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on Small Business Management |
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Issue of 2016‒02‒17
twenty-two papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | YoungGak KIM; IKEUCHI Kenta; KWON Hyeog Ug; FUKAO Kyoji |
| Abstract: | Using firm level panel data taken from the Basic Survey of Japanese Business Structure and Activities between 1991 and 2010, we examine the relationship between innovation, excessive labor, and employment growth in Japan. The main results of this paper are as follows: (1) There are relatively many firms holding excessive labor. (2) The degree of the excessive labor is serious for large firms. (3)Firms do not adjust employment instantly. If excessive labor for the current term exists, firms gradually reduce employment. This result is consistent with theoretical model considering adjustment cost. (4) Other things being equal, as firms invest aggressively in research and development (R&D), they increase employment. (5) The negative correlation between total factor productivity (TFP) growth and employment growth is observed, whereas TFP growth by R&D has a positive impact on employment. (6) The product innovation that is proxied by R&D positively affects employment in the manufacturing sector. On the other, in the non-manufacturing sector, the process innovation that is proxied by capital formation increases employment. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:16002&r=sbm |
| By: | Brunow, Stephan; Grünwald, Luise |
| Abstract: | Theoretical and empirical contributions on export behavior highlight the importance of firms' productivity and their levels of economies of scale on firms' export success in `foreign markets. In the context of agglomeration economies, firms enjoy produc-tivity gains when they are located close to competitors or upstreaming industries and they benefit from knowledge spillovers and other positive externalities. In such a stimulating environment, firms become more prone to be exporters. Beyond the role played by externalities, firms may benefit when they employ a diverse workforce and when the interaction of distinct knowledge and related problem-solving abilities increases productivity and secures export success. In this paper, we ask whether German firms (i.e., establishments) benefit from localization and urbanization exter-nalities and face higher export proportions. We also control for a variety of estab-lishment characteristics and workforce diversity. For this purpose, a comprehensive German data set that combines survey data and administrative data is used. While controlling for firm heterogeneity in a fractional response model, we provide evi-dence that manufacturing establishments and smaller establishments (up to 250 employees) benefit most from externalities and especially from knowledge spillover. There is weak evidence supporting the benefit of workforce diversity; however, that factor could explain between-establishment variation. |
| JEL: | D22 F14 M14 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113182&r=sbm |
| By: | Hiller, Sanne; Bitzer, Jürgen; Gören, Erkan |
| Abstract: | This paper explores the role of immigrant employees for a firm's capability to absorb international knowledge. Using matched employer-employee data from Denmark for the years 1999 to 2009, we are able to show that non-Danish employees from technological advanced countries contribute significantly to firm's economic output through their ability to access international knowledge. The empirical results suggest that the immigrants' impact increases if they come from technological advanced countries, have a high educational level, and are employed in high-skilled positions. However, the latter does not hold for immigrant managers. |
| JEL: | D20 J82 L20 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113205&r=sbm |
| By: | Brenner, Thomas |
| Abstract: | This paper studies the effects of public research (publications) and innovation output (patents) on national economic growth with the help of a GMM panel regression including 114 countries. Effects on productivity growth and capital and labor inputs are distinguished. Furthermore, different time lags are examined for the various analyzed effects and two time periods as well as less and more developed countries are studied separately. The results confirm the effect of innovation output on productivity for more developed countries. Simultaneously, innovation output is found to have negative impacts on capital and labor inputs, while public research is found to have positive impacts on labor inputs. |
| JEL: | O11 O31 C23 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112873&r=sbm |
| By: | Broekel, Tom; Brachert, Matthias; Duschl, Matthias; Brenner, Thomas |
