nep-sbm New Economics Papers
on Small Business Management
Issue of 2015‒09‒05
eighteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Innovation, investor sentiment, and firm-level experimentation By Aramonte, Sirio
  2. Commercial success of innovation: the roles of R&D cooperation and firm age By Koski, Heli
  3. The effect of public support on R&D employment in small firms By V. DORTET-BERNADET; M. SICSIC
  4. Types of knowledge and diversity of business-academia collaborations: Implications for measurement and policy By Havas, Attila
  5. R&D policies in France: New evidence from a NUTS3 spatial analysis By Montmartin, B.; Herrera, M.; Massard, N.
  6. The role of regional sectoral specialization on the geography of innovation networks: a comparison between firms located in regions in developed and emerging economies By Plechero, Monica; Chaminade , Cristina
  7. Uma perspectiva sobre a evolução do sistema de inovação industrial gaúcho: análise dos resultados das pesquisas de inovação (pintec) 2000 e 2011. By Oliveira, Livio Luiz Soares de
  8. Did the Reduction of ICT Investment Due to the 2008 Economic Crisis Affect the Innovation Performance of Firms? By Spyros Arvanitis; Euripidis Loukis
  9. Startups, Financing and Geography– Findings from a survey By Bjuggren, Per-Olof; Elmoznino Laufer, Michel
  10. Do U.S. Firms Hold More Cash? By Pinkowitz, Lee; Stulz, Rene M.; Williamson, Rohan
  11. Family business: management effort and firm performance By Oriana Bandiera; Andrea Prat; Raffaella Sadun
  12. The Logic of Agglomeration By Gilles Duranton; William R. Kerr
  13. Business Practices in Small Firms in Developing Countries By David McKenzie; Christopher Woodruff
  14. Bank Ownership Structure, SME Lending and Local Credit Markets By Hasan, Iftekhar; Jackowicz, Krzysztof; Kowalewski, Oskar; Kozlowski, Lukasz
  15. Business practices in small firms in developing countries By Mckenzie,David J.; Woodruff,Christopher M.
  16. Structural policies and productivity: Evidence from Portuguese firms By Jens Arnold; Natália Barbosa
  17. The Turnaround of Swedish Industry: Reforms, Firm Diversity and Job and Productivity Dynamics By Heyman, Fredrik; Norbäck, Pehr-Johan; Persson, Lars
  18. L’émergence de dynamiques coopératives : l’exemple d’un réseau d’entreprises créatives co-localisées, Une approche par l’économie des proximités By Sandrine Emin; Dominique Sagot-Duvauroux

  1. By: Aramonte, Sirio (Board of Governors of the Federal Reserve System (U.S.))
    Abstract: Due to frictions like informational externalities, firms invest too little in learning the productivity of newly available technologies through small-scale experimentation. I study the effect of investor sentiment on the relation between technological innovation and future firm-level R&D expenses, which include the resources used for small-scale experimentation. I find that rapidly improving investor sentiment strengthens the effect of technological innovation on one-year-ahead R&D expenses, and that the effect is more pronounced for high-tech firms with tighter financing constraints. The results are not driven by sentiment proxying for technological innovation or by sentiment and R&D expenses being jointly determined. The evidence is consistent with the hypothesis that sentiment counteracts frictions in the process of technology diffusion.
    Keywords: Investor sentiment; R&D; Technological innovation
    JEL: G02 G31 O32 O33 O40
    Date: 2015–08–12
  2. By: Koski, Heli
    Abstract: Data comprising 1790 Finnish firms and covering the years 2006-2012 suggest that turnover from innovative sales per employee were higher for both young firms - particularly for young innovative companies (or YICs) - and older incumbents that had broad innovation collaboration involving vertical, horizontal and institutional partners. Younger firms with simultaneous horizontal and vertical innovation collaboration tend to also generate higher turnover due new products and services, while this type of collaboration did not appear statistically significant in innovation production function for older incumbents. Our data further indicate that not only the relationship between inventor age and patentable inventions at the inventor level is inversely u-shaped – as previous studies report - but also the relationship between employee age structure and the generation of commercially successful products and services at the firm level follows the same pattern. High education of employees distinguished particularly the top performers from others at the highest 0.9 quantile of turnover from innovative sales per employee. Furthermore, firms with relatively highly educated employees and broad innovation collaboration had clearly higher returns from innovative sales per employee than other firms, while none of the innovation collaboration types was statistically significantly related to the innovation output of firms with relatively low education of employees.
