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on Small Business Management |
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Issue of 2015‒02‒05
sixteen papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | Han, Junghee (Chonnam National University); Heshmati, Almas (Jönköping University, Sogang University) |
| Abstract: | This paper analyzes the patent propensity as an outcome of innovative activities of regional SMEs. To achieve the aims, we apply robust regression analysis to estimate the models to test 5 research hypotheses using 263 firm level data located at Gwangju region in Korea. Our empirical results show that a firm's industry characteristics, such as machinery and automotive parts industry, is negatively related with propensity to patent innovation. Also, unlike expectations, the InnoBiz firms designated as innovative SMEs by the government are not performing differently than general firms. Only the CEO's academic credentials are positively related with propensity to patent. From the findings, we can conclude that patenting propensity is not directly related with a firm's characteristics but mainly to CEO's managerial strategy. Also, we cannot find evidence for policy effectiveness from public support given to InnoBiz firms as part of the state policy to nurture photonic industry to boost regional economic development. Given the lack of strong policy effects, a new industry policy should be considered to actively promote SMEs innovativeness. |
| Keywords: | patent propensity, photonic industry, SMEs growth, R&D, innovation, InnoBiz, Korea |
| JEL: | C51 D22 O31 O32 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8790&r=sbm |
| By: | Hombert, Johan; Schoar, Antoinette S; Sraer, David; Thesmar, David |
| Abstract: | We study a large-scale French reform that provided generous downside insurance for unemployed individuals starting a business. We study whether this reform affects the composition of people who are drawn into entrepreneurship. New firms started in response to the reform are, on average, smaller, but have similar growth expectations and education levels compared to start-ups before the reform. They are also as likely to survive or to hire. In aggregate, the effect of the reform on employment is largely offset by large crowd-out effects. However, because new firms are more productive, the reform has the impact of raising aggregate productivity. These results suggest that the dispersion of entrepreneurial abilities is small in the data, so that the facilitation of entry leads to sizable Schumpeterian dynamics at the firm-level. |
| Keywords: | Crowding out; Entrepreneurship; Unemployment |
| JEL: | L26 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10294&r=sbm |
| 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: | D20 E24 L25 L29 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:60286&r=sbm |
| By: | Brown, James R. (Department of Finance, Iowa State University); Martinsson, Gustav (Institute for Financial Research (SIFR) & Centre of Excellence for Science and Innovation Studies (CESIS)); Petersen, Bruce C. (Department of Economics, Washington University in St. Louis) |
| Abstract: | Information problems and lack of collateral value should make R&D more susceptible to financing frictions than other investments, yet existing evidence on whether financing constraints limit R&D is decidedly mixed, particularly in studies of non-U.S. firms. We study a large sample of European firms and also find little evidence of binding finance constraints when we estimate standard investment-cash flow regressions. However, we find strong evidence that the availability of finance matters for R&D once we directly control for: i) firm efforts to smooth R&D with cash reserves, and ii) firm use of external equity finance. Our study provides a framework for evaluating financing constraints when firms rely extensively on external finance and endogenously manage buffer stocks of liquidity to keep investment smooth, and our findings show that controlling for this smoothing behavior is critical for uncovering the full effect of financing constraints. Our findings also indicate a major role for external equity in financing R&D, highlighting a causal channel through which stock market development and liberalization can promote economic growth by increasing firm-level innovative activity. |
| Keywords: | Financing innovation; R&D financing constraints; Finance and growth; Stock market development; Value of liquidity |
| JEL: | G31 G32 |
| Date: | 2015–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0394&r=sbm |
| By: | Kristoffer Moeller |
| Abstract: | Knowledge based firms like IT companies do neither have a capital- nor a land intensive production. They predominantly rely on qualified labour and increasingly depend on the location of its (potential) employees. This implies that it is more likely that firms follow workers rather than the other way around. Contributing to the literature of firm location and consumer cities I empirically test the amenity oriented firm location hypothesis. In particular I investigate whether Berlin internet start-up firms, representing a footloose knowledge-based service industry, locate in urban amenity-rich places. Identification builds on the sudden fall of the Berlin Wall. The intra-city analysis yields a significant impact of urban amenities on the location of internet start-up. A comparison with other service industries suggests that amenities are significant to the location choice of creative sectors whereas no effect can be observed for non-creative firms. |