| Abstract: | Subsidies for R&D are an important tool of public R&D policy, which motivates extensive scientific analyses and evaluations. The paper adds to this literature by arguing that the effects of R&D subsidies go beyond the extension of organizations monetary resources invested into R&D. It is argued that collaboration induced by subsidized joint R&D projects yield significant effects that are missed in traditional analyses. An empirical study on the level of German labor market regions substantiates this claim showing that collaborative R&D subsidies impact regions innovation growth when providing access to related variety and embedding regions into central positions in cross- regional knowledge networks. |
| JEL: | L14 O31 R12 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112808&r=sbm |
| By: | Riedel, Nadine; Böhm, Tobias; Karkinsky, Tom; Knoll, Bodo |
| Abstract: | This paper complements a small but growing literature on the effect of corporate taxes on R&D investment and patent holdings. We provide evidence that patent strategies are exploited as a device to shift income to low-tax countries. Using data on the population of corporate patent applications to the European Patent Office, we show that the location of R&D investment and patent ownership is geographically separated in a non-negligble number of cases. We find that countries which levy low patent income taxes attract ownership of foreign-invented patents, especially those patents that have a high earnings potential. Moreover, our results suggest that the probability for a patent to be owned by a party in a tax haven country significantly decreases if the inventor country has implemented controlled foreign company laws. |
| JEL: | H26 H25 H30 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112978&r=sbm |
| By: | Dinlersoz, Emin (U.S. Census Bureau); Hyatt, Henry R. (U.S. Census Bureau); Janicki, Hubert P. (U.S. Census Bureau) |
| Abstract: | Young and small firms are typically matched with younger and nonemployed individuals, and they provide these workers with lower earnings compared to other firms. To explore the mechanisms behind these facts, a dynamic model of entrepreneurship is introduced, where individuals can choose not to work, become entrepreneurs, or work in one of the two sectors: corporate or entrepreneurial. The differences in production technology, financial constraints, and labor market frictions lead to sector-specific wages and worker sorting across the two sectors. Individuals with lower assets tend to accept lower-paying jobs in the entrepreneurial sector, an implication that finds support in the data. The effect on the entrepreneurial sector of changes in key parameters is also studied to explore some channels that may have contributed to the decline of entrepreneurship in the United States. |
| Keywords: | entrepreneurship, borrowing constraints, financial frictions, labor market frictions, worker sorting, decline in entrepreneurship |
| JEL: | L26 J21 J22 J23 J24 J30 E21 E23 E24 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9693&r=sbm |
| By: | Kleinhans, Reinout (Delft University of Technology); van Ham, Maarten (Delft University of Technology) |
| Abstract: | In many European countries, community entrepreneurship is increasingly considered as a means to initiate small-scale urban regeneration. However, residents in deprived communities are often viewed to lack key entrepreneurial attributes and skills. This paper reports a unique experiment in the Netherlands with nascent community enterprises which received start-up support from a private foundation. This paper investigates how active citizens perceive the benefits and drawbacks of this support. In depth analysis of transcriptions of repeated semi-structured interviews (panel design with the same respondents) with representatives of established community enterprises and resident groups were analysed. While we find positive feedback on provided support, our research provides strong evidence for a 'support paradox': the support that was intended to overcome a number of entry barriers and difficulties on the road to community entrepreneurship has in fact significantly hampered progress among several of the studied CEs. |
| Keywords: | community enterprises, community entrepreneurship, active citizenship, support, urban regeneration, self-organisation, The Netherlands |
| JEL: | D71 L26 L31 R23 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9625&r=sbm |
| By: | Bolli, Thomas; Kemper, Johanna |
| Abstract: | This paper exploits exceptions in the application of employment protection legislation (EPL) to small firms beneath a particular size threshold to test the theoretical hypothesis that EPL increases the incentives of firms to train their employees in a regression discontinuity setting. Using firm-level data from Finland and Italy provides no empirical evidence for this hypothesis. In fact, the results rather suggest a potentially negative impact, which is unstable across empirical specifications though. We test whether this might be due to a negative selection of employees by comparing firms with low and high shares of old employees. The insignificantly higher effect of EPL for firms with older workers provides at best suggestive evidence that EPL affects training negatively though. |
