Self-selection, Agribusiness, International Relations/Trade,
    Date: 2015
  18. By: Henry Hyatt (US Census Bureau); Erika McEntarfer (US Census Bureau); John Haltiwanger (University of Maryland)
    Abstract: Search-and-matching models with on-the-job search and firm size yield the prediction that job-to-job flows reallocate workers from smaller to larger firms. Recent papers have extended such models to explain the cyclicality of employment at large vs. small firms. In this paper, we use linked employer-employee data for the U.S. to provide direct evidence on worker reallocation by firm size. We find that job-to-job flows do not generally move workers from smaller to larger employers. Instead, we show that workers moving directly from one job to another more frequently move from large firms to small firms than the reverse. This is despite the fact that large businesses rely more on poaching workers from other firms when hiring and small businesses hire largely from the pool of nonemployed, results that are consistent with the theory. Regarding the cyclical nature of this reallocation, we find that poaching hires are highly procyclical for both large and small firms. Yet despite the cyclical nature of poaching, net reallocation across firm size classes via poaching is relatively stable across the business cycle. The implication is that net poaching by size class is relatively small in magnitude at all phases of the cycle. We find more supportive evidence of the predictions of recent theories regarding net poaching between small and large firms in times of tight labor markets when we focus on mature firms. Even here however the quantitative effects are small.
    Date: 2014

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