| Keywords: | firm location; urban amenities; consumer city; internet start-ups; entrepreneurs; Berlin |
| JEL: | D20 L20 R30 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:57875&r=sbm |
| By: | Neil Lee; Max Nathan |
| Abstract: | A growing body of research is making links between diversity and the economic performance of cities and regions. Most of the underlying mechanisms take place within firms, but only a handful of organization-level studies have been conducted. We contribute to this underexplored literature by using a unique sample of 7,600 firms to investigate links among cultural diversity, innovation, entrepreneurship, and sales strategies in London businesses between 2005 and 2007. London is one of the world's major cities, with a rich cultural diversity that is widely seen as a social and economic asset. Our data allowed us to distinguish owner/partner and wider workforce characteristics, identify migrant/minority-headed firms, and differentiate firms along multiple dimensions. The results, which are robust to most challenges, suggest a small but significant “diversity bonus” for all types of London firms. First, companies with diverse management are more likely to introduce new product innovations than are those with homogeneous “top teams.” Second, diversity is particularly important for reaching international markets and serving London's cosmopolitan population. Third, migrant status has positive links to entrepreneurship. Overall, the results provide some support for claims that diversity is an economic asset, as well as a social benefit. |
| Keywords: | cultural diversity; innovation; entrepreneurship; management; immigration; economic development; diasporas; cities; London |
| JEL: | N0 |
| Date: | 2013–07–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:52363&r=sbm |
| By: | Carlo Altomonte; Tommaso Aquilante; Gábor Békés; Gianmarco I. P. Ottaviano |
| Abstract: | We use a representative and cross-country comparable sample of manufacturing firms (EFIGE) to document patterns of interaction among firm-level internationalization, innovation and productivity across seven European countries (Austria, France, Germany, Hungary, Italy, Spain, United Kingdom). We find strong evidence of positive association among the three firm-level characteristics across countries and sectors. We also find that the positive correlation between internationalization and innovation survives after controlling for productivity, with some evidence of causality running from the latter to the former. Our analysis suggests that export promotion per se is unlikely to lead to sustainable internationalization because internationalization goes beyond export and because, in the medium-to-long term, internationalization is driven by innovation. We recommend coordination and integration of internationalization and innovation policies ‘under one roof’ at both the national and EU levels, and propose a bigger coordinating role for EU institutions. |
| Keywords: | Internationalization; innovation; firm-level data; exports; foreign direct investment; outsourcing |
| JEL: | F13 F23 O31 O38 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:60275&r=sbm |
| By: | Ross Brown; Neil Lee |
| Abstract: | How do we ensure that companies with the potential to grow do so? Does a lack of finance prevent firms from growing and benefiting the wider economy? These are important questions if we are looking for economic growth. There has been much focus and debate on the funding issues affecting small and medium sized entities (SMEs), but this report takes that debate a stage further by investigating ‘high growth SMEs’. One of the 14 published policies of the Department of Business, Innovation and Skills (BIS) in the UK is ‘Making it easier to set up and grow a business’. This report aims to provide evidence for the debate on how this policy can be achieved and covers both supply and demand issues for high growth SMEs. It does so by a review of the existing literature, an analysis of the Small Business Survey, undertaken by BIS, and a series of in-depth interviews with a small number of high growth SMEs. The study finds that although high growth SMEs are 9% more likely to apply for finance than other SMEs, they are no more or less likely to be successful. Importantly, these firms are identified as highly ‘reluctant borrowers’ rather than ‘discouraged borrowers’ – that is they are just unwilling to borrow, even to fund growth. This reluctance stems from a lack of trust of banks and a resistance to any dilution in their own autonomy. A number of policy implications are drawn from this research by the authors, with recommendations for both the supply and the often neglected demand-side of funding. Most importantly, though, there is a need to consider how ‘reluctant borrowers’ may be transformed into ‘willing borrowers’ and how demand for finance may be stimulated in the future. |
| JEL: | N0 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:57264&r=sbm |
