nep-sbm New Economics Papers
on Small Business Management
Issue of 2015‒07‒04
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The impact of R&D subsidy on innovation: a study of New Zealand firms By Adam Jaffe; Trinh Le
  2. Entrepreneurial Regions: Do Macro-psychological Cultural Characteristics of Regions help solve the “Knowledge Paradox” of Economics? By Obschonka, Martin; Stuetzer, Michael; Gosling, Samuel D.; Rentfrow, Peter J.; Lamb, Michael E.; Potter, Jeff; Audretsch, David B.
  3. Work Force Composition and Innovation: How Diversity in Employees’ Ethnical and Disciplinary Backgrounds Facilitates Knowledge Re-combination By Mohammadi, Ali; Broström, Anders; Franzoni, Chiara
  4. Local innovation and global value chains in developing countries By De Marchi V.; Giuliani E.; Rabellotti R.
  5. The Persistence of Regional Entrepreneurship - Are all types of Self-Employment Equally Important? By Michael Fritsch; Michael Wyrwich
  6. Unraveling the R&D-Innovation-Productivity relationship - a study of an academic endavour By Broström , Anders; Karlsson, Staffan
  7. Best Practices as to How to Support Investment in Intangible Assets By Alexander Ebner; Fabian Bocek
  9. Financial constraints and export performance: Evidence from Brazilian micro-data By Bouattour, Fatma
  10. Industry Productivity in the Manufacturing Sector: The Role of Offshoring By Sydor, Aaron; Tang, Jianmin; Couture, Lydia
  11. Patent Boxes Design, Patents Location and Local R&D By Alstadsaeter, Annette; Barrios, Salvador; Nicodème, Gaëtan; Skonieczna, Agnieszka Maria; Vezzani, Antonio
  12. Identifying Critical Requirements for Successful Recruitment Practices in Wellington’s Small IT Firms By Longley, Dylan
  13. Internationalization Of Regional Clusters: Theoretical And Empirical Issues By Ekaterina Islankina

  1. By: Adam Jaffe (Motu Economic and Public Policy Research); Trinh Le (Motu Economic and Public Policy Research)
    Abstract: This paper examines the impact of government assistance through R&D grants on innovation output for firms in New Zealand. Using a large database that links administrative and tax data with survey data, we are able to control for large number of firm characteristics and thus minimise selection bias. We find that receipt of an R&D grant significantly increases the probability that a firm in the manufacturing and service sectors applies for a patent during 2005–2009, but no positive impact is found on the probability of applying for a trademark. Using only firms that participated in the Business Operation Survey, we find that receiving a grant almost doubles the probability that a firm introduces new goods and services to the world while its effects on process innovation and any product innovation are relatively much weaker. Moreover, there is little evidence that grant receipt has differential effects between small to medium (<50 employees) and larger firms. These findings are broadly in line with recent international evidence from Japan, Canada and Italy which found positive impacts of public R&D subsidy on patenting activity and the introduction of new products.
    Keywords: Industrial policy, innovation, R&D
    JEL: O31 O34 O38
    Date: 2015–05
  2. By: Obschonka, Martin; Stuetzer, Michael; Gosling, Samuel D.; Rentfrow, Peter J.; Lamb, Michael E.; Potter, Jeff; Audretsch, David B.
    Abstract: In recent years, modern economies have shifted away from being based on physical capital and towards being based on new knowledge (e.g., new ideas and inventions). Consequently, contemporary economic theorizing and key public policies have been based on the assumption that resources for generating knowledge (e.g., education, diversity of industries) are essential for regional economic vitality. However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates). To date, this “knowledge paradox” has resisted resolution. We take an interdisciplinary perspective to offer a new explanation, hypothesizing that “hidden” regional culture differences serve as a crucial factor that is missing from conventional economic analyses and public policy strategies. Focusing on entrepreneurial activity, we hypothesize that the statistical relation between knowledge resources and entrepreneurial vitality (i.e., high entrepreneurship rates) in a region will depend on “hidden” regional differences in entrepreneurial culture. To capture such “hidden” regional differences, we derive measures of entrepreneurship-prone culture from two large personality datasets from the United States (N = 935,858) and Great Britain (N = 417,217). In both countries, the findings were consistent with the knowledge-culture-interaction hypothesis. A series of nine additional robustness checks underscored the robustness of these results. Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries. In doing so, the findings raise the idea of regional culture serving as a new causal candidate, potentially driving the knowledge paradox; such an explanation would be consistent with research on the psychological characteristics of entrepreneurs.
