nep-sbm New Economics Papers
on Small Business Management
Issue of 2016‒03‒23
sixteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Innovation strategies and firm growth By Stefano Bianchini; Federico Tamagni; Gabriele Pellegrino
  2. Exploring the link between Innovation and Growth in Chilean firms By Caterina Santi; Pietro Santoleri
  3. Local policies for innovation: the case of technology districts in Italy By Federica Bertamino; Raffaello Bronzini; Marco De Maggio; Davide Revelli
  4. From less promising to green? Technological opportunities and their role in (green) ICT innovation By Cecere, Grazia; Rexhäuser, Sascha; Schulte, Patrick
  5. Do Tax Incentives for Research Increase Firm Innovation? An RD Design for R&D By Antoine Dechezleprêtre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
  6. Vertical Differentiation, Uncertainty, Product R&D and Policy Instruments in a North-South Duopoly By Julien Berthoumieu; Viola Lamani
  7. Dynamic R&D Choice and the Impact of the Firm's Financial Strength By Bettina Peters; Mark J. Roberts; Van Anh Vuong
  8. Traces of entrepreneurship in the artistic context By Lisa Balzarin; Chiara Monica Calcagno
  9. Markup responses to Chinese imports By Meinen, Philipp
  10. Finance and creative destruction: evidence for Italy By Francesca Lotti; Francesco Manaresi
  11. Policy Brief: Informality and Access to Finance in Low Income Countries (LICs) By Voeten, Jaap
  12. Evaluation of the Jobs and Innovation Accelerator Challenge Grants: Interim Findings on Multiagency Collaboration and Cluster Progress By Megan Hague Angus; Jeanne Bellotti; Kevin Hollenbeck; Brittany English
  13. Does Geographical Proximity Matter in Small Business Lending? Evidence from Changes in Main Bank Relationships By Ono, Arito; Saito, Yukiko; Sakai, Koji; Uesugi, Iichiro
  14. On the role of publicly funded R&D for public sector performance By Maroto Sánchez, Andrés; Rubalcaba Bermejo, Luis; Gallego Martinez, Jorge
  15. Achieving European Policy Objectives through Financial Technology By Milne, Alistair
  16. Taxation, Corruption, and Growth By Philippe Aghion; Ufuk Akcigit; Julia Cagé; William R. Kerr

  1. By: Stefano Bianchini (BETA, University of Strasbourg); Federico Tamagni (Scuola Superiore San'Anna); Gabriele Pellegrino (WIPO & EPFL & IEB)
    Abstract: In this work, we explore the relations between sales growth and a set of innovation indicators that capture the different sources, modes and results of the innovative activity undertaken within firms. We exploit a rich panel on innovation activity of Spanish manufacturing firms, reporting detailed CIS-type information continuously over the period 2004-2011. Standard GMM-panel estimates of the average effect of innovation activities reveal significant and positive effect for internal R&D, while no effect is found for external sourcing of knowledge (external R&D, acquisition of embodied and disembodied technologies) as well as for output of innovation (process and product innovation). However, fixed-effects quantile regressions reveal that innovation activities, apart from process innovation and disembodied technical change, display a positive effect on high-growth performance. Finally, we find evidence of super-modularity of the growth function, revealing complementarities of internal R&D with product innovation, and between product and process innovation.
    Keywords: Firm growth, product and process innovation, internal and external R&D, embodied and disembodied technical change, fixed-effects quantile regressions, complementarity
    JEL: C21 D22 O31 O32
    Date: 2016
  2. By: Caterina Santi; Pietro Santoleri
    Abstract: We employ a balanced panel dataset representative of the entire Chilean productive structure in order to investigate the relation between the introduction of innovation and subsequent firm growth in terms of sales. Recent contributions examining the returns to innovation on firm performance have stressed the need of going beyond the analysis of the `average effect for the average firm'. However, previous studies in the case of Latin American economies have often overlooked the importance of analyzing which firms benefit more from the introduction of innovations. Our analysis consists of a series of parametric and non-parametric exercises which take into account the properties of the firm growth distribution. In particular, we adopt quantile treatment effects (QTE) which allow to estimate the effect of the introduction of innovation by comparing firms with a similar propensity to innovate for different quantiles of the firm growth distribution. On one hand, our results indicate that process innovation shows a positive and significant relation with firm growth for those firms located at the 75th and 90th percentiles. On the other, product innovation shows a negative association only for high-growth firms.