| By: | Bianchini, Stefano; Krafft, Jackie; Quatraro, Francesco; Ravix, Jacques (University of Turin) |
| Abstract: | This paper investigates the relationship between corporate governance (CG) and innovation according to firms’ age by combining insights from the recent strand of contributions analysing CG and innovation with the lifecycle literature. We find a negative relationship between CG and innovation which is stronger for young firms than for mature ones. The empirical analysis is carried out on a sample of firms drawn from the ISSR isk Metrics database and observed over the period 2003 -2008. The parametric methodology provides results that are consistent with the literature and supports the idea that mature firms are better off than young ones. We check for possible non-linearities by implementing a non-parametric analysis and suggest that the negative relationship between CG and innovation is mostly driven by higher values of CG. |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:201504&r=sbm |
| By: | Brunow, Stephan (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Grünwald, Luise |
| Abstract: | "Theoretical and empirical contributions on export behavior highlight the importance of firms' productivity and their levels of economies of scale on firms' export success in 'foreign' markets. In the context of agglomeration economies, firms enjoy productivity gains when they are located close to competitors or upstreaming industries and they benefit from knowledge spillovers and other positive externalities. In such a stimulating environment, firms become more prone to be exporters. Beyond the role played by externalities, firms may benefit when they employ a diverse workforce and when the interaction of distinct knowledge and related problem-solving abilities increases productivity and secures export success. In this paper, we ask whether German firms (i. e., establishments) benefit from localization and urbanization externalities and face higher export proportions. We also control for a variety of establishment characteristics and workforce diversity. For this purpose, a comprehensive German data set that combines survey data and administrative data is used. While controlling for firm heterogeneity in a fractional response model, we provide evidence that manufacturing establishments and smaller establishments (up to 250 employees) benefit most from externalities and especially from knowledge spillover. There is weak evidence supporting the benefit of workforce diversity; however, that factor could explain between-establishment variation." (Author's abstract, IAB-Doku) ((en)) |
| Date: | 2015–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabdpa:201503&r=sbm |
| By: | Foellmi, Reto; Legge, Stefan; Tiemann, Alexa |
| Abstract: | This paper examines how trade liberalization affects investments in R&D at the firm level. We provide a model with entrepreneurs differing in their wealth endowment, causing them to rely differently on external funds. In the presence of capital market imperfections, this implies heterogeneous access to external funds such that poor entrepreneurs run smaller firms, are less likely to invest in R&D, and more likely to exit the market. Decreasing trade costs resulting from tariff reductions exacerbate these characteristics. Using firm-level panel data on seven Latin American countries for 2006 and 2010, we find support for our theoretical predictions. While recent studies emphasize a positive impact of trade liberalization on firms' productivity-enhancing activities, we provide novel evidence showing that financial constraints can impair the effect on R&D efforts. These results suggest that imperfect capital markets can prevent welfare gains from trade liberalization to materialize. |
| Keywords: | Financial constraints, innovation, trade liberalization |
| JEL: | F14 O12 O16 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2015:03&r=sbm |
| By: | Blyde, Juan; Iberti, Gonzalo; Mussini, Micaela |
| Abstract: | A growing number of studies that look at the relationship between innovation and exports find that more innovation tends to allow firms to export more. But very little is known about the heterogeneous impacts of innovation on exports. Since innovation is not a costless activity, it is important to know the specific situations in which a firm most likely needs to innovate to raise its exports. Using data from Chile, we combine information on innovation activities at the firm level with a rich dataset on exports at the transaction level. We find that the firms that engage in innovation tend to export more than other firms because they are able to sell goods and target markets that reward innovation. We show that the goods and markets in which innovative exporters outperform non-innovative exporters are those where innovation can lead to substantial differences in terms of quality. Innovative firms do not have an edge in exporting goods and in targeting markets that do not reward innovation. In particular, innovative firms do not outperform non-innovative firms when exporting goods and penetrating markets in which differentiation in terms of quality is not possible or not relevant. |
| Keywords: | Innovation, exports, product quality |
| JEL: | F10 F14 O30 |
