nep-sbm New Economics Papers
on Small Business Management
Issue of 2015‒02‒28
sixteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Does Innovation Mediate Good Firm Performance? By Llanto, Gilberto M. ; del Prado, Fatima
  2. Collaboration and Innovation Speed : Evidence from a Prize Data-Set, 1955-2010 By Shimizu, Hiroshi ; Hoshino, Yusuke
  3. "Innovation Height and Firm Performance:Using Innovation Survey from Japan" By Daiya Isogawa ; Kohei Nishikawa ; Hiroshi Ohashi
  4. Innovation and export in SMEs: the role of relationship banking By Serena Frazzoni ; Maria Luisa Mancusi ; Zeno Rotondi ; Maurizio Sobrero ; Andrea Vezzulli
  5. SME Internationalization through Global Value Chains and Free Trade Agreements: Malaysian Evidence By Arudchelvan, Menaka ; Wignaraja, Ganeshan
  6. Academic Spinoffs New Venture Teams and Performance: Insights from Faultline Theory By Cyrine Ben-­-Hafaïedh ; Alessandra Micozzi ; Pierpaolo Pattitoni
  7. Innovation and Trade in the Presence of Credit Constraints By Foellmi, Reto ; Legge, Stefan ; Tiemann, Alexa
  8. Innovation and Productivity in Services: Evidence from Germany, Ireland and the United Kingdom By Bettina Peters ; Rebecca Riley ; Iulia Siedschlag ; Priit Vahter ; John McQuinn
  9. Simulating micro behaviours and structural properties of knowledge networks: toward a “one size fits one” cluster policy By Joan Crespo ; Frédéric Amblard ; Jérôme Vicente
  10. Inter-temporal patterns of R&D collaboration and innovative performance By Belderbos R.A. ; Carree M.A. ; Lokshin B. ; Fernandez J.
  11. FDI and Heterogeneous Performance of European Enterprises By Valeria Gattai ; Giorgia Sali
  12. Nowcasting and Placecasting Entrepreneurial Quality and Performance By Jorge Guzman ; Scott Stern
  13. Intangible investments and innovation propensity. Evidence from the Innobarometer 2013 By Sandro Montresor ; Antonio Vezzani
  14. High-Growth Firms: Stylized Facts and Conflicting Results By Fabio Moreno ; Alex Coad
  15. The Role of Firm RD Effort and Collaboration as Mediating Drivers of Innovation Policy Effectiveness By Giovanni Cerulli ; Roberto Gabriele ; Bianca Poti'
  16. The internet as a general-purpose technology : firm-level evidence from around the world By Clarke, George R.G. ; Qiang, Christine Zhenwei ; Xu, Lixin Colin

  1. By: Llanto, Gilberto M. ; del Prado, Fatima
    Abstract: Private firms invest in physical capital and human resource but they are also advised to invest in innovations to be more productive and profitable. Innovations refer to the development, deployment, and economic utilization of new products, processes, and services. It is important for firms to know whether investment in innovations is investment well-spent. Our empirical results provided an affirmative response to the question raised in this paper: "Does innovation mediate good firm performance?" Product and process innovations lead to increase in sales and profits and improve labor productivity. The paper also showed that firm size, age, and foreign equity are important factors leading firms to innovate.
    Keywords: innovation, Philippines, process innovation, product innovation, firm performance, small and medium enterprises (SMEs)
    Date: 2015
  2. By: Shimizu, Hiroshi ; Hoshino, Yusuke
    Abstract: The anecdotal evidence has indicated that inter-organizational collaboration increases R&D productivity by providing access to outside complimentary assets for firms. Focusing on the length of time from launching R&D project to realizing its R&D outcomes, we call it innovation speed, this paper examines a prize data-set on industrial technology, including 434 award-winning R&D projects, and empirically examines the relationship between inter-organizational collaboration and innovation speed and explores how the relationship varies across different types of collaborations. After controlling time periods, technological areas, prize categories, and collaboration types, the data reveal that inter-organizational collaboration among non-business group firms is associated with shorter innovation speed. The curtailed time periods vary from 19.9% to 32.2% according to the models. However, such accelerated time periods are not observed in other collaboration types such as inter-firm collaboration and firm-academic collaboration.