| JEL: | J24 J21 L51 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112895&r=sbm |
| By: | Rydzek, Benedikt; Egger, Peter; Riezman, Raymond |
| Abstract: | In this paper we develop a model to analyze the effects of (country-pair-specific) costs of creating, transferring and accessing intangible assets for multi-unit firms. These costs might vary with the cultural distance between countries, such as the difference in language, work ethics or other moral values. We argue that these costs are an important factor to explain why most firms are single unit firms, most multi-unit firms have only one affiliated unit and why multinational firms are only a tiny fraction of all firms in a country. Therefore, we develop a model with heterogeneous firms that produce differentiated goods in different firm units. The number of units depends on the costs of transferring intangible assets. If these costs are relatively high, most firms will be single unit firms. Furthermore, if costs of transferring intangible assets to an affiliated firm in a foreign country are even higher, only the most productive firms will be multinational firms. Additionally, multinational firms will be open more affiliated firms in countries that are culturally closer to their home country. These findings square with stylized facts and estimation results presented in the paper. |
| JEL: | F23 L11 L25 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112925&r=sbm |
| By: | Smajlbegovic, Esad |
| Abstract: | This study analyzes the impact of regional economic conditions on stock returns. I identify all U.S. states that are economically relevant for a firm through textual analysis of annual reports and construct a novel proxy for regional economic activity. Using this proxy, I find that economic conditions of firm-relevant U.S. regions positively influence stock returns on a monthly basis. This finding is robust to short-term reversal, individual stock momentum, industry momentum, geographic dispersion and a list of standard controls. Additionally, these results indicate that information arising from all relevant states matters over and above the information content of the mere headquarter state. Furthermore, I show that forecasts on regional economic activity predict stock returns. A zero-cost trading strategy based on this new predictive variable generates a risk-adjusted return of 6.3 (8.3) percent per year using an equal-weighted (value-weighted) portfolio. Evidence indicates that forecasts of regional activity also predict firms' real operations, suggesting that economic conditions of U.S. regions capture an important cash flow component of stock returns. Finally, this study shows that information on regional economic activity is gradually incorporated into stock prices and that the return predictability is stronger among difficult-to-arbitrage firms. |
| JEL: | G12 G14 R11 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112854&r=sbm |
| By: | Neubäumer, Renate Ingrid; Müller, Steffen |
| Abstract: | We develop the hypotheses that the size of training firms affects long-run cumulated unemployment exposure, and that the access to large training firms depends on young workers ability and their luck to live in a region with many large and medium-sized training firms. We test these hypotheses empirically by using a large administrative data set and find corroborative evidence. |
| JEL: | D21 L25 L26 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112923&r=sbm |
| By: | Julian di Giovanni (Universitat Pompeu Fabra, Barcelona GSE, CREI and CEPR); Andrei A. Levchenko (University of Michigan, NBER, and CEPR); Isabelle Méjean (Ecole Polytechnique and CEPR) |
| Abstract: | This paper investigates the role of individual firms in international business cycle comovement using data covering the universe of French firm-level value added, bilateral imports and exports, and cross-border ownership over the period 1993-2007. At the micro level, controlling for firm and country effects, trade in goods with a particular foreign country is associated with a significantly higher correlation between a firm and that foreign country. In addition, foreign multinational affliates operating in France are significantly more correlated with the source economy. The impact of direct trade and multinational linkages on comovement at the micro level has significant macro implications. Because internationally connected firms are systematically larger than noninternationally connected firms, the firms directly linked to foreign countries represent only 8% of all firms, but 56% of all value added, and account for 75% of the observed aggregate comovement. Without those linkages the correlation between France and foreign countries would fall by about 0.091, or one-third of the observed average business cycle correlation of 0.29 in our sample of partner countries. These results are evidence of transmission of business cycle shocks through direct trade and multinational ownership linkages at the firm level. |
| Keywords: | Comovement, International Trade, Firm-Level Shocks, Large Firms |