    Keywords: innovation, firm growth, Chile, quantile regression, quantile treatment effects
    Date: 2016–01–03
  3. By: Federica Bertamino (Agency for Territorial Cohesion); Raffaello Bronzini (Banca d'Italia); Marco De Maggio (University of Salento); Davide Revelli (Banca d'Italia)
    Abstract: In this paper we study a policy tool called technology districts, implemented in Italy over the last decade to foster local innovation activity. First, we examine the characteristics of technology districts and those of the firms within them. Next, we assess the performance of district firms. We find that in the Southern regions technology districts are more numerous but smaller than those located in the Centre-North, are poorly diversified from a sectorial point of view and more distant from the economic structure of the area. We find that the firms that did join a district had previously been, on average, larger, more innovative and profitable, and also show higher leverage than the others. Our results show that overall after the birth of a district the performance of the firms that joined it did not differ significantly from that of similar firms that did not.
    Keywords: technology districts, innovation, patents, public policies, matching, differences-in-differences
    JEL: O31 R0 H2
    Date: 2016–02
  4. By: Cecere, Grazia; Rexhäuser, Sascha; Schulte, Patrick
    Abstract: This paper aims to shed light on the role of technological opportunities for green innovation by studying the case of Green ICT innovation. We test two hypotheses: (1) Firms active in low-opportunity technological areas are less innovative; (2) Firms active in low-opportunity technological areas are more likely to change their direction of technical change. To do so, we construct a firm-level panel data set for the years 1992-2009 combining patent data from the European Patent Office with firm-level data from the German Innovation Panel (Mannheim Innovation Panel). The results are based on dynamic count data estimation models applying General Methods of Moments estimators. Our results support our hypotheses: firms active in low-opportunity technological areas are less innovative but are more likely to switch from pure ICT innovation to Green ICT innovation.
    Keywords: technological opportunities,innovation,information and communication technology (ICT),green ICT,firm-level patent data,dynamic count data model
    Date: 2015
  5. By: Antoine Dechezleprêtre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
    Abstract: We present the first evidence showing causal impact of research and development (R&D) tax incentives on innovation outcomes. We exploit a change in the asset-based size thresholds for eligibility for R&D tax subsidies and implement a Regression Discontinuity Design using administrative tax data on the population of UK firms. There are statistically and economically significant effects of the tax change on both R&D and patenting, with no evidence of a decline in the quality of innovation. R&D tax price elasticities are large at about 2.6, probably because the treated group is from a sub-population subject to financial constraints. There does not appear to be pre-policy manipulation of assets around the thresholds that could undermine our design, but firms do adjust assets to take advantage of the subsidy post-policy. We estimate that over 2006-11 business R&D would be around 10% lower in the absence of the tax relief scheme.
    Keywords: R&D, patents, tax, innovation, Regression Discontinuity design
    JEL: O31 O32 H23 H25 H32
    Date: 2016–03
  6. By: Julien Berthoumieu (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - Université Montesquieu - Bordeaux 4); Viola Lamani (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - Université Montesquieu - Bordeaux 4)
    Abstract: This paper analyzes the impact of several trade policy instruments on product Research and Development (R&D) investment in a North-South duopoly where a Northern firm competes in prices with a Southern firm on both markets. The Northern firm invests in product R&D owing to a competitive disadvantage compared to the Southern firm which benefits from a lower labor cost. The outcome of the R&D activity is uncertain. If successful, vertical differentiation occurs in both markets. The Northern country’s government is the only one policy active and may implement the following trade policy instruments: an import tariff, a production subsidy, an R&D subsidy, a standard of quality, a minimum-price, and an import quota. The results show that the Northern firm’s R&D expenditures increase with each policy instrument except for the import quota. The paper also provides a welfare analysis in order to verify whether or not the Northern government is encouraged to implement these policy instruments.