    Date: 2015–01
  3. By: Daiya Isogawa (Faculty of Economics, The University of Tokyo ); Kohei Nishikawa (Faculty of Economics, Setsunan University ); Hiroshi Ohashi (Faculty of Economics, The University of Tokyo )
    Abstract: This study evaluates the economic impact of product innovation by using firm-level data obtained from the Community Innovation Survey conducted in Japan. It accounts for possible technological spillovers from innovation activities, and examines the extent to which new-to-market product innovation contributes to firm performance. Casual observations on the data reveal that new-to-market product innovation is likely to (1) contribute higher sales for the firm with less cannibalization with existing products; (2) generate higher degree of technological spillovers to other innovations; and (3) be brought by those firms that corroborate with universities and other academic institutions. An econometric analysis on simultaneous equations confirms these observations. Policy implications are also discussed. --
    Date: 2015–02
  4. By: Serena Frazzoni ; Maria Luisa Mancusi (Università Cattolica del Sacro Cuore ; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore ); Zeno Rotondi ; Maurizio Sobrero ; Andrea Vezzulli
    Abstract: This paper assesses the role of relationship lending in explaining simultaneously the innovation activity of Small and Medium Enterprises (SME), their probability to export (i.e. the extensive margin) and their share of exports on total sales conditional on exporting (i.e. the intensive margin). We adopt a measure of informational tightness based on the ratio of firm’s debt with its main bank to firm’s total assets. Our results show that the strength of the bank-firm relation has a positive impact on both SME’s probability to export and their export margins. This positive effect is only marginally mediated by the SME’s increased propensity to introduce product innovation. We further discuss the financial and non-financial channels through which the intensity of bank-firm relationship supports SMEs’ international activities.
    Keywords: margins of export, bank-firm relationships, innovation, localized knowledge spillovers
    JEL: F10 G20 G21 O30
    Date: 2014–11
  5. By: Arudchelvan, Menaka (Asian Development Bank Institute ); Wignaraja, Ganeshan (Asian Development Bank Institute )
    Abstract: Growing internationalization of firms in Asia through participation in global value chains (GVCs) and free trade agreements (FTAs) has focused attention on small and medium-sized enterprises (SMEs). Yet there is scant literature on the characteristics of SMEs involved in GVCs and FTAs. Malaysia is reputed for its engagement in GVCs and is actively pursuing FTAs. Drawing on a survey of Malaysian enterprises, this paper examines the characteristics of SMEs in GVCs and FTAs and explores the policy implications. It finds that even among SMEs, firm size matters for participation in GVCs and FTAs. But size is not the whole story for SME internationalization. Licensing of foreign technology and investment in research and development are also positively associated with SMEs joining GVCs. Furthermore, increased exposure to international trade, knowledge of FTA provisions and central location positively affects the use of FTAs by SMEs. More business support for SMEs can help them to engage in GVCs and FTAs.
    Keywords: internationalization; global value chains. utilization of free trade agreement; firm-level analysis
    JEL: F13 F14 F15
    Date: 2015–02–18
  6. By: Cyrine Ben-­-Hafaïedh (IÉSEG School of Management,France ); Alessandra Micozzi (Università Politecnica delle Marche, Italy ); Pierpaolo Pattitoni (University of Bologna, Italy )
    Abstract: Academic spin-offs (ASOs) are particular new technology-based firms (NTBFs) originating from public or university-based research institutions. One of their major challenges is to integrate scientific knowledge with the commercial knowledge in the entrepreneurial team (ET). The effect of ET composition on ASO performance has generally been examined through human capital theory or upper echelons theory. These traditional approaches have their merits and generally conclude to the necessity to add surrogate (external) entrepreneurs to the core team of academics. However, this would create a faultline, i.e. a divide between these two subgroups that negatively impacts team processes, and might explain why these artificially created ETs are not as successful as expected. We argue that a combination of these different lenses on ET composition and its relationship with performance may lead to a better understanding. Drawing on the human capital and upper echelons theories on the one hand and on the faultline theory on the other, we develop interaction hypotheses to test for their combined effect on a sample of 172 Italian ASOs. Our results permit to reveal the significant impact on performance of subtle compositional dimensions of the core academic ET that would have otherwise gone unnoticed. They also allow us to stress the importance of cognitive distance optimizers and show how they contribute not only to prevent the negative effects of diversity but also to create the preconditions for the positive effects. Theoretical and practical implications are drawn and future avenues of research suggested.