| JEL: | F44 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:mie:wpaper:649&r=sbm |
| By: | Caliendo, Marco (University of Potsdam); Künn, Steffen (Maastricht University); Weißenberger, Martin (University of Potsdam) |
| Abstract: | Many countries support business start-ups to spur economic growth and reduce unemployment with different programmes. Evaluation studies of such programmes commonly rely on the conditional independence assumption (CIA), allowing a causal interpretation of the results only if all relevant variables affecting participation and success are accounted for. While the entrepreneurship literature has emphasised the important role of personality traits as predictors for start-up decisions and business success, these variables were neglected in evaluation studies so far due to data limitations. In this paper, we evaluate a new start-up subsidy for unemployed individuals in Germany using propensity score matching under the CIA. Having access to rich administrative-survey data allows us to incorporate usually unobserved personality measures in the evaluation and investigate their impact on the estimated effects. We find strong positive effects on labour market reintegration and earned income for the new programme. Most importantly, results including and excluding individuals' personalities do not differ significantly, implying that concerns about potential overestimation of programme effects in absence of personality measures might be less justified if the set of other control variables is rich enough. |
| Keywords: | start-up subsidies, evaluation, self-employment, personality, treatment effects |
| JEL: | C14 L26 H43 J68 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9628&r=sbm |
| By: | Li, Chen |
| Abstract: | Using novel German district-level data from 1999-2011, this paper analyses whether the presence of immigrants in a particular location helps to attract inward FDI from the immigrants' country of origin. Results show that a one standard-deviation increase in the immigrant share is associated with a 3.3% rise in firm entry. This effect is stronger for an investor's first entry into Germany, and there is indication that firms from developing countries depend more on immigrants. A quasi-natural experiment exploiting the migration of ethnic Germans from the former Soviet Union in the 1990s (`Sp taussiedler') confirms the results. |
| JEL: | F14 F22 F23 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113130&r=sbm |
| By: | Franke, Günter; Draheim, Matthias |
| Abstract: | This paper analyzes the governance and performance of firms which, according to simplistic agency theory, should not be viable. These firms are fully or partially owned by a foundation which itself is not owned by natural or legal persons. Therefore, residual claimholders have restricted or no influence on corporate governance. The lack of owners strengthens other stakeholders, in particular employees. Relative to matching family firms, German foundation owned firms are larger in terms of employees and operating revenue, and substitute labor for material, but not for capital. Their hiring and firing policy is about the same. They follow a more conservative financing policy, their financial performance is somewhat weaker. |
| JEL: | G32 G34 L21 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:113217&r=sbm |
| By: | Fausto Brito (Cedeplar-UFMG); Breno A. T. D. de Pinho (Cedeplar-UFMG) |
| Abstract: | The urban network spatially organizes the municipalities and their changes, mark an increasingly integrated economy, incorporating new spaces, and at the same time, ensuring the permanence of serious and historical regional imbalances. The immigration point of view , the hierarchical integration of different areas of migratory influence is nationally controlled by the metropolitan regions of São Paulo, mainly , and Rio de Janeiro and Brasilia, combining with regional and state hierarchies , guaranteed by the centrality of the other metropolitan areas and medium-sized cities . Analysis of the spatial distribution of the population of over five thousand cities, linked by internal migration and organized by lush urban structure, is the purpose of this article. |
| Keywords: | spatial distribution of population; urbanization; metropolization; internal migration |
| JEL: | Y80 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td524&r=sbm |
| By: | Fossen, Frank M.; König, Johannes |