    Keywords: Trade Policy Instruments, Product Research and Development, North-South Duopoly, Vertical Differentiation.
    Date: 2016
  7. By: Bettina Peters; Mark J. Roberts; Van Anh Vuong
    Abstract: This article investigates how a firm's financial strength affects its dynamic decision to invest in R&D. We estimate a dynamic model of R&D choice using data for German firms in high-tech manufacturing industries. The model incorporates a measure of the firm's financial strength, derived from its credit rating, which is shown to lead to substantial differences in estimates of the costs and expected long- run benefits from R&D investment. Financially strong firms have a higher probability of generating innovations from their R&D investment, and the innovations have a larger impact on productivity and profits. Averaging across all firms, the long run benefit of investing in R&D equals 6.6 percent of firm value. It ranges from 11.6 percent for firms in a strong financial position to 2.3 percent for firms in a weaker financial position.
    JEL: O3
    Date: 2016–02
  8. By: Lisa Balzarin (Dept. of Management, Università Ca' Foscari Venice); Chiara Monica Calcagno (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The interplay between the world of arts and that of business is at the centre of the present paper, where the processes of artistic entrepreneurship are investigated through the observation of a group of artists living the experience of founding their own cultural enterprises in the specific context of performing arts. The result is a picture of what the contemporary artists-entrepreneurs are: they act entrepreneurially guided by the respect of the integrity of the Art and assume the role of gatekeepers of the quality of their product, playing in the business world and challenging its logics and structures.
    Keywords: cultural entrepreneurship, artistic entrepreneurship, creativity, innovation, paradox, compromise, performing arts
    JEL: L26
    Date: 2016–03
  9. By: Meinen, Philipp
    Abstract: This paper analyzes markup responses of Danish firms to Chinese imports. Besides negative markup responses due to competitive pressure, we present some evidence for marginal cost savings related to Chinese intermediate goods imports which tend to raise firm-level markups.
    Keywords: Chinese Imports,Markups
    JEL: D22 F14 L25
    Date: 2016
  10. By: Francesca Lotti (Banca d'Italia); Francesco Manaresi (Banca d'Italia)
    Abstract: In this paper we provide new evidence on the relationship between market concentration in the banking industry and firm dynamics. In Italy, in the case of a banking merger or acquisition, the antitrust authorities can require the sale of bank branches if the joint market share of the banks involved in the merger exceeds a specific threshold. We exploit this feature to carry out RDD estimates of (i) the effect of intervention by antitrust authorities on banking market concentration, and (ii) the effect of the level of bank concentration on various measures of firm dynamics. The results show that, in those areas where the authorities forced branch sales, firm's entry rates increase, reallocation of employees from incumbent to entrant firms is higher, and the survival rate of newly formed businesses increases. The overall allocative efficiency, as measured by an Olley-Pakes decomposition of labor productivity, is found to improve.
    Keywords: bank competition, firm dynamics, entry, exit, firm size, regression discontinuity
    JEL: G21 L11 M13
    Date: 2015–12
  11. By: Voeten, Jaap (Tilburg University, School of Economics and Management)
    Date: 2016
  12. By: Megan Hague Angus; Jeanne Bellotti; Kevin Hollenbeck; Brittany English
    Abstract: This interim report presents early findings on the implementation of the Jobs and Innovation Accelerator Challenge (JIAC) and Advanced Manufacturing JIAC grants through summer 2014.
