nep-sbm New Economics Papers
on Small Business Management
Issue of 2015‒11‒15
fifteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Open Innovation research: trends and influences – a bibliometric analysis By Santos, Antonio Bob
  2. Human Resources and Innovation: Total Factor Productivity and Foreign Human Capital. By Fassio, Claudio; Kalantaryan, Sona; Venturini, Alessandra
  3. Firms’ heterogeneity and performance in manufacturing during the great recession By A. Arrighetti; R. Brancati; A. Lasagni; A. Maresca
  4. High Growth Firms and Technological Knowledge: Do gazelles follow exploration or exploitation strategies? By Alessandra Colombelli; Jackie Krafft; Francesco Quatraro
  5. Tolerance, Agglomeration and Enterprise Innovation Performance: A Multi-Level Analysis of Latin American Regions By Edward Lorenz; Jana Schmutzler
  6. Firms’economic crisis and firm exit: do intangibles matters? By A. Arrighetti; F. Landini; A. Lasagni
  7. Diversity of Firm Sizes, Complexity, and Industry Structure in the Chinese Economy By Heinrich, Torsten; Dai, Shuanping
  8. The performance of firms in Latin America and the Caribbean: Microeconomic factors and the role of innovation By Grazzi, Matteo; Pietrobelli, Carlo; Szirmai, Adam
  9. The Kauffman Index: Startup Activity | National Trends By Fairlie, Robert
  10. Who Quits Next? Firm Growth in Growing Economies By Emircan Yurdagul; Julieta Caunedo
  11. Global value chains and the effects of outsourcing and offshoring on firms: Evidence from matched firm-employee data By Lindic, Mojca
  12. Are Entrepreneurs more Optimistic and Overconfident than Managers and Employees? By Martin Koudstaal; Randolph Sloof; Mirjam van Praag
  13. Evaluating the performance of innovation intermediaries: insights from the experience of Tuscany’s innovation poles By Margherita Russo; Annalisa Caloffi; Federica Rossi
  14. Job Creation, Small vs. Large vs. Young, and the SBA By Brown, J. David; Earle, John S.; Morgulis, Yana
  15. Entrepreneurship: State of grace or human action? Schumpeter’s leadership vs Kirzner’s alertness. By Ferlito, Carmelo

  1. By: Santos, Antonio Bob
    Abstract: In this paper, a bibliometric analysis about open innovation research is developed, covering the period of 2003-2013 (using the Scopus database) and carried out in three steps: 1) characterization of the research on the main trends of open innovation; 2) analysis of the theoretical influence on the open innovation research; 3) analysis of the influence of open innovation literature on other research areas and disciplines. The main conclusions are: open innovation research is mostly focused on the analysis of the U.S.A. and European countries reality; analysis by time periods shows an increase on the number of target countries and regions of open innovation research; the origins of open innovation were influenced by several areas of economics and management, developed over the last decades; there is a lack of research regarding open innovation outside the firm environment, such as in clusters/networks, innovation systems, public policies or at individual level; open innovation research is influencing a growing number of areas outside business, management and engineering; new research methodologies should be used by open innovation scholars in order to deepen the existing knowledge.
    Keywords: Innovation, Open Innovation, Research Trends, Research Areas, Open Innovation Impact, Bibliometric Analysis, Theoretical Review, Theoretical Influence, Influential Authors, Time Periods, Longitudinal Analysis
    JEL: O30 O39
    Date: 2015
  2. By: Fassio, Claudio; Kalantaryan, Sona; Venturini, Alessandra (University of Turin)
    Abstract: The objective of this paper is to analyse the role of migrants in innovation in Europe. We use Total Factor Productivity as a measure of innovation and focus on the three largest European countries – France, Germany and the United Kingdom – in the years 1994-2007. Unlike previous research, which mainly employs a regional approach, we analyse ù the link between migration and innovation at the sectoral level. This allows us to measure the direct contribution of migrants in the sector in which they are actually employed. Moreover, it allows a distinction between the real contribution of migrants to innovation from possible inter-sectoral complementarities, which might as well foster innovation. We control for the different components of human-capital, such as age, education and diversity of origin. To address the possible endogeneity of migration we draw on an instrumental variable strategy originally devised by Card (2001) and adapt it at the sector level The results show that overall migrants are relevant in all sectors, but some important differences emerge across sectors: highlyeducated migrants show a larger positive effect in the high-tech sectors, while middle- and loweducated ones are more relevant in manufacturing. The diversity of countries of origin contributes to innovation only in the services sectors, confirming that in empirical analyses at the regional or national level the diversity measure might capture the complementarity between sectors rather than the contribution of different national skills.