    Keywords: innovation performance, R&D cooperation, human capital
    JEL: L2 O31 O32
    Date: 2015–08–14
  3. By: V. DORTET-BERNADET (Insee); M. SICSIC (Insee)
    Abstract: Between 2003 and 2010, total R&D public support (tax incentives and subsidies) targeted at SMEs increased by more than 300%: in 2010 it amounted to almost 2 billion euros, of which 26% (nearly 500 million euros) were perceived by very small businesses (fewer than 10 employees). This sharp increase is mainly explained by two reforms of the R&D tax credit (in 2004 and 2008) and a new public program dedicated to young innovative enterprises launched in 2004. An aggregate analysis shows that the share of R&D personnel financed by public funding has been multiplied by four for very small businesses, from 14% in 2003 to 49% in 2010. This change was accompanied by a decline of privately funded R&D personnel employed by very small businesses (and other SMEs to a lesser extent). An econometric analysis of a panel of small firms active in R&D intensive sectors tends to confirm this agregate finding at the firm level: R&D public support appears to have a positive impact on highly qualified and R&D employment but the impact on the associated labor costs appears to be significantly lower than the increase of the public financing, particularly from 2008.
    Keywords: R&D tax credit, subsidies, public policy evaluation, difference-in-differences
    JEL: O38 H25 C23
    Date: 2015
  4. By: Havas, Attila
    Abstract: Analysis of business-academia (B-A) collaborations typically relies on a single method, addressing one or two major research questions. In contrast, this article tackles both R&D and innovation collaborations among businesses and academia relying on information using multiple methods and multiple sources of information to offer insights on dynamics and qualitative features of these co-operation processes. Interviews conducted in Hungary – in line with other research findings – have also confirmed that (i) motivations, incentives for, and norms of, conducting R&D and innovation activities diametrically differ in business and academia; and (ii) different types of firms have different needs. Thus, more refined policy measures are to be devised to promote B-A collaboration more effectively, better tuned to the needs of the actors, based on a relevant taxonomy of their co-operations. Evaluation criteria for academics should also be revised to remove some major obstacles, currently blocking more fruitful B-A co-operation. Several findings can be generalised beyond the cases considered, suggesting the need for a deeper understanding of the role of intermediaries in the Triple Helix and for broader comparative analysis of innovation policies. The research design to analyse B-A collaborations always needs to be tailored to the innovation system in question, just as the concomitant policy recommendations.
    Keywords: Types of knowledge; Diversity in business-academia collaboration; Multiple methods to map business-academia collaborations; STI policy implications
    JEL: I23 I28 O33 O38 O52
    Date: 2014–12–20
  5. By: Montmartin, B.; Herrera, M.; Massard, N.
    Abstract: The French policy-mix for R&D and innovation has deeply evolved in recent years and is nowadays, one of the most generous and market-friendly system in the world. This paper investigates the (evolutive) effects of this policy-mix by using a unique database containing information on the amount of R&D tax credit, regional, national and European subsidies received by firms in all French metropolitan NUTS3 regions over the period 2001-2011. By estimating a Spatial Durbin model with regimes and fixed effects, we provide new evidence on the efficiency of the French policy-mix. First, a yardstick competition between NUTS3 regions for R&D investment driven by negative spatial spillovers is found. Second, it seems that national subsidies are the only instrument able to generate a significant leverage effect on privately-financed R&D. Third, due to the context of spatial competition, the three other policies studied (Tax Credit, Regional and European subsidies) do not generate significant leverage or crowding-out effect. Fourth, we highlight the presence of structural breaks in our data that correspond to the last two important reforms of the French tax credit. Consequently, the effect of R&D policies and especially R&D tax credit are likely to change over time and influence ex-post evaluation results.
    JEL: H25 O31
    Date: 2015
  6. By: Plechero, Monica (DEAMS – University of Trieste, Italy & CIRCLE, Lund University); Chaminade , Cristina (CIRCLE, Lund University)
    Abstract: Recently, there has been a rise of contributions in innovation and economic geography studies on how firms from specific industries and regional innovation systems (RISs) rely on international networks to innovate. So far, the focus has been on single cases, firms located in well-known RISs and international linkages, without really distinguishing those with geographically close partners from those with partners from distant locations. Using primary firm-level data, this article compares the patterns of collaboration for innovation in a selection of Swedish, Norwegian, Chinese and Indian regions with an ICT cluster specialization. The results show that firms in RISs in emerging economies tend to link more to innovation networks with a real global character, particularly in relation to new-to-the-world innovation. It also shows that firms in the most successful RISs in ICT clusters rely more than others on networks with organizations in close proximity.
