nep-sbm New Economics Papers
on Small Business Management
Issue of 2015‒04‒11
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The Cost of Knowledge. By Antonelli, Cristiano; Colombelli, Alessandra
  2. Innovation in Business Group Firms: Influence of Network Diversity By Kerai, Anita; Sharma, Sunil
  3. Corporate Governance, Innovation and Firm Age: Insights and New Evidence. By Bianchini, Stefano; Krafft, Jackie; Quatraro, Francesco; Ravix, Jacques
  4. Eco-innovation and firm growth: Do green gazelles run faster? Microeconometric evidence from a sample of European firms By Alessandra Colombelli; Jackie Krafft; Francesco Quatraro
  5. Persistent Product Innovation and Market-oriented Behaviour: the Impact on Firms' Performance By Primo Autore; Secondo Autore
  6. Firm Survival and Change in Ghana, 2003-2013 By Elwyn Davies; Andrew Kerr
  7. The Impact of Top Management Team Characteristics on Firms Growth. By Colombelli, Alessandra
  8. Determinants of export performance of Ukrainian firms By Andrzej Cieslik; Jan Michalek; Iryna Nasadiuk
  9. Do Key Enabling Technologies shape regional Smart Specialization Strategies? A patent based analysis of European data By Sandro Montresor; Francesco Quatraro
  10. What do firms know? What do they produce? A new look at the relationship between patenting profiles and patterns of product diversification By Giovanni Dosi; Marco Grazzi; Daniele Moschella
  11. Financing Productivity- and Innovation-Led Growth in Developing Asia: International Lessons and Policy Issues By Ajai Chopra
  12. Dynastic Entrepreneurship, Entry, and Non-Compete Enforcement By James Rauch
  13. The influence of clusters on economic development. A comparative analysis of cluster policy in the European Union and Japan By Katarzyna Cheba

  1. By: Antonelli, Cristiano; Colombelli, Alessandra (University of Turin)
    Abstract: This paper contributes the economics of knowledge and innovation with the analysis of the knowledge cost function and sheds light on the determinants of the large variance in the cost of innovation across firms. The amount and the structure of external knowledge and the internal stocks of knowledge that firms can access and use in the generation of new technological knowledge help firms to reduce the costs of innovations. The empirical section is based upon a panel of companies listed on UK and the main continental Europe financial markets (Germany, France and Italy) for the period 1995 – 2006, for which information about patents have been gathered. The econometric analysis of the costs of knowledge considers the unit costs of patents on the right hand side, and on the left hand side next to R&D expenditures, the stock of knowledge internal and external to each firm. In order to articulate the different facets of the external knowledge that is made accessible by proximity with firms co-localized in the same region (NUTS2), we further include other variables proxying for regional variety, complementarity and similarity. The results confirm that the stock of internal knowledge and the access to external knowledge play a key role in reducing the actual cost of the generation of new technological knowledge at the firm level.
    Date: 2014–10
  2. By: Kerai, Anita; Sharma, Sunil
    Abstract: Extant research on influence of ownership structure on innovation suggests a positive relationship between business group affiliation and innovation. While it is true that firms affiliated to business groups seem to benefit from availability of internal capital, determinants that influence the process of innovation have not been examined. This Paper aims to study the influence of network diversity on innovation for firms affiliated to a business group. We draw upon literature on resource based and principal-agency literature to study nature of knowledge exploration and exploitation by business group firms. We argue that network diversity impacts nature of innovation by business group firms.
  3. 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
  4. By: Alessandra Colombelli; Jackie Krafft; Francesco Quatraro
    Abstract: This paper investigates the impact of eco-innovation on firms’ growth processes, with a special focus on gazelles, i.e. firms’ showing higher growth rates than the average. In a context shaped by more and more stringent environmental regulatory frameworks, we posit that inducement mechanisms stimulate the adoption of green technologies, increasing the derived demand for technologies produced by upstream firms supplying eco-innovations. For these reason we expect the generation of green technologies to trigger sales growth. We use firm-level data drawn from the Bureau van Dijk Database, coupled with patent information obtained from the OECD Science and Technology Indicators. The results confirm that eco-innovations are likely to augment the effects of generic innovation on firms’ growth, and this is particularly true for gazelles, which actually appear to run faster than the others.