    Date: 2015–10
  3. By: A. Arrighetti; R. Brancati; A. Lasagni; A. Maresca
    Abstract: This paper highlights how the heterogeneity of manufacturing firms impacted their performance and survival during the “Great Recession”. The findings indicate that firms that assumed a strategically proactive and innovative strategy in the pre-crisis period showed better economic performance during the crisis in terms of both sales and value added. The evidence also shows that the youngest firms and those that had a lower level of financial exposure were favored in terms of performance. Finally, the results also confirm the increased importance of different technological regimes. In contrast, survival estimates demonstrate the non-significance of pre-crisis strategic profiles: ceteris paribus, the results indicate that the most innovative, internationalized and dynamic firms did not register a greater likelihood of survival than other businesses. This result casts doubt on the efficiency and direction of the selection process.
    Keywords: Crisis and Restructuring; Heterogeneity, Growth; Firms’ Performance; Firms’ Survival; Manufacturing Industry; Italy
    Date: 2015
  4. By: Alessandra Colombelli (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS); Jackie Krafft (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS, Department of Economics, University of Turin - University of Turin)
    Abstract: This paper analyzes the contribution of high-growth firms to the process of knowledge creation. We articulate a demand-pull innovation framework in which knowledge creation is driven by sales growth, and knowledge stems from creative recombination. Given the established literature on high growth firms and economic growth, we wonder whether gazelles follow patterns of knowledge creation mostly dominated by exploration or exploitation strategies. To this purpose, we derive indicators able to describe the structure of knowledge and qualify firms' innovation strategies. The empirical results suggest that the reality is richer than the interpretative frameworks. Increasing growth rates are indeed associated to exploration strategies, supporting the idea that high growth firms are key actors in the creation of new technological knowledge. But in the meantime, firms showing growth rates significantly higher than the average are able to command the exploration strategies by constraining them within the boundaries of familiar technological competences, suggesting that the exploration process is less random than anticipated. We end up with the result that high growth firms, and especially gazelles, follow predominantly an exploration strategy, but with the characteristics of an organized search which is often more observed in an exploitation strategy.
    Keywords: Gazelles,Recombinant Knowledge,Schumpeterian innovation patterns
    Date: 2014–04–01
  5. By: Edward Lorenz (Université Nice Sophia Antipolis, France; GREDEG-CNRS); Jana Schmutzler (Universidad de Norte, Colombia; Bergische Universität Wuppertal, Germany)
    Keywords: human capital, tolerance, innovation, regional development, Latin America
    JEL: O30 R10 J24
    Date: 2015–11
  6. By: A. Arrighetti; F. Landini; A. Lasagni
    Abstract: The crisis regarding the Euro area has caused several business closures, especially in the periphery of the EMU. In this paper, we use an original Italian firm-level dataset to determine why firms exit the market during times of economic crisis, paying particular attention to the role of intangibles. We argue that intangibles strengthen a firm’s resilience, which improves the firm’s ability to cope with adverse events and unexpected shocks. We obtain two main results: first, we show that the presence of intangibles significantly reduces the probability of firm exit, especially during the initial phase of the crisis; second, we find that financial constraints become more relevant than intangibles in explaining firm exit during the later stages of the crisis. Thus, the process of firm selection during the crisis has undergone a rapid transformation, with distortions that may lead even skilled firms to exit. Implications of these findings for EU recovery policies are discussed.
    Keywords: intangibles, firm exit, EU crisis, industry dynamics
    JEL: D22 L21 L25 O32
    Date: 2015
  7. By: Heinrich, Torsten; Dai, Shuanping
    Abstract: Among the phenomena in economics that are not yet well-understood is the fat-tailed (power-law) distribution of firm sizes in the world's economies. Different mechanisms suggested in the literature to explain this distribution of firm sizes are discussed in the present paper. The paper uses the China Industrial Enterprises Database to study the distribution (firm size in terms of the number of employees, capital, and gross profit) for the provinces of China for the years 1998-2008. We estimate the power-law distribution and confirm its plausibility using the KS test and the log-likelihood ratio vs. lognormal and exponential distributions. The analysis on regional levels allows an assessment of regional effects on differences in the distribution; we discuss possible explanations for the observed patterns in the light of the recent regional economic development in the PRC.