    Keywords: Innovation; Personality; Knowledge; Culture; Entrepreneurship; Psychology; Regions; Cities
    JEL: L26 M13 O3
    Date: 2015–06
  3. By: Mohammadi, Ali (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Broström, Anders (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Franzoni, Chiara (Politecnico di Milano)
    Abstract: In this paper, we study how workforce composition is related to firm’s radical innovation. Previous studies have argued that teams composed by individuals with diverse background are able to perform more information processing and make a deeper use of the information, which is important to accomplish complex tasks. We suggest that this argument can be extended to the level of the aggregate workforce of high technology firms. Our theoretical interest is focused on the extent to which insights from the literatures on science and invention can be applied to firms’ abilities to achieve radical innovation. In particular, we argue that having a set of employees with greater ethnical and higher education diversity is associated with superior radical innovation performance. Using a sample of 3,888 Swedish firms, we find that greater workforce ethnic diversity is positively correlated to the share of a firm’s turnover generated by radical innovation, while it is neutral to incremental innovation. Greater diversity in terms of higher educational disciplinary background of the workforce is positively correlated to the share of turnover generated by both radical and incremental innovation. Contrary to our hypothesis, we also find that having more external collaborations reduces the importance of a workforce with a diverse disciplinary background, while the importance of ethnic diversity is hold unchanged. Our findings hold after using alternatives measures of dependent and independent variables, alternative sample sizes, and alternative estimation techniques including panel data, and structural equation modeling for simultaneous estimation of diversity, R&D intensity and external search.
    Keywords: Ethnic diversity; Education diversity; External search; Radical innovation
    JEL: J15 J24 J61 O32
    Date: 2015–06–29
  4. By: De Marchi V.; Giuliani E.; Rabellotti R. (UNU-MERIT)
    Abstract: The GVC approach has stressed that inter-firm linkages within GVCs can play a crucial role in transferring technological knowledge and promoting innovation. However, the exact nature of these GVC inter-firms relationships, and their impact on the learning and innovative processes of firms involved in such GVCs in developing countries is still controversial and rather understudied. In this paper we argue that to investigate whether and how firms involved in GVCs as well as industrial clusters, regions and countries innovate, scholars should not focus entirely on GVC characteristics and the role of lead firms, but they also should take into account domestic technological capabilities at the firm, industrial cluster/regional and local innovation system-levels. In this study we undertake a systematic review of the literature on GVCs in developing countries to investigate if and how innovation has been undertaken at the local level. With cluster analysis, we have identified three types of GVCs, defined as a GVC-led Innovators, consisting of innovative local firms, which intensively use knowledge sources from within the GVC; b Independent Innovators also consisting of innovative firms, but whose learning sources mainly come from outside the GVC; c Weak Innovators, including a large group of scarcely innovative firms, drawing selectively on some of the knowledge sources available within the GVC but poorly using other forms of learning.
    Keywords: Industrialization; Manufacturing and Service Industries; Choice of Technology; International Linkages to Development; Role of International Organizations; Technological Change: Choices and Consequences; Diffusion Processes; Technological Change: Government Policy;
    JEL: O14 O19 O33 O38
    Date: 2015
  5. By: Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Michael Wyrwich (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: We explore the role of different types of self-employment for a persistence of the regional level of entrepreneurship over time. Our analysis for West German regions shows relatively strong effects for the historical self-employment rate in the non-agricultural sector, particularly in knowledge-intensive industries on current levels of new business formation. While self-employment by males shows a statistically significant relationship, the self-employment rate of females remains statistically insignificant. Also, no statistically significant effect can be found for the share of homeworkers that can be regarded a rather weak form of entrepreneurship.