    Keywords: Gazelles, Eco-Innovation, firms’ growth, Inducement mechanisms, derived demand, WIPO Green Inventory
    JEL: L10 L20 O32 O33 Q53 Q55
    Date: 2015–03
  5. By: Primo Autore (ISTAT, Istituto Nazionale di Statistica); Secondo Autore (DISCE, Università Cattolica)
    Abstract: This paper provides an empirical investigation of the impact of innovation on firms' economic performance pinpointing complementarities between product and marketing innovation during the period 1998-2008. Firms' profitability and productivity are simultaneously estimated, thus allowing for consistent and robust estimates of the relationship being tested. The conceptual framework in which we have developed the analysis bridges the gap between the management (organization) approach, from which we grasp the notion of a firm's market orientation to innovation, and the economics of innovation perspective. The results show that being a persistent product-innovating and market-oriented firm significantly affects profitability, although the estimated impact is relatively mild. The gain in productivity determined by investing in R&D is relatively small and in line with the corresponding gain attributable to investing in marketing and organizational innovations. Conversely, capital deepening as measured by the capital-labor ratio-exerts a larger impact on productivity, thus underlining how knowledge capital plays a less relevant role. This result emphasizes a crucial weakness of Italian manufacturing firms, because knowledge investment is the key to future economic growth. The estimates we have presented cover a sufficiently long time interval, thus enabling us to perform different robustness tests.
    Keywords: Product Innovation, Market Orientation, European Community Innovation Survey, Profitability, Productivity
    JEL: L25
    Date: 2015–03
  6. By: Elwyn Davies; Andrew Kerr
    Abstract: How did Ghanaian manufacturing firms change in the period between 2003 and 2013? This paper presents results from a survey of 1000 firms in Ghana, conducted in 2013, which were randomly selected from the 2003 Ghanaian National Industrial Census. This survey allows us to track survival and exit of firms between 2003 and 2013. We find strong regional differences and also differences for small, medium and large firms. The exit rate of firms in Kumasi, the second city, is lower than in Accra, but the growth rate of firms in Kumasi was also lower. Small firms were more likely to exit than large firms. Overall, the picture we paint of manufacturing in Ghana is not a positive one: total employment by firms operating before 2003 decreased from 134 863 in 2003 to 74 319 in 2013. It remains a question to what extent this was compensated by new employment by firms that entered after 2003, who were not surveyed. We also consider the firm size distribution evolution, and show that selection plays some role in explaining the positive correlation between firm size and age, but that this is less strong than in earlier studies.
    Keywords: Firm survival, Firm growth, Ghana, Firm size, Firm size distribution, Selection
    JEL: L25 O11 O14 O55
    Date: 2015
  7. By: Colombelli, Alessandra (University of Turin)
    Abstract: This study attempts to identify the factors affecting the growth of companies listed on the Alternative Investment Market (AIM), the London Stock Exchange’s market dedicated to young and growing companies. We investigate the post IPO growth of a panel consisting of 665 companies listed on the AIM from 1995 to 2006. Our empirical model is estimated using the GMM - System (GMM - SYS) estimator. Our findings confirm that small companies listed on the AIM grow at a faster rate after the IPO. It seems that both human capital and firm characteristics are important determinants of their fast growth. The results of this study carry some policy implications. Policy makers could take into account the relevance of an efficient financial system. Moreover, it is important to look at the process of transformation in the cultural and behavioural attitudes of many countries towards entrepreneurship.
    Date: 2014–10
  8. By: Andrzej Cieslik (University of Warsaw); Jan Michalek (University of Warsaw); Iryna Nasadiuk (University of Warsaw)
    Abstract: Following the new strand in the new trade theory literature that focuses on firm heterogeneity in this paper we investigate determinants of firm export performance in Ukraine. The study is based on the BEEPS firm level data compiled by EBRD and the World Bank. The study covers the period starting in 2005 and ending in 2013. We estimate probit regressions for each year of our sample as well as for the pooled dataset that includes all years. Our pooled estimation results indicate that the probability of exporting is related to the level of productivity, the firm size, R&D expenditure, the share of university graduates in productive employment, as well as the internationalization of firms. The estimation results obtained for particular countries reveal some degree of heterogeneity. In particular, the firm age is significant only in the last years of our sample.
    Keywords: Export activity, firm heterogeneity, Ukraine
    JEL: F14 P33
    Date: 2015–04
  9. By: Sandro Montresor; Francesco Quatraro (University of Turin)
    Abstract: The paper focuses on the analysis of effects of Key Enabling Technologies (KETs) on regional Smart Specialisation Strategies (S3). Drawing on the economic geography approach to S3, we formulate some hypotheses about the impact that KETs-related knowledge can have on the construction of new regional technological advantages (RTAs). By crossing regional data on patent applications, in KETs-mapped classes of the International Patent Classification (IPC), with a number of regional economic indicators, we test these hypotheses on a panel of 26 European countries over the period 1980-2010. KETs positively affect the construction of new RTAs, pointing to a new “enabling” role for them. They also mitigate the impact of the density to related pre-existing technologies on the construction of new RTAs, pointing to the KETs capacity of making the latter less binding in pursuing S3. Overall, the net-impact of KETs is positive, pointing to a new case for plugging KETs in the S3 policy tool-box.