| Date: | 2015–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61574&r=sbm |
| By: | Mauricio Vargas |
| Abstract: | As emphasized by Hausmann, Rodrik and Velasco, the policy challenge of boosting growth requires prioritization and identifying what are the most binding constraints. This paper draws on firm-level data from the World Bank Enterprise Survey, which suggests that the obstacles for the functioning of firms is related to firm size. Recognizing the potential endogeneity and simultaneity between firms' constraints and firm size, we implement an Ordered-Probit model with a potential categorical endogenous regressor to estimate, for the case of Bolivia, the conditional probability of facing obstacles given the firm size category, while controlling for other factors. The results confirm the importance of allowing for the roles of firm size in identifying constraints and suggest priorities for policies to remove constraints to economic performance. |
| Keywords: | Economic growth;Business enterprises;Bolivia;Econometric models;Firm Size, Firms’ Constraints, IV-Oprobit, Bolivia |
| Date: | 2015–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:15/3&r=sbm |
| By: | Beata Glinkowska (Uniwersytet Lodzki) |
| Abstract: | This article applies to the process of organizational knowledge acquisition by managers and specialists with possesses manager license. In the theoretical part explained concepts of knowledge, knowledge management, knowledge sources, the step of creating and acquiring knowledge. The research part focuses on the presentation and analysis of obtained results of research performed by the author. |
| Keywords: | small and medium- sized enterprises, manager, knowledge, absorption of knowledge, knowledge acquisition |
| JEL: | L21 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:pes:wpaper:2015:no3&r=sbm |
| By: | Buzard, Kristy (Syracuse University); Carlino, Gerald A. (Federal Reserve Bank of Philadelphia); Hunt, Robert M. (Federal Reserve Bank of Philadelphia); Carr, Jake (The Ohio State University); Smith, Tony E. (University of Pennsylvania) |
| Abstract: | We employ a unique data set to examine the spatial clustering of private R&D labs, and, using patent citations data, we provide evidence of localized knowledge spillovers within these clusters. Jaffe, Trajtenberg, and Henderson (1993, hereafter JTH) provide an aggregate measure of the importance of knowledge spillovers at either the state or metropolitan area level. However, much information is lost regarding differences in the localization of knowledge spillovers in specific geographic areas. In this article, we show that such differences can be quite substantial. Instead of using fixed spatial boundaries, we develop a new procedure — the multiscale core-cluster approach — for identifying the location and size of specific R&D clusters. This approach allows us to better capture the geographic extent of knowledge spillovers. We examine the evidence for knowledge spillovers within R&D clusters in two regions: the Northeast Corridor and California. In the former, we find that citations are from three to six times more likely to come from the same cluster as earlier patents than in comparable control samples. Our results are even stronger for labs located in California: Citations are roughly 10 to 12 times more likely to come from the same cluster. Our tests reveal evidence of the attenuation of localization effects as distance increases: The localization of knowledge spillovers is strongest at small spatial scales (5 miles or less) and diminishes rapidly with distance. At the smallest spatial scales, our localization statistics are generally much larger than JTH report for the metropolitan areas included in their tests. |
| Keywords: | Spatial clustering; R&D; Knowledge spillover; |
| JEL: | O31 R12 |
| Date: | 2015–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:15-3&r=sbm |
| By: | Garry Gabison (European Commission – JRC - IPTS); Annarosa Pesole (European Commission – JRC - IPTS) |
| Abstract: | This report discusses models of distributed innovation and how they differ in their nature, effects, and origins. Starting from Open Innovation, the paper analyses its methodological evolution, some of its applications, and the opportunities to apply it in a social context. Open Innovation has gained traction in the last ten years and because of this popularity, Open Innovation has been endowed with numerous meanings. This paper dives into the large literature associated with Open Innovation. First, this paper describes Open Innovation. Second, it explains how Open Innovation has evolved from a linear model of innovation to a model that includes feedback loops. Third, it describes the parallel evolution of Open Innovation and User Innovation, where users are actively involved. This new perspective on the user involvement further contributes to the evolution of Open Innovation into Open Innovation 2.0. Finally, the paper considers the role of Open Innovation in tackling societal challenges and how and if this new innovation process could help Social Innovation to find ways to scale up and reproduce successful results. |
| Keywords: | Ditributed Innovation, Open Innovation, User Innovation |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc93533&r=sbm |