    Keywords: Firm size distribution; Evolutionary industry dynamics; Power-law distribution; China
    JEL: C14 C46 L11 N15
    Date: 2014–12–15
  8. By: Grazzi, Matteo; Pietrobelli, Carlo; Szirmai, Adam (UNU-MERIT)
    Abstract: The low productivity of Latin American and Caribbean economies has been acknowledged as a serious problem that calls for detailed analyses and appropriate and timely responses. However, in addition to macroeconomic and regulatory factors, productivity depends crucially on microeconomic aspects and on the specific strategies and decisions of individual firms. Such microeconomic decisions have been seldom studied in a quantitative and comparative manner. This paper addresses this gap in the literature. The paper presents the results of recent original microeconomic evidence, showing that innovation significantly influences the productivity of firms, although to different degrees depending on the characteristics of the firms. Moreover, the evidence confirms that the impact of innovation on productivity depends also on additional complementary assets, such as access and use of ICT and on-the-job training. Our analysis reveals that these conclusions also hold true for the Caribbean economies, traditionally understudied. Additional factors that can influence productivity have also been detected, such the age of firms, their access to credit and finance, and their participation in international markets and global value chains. The paper concludes by stating that a thorough understanding of these complex phenomena and their interrelations is an essential condition for the design of more effective public policies.
    Keywords: Latin America and Caribbean, Firm Productivity, Research and Development, Innovation, ICT, Microeconomic factors
    JEL: D22 O30 O12
    Date: 2015
  9. By: Fairlie, Robert
    Abstract: The Kauffman Index: Startup Activity is a novel early indicator of new business creation in the United States, integrating several high-quality sources of timely entrepreneurship information into one composite indicator of startup activity. The Index captures business activity in all industries, and is based on both a nationally representative sample size of more than a half million observations each year and on the universe of all employer businesses in the United States. This allows us to look at both entrepreneurs and the startups they create. Broad-based entrepreneurship in America appears to be slowly crawling its way out of the depths it has been stuck in since 2010. Startup activity rose in 2015, reversing a five-year downward trend in the United States, giving rise to hope for a revival of entrepreneurship. However, the return remains tepid and well below historical trends. A principle driver of this year’s uptick is the growth of male opportunity entrepreneurship, accompanied by the continued strength of immigrant entrepreneurship. Trends in entrepreneurship rates are analyzed for several additional demographic groups.
    Keywords: Business, Social and Behavioral Sciences, entrepreneurship, business, startups, self-employment
    Date: 2015–11–05
  10. By: Emircan Yurdagul (Washington University in Saint Louis); Julieta Caunedo (Cornell University)
    Abstract: This paper provides a theory linking characteristics of the industry dynamics to aggregate growth. We analyze firms' life cycle productivity, employment-age profiles, and firm selection across countries. Using a large cross-country dataset we document (i) more frequent labor productivity growth for firms operating in fast growing economies, (ii) lack of systematic relationship between the tail of the employment size distribution and growth and (iii) steeper employment-age profiles in slow growing economies. Our working thesis is that firms' likelihood of turning their investments into actual productivity growth, and uncertainty on their returns if successful, impacts firms investment in productivity, selection and aggregate growth. We think of firm uncertainty broadly, to include for example political instability, changes in tax regimes, lack of social capital or firm demand fluctuations. We argue that in slow growing rich productive economies, steep-employment age profiles are related to high return uncertainty and strong firm selection. We are able to accommodate poor and rich slow growing economies by decoupling firm's probability of success from return uncertainty. We build a tractable general equilibrium model that displays endogenous long run growth compatible with a stationary size distribution and the documented empirical facts. We contribute to the literature by analyzing how variations in the probability of firm success and return uncertainty account for differences in observed industry structure and its relationship with aggregate growth.
    Date: 2015
  11. By: Lindic, Mojca
    Abstract: This paper studies the effects of outsourcing and offshoring on the skill structure of firms. The study verifies whether controlling for both activities in one model alters previous empirical studies, which controlled only for one factor in their models; whether controlling for destination country of outsourcing and offshoring brings new insights; and whether controlling for occupational level of workers when defining skills brings additional contribution to the results. Regarding the latter, besides the conventional approach for defining skills, i.e. the educational level, skills are also defined by three major occupational groups; Managers, Professionals and Technicians. To empirically estimate the abovementioned hypotheses, a matched employer-employee dataset for Slovenian manufacturing and service firms during 1997 to 2010, and the methods for panel data analysis were used. Results of the model on average show a positive impact of offshoring on the skill share of firms, while the results for outsourcing are uncommon. When controlling for high- and low-income countries, the results for manufacturing firms show a positive and similar effect of offshoring to both groups of countries on the share of skilled employees. In service firms, results show a weaker impact of offshoring to high-income countries on the relative employment of skilled, compared to offshoring to low-income countries. When taking into account also occupational levels for defining skills, the results show that the impact of education differs between occupational groups, indicating that firms differentiate between more and less educated individuals within the same occupational group.
