nep-sbm New Economics Papers
on Small Business Management
Issue of 2016‒03‒06
nineteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Clusters and collective learning networks: the case of the Competitiveness Cluster ‘Secure Communicating Solutions’ in the French Provence-Alpes-Côte d’Azur Region By Christian Longhi
  2. The Bright Side of Financial Derivatives: Options Trading and Firm Innovation By Blanco, Iván; Wehrheim, David
  3. The effect of house prices on business start-ups: A review and analysis using Swedish regional data By Berggren, Björn; Fili, Andreas; Wilhelmsson, Mats
  4. Knowledge Spillovers, absorptive capacity and growth: An Industry-level Analysis for OECD Countries By Ioannis Bournakis; Dimitris Christopoulos; Sushanta Mallick
  5. The Link between R&D, Innovation and Productivity: Are Micro Firms Different? By Baumann, Julian; Kritikos, Alexander S.
  6. Concentration on the few? R&D and innovation in German firms 2001 to 2013 By Rammer, Christian; Schubert, Torben
  7. FDI and Heterogeneous Firms: Evidence from BRIC Countries By Valeria, Gattai; Rajssa, Mechelli; Piergiovanna, Natale
  8. Economic Clusters Research: An Annotated Bibliography By Jing Chen; Randall Jackson
  9. Two Sides to the Evasion: The Pirate Bay and the Interdependencies of Evasive Entrepreneurship By Elert, Niklas; Henrekson, Magnus; Lundblad, Joakim
  10. God Helps Those Who Help Themselves! A Study of User-Innovation in Russia By Konstantin Fursov; Thomas Thurner
  11. Innovation in professional services in a context of disruption By Bailey, Andrew
  12. Industrial Dynamics: A Review of the Literature 1990-2009 By Carlsson , Bo
  13. Availability of business services and outward investment: Evidence from French firms By Görg, Holger; Jabbour, Liza
  14. Family Firms, Corporate Governance and Export By Raoul Minetti; Pierluigi Murro; Monica Paiella
  15. Outward FDI by Indian Manufacturing MNEs: Impacts and Implications By Khanindra Ch. Das
  16. Will the real R&D employees please stand up? Effects of tax breaks on firm level outcomes By Irem Guceri
  17. Intra-Firm Diffusion of Green Energy Technologies and the Choice of Policy Instruments By Tobias Stucki; Martin Wörter
  18. Enabling Participation of SMEs in International Trade and Production Networks: Trade Facilitation, Trade Finance and Communication Technology By Yann Duval; Chorthip Utoktham
  19. Research and development strategy for environmental technology in Japan: A comparative study of the private and public sectors By Fujii, Hidemichi; Managi, Shunsuke

  1. By: Christian Longhi (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Since the development of the knowledge based economies, clusters and clusters policies have been the subject of increased interest, as sources of knowledge, innovation, and competitiveness. The paper focuses on a case study drawn from the French cluster policy, the pole of competitiveness ‘Secure Communicating Solutions’ in the French Provence-Alpes-Côte d’Azur Region, based on two high tech clusters, Rousset – Gémenos and Sophia-Antipolis. The policy aims to provide the firms incentives to build network relations of heterogeneous actors to trigger innovative processes. The analysis of the collaborative R&D projects of the pole provides insights on the nature of the collective learning networks working in the clusters as well as the prevailing organizational forms resulting from the firms strategies. It show that knowledge spillovers are not simply “in the air” but very specific of the learning networks and clusters from which they belong. Clusters thus need to be analyzed jointly with networks in order to understand the processes underlying their innovation capacity
    Keywords: Collective Learning Networks,Knowledge,Innovation,Clusters,Cluster Policy,Social Network Analysis
    Date: 2015
  2. By: Blanco, Iván; Wehrheim, David
    Abstract: Do financial derivatives enhance or impede innovation? We aim to answer this question by examining the relationship between equity options markets and standard measures of firm innovation. Our baseline results show that firms with more options trading activity generate more patents and patent citations per dollar of R&D invested. We then investigate how more active options markets affect firms' innovation strategy. Our results suggest that firms with greater trading activity pursue a more creative, diverse and risky innovation strategy. We discuss potential underlying mechanisms and show that options appear to mitigate managerial career concerns that would induce managers to take actions that boost short-term performance measures. Finally, using several econometric specifications that try to account for the potential endogeneity of options trading, we argue that the positive effect of options trading on firm innovation is causal.