    Keywords: Entrepreneurship, self-employment, new business formation, entrepreneurship culture, persistence
    JEL: L26 R11 O11
    Date: 2015–06–29
  6. By: Broström , Anders (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Karlsson, Staffan (Swedish Research Council & Royal Institute of Technology (KTH))
    Abstract: This paper accounts for the development of the academic endavour to determine the firm-level relationship between investments in R&D and productivity. The impact of 28 highly cited publications within this line of study is investigated using a combination of bibliometric techniques and citation function analysis. We show how the attention paid to this line of research broadens and deepens in parallel to the diffusion of innovation as a research theme during 2000s. Our findings also suggest that the attraction of scholarly attention is driven by combination of broadening interest in the central research question under study and boundary-pushing methodological contributions made in the key contributions.
    Keywords: innovation; productivity; R&D; citation analysis; bibliometric analysis
    JEL: B21 B23 B41 C38 D24
    Date: 2015–06–29
  7. By: Alexander Ebner; Fabian Bocek
    Abstract: Intangible investment is an indispensable factor in the projected socio-ecological transition towards a new European path of economic growth. Its concern with knowledge-based intangible assets highlights the innovation-driven formation of a knowledge-based economy, which is at the heart of current EU strategies for the promotion of sustainable growth. The policy report will summarise best practices of supporting investments in intangible assets in the EU member states at the level of firms, industries and countries as a whole. In proceeding with this work, the policy report will draw on insights that were developed in preceding FP7 projects, in particular COINVEST. This allows for an understanding of intangible investment as investment in intangible assets that provide firm-specific flows of knowledge services. These involve both formal and tacit knowledge in diverse areas such as firm-funded investment in R&D, education and training, software and databases as well as design and branding, accompanied by mechanisms of inter-firm cooperation in the management of knowledge assets. The diverse strategies and policies in support of intangible investment across the EU are going to be assessed on the basis of available cases and data about best practices. The resulting policy report is set to sort out those strategies and policies that provide the most effective support of intangible investment in the formation of a socio-ecologically sustainble knowledge-based economy.
    Keywords: Economic growth path, High road strategy, Innovation, Intangible assets, Social capital as growth driver, Socio-ecological transition
    JEL: D22 D83 M19
    Date: 2015–06
  8. By: Jitao Tang (Ernst&Young LLP); Rosanne Altshuler (Rutgers University)
    Abstract: Most studies of foreign direct investment (FDI) spillovers focus on externalities of inward FDI to host country firms. However, spillovers may also be generated from outward FDI and flow to home country firms. We test for the presence of spillovers from U.S. multinational corporations to domestic U.S. firms in the same industry, downstream industries and upstream industries using firm level information from Standard and Poor’s Compustat data and industry level data on U.S. outward FDI from the U.S. Bureau of Economic Analysis. We find evidence of positive and significant spillovers flowing from multinational customers to their domestic suppliers. This is consistent with most previous studies of spillovers from inward FDI and may suggest a role for domestic policies that subsidize outward FDI. We also find that the presence of beneficial spillovers depends on several firm characteristics in
    Keywords: Multinational enterprises, Foreign direct investment, Productivity spillovers, Absorptive capacity
    JEL: F21 F23
    Date: 2015–01–04
  9. By: Bouattour, Fatma
    Abstract: Despite the growing role of Brazil in international trade, exports still face challenges. Following the theoretical framework of Manova (2013), this paper provides firm-level evidence that financial constraints hamper the export performances. Using customs data from Brazil, I show through a probability model, that Large firms exhibit more probability to have export performances when compared with Small and Medium-sized firms, and that this advantage tends to decrease in industries with high external funding needs. The sectors financial vulnerability is proxied with two measures borrowed from Rajan and Zingales (1998) and computed for Brazilian industries over the recent period of the 2000s. The results are globally robust to the modification of the proxies of sectoral external finance dependence, used in the literature. Other tests demonstrate that Brazilian subsidiaries have greater chances to be export performant, and that there is a "regional effect" that makes some Brazilian regions export more than others. This paper also provides an insight of the effects of the global crisis of 2008 on the export patterns.