    Keywords: Globalization; innovation networks; developed economies; emerging economies; China; India; Sweden; Norway; regional innovation system; cluster specialization; ICT; new-to-the-world innovation
    JEL: O18 O33
    Date: 2015–08–16
  7. By: Oliveira, Livio Luiz Soares de
    Abstract: This work aims to present the main results of the analysis of the data provided by the Innovation Survey (PINTEC) 2000 and 2011 for the state of Rio Grande do Sul, Brazil. This paper also defines technical concepts of innovation according to the main manuals dealing with the development of indicators systems for Science, Technology and Innovation (ST & I). The results of PINTEC 2011 are compared with those from the 2000 PINTEC in order to infer the innovative performance of manufacturing companies at Rio Grande do Sul and Brazil during the period analyzed in this study. We conclude that regional manufacturing industry firms have become more innovative, in average, than those located in other Brazilian states.
    Keywords: Company, innovation, PINTEC
    JEL: L10 O30
    Date: 2015
  8. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Euripidis Loukis (University of Aegean, Samos, Greece)
    Abstract: In this paper we investigate empirically, first, the characteristics of the firms that reduced their ICT investment due to the 2008 crisis, particularly the firms’ ICT-related characteristics in terms of ICT budget, skills and applications used. The analysis of the ICT characteristics that may influence the likelihood of having reduced ICT investment as a consequence of the crisis is primarily explorative, thus driven by available data and economic intuition. The second research question we examine empirically refers to the possibility that an economic crisis could affect innovation performance through the ICT investment channel. In connection with this, it is also interesting to analyze the ICT characteristics that are associated with ICT-enabled innovation performance. This is the third research question of this paper. Our study is based on firm data from the glass/ceramics/cement industry in six European countries. We find that ICT-related crisis vulnerability correlates positively with decreasing ICT budgets (pro-cyclical investment behaviour), the existence of skill deficits in ICT, the awareness of and interest in novel ICT applications that presumably request much additional ICT investment, the exposure to strong price competition and the strong presence in international markets, in which activities have significantly decreased due to the crisis. Further, statistically significant negative relationship between ICT-enabled product innovation and crisis vulnerability (pro-cyclical behaviour) is found only for new products or services that contain ICT components, and are therefore directly affected by crisis-related decreasing product demand. Employment of specialized ICT personnel, ICT outsourcing (only for process innovation), competition (only for product innovation), and the use of some ICT applications specific to the kind of innovation pursued are ICT characteristics that positively correlate with ICT-enabled innovation.
    Keywords: economic crisis, information and communication technologies (ICT), innovation, ICT-enabled innovation
    JEL: O31
    Date: 2015–08
  9. By: Bjuggren, Per-Olof (The Ratio institute and Jönköping School of Economics.); Elmoznino Laufer, Michel (The Ratio institute)
    Abstract: This paper investigates the importance of bank loans for the financing of startups and how location matters for expansion plans and financing. We will show that there has not been sufficient attention paid to legal form when distinguishing between the external and internal financing of startups. The focus will be on the corporate form of business and the implications of this legal form for what can be considered external financing. In the analysis of how location matters, we will draw upon the literature about agglomeration and knowledge spillovers. The two main questions posed are: How does the corporate form matter for what can be considered the external financing of startups, and how does location matter for expansion plans and financing? To provide empirical answers to these questions, both survey data and registry data have been used. The survey data are from a questionnaire sent out to startups listed in the files of the Swedish Jobs and Society Foundation. We looked at corporations founded during the period 2009-2013 that family firms in terms of ownership structure. The survey indicated that bank loans are rare and had to be backed up with personal assets used as collateral and personal guarantees of repayment for the majority of the firms who had used bank loans. Essentially, the entrepreneur personally takes most of the business risk. Bank loans have, to a large extent, the character of internal financing. Combining registry data with the qualitative data from the survey, we used regression analysis to further study differences due to location. The regression analysis showed that the degree of urbanization matters for plans for expansion. In the three most urbanized areas, the startup firms had plans to expand their business both at home and abroad. In the other urbanized areas, the focus was on expansion at home.