    Keywords: innovation, R&D productivity, options market, stock price efficiency, career concerns
    JEL: D81 G12 G14 G30 G38 O31 O32
    Date: 2016–02–04
  3. By: Berggren, Björn (Department of Real Estate and Construction Management, Royal Institute of Technology); Fili, Andreas (Department of Real Estate and Construction Management, Royal Institute of Technology); Wilhelmsson, Mats (Department of Real Estate and Construction Management, Royal Institute of Technology)
    Abstract: Entrepreneurs are at the core of economic development in that they start new businesses or make existing firms grow. To fulfill this important role, entrepreneurs need access to finance. Owing to information asymmetry and the relatively high risk associated with business start-ups, many financiers shy away from engaging in relationships with firms during the early stages of their development. Based on the existing body of knowledge on the financing of entrepreneurship, we know that insider finance is of paramount importance in the early stages of firms’ development. We expand this knowledge base by analyzing the influence of house prices on business start-ups across municipalities in Sweden. In our analysis, we include data from all municipalities in Sweden. Our data on house prices and control variables are collected in period one, and our data on the frequency of start-ups are collected in period two. We find that rising house prices in a municipality lead to a higher frequency of start-ups. In our regression analysis, we find that a 1% increase in house prices leads to a 0.14% increase in start-ups. Our findings are in line with the limited international research that has been previously conducted, and for this reason, they could be seen as a vital addition to the existing body of knowledge within the area of entrepreneurship and regional development.
    Keywords: Business start-ups; entrepreneurship; financing; house prices; mortgages
    JEL: M13 R11 R31
    Date: 2015–10–06
  4. By: Ioannis Bournakis; Dimitris Christopoulos; Sushanta Mallick
    Abstract: Given the decline in growth momentum in the manufacturing sector in many OECD countries, the role of knowledge-based capital has emerged as a key driver for sustained growth. While empirical studies on estimating knowledge spillovers have usually been undertaken at the country level, the spillover effects can be more definitive only if the analysis is conducted at the industry-level. The effectiveness of international spillovers is conditional on recipient country’s absorptive capacity and this is an important component of the spillover mechanism that has not attracted significant attention so far. This paper therefore assesses the effect of spillovers in driving per capita output growth taking into account the role of absorptive capacity. Our main findings are first, that there is evidence for a robust positive relationship between human capital and output growth across these countries at industry level. Second, the potential of international spillover gains is greater in countries with higher human capital and a more protective environment as far as intellectual property rights are concerned. Countries that improve their absorptive capacity can potentially increase gains from spillovers either via trade or FDI (including vertical FDI). Finally, significant heterogeneity is found between high and low-tech industries with high-tech group displaying greater knowledge spillovers, suggesting that low-tech industries need to be more innovative in order to absorb the technological advancements of domestic and international rivals.
    Keywords: Growth; R&D; Knowledge Spillovers; Absorptive Capacity; Human Capital; Intellectual Property Rights.
    JEL: E24 F1 O3 O4
    Date: 2015–04
  5. By: Baumann, Julian (DIW Berlin); Kritikos, Alexander S. (DIW Berlin)
    Abstract: We analyze the link between R&D, innovation, and productivity in MSMEs with a special focus on micro firms with fewer than 10 employees; usually constituting the majority of firms in industrialized economies. Using the German KfW SME panel, we examine to what extent micro firms are different from other firms in terms of innovativeness. We find that while firms engage in innovative activities with smaller probability, the smaller they are, for those firms that do make such investment, R&D intensity is larger the smaller firms are. For all MSMEs, the predicted R&D intensity is positively correlated with the probability of reporting innovation, with a larger effect size for product than for process innovations. Moreover, micro firms benefit in a comparable way from innovation processes as larger firms, as they are similarly able to increase their labor productivity. Overall, the link between R&D, innovation, and productivity in micro firms does not largely differ from their larger counterparts.
    Keywords: MSMEs, micro firms, small firms, R&D, innovation, productivity
    JEL: L25 L60 O31 O33
    Date: 2016–02
  6. By: Rammer, Christian; Schubert, Torben
    Abstract: Innovation activities in the German enterprise sector showed two opposing trends over the past two decades: While total innovation expenditures grew substantially, the number of firms conducting innovation activities fell sharply. Innovation expenditures hence concentrate on fewer firms. In this paper we analyse the evolution of firms' innovation and R&D activities. Based on panel data from the German part of the Community Innovation Survey covering a 13 years period (2001 to 2013) we use continuous-time Markov-Chains to analyse the changing properties of the firms' choices to conduct R&D and non-R&D innovation activities. Our findings are threefold. As compared to the pre-crisis period 2001-2007 there is a considerable change in innovation and R&D behaviour of German firms from 2008 onwards with an increasing number of firms exiting R&D and innovation activities. Smaller firms are the main driver behind this process, particularly with regard to quitting non-R&D innovation activities. Although smaller firms were also less likely to move to higher levels of innovativeness and R&D engagement and more likely to fall back in the pre-crisis period, these trends have been more pronounced in the crisis and even in the post-crisis period. Both public innovation support and better financial capabilities can increase the rate chances to move to higher levels of innovativeness and reduce the chances to fall back.