    Keywords: Entrepreneurial teams; faultline theory; human capital theory; academic spin-offs;performance
    Date: 2015–02
  7. By: Foellmi, Reto ; Legge, Stefan ; Tiemann, Alexa
    Abstract: This paper examines how trade liberalization affects investments in R&D at the firm level. In a model where entrepreneurs are heterogeneous in their wealth endowment, they 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. To address potential endogeneity concerns, we verify our findings using external financial dependence based on U.S. firms. 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: 2015–02
  8. By: Bettina Peters (Centre for European Economic Research (ZEW) ); Rebecca Riley (National Institute for Economic and Social Research of London ); Iulia Siedschlag (European Commission JRC-IPTS ); Priit Vahter (University of Tartu ); John McQuinn (Cambridge Econometrics )
    Abstract: This paper examines the links between innovation and productivity in service enterprises. For this purpose, we use micro data from the Community Innovation Survey 2008 in Germany, Ireland and the United Kingdom, and estimate an augmented structural model. Our results indicate that innovation in service enterprises is linked to higher productivity. In all three countries analysed, among the innovation types that we consider, the strongest link between innovation and productivity was found for marketing innovations. Our empirical evidence highlights the importance of internationalisation in the context of innovation outputs in all three countries. The determinants of innovation in service enterprises appear remarkably similar to the determinants of innovation in manufacturing enterprises.
    Keywords: Internationalisation of services; innovation; productivity
    JEL: L25 O31
    Date: 2014
  9. By: Joan Crespo ; Frédéric Amblard ; Jérôme Vicente
    Abstract: The economic return of cluster policies has been recently called into question. Essentially based on a “one size fits all” approach consisting in boosting R&D collaborations and reinforcing network density in regions, cluster policies are suspected to have failed in reaching their objectives. The paper proposes to go back to the micro foundations of clusters in order to disentangle the links between the long run performance of clusters and their structural properties. We use a simple agent-based model to shed light on how individual motives to shape knowledge relationships can give rise to emerging structures with different properties, which imply different innovation and renewal capabilities. The simulation results are discussed in a micro-macro perspective, and the findings suggest reorienting cluster policy guidelines towards more targeted public-funded incentives for R&D collaboration.
    Keywords: cluster policy, networks, micro-behaviours, structural properties, agent-based model
    JEL: B52 O32 R12 Z13
    Date: 2015–02
  10. By: Belderbos R.A. ; Carree M.A. ; Lokshin B. ; Fernandez J. (GSBE )
    Abstract: While prior studies have investigated the effect of collaborative RD with different partner types suppliers, customers, competitors and research institutions universities on firms innovative performance, the implications of dynamic patterns in these collaborations have not received attention. In a large panel of Spanish innovating firms operating in a broad range of industries during the period 2004-2011, we examine the differential effects of recently formed, persistent, and recently discontinued collaboration on innovative performance. Persistence is the most common pattern of collaboration, while discontinuities are most often observed for competitor collaboration. We find that it is persistent collaboration that has a systematically positive effect on performance. With the exception of recently formed collaboration with universities and research institutes, other temporal patterns of collaboration do not significantly improve performance. Implications of these findings are discussed.
    Keywords: Innovation and Invention: Processes and Incentives; Management of Technological Innovation and R&D;
    JEL: O31 O32
    Date: 2015
  11. By: Valeria Gattai ; Giorgia Sali
    Abstract: This paper investigates the link between internationalization and performance in Europe. It takes a microeconomic perspective and studies how Foreign Direct Investment (FDI) experience relates with European firms’ economic, innovation and financial performance. Drawing on a large longitudinal database, our multinomial logit estimates suggest that FDI really matters. Indeed, firms experiencing some FDI (either inward, outward or both) enjoy a superior performance compared with purely domestic enterprises. Moreover, within the class of FDI players, firms engaged in inward and outward FDI turn out to be better than those engaged only in outward FDI, which are better than those engaged only in inward FDI. These results are robust to several performance measures and alternative specifications including firm, industry and country controls.