    Keywords: startups; bank loans; asymmetric information; the corporate form of business; agglomeration; functional region
    JEL: G21 G32 L26 M13 R12 R58
    Date: 2015–06–12
  10. By: Pinkowitz, Lee (Georgetown University); Stulz, Rene M. (OH State University and ECGI, Brussels); Williamson, Rohan (Georgetown University)
    Abstract: Using medians, U.S. firms do not hold more cash than similar foreign firms, irrespective of whether the foreign firms come from countries with good investor protection or not. With means, they do. The means, in contrast to the medians, are affected by U.S. multinationals. U.S. multinationals with high R&D expenditures hold 38.7% more cash than comparable foreign firms, but there is evidence that these high cash holdings may result more from high R&D expenditures than from multinationality. The crisis leaves only small traces in the recent cash holdings of firms. Firms throughout the world decreased their cash holdings during the crisis and replenished their cash holdings afterwards as expected with the precautionary motive for cash holdings. However, U.S. firms hold more cash than firms from countries where the stock market fell less during the crisis. There is no evidence that the determinants of cash holdings changed from before the crisis to after the crisis.
    JEL: F23 G32
    Date: 2014–04
  11. By: Oriana Bandiera; Andrea Prat; Raffaella Sadun
    Abstract: Might familyowned, familyrun firms be a serious obstacle to productivity growth in Europe? Oriana Bandiera, Andrea Prat and Raffaella Sadun have collected time use data on over 1,000 chief executive officers to explore differences in the hours worked by family and professional managers - and the impact on their firms' performance.
    Keywords: CEO, Time, Family firms, Competition, Productivity
    JEL: M12 L2 D24
    Date: 2015–07
  12. By: Gilles Duranton; William R. Kerr
    Abstract: This review discusses frontier topics in economic geography as they relate to firms and agglomeration economies. We focus on areas where empirical research is scarce but possible. We first outline a conceptual framework for city formation that allows us to contemplate what empiricists might study when using firm-level data to compare the functioning of cities and industries with each other. We then examine a second model of the internal structure of a cluster to examine possibilities with firm-level data for better exposing the internal operations of clusters. An overwhelming theme of our review is the vast scope for enhancements of our picture of agglomeration with the new data that are emerging.
    JEL: J2 J6 L1 L2 L6 O1 O3 R10 R3
    Date: 2015–08
  13. By: David McKenzie; Christopher Woodruff
    Abstract: Management has a large effect on the productivity of large firms. But does management matter in micro and small firms, where the majority of the labor force in developing countries works? We develop 26 questions that measure business practices in marketing, stock-keeping, record-keeping, and financial planning. These questions have been administered in surveys in Bangladesh, Chile, Ghana, Kenya, Mexico, Nigeria and Sri Lanka. We show that variation in business practices explains as much of the variation in outcomes – sales, profits and labor productivity and TFP – in microenterprises as in larger enterprises. Panel data from three countries indicate that better business practices predict higher survival rates and faster sales growth. The effect of business practices is robust to including numerous measures of the owner’s human capital. We find that owners with higher human capital, children of entrepreneurs, and firms with employees employ better business practices. Competition has less robust effects.
    JEL: L26 M20 O12
    Date: 2015–08
  14. By: Hasan, Iftekhar (Fordham University and Bank of Finland); Jackowicz, Krzysztof (Kozminski University); Kowalewski, Oskar (Institute of Economics, Polish Academy of Sciences); Kozlowski, Lukasz (Bank BGZ BNP Paribas SA)
    Abstract: In this paper, by employing a novel approach, we study the relationship between bank type and small-business lending in a post-transition country. Using a unique dataset on bank branches and firm-level data, we find that local cooperative banks lend more to small businesses than do large domestic banks and foreign-owned banks, even when controlling for the financial situation of the cooperative banks. Additionally, our results suggest that cooperative banks provide loans to small businesses at lower costs than foreign-owned banks or large domestic banks. Finally, we show that small and medium-sized firms perform better in counties with a large number of cooperative banks than in counties dominated by foreignowned banks or large domestic banks. Our results are important from a policy perspective, as they show that foreign bank entry and industry consolidation may raise valid concerns for small firms in developing countries.
    JEL: G21 G28
    Date: 2014–08
  15. By: Mckenzie,David J.; Woodruff,Christopher M.
    Abstract: Management has a large effect on the productivity of large firms. But does management matter in micro and small firms, where the majority of the labor force in developing countries works? This study developed 26 questions that measure business practices in marketing, stock-keeping, record-keeping, and financial planning. These questions have been administered in surveys in Bangladesh, Chile, Ghana, Kenya, Mexico, Nigeria, and Sri Lanka. This paper shows that variation in business practices explains as much of the variation in outcomes ? sales, profits, and labor productivity and total factor productivity ? in microenterprises as in larger enterprises. Panel data from three countries indicate that better business practices predict higher survival rates and faster sales growth. The effect of business practices is robust to including many measures of the owner?s human capital. The analysis finds that owners with higher human capital, children of entrepreneurs, and firms with employees employ better business practices. Competition has less robust effects.