| Abstract: | We estimate the impact of a differential treatment of paid employees versus self-employed workers in a public health insurance system on the entry rate into entrepreneurship. In Germany, the public health insurance system is mandatory for most paid employees, but not for the self-employed, who usually buy private health insurance. Private health insurance contributions are relatively low for the young and healthy, and until 2013 also for males, but less attractive at the other ends of these dimensions and if membership in the public health insurance system allows other family members to be covered by contribution-free family insurance. Therefore, the health insurance system can create incentives or disincentives to starting up a business depending on the family's situation and health. We estimate a discrete time hazard rate model of entrepreneurial entry based on representative household panel data for Germany, which include personal health information, and we account for non-random sample selection. We estimate that an increase in the health insurance cost differential between self-employed workers and paid employees by 100 euro per month decreases the annual probability of entry into self-employment by 0.38 percentage points, i.e. about a third of the average annual entry rate. The results show that the phenomenon of entrepreneurship lock, which an emerging literature describes for the system of employer provided health insurance in the USA, can also occur in a public health insurance system. Therefore, entrepreneurial activity should be taken into account when discussing potential health care reforms, not only in the USA and in Germany. |
| JEL: | L26 I13 J20 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112934&r=sbm |
| By: | Schäffler, Johannes; Hecht, Veronika; Moritz, Michael |
| Abstract: | On the basis of a unique dataset the regional distribution of German multinationals and their Czech affiliates is analysed for both countries. The investigation covers market size and agglomeration features, distance issues, and labour market characteristics. Apart from the vital role of large markets and a low transport distance there are further crucial findings regarding joint foreign direct investment (FDI) projects that can be revealed from a home-host country perspective: the strong position of the common border region, the non-relevance of a relatively high wage gap between the site of the headquarters and the location of the affiliate in coincidence with the great importance of the availability of high-skilled employees in the target country, and differences in the significance of sectoral employment shares. |
| JEL: | F15 F23 R12 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112891&r=sbm |
| By: | Vuong, Van Anh; Peters, Bettina; Roberts, Mark |
| Abstract: | In this paper, we estimate a dynamic structural model of a rm s decision to invest in R&D and use it to measure the expected long-run bene t from R&D investment. We apply the model to German rms in ve high-tech manufacturing industries and distinguish rms by whether they sell in just the domestic market or also export some of their production. We nd that R&D investment leads to a higher rate of product and process innovation among exporting rms and these innovations have a larger impact on productivity improvement in export market sales. As a result, exporting rms have a higher payo from R&D investment, invest in R&D more frequently than rms that only sell in the domestic market, and, subsequently, have higher rates of productivity growth. The endogenous investment in R&D is an important mechanism that leads to a divergence in the long-run performance of rms that di er in their export market exposure. |
| JEL: | L60 O31 O33 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112938&r=sbm |
| By: | White, Michael (Policy Studies Institute); Bryson, Alex (University College London) |
| Abstract: | Using nationally representative workplace data we find substantial use of high-performance work systems (HPWS) in Britain's small enterprises. We find empirical support for the proposition that HPWS have a non-linear association with employees' overall job attitude, with a positive association apparent where HPWS are used intensively. These associations are robust to factors often cited as obstacles to HPWS implementation such as informality and family ownership. |
| Keywords: | human resource management, high-performance work system, small firms, organisational commitment, job satisfaction |
| JEL: | J28 M50 M54 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9690&r=sbm |
| By: | Fritsch, Ursula |
| Abstract: | This paper empirically investigates the effects of offshoring on innovation in a sample of 18 developed countries. Offshoring of services relates positively to innovation whereas offshoring of manufacturing depicts a negative relation with innovation. Solely offshoring manufacturing to high-income countries is found to be detrimental to domestic innovation, but not offshoring of manufacturing to emerging countries. These results are robust to an instrumental variables approach. Labor market dynamics can mitigate or even reverse these negative effects of offshoring of manufacturing if skill upgrading takes place simultaneously. This paper documents that innovation effects differ from the positive productivity effects found in earlier research and suggests that policy makers should take these different effects into account when designing a regulatory framework for further trade integration. |
| JEL: | F14 F16 O30 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc15:112973&r=sbm |