    JEL: O31 C22
    Date: 2016
  7. By: Valeria, Gattai; Rajssa, Mechelli; Piergiovanna, Natale
    Abstract: This paper investigates the link between Outward Direct Investment (ODI) and the performance of BRIC firms. Drawing on firm-level data, we introduce a rich taxonomy of ODI that accounts for the decision to invest and the number, destination and ownership structure of foreign affiliates. Through different econometric models and specifications, we consistently demonstrate that BRIC firms engaged in ODI are in the minority, but they outperform domestic enterprises. Moreover, firms selecting less preferred ODI types outperform firms undertaking other ODI strategies.
    Keywords: ODI, FDI, Performance, BRIC, Firm-Level Data
    JEL: F23 L25 O57
    Date: 2016–01–18
  8. By: Jing Chen (Regional Research Institute, West Virginia University); Randall Jackson (Regional Research Institute, West Virginia University)
    Abstract: The concept of “economic clusters” is usually referred to as geographical concentrations of firms in the same or related industries. Illustrative examples of economic clusters are medical devices clusters in Massachusetts and high-tech clusters in Silicon Valley, California. Such phenomenon have attracted interests from geographers, regional economists, urban planners and regional scientists a long time ago, yet in recent decades it has become extremely popular among policy-makers for regional development. Thus, an annotated bibliography on the state of the art of economic cluster research will be useful for current academicians and practitioners and will help them gain a deep and comprehensive understanding towards current economic clusters research
    Keywords: economic clusters, agglomerations, typologies
    JEL: R11 R12 O18
    Date: 2015–12
  9. By: Elert, Niklas (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Lundblad, Joakim (Centre for Innovation, Research and Competence in the Learning Economy (CIRCLE))
    Abstract: Evasive entrepreneurs innovate by circumventing or disrupting existing formal institutional frameworks by evading them. Since such evasions rarely go unnoticed, they usually lead to responses from lawmakers and regulators. We introduce a conceptual model to illustrate and map the interdependence between evasive entrepreneurship and the regulatory response it provokes. We apply this framework to the case of the file sharing platform The Pirate Bay, a venture with a number of clearly innovative and evasive features. The platform was a radical, widely applied innovation that transformed the Internet landscape, yet its founders became convicted criminals because of it. Applying the evasive entrepreneurship framework to this case improves our understanding of the relationship between policymaking and entrepreneurship in the digital age, and is a first step towards exploring best responses for regulators facing evasive entrepreneurship.
    Keywords: Entrepreneurship; Innovation; Institutions; Regulation; Self-employment
    JEL: L50 M13 O31 P14
    Date: 2016–01–06
  10. By: Konstantin Fursov (National Research University Higher School of Economics); Thomas Thurner (National Research University Higher School of Economics)
    Abstract: This paper studies the specificities of Russian user-innovators on a sample of 1670 home interviews. The percentage of end users who innovate in their daily life in the Russian population and the willingness to share one’s ideas and developments is much higher in comparison to western countries and probably historically rooted in long-standing community activities which spread during soviet times. Our data suggests the existence of two different groups of user-innovators: one group of urban, male, well educated, and financially better-situated individuals who innovate for career reasons (or for fun) vs. a much more diverse group of small town folks who innovate out of necessity. While the first group confirms findings well described in the literature, the second group seems to be unique to developing markets and to Russia in particular. User-innovation happens also in remote areas, and among user groups outside of the working age. As these user-innovators are reluctant to share their innovations with others and would rather keep them for themselves, a great source of ideas and commercial opportunity remains untouched. Russia’s innovation system has so far concentrated on the classical innovation modes around major cities or big companies. Given Russia’s extensive presence of user-innovators, it might be a promising policy move to provide greater support to existing and emerging amateur communities. We believe that our study adds insights into the informal and totally neglected viewpoint on Russia’s innovation.