    Keywords: E-Business,Business Environment,Competitiveness and Competition Policy,Emerging Markets,Business in Development
    Date: 2015–08–27
  16. By: Jens Arnold; Natália Barbosa
    Abstract: This paper provides empirical evidence on links between the productivity of Portuguese firms and a number of policy variables in Portugal. The analysis is based on a census of Portuguese manufacturing companies, covering more than 40,000 firms between 2006 and 2011. The results suggest that a number of these variables matter for firm performance, including the number of procedures required to start a business, a more extensive coverage of collective wage bargaining agreements, the tax burden, tax compliance costs and the number of procedures required to enforce a contract.<P>Politiques structurelles et productivité : Résultats empiriques du Portugal<BR>Ce document présente des résultats empiriques sur la productivité des entreprises au Portugal et une série de variables de politiques. L’analyse est basée sur plus de 40 000 entreprises Portugaises entre 2006 et 2011. Les résultats suggèrent une influence significative de ces politiques sur la productivité des entreprises, notamment pour le nombre de procédures requises pour créer une entreprise, l’extension administrative des accords de négociations salariales, les impôts et leur complexité ainsi que le nombre de procédures requises pour exécuter un contrat.
    Keywords: total factor productivity, structural policies, firm-level analysis
    Date: 2015–08–21
  17. By: Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: In this paper, we argue that fundamental reforms of the Swedish business sector can explain the remarkable productivity and employment growth that followed the deep economic crisis in Sweden in the early 1990s. In the 1970s and 1980s, Sweden had one of the most regulated business sectors in the developed world. In the 1990s, however, Sweden reformed its labour market, product market, and corporate tax system as well as removed barriers to foreign direct investment (FDI). Our main finding from our institutional and theoretical examination is that the removal of barriers to entry and growth for new and productive firms and the increased rewards for investments in human capital and effort in workplaces were crucial to the success of these reforms. We find support for our thesis using detailed matched plant-firm-worker data. In particular, we observe increased allocative efficiency, measured as increased market share for more productive firms. Moreover, we show that foreign firms substantially contributed to productivity and employment growth during this period, which suggests that the liberalization of FDI was an important factor in the success of the reforms. Finally, we discuss how other countries can benefit from the Swedish experience by examining factors that appear to be specific to Sweden and others that can be generalized to other countries.
    Keywords: Regulations; Allocative efficiency; Productivity; Job dynamics; Matched employer-employee data; Industrial structure and structural change
    JEL: D22 E23 J21 J23 K23 L11 L16 L51
    Date: 2015–09–01
  18. By: Sandrine Emin (Granem - Groupe de Recherche ANgevin en Economie et Management - UA - Université d'Angers - Agrocampus Ouest - Institut National de l'Horticulture et du Paysage); Dominique Sagot-Duvauroux (Granem - Groupe de Recherche ANgevin en Economie et Management - UA - Université d'Angers - Agrocampus Ouest - Institut National de l'Horticulture et du Paysage)
    Abstract: The objective of this paper is to analyze the conditions for the emergence of collaboration between firms grouped in a creative cluster. According to the school of proximity, the dynamics of a cluster are characterized by the gathering of two forms of proximity: spatial proximity and organized proximity. A quantitative study, a network analysis and a qualitative study were conducted to analyze the contribution of different forms of proximity (social, cognitive, organizational, institutional) to the emergence of collaborations between businesses. We highlight  three main results : Collaborations between creative firms need gatekeepers ; They also need specific plans among them the way the place is structured plays a high role ; proximity of values appears as a strong condition of collaborations.
    Abstract: L’objectif de cet article est d’analyser les conditions de l’émergence des collaborations entre un ensemble de firmes co-localisées appartenant aux industries culturelles et créatives. En nous appuyant sur l’économie des proximités, nous confirmons, à partir d’une analyse exhaustive des coopérations développées entre 50 entreprises créatives regroupées au sein d’un même bâtiment, que la proximité géographique ne se convertit en coopération qu’à la condition qu’elle s’accompagne d’autres formes de proximité dites socio-économiques.  Trois résultats principaux se dégagent de notre travail : (1) la nécessité de personnalités Gatekeeper chargées de faire le lien entre les acteurs, (2) le rôle des dispositifs spécifiques de mise en connexion des acteurs (configuration des lieux, routines, protocoles…) dans le développement des collaborations et (3) l’intérêt d’identifier plus formellement une proximité de valeurs au sein des catégories existantes de proximités socio-économiques.
    Date: 2015–08–24

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