    Date: 2015–03
  10. By: Giovanni Dosi; Marco Grazzi; Daniele Moschella
    Abstract: In this work we analyze the relationship between the patterns of firm diversification, if any, across product lines and across bodies of innovative knowledge, proxied by the patent classes where the firm is present. Putting it more emphatically we investigate the relationship between "what a firm doe" and "what a firm knows". Using a newly developed dataset matching information on patents and products at the firm level, we provide evidence concerning firms' technological and product scope, their relationships, the size-scaling and coherence properties of diversication itself. Our analysis shows that typically firms are much more diversified in terms of products than in terms of technologies, with their main products more related to the exploitation of their innovative knowledge. The scaling properties show that the number of products and technologies increase log-linearly as firms grow. And the directions of diversification themselves display coherence between neighboring activities also at relatively high degrees of diversification. These findings are well in tune with a capability-based theory of the firm.
    Date: 2015–01–04
  11. By: Ajai Chopra (Peterson Institute for International Economics)
    Abstract: Growth in developing Asia will need to rely more on improvements in productivity growth and less on capital deepening. Although there is no single reform path to spur productivity growth, financial system deepening is central to a more efficient allocation of capital across sectors and can facilitate innovation and technology transfer. But malfunctioning financial systems can also result in the misallocation of resources, making it important that policymakers focus less on increasing the size of the financial sector and more on improving its intermediation function. The paper discusses the general policy priorities for further financial development in Asia based on financial sector realities in the region and the level of country income. Steps to mobilize Asia's ample private savings for long-term financing, especially to tackle the region's infrastructure deficit and improve access to financing for small and medium enterprises, can help raise productivity. Further, as many countries in Asia shift from a development model based on technology absorption to one that promotes innovation, specialized finance and investors can play a critical role in allowing innovative firms to conduct research, adopt technologies necessary for inventions, and ultimately commercialize innovations.
    Keywords: Asia, financial sector, productivity
    JEL: G21 G23 G24 G28 O30 O40 O53
    Date: 2015–03
  12. By: James Rauch
    Abstract: We investigate entry in a dynastic entrepreneurship (overlapping generations) environment created by employee spinoffs. Without finance constraints, enforcement of non-compete agreements unambiguously improves social welfare outcomes, and even increases the rate of spinoffs from original firms. Indeed, if employers have all the bargaining power vis-à-vis their employees, optimal entry of original firms and all subsequent employee spinoffs is achieved, despite the fact that the original firm can only negotiate with the first spinoff. However, if employees are unable to buy out their non-compete contracts, enforcement of these agreements shuts down socially profitable spinoff firms. Non-enforcement sacrifices entry of original firms that would be marginally profitable in the absence of employee spinoffs, but otherwise clearly improves social welfare outcomes over enforcement in the presence of finance constraints.
    JEL: K12 L26
    Date: 2015–04
  13. By: Katarzyna Cheba (West Pomeranian University of Technology in Szczecin)
    Abstract: The development of clusters seems to be a natural consequence of the observed trends in the global economy. The increased interest in the creation and development of clusters can also be seen in most of the countries of the European Union, however, the experience of EU countries in this field is different. In addition to strong clusters with a long tradition, new clusters are created with much lower potential. Clusters compatible with the most important EU documents are to play the role of organizations supporting regional development and ensuring the growth of innovation of the European Union in the new programming period. Japanese economy is based on the important role of clusters in this area, which along with the US and the European Union is among the largest economies in the world. The experience of Japan in this area is much longer. A lot of still functioning clusters were created in this country in the XVII and XVIII centuries. The aim of this study is a comparative analysis of the socio-economic situation of the European Union and Japan, with special emphasis on the role, that clusters play in those economies. The result of the analysis is to identify the factors that allow for the effective operation of enterprises within created cluster structures. The analysis of Japan's experience in this area is a valuable source of information for policy guidelines developed to support clusters in the EU.
    Keywords: cluster, effectiveness of clusters, regional development, value of regions
    JEL: O12 O57
    Date: 2015–04

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