    Keywords: offshoring, outsourcing, skill structure of firms
    JEL: F14 F16
    Date: 2015–11
  12. By: Martin Koudstaal (VU University Amsterdam); Randolph Sloof (VU University Amsterdam, the Netherlands); Mirjam van Praag (Copenhagen Business School, Denmark)
    Abstract: Empirical evidence supports the conventional wisdom that entrepreneurs are more optimistic and overconfident than others. However, the same holds true for top managers. In this lab-in-the-field experiment we directly compare the scores of entrepreneurs, managers and employees on a comprehensive set of measures of optimism and overconfidence (n = 2,058). The results show that on average entrepreneurs are more optimistic than others in their dispositional optimism and attributional style when bad events occur. For incentivized measures of overconfidence we find no difference between entrepreneurs and managers, although both are more prone to it than employees. Finally, exploration of within-group heterogeneities shows that optimism and success are more strongly related for managers than for entrepreneurs and that an average entrepreneur is not more optimistic than successful managers. We conclude that optimism and overconfidence are indeed characteristics of entrepreneurs, but they are not unique when compared to (top) managers.
    Keywords: Entrepreneurs; managers; dispositional optimism; attributional style; overestimation; overconfidence; behavioral economics
    JEL: L26 C93 D03 M13
    Date: 2015–11–06
  13. By: Margherita Russo; Annalisa Caloffi; Federica Rossi
    Abstract: With the growing importance of innovation intermediaries, particularly in the policy context, a need has emerged for appropriate instruments to evaluate their performance. The identification of appropriate performance indicators, however, has proved to be problematic. First, indicators are likely to influence the behavior of innovation intermediaries, not always in a desirable manner. Second, commonly used indicators focus on the immediate results achieved by the intermediaries, often disregarding the permanent behavioral changes that they can stimulate in their innovation system. Instead, we argue that the latter are particularly important for the evaluation of innovation intermediaries, whose success should be measured in terms of their ability to enable other organizations to improve their innovation capabilities. By focusing on an innovation policy intervention implemented by the Italian region of Tuscany in the period 2007-2013, we discuss the advantages and limitations of the indicators that have been set up by the regional government in order to evaluate the performance of innovation poles, a particular type of innovation intermediary, and discuss some feasible avenues for their improvement.
    Keywords: innovation policy; innovation intermediaries; innovation poles; evaluation; technology transfer policies
    JEL: O25 O38 O30
    Date: 2015–10
  14. By: Brown, J. David (U.S. Census Bureau); Earle, John S. (George Mason University); Morgulis, Yana (University of California, San Diego)
    Abstract: Analyzing a list of all Small Business Administration (SBA) loans in 1991 to 2009 linked with annual information on all U.S. employers from 1976 to 2012, we apply detailed matching and regression methods to estimate the variation in SBA loan effects on job creation and firm survival across firm age and size groups. The number of jobs created per million dollars of loans generally increases with size and decreases in age. The results imply that fast-growing firms ("gazelles") experience the greatest financial constraints to growth, while the growth of small, mature firms is least financially constrained. The estimated association between survival and loan amount is larger for younger and smaller firms facing the "valley of death".
    Keywords: job creation, firm survival, credit constraints, small businesses, government loan guarantees
    JEL: H81
    Date: 2015–11
  15. By: Ferlito, Carmelo
    Abstract: Joseph A. Schumpeter developed a very well-known theory of entrepreneurs and entrepreneurship, centred on the concept of ‘new combinations’. According to him, innovation and entrepreneurship are destructive elements driving the system beyond an equilibrium position and setting in motion a competitive process, in order to reach a new equilibrium point. Though Austrian, Schumpeter was never a member of the Austrian School of Economics. However, his position as regards entrepreneurship is widely commented on by Austrian School members. In particular, Israel M. Kirzner devoted his research activity to develop an alternative concept of entrepreneurship rooted in Misesian human action and the concept of ‘alertness’. This paper aims to analyze and compare the two positions, in an attempt not so much to stress differences but to find possible common paths for further developments of the concept of entrepreneurship.
    Keywords: Schumpeter, Kirzner, Entrepreneur, Entrepreneurship, Innovation, Austrian School of Economics.
    JEL: B13 B25 B53 L26 O31 O33
    Date: 2015–05–12

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