    Keywords: FDI, Heterogeneous firms, Europe
    JEL: F23 L25 O52
    Date: 2015–02
  12. By: Jorge Guzman ; Scott Stern
    Abstract: A central challenge in the measurement of entrepreneurship is accounting for the wide variation in entrepreneurial quality across firms. This paper develops a new approach for estimating entrepreneurial quality by linking the probability of a growth outcome (e.g., achieving an IPO or a significant acquisition) as a function of start-up characteristics observable at or near the time of initial business registration (e.g., the firm name or filing for a trademark/patent). Our approach allows us to characterize entrepreneurial quality at an arbitrary level of geographic granularity (placecasting) and in advance of observing the ultimate growth outcomes associated with any cohort of start-ups (nowcasting). We implement this approach in Massachusetts from 1988-2014, yielding several key findings. First, consistent with Guzman and Stern (2015), we find that a small number of observable start-up characteristics allow us to distinguish the potential for a significant growth outcome: in an out-of-sample test, more than 75% of growth outcomes occur in the top 5% of our estimated quality distribution. Second, we propose two new economic statistics for the measurement of entrepreneurship: the Entrepreneurship Quality Index (EQI) and the Regional Entrepreneurship Cohort Potential Index (RECPI). We use these indices to offer a novel characterization of changes in entrepreneurial quality across space and time. For example, we are able to document changes in entrepreneurial quality leadership between the Route 128 corridor, Cambridge and Boston, as well as more granular assessments that allow us to distinguish variation in average entrepreneurial quality down to the level of individual addresses. Third, we find a high correlation between an index that depends only on information directly observable from business registration records (and so can be calculated on a real-time basis) with an index that allows for a two-year lag that allows the estimate of entrepreneurial quality to incorporate early milestones such as patent or trademark application or being featured in local newspapers. Finally, we find that the most significant “gap” between our index and the realized growth outcomes of a given cohort seem to be closely related to investment cycles: while the most successful cohort of Massachusetts start-ups was founded in 1995, the year 2000 cohort registered the highest estimated quality.
    JEL: C43 C51 C81 E27 L25 L26 R12
    Date: 2015–02
  13. By: Sandro Montresor (University Kore of Enna, Italy ); Antonio Vezzani (European Commission JRC-IPTS )
    Abstract: This paper investigates the innovation impact of intangibles by considering the decision of firms to invest in a comprehensive set of them. By using a new survey on a large sample of firms in 28 EU (plus 8 non-EU) countries, we first identify the principal components of the resources firms invest in six kinds of intangibles. Their contribution to the firms’ propensity to introduce new products and/or processes is then estimated with a two-step model, which addresses the endogeneity of the focal regressors through theoretically consistent instruments. A firm’s innovativeness depends on its choice of using internal vs. external resources for its intangible investments more than on their actual amount, and on the kind of assets these investments are directed to. Intangibles need to be managed strategically in order to have an innovation impact and the policy support of this type of investment must take this strategic use into account.
    Keywords: Innovation; Intangibles; R&D
    JEL: O30 O33
    Date: 2014
  14. By: Fabio Moreno (SPRU, University of Sussex, UK ); Alex Coad (SPRU, University of Sussex, UK )
    Abstract: High Growth Firms (HGFs) make a considerable contribution to economic growth, and in recent years they have received increasing interest from entrepreneurship scholars. By analysing recent findings in the literature of high growth firms, this study identifies some stylized facts, as well as contradictory findings, and also some unknowns regarding the determinants and internal strategies of HGFs, particularly on the persistence of their superior growth performance and the implications of recent findings for economic policy.
    Date: 2015–02
  15. By: Giovanni Cerulli ; Roberto Gabriele ; Bianca Poti'
    Abstract: This paper investigates the impact of firm RD policies sustaining RD investment and collaboration on company innovation performance. Individual and cooperative RD investments are considered as intermediate outcomes (input and behavioral additionality, respectively) contributing to the final outcome (presence of product innovation). We use a treatment random coefficient model to estimate the policy additionality on a panel dataset merging the third and the fourth wave of the Italian Community Innovation Survey (CIS). Results show a significant and positive policy impact on company propensity to product innovation only for the input additionality and for the interaction between the input and the cooperative additionality. This occurs when company cooperation scores overcome a certain threshold, in accordance with the theory which states that cooperation outcomes tend to increase when higher spillovers are .pursued by the firms.
    Keywords: RD collaborations, RD policy, additionality; average treatment effect
    Date: 2015
  16. By: Clarke, George R.G. ; Qiang, Christine Zhenwei ; Xu, Lixin Colin
    Abstract: This paper uses firm-level data to assess whether telecommunication services are general-purpose technologies (technologies that benefit a large segment of the economy and have long-lasting effect). It finds that only Internet services are so: firm growth and productivity are much higher when Internet access is greater and when firms use the Internet more intensively; and Internet access benefits firms in high- and low-tech industries, firms of all sizes, and exporter and non-exporter firms. Small firms appear to benefit more from the Internet than large firms do. In contrast, fixed-line and cellular services are not robustly linked to firm performance.
    Keywords: Technology Industry,E-Business,ICT Policy and Strategies,Telecommunications Infrastructure,Microfinance
    Date: 2015–02–01

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