    Keywords: collaboration, federal agencies, regional innovation clusters, workforce outcomes, cluster progress, Labor
    JEL: J
    Date: 2015–08–25
  13. By: Ono, Arito; Saito, Yukiko; Sakai, Koji; Uesugi, Iichiro
    Abstract: Using a unique and massive firm-bank matched panel dataset, this paper examines the causal link between the geographical distance between a firm and its main bank and the probably that a firm will switch its main bank. Utilizing the exogenous change in firm-main bank distances brought about by bank mergers and bank branch consolidations in Japan during 2000–2010, the analysis – the first of its kind – finds the following. First, an increase in lending distance positively affected switching of firm-main bank relationships. Second, the average lending distance for firms that switched to new main banks significantly decreased afterwards. Third, the lending distance of new firm-main bank relationships after the switch did not have a significant impact on firms' probability of ex-post default, suggesting that larger lending distance does not necessarily result in a deterioration in the quality of soft information.
    Keywords: lending distance, firm-bank relationships, bank mergers, main bank
    JEL: G21 R12
    Date: 2016–02
  14. By: Maroto Sánchez, Andrés (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Rubalcaba Bermejo, Luis (World Bank. Trade and Competitiveness Practice. Washington DC.); Gallego Martinez, Jorge (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)
    Abstract: Public sectors are under increasing pressure to improve their efficiency and to provide better services in order to boost economic growth and social welfare. One significant way in doing this is the promotion of innovation through research and development (R&D) policies. In this context, the aim of the paper is twofold. On the one hand, to briefly review the framework and state of the art on the relationships between R&D, general innovation systems and public sectors. On the other hand, to test the role of public R&D spending on public sector performance (using multivariate techniques and econometric analyses) and efficiency (using a non- parametric approach) in the European case. Results indicate that publicly funded R&D should be considered a dimension of public sector performance, but that it also plays a key role in its efficiency, mainly when the private and public develop complementarities among them. Managerial implications for R&D policy makers follow from these results. Both performance and efficiency of public sectors could be improved through effective R&D public spending.
    Keywords: R&D, Innovation, Public sector, Performance, Efficiency, Europe
    JEL: H11 H50 C61 O38 O52
    Date: 2016–02
  15. By: Milne, Alistair
    Abstract: Alistair Milne argues in this ECRI Commentary that ‘FinTech’ (newly emerging Financial Technologies) can play a crucial role in achieving European policy objectives in the area of financial markets. These notably include increasing access by smaller firms to trade credit and other forms of external finance and completing the banking and capital markets unions. He points out, however, that accomplishing these objectives will require a coordinated European policy response, focused especially on promoting common business processes and the adoption of shared technology and data standards.
    Date: 2015–11
  16. By: Philippe Aghion; Ufuk Akcigit; Julia Cagé; William R. Kerr
    Abstract: We build an endogenous growth model to analyze the relationships between taxation, corruption, and economic growth. Entrepreneurs lie at the center of the model and face disincentive effects from taxation but acquire positive benefits from public infrastructure. Political corruption governs the efficiency with which tax revenues are translated into infrastructure. The model predicts an inverted-U relationship between taxation and growth, with corruption reducing the optimal taxation level. We find evidence consistent with these predictions and the entrepreneurial channel using data from the Longitudinal Business Database of the US Census Bureau. The marginal effect of taxation for growth for a state at the 10th or 25th percentile of corruption is significantly positive; on the other hand, the marginal effects of taxation for growth for a state at the 90th percentile of corruption are much lower across the board. We make progress towards causality through Granger-style tests and by considering periphery counties where effective tax policy is largely driven by bordering states. Finally, we calibrate our model and find that the calibrated taxation rate of 37% is fairly close to the model's estimated welfare maximizing taxation rate of 42%. Reducing corruption provides the largest potential impact for welfare gain through its impact on the uses of tax revenues.
    JEL: H11 H21 H25 H41 H71 H72 M13 O11 O12 O40 R11 R12
    Date: 2016–01

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