    Keywords: user innovation, innovation community, Russia
    JEL: H00 O31 O32 O33
    Date: 2016
  11. By: Bailey, Andrew
    Abstract: This research is focussed on how large professional services firms in New Zealand innovate in the context of and as a response to potential disruption. The theory of disruptive innovation describes how incumbents can be overwhelmed by innovative new entrants. Typically these new entrants begin in markets which are unattractive to incumbents because they can’t make money there with their existing business models. Therefore, some have claimed that new businesses must be set up, or various dual approaches adopted, to survive against disruptive new entrants. Semi-structured interviews were held with senior members of large professional services firms to understand their perspective on how innovation is managed in their organisation in the context of potential disruption and the capabilities which support them in doing this. From these interviews, a number of themes emerged which were compared with some of the approaches advocated by the literature in terms of responding to potential disruption. The research found that large professional services firms in New Zealand are focussed on how they can enable innovation from within the firm – typically built off the back of client demand and concentrating on how they work differently with clients, using new methodologies and resourcing models – particularly partnering with third parties to play a service aggregator role – to deliver better outcomes for clients and maintain the professional services firms’ incumbency. At the same time, there are some tentative steps to think about how incubation and/or ‘dual organisations’ might be able to test more disruptive, alternative business models.
    Keywords: Disruptive, Innovation, Professional services,
    Date: 2015
  12. By: Carlsson , Bo (Case Western Reserve University, Weatherhead School of Management, Department of Economics, Cleveland and CIRCLE, Lund University)
    Abstract: This paper reviews the literature in the field of Industrial Dynamics as it has emerged since I first introduced the term in 1985. Nearly 8,000 articles in 12 major journals have been reviewed and classified under five broad themes that constitute the basic questions in industrial dynamics: 1. The causes of industrial development and economic growth, including the dynamics and evolution of industries and the role of entrepreneurship 2. The nature of economic activity in the firm and the dynamics of supply, particularly the role of knowledge. 3. How the boundaries and interdependence of firms change over time and contribute to economic transformation. 4. Technological change and its institutional framework, especially systems of innovation. 5. The role of public policy in facilitating adjustment of the economy to changing circumstances at both micro and macro levels. Under each theme, the main findings and their implications for theory and policy are summarized.
    Keywords: industrial dynamics; literature review; knowledge; technological change; institutions; growth
    JEL: D00 D20 L00 O30
    Date: 2016–01–18
  13. By: Görg, Holger; Jabbour, Liza
    Abstract: This paper considers the link between the local availability of services and a firm's decision to become a multinational. This is a highly topical issue, given that many industrialised countries are increasingly becoming services economies and firms become increasingly more globalised. In an analysis of rich firm level data for France we find evidence that the availability of services in the home country indeed has a positive impact on firms' decisions to become multinationals. This is robust to endogeneity concerns. The result can be interpreted in a simple set up where the local availability of business services improves firm efficiency and, hence, allows firms to overcome sunk costs of investing abroad more easily.
    Keywords: Business Services,Foreign Direct Investment,Multinationals
    JEL: F23 R11
    Date: 2015
  14. By: Raoul Minetti (Michigan State University); Pierluigi Murro (LUMSA University); Monica Paiella (University Parthenope)
    Abstract: This paper tests the impact of family ownership on fi…rms' export decisions using a data set of 20,000 Italian manufacturers. We fi…nd that family ownership increases the probability that fi…rms export, although the effect weakens as ownership concentration rises. The bene…fit of family owners is especially pronounced when they retain control rights (ownership is aligned with control) and seek the support of external managers (ownership is partially separated from management). The results suggest that families better internalize the long-run benefi…ts of internationalization, but that their limited competencies could attenuate this benefi…t in high-tech industries and in remote and unfamiliar export markets.
    Keywords: Family firms; Export; Corporate governance
    JEL: G32 G34
    Date: 2014–10
  15. By: Khanindra Ch. Das (Rajiv Gandhi Indian Institute of Management (RGIIM))
    Abstract: Outward foreign direct investment (OFDI) by Indian firms has increased significantly in recent years. Such investments by Indian firms have gone to more than 100 host countries. However, little is known about the effects of such OFDI on domestic activity of Indian multinational enterprises (MNEs). The paper investigates the home-country effects of OFDI by Indian manufacturing firms during 2008/09 to 2011/12 using a quasi-experimental technique. A priori, the relationship between firm’s OFDI and domestic activity is ambiguous as both complementary and substitution effects could be induced by such investment activities. The propensity score matching technique is used, to construct treatment and control groups, for examining the effect of engaging in OFDI on domestic activities of Indian manufacturing MNEs. The empirical evidence suggests that OFDI by Indian MNEs has positive impact on export intensity and research and development (R&D). On the other hand, no significant impact could be found on domestic investments, output, employment, import of raw materials, and import of capital goods. Overall, no significant negative (or substitution) effect of OFDI on domestic activity could be discerned in this study. Nevertheless, to derive desired complementary benefits of OFDI by the manufacturing firms, policies may be directed to enhance the country’s international supply chain connectivity for greater participation in global value chain and production network.