    Keywords: Export; firms; international trade;
    JEL: F10 F14 G30 L25
    Date: 2015–06
  10. By: Sydor, Aaron; Tang, Jianmin; Couture, Lydia
    Abstract: Two sources of industry productivity growth are firm productivity improvements and the reallocation of productive resources from less productive to more productive firms. This paper studies the role of offshoring in improving industry productivity through these two channels, using a new Canadian manufacturing data base that links the Annual Survey of Manufactures and the Importer Register database at the commodity level. The database provides information on direct imports of intermediate inputs by firms. This allows us to estimate offshoring intensity in Canada at the firm level, and to differentiate those imports by region of origin.
    Keywords: Economic accounts, Manufacturing, Productivity accounts
    Date: 2015–06–22
  11. By: Alstadsaeter, Annette; Barrios, Salvador; Nicodème, Gaëtan; Skonieczna, Agnieszka Maria; Vezzani, Antonio
    Abstract: Patent boxes have been heavily debated for their role in corporate tax competition. This paper uses firm-level data for the period 2000-2011 for the top 2,000 corporate research and development (R&D) investors worldwide to consider the determinants of patent registration across a large sample of countries. Importantly, we disentangle the effects of corporate income taxation from the tax advantage of patent boxes. We also exploit a new and original dataset on patent box features such as the conditionality on performing research in the country, and their scope. We find that patent boxes have a considerable effect on attracting patents, mostly because of their favourable tax treatment, especially for high-quality patents. Patent boxes with a large scope in terms of tax base definition also have stronger effects on the location of patents. The size of the tax advantage offered through patent box regimes is found to deter local innovative activities, whereas R&D development conditions tend to attenuate this adverse effect. Our simulations show that, on average, countries imposing such development conditions tend to grant a tax advantage that is slightly greater than optimal from a local R&D impact perspective.
    Keywords: corporate taxation; location; nexus approach; patent boxes; patents; R&D
    JEL: F21 F23 H25 H73 O31 O34
    Date: 2015–06
  12. By: Longley, Dylan
    Abstract: This paper explores the needs of small IT firms in Wellington related to staff recruitment and retention. It identifies the critical factors that influence the location, sourcing and matching of candidates’ and their skills and behavioural qualities to the strategic technical, business and human resource management needs of these firms. Successful recruitment into Wellington’s IT industry is a critical sustainable growth factor for many small IT firms. Wellington is considered to be a national hub for the IT services sector. Limits in small firms’ ability to spend for recruitment and salary hamper their productivity and growth due to competition for talent in the sector. Innovations to solve the shortage related problems are taking place. Three alternative approaches are proposed that could contribute to a more stable equilibrium between supply of and demand for skilled IT professionals in Wellington.
    Keywords: IT, Industry, Strategic, Human Resource Management, Information Technology, Critical factors, Recruitment, Sustainable growth,
    Date: 2014
  13. By: Ekaterina Islankina (National Research University Higher School of Economics)
    Abstract: Today regions are becoming independent actors able to compete globally as globalization of competition is consistent with the localization of competitive advantage. In many ways regional competitiveness is based on the clustering concept. Changes in the global economic environment are making cluster linkages more important, too. Clusters are not capable of long-term excellence and development unless their members are acting in global markets and involved in international knowledge transfer. Thus, internationalization of clusters has turned out to be a new subject of innovation policy and regional development agenda, however lacking strong scientific background in Russia. The paper aims at discovering theoretical and analytical basis for clustering concept and internationalization, the reviewing of best internationalization practices from the clusters worldwide as well as exploring empirical issues of regional clusters` internationalization in Russia and their comparison with the EU outputs. A special emphasis is put on the articulation of practical guide for cluster management organizations responsible for the development of global linkages.
    Keywords: regional development, innovative clusters, internationalization, Russia, the EU
    JEL: F20 O O19 O57 R58
    Date: 2015

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