    Keywords: Outward FDI, Multinational Enterprises, Manufacturing, Propensity Score Matching, Production Network
    JEL: F13 F14 F21 F23 O31
    Date: 2015–04
  16. By: Irem Guceri (Oxford University Centre for Business Taxation)
    Abstract: This paper evaluates the effect of R&D tax incentives in a quasi-experimental setting. I identify the impact by exploiting a reform in UK policy which increased the SME threshold from 250 to 500 employees. First, I provide evidence that tax incentives help to increase R&D spending at the company level, and the effect translates to a user cost elasticity of -1.18. Second, R&D generated through the reform may be attributable to an increase in the number of R&D employees. I use R&D survey data for which the companies do not have an incentive to relabel their ordinary spending as R&D.
    Keywords: R&D, tax credits, difference-in-differences
    JEL: H25 O30
    Date: 2016
  17. By: Tobias Stucki (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Wörter (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Environmental benefits only unfold if green (environmentally friendly) technologies are widely diffused and intensively deployed within a firm. We investigate how different types of policies - directly and in combination - affect the number of different green energy technologies adopted by a single firm (intra-firm diffusion). Using data from a dedicated survey on the diffusion of green energy technologies of 1200 Swiss firms and applying well-identified econometric models, we found that energy taxes are a very effective policy instrument for the intra-firm diffusion of green energy technologies. Even more important, however, are non-political measures that show the largest effect among all tested instruments. Additional analyses show that (a) time-consistency in policy making is more important for energy tax regimes than for regulations and (b) no evidence for complementarities between the policy types could be identified.
    Keywords: Technology Adoption, Innovation, Policies, Intra-firm diffusion, Survey data
    JEL: O31
    Date: 2016–01
  18. By: Yann Duval (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Chorthip Utoktham (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP))
    Abstract: This study aimed at identifying key factors affecting SME participation in direct export and international production networks (IPNs), both globally and in Asia and the Pacific. A global dataset of firm-level data from developing countries was analyzed to identify the main obstacles to establishment and operation of direct and indirect small and medium size exporters. Logit models of SME export and IPN participation revealed the importance of several trade facilitation and related factors. The importance of modern information technology and international quality certification appear to be particularly crucial to participation in IPNs with SMEs using both at least 13% more likely to be involved in such networks. Exporting SMEs both globally as well as in the Asia-pacific region reported access to finance as the key obstacle to their business operations. Almost 60% of Asia-Pacific exporting SMEs rely exclusively on internal financing, while only 40% do so globally. Access to a variety of external trade finance sources was found to be important to boost SME export participation, with bank financing and supplier credit found to increase likelihood of SME participation in both direct export and IPNs most. The results particularly highlighted the importance of supply chain financing to facilitate direct export participation of Asia-Pacific SMEs. Comparing the marginal effects of various factors on SMEs and large enterprises, a reduction in customs and trade clearance times was also found to increase SMEs likelihood of participation in export or IPNs relatively more than that of larger enterprises.
    Keywords: Export participation, international production network, firm-level data, Asia and the Pacific, trade facilitation, trade finance, small and medium-sized enterprises (SMEs)
    JEL: F1 O5 C1
    Date: 2014–07
  19. By: Fujii, Hidemichi; Managi, Shunsuke
    Abstract: Environmental protection technology plays an important role in a sustainable society, simultaneously promoting economic development and pollution control. This study examines the determinants of technology inventions related to environmental protection in Japan. We use patent application data in a decomposition analysis framework. We find that environmental patent applications increase according to the prioritization of environmental patents by private companies and according to efficiency improvements in patent applications in the public sector. Additionally, patent applications related to emissions trading increased rapidly among private companies, mainly due to their increased priority after 2005. The different determinants of environmental technologies between the private and public sectors are useful for formulating effective policies to promote environmental innovation.
    Keywords: Green invention; decomposition analysis; research and development strategy; patent data; log mean Divisia index
    JEL: O32 Q55
    Date: 2016–02

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