nep-sbm New Economics Papers
on Small Business Management
Issue of 2016‒03‒29
sixteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Choosing the Right Partner: R&D Cooperations and Innovation Success By Sandra M. Leitner
  2. Opening up the innovation system framework towards new actors and institutions By Warnke, Philine; Koschatzky, Knut; Dönitz, Ewa; Zenker, Andrea; Stahlecker, Thomas; Som, Oliver; Cuhls, Kerstin; Güth, Sandra
  3. Financing innovation By Kerr, William R.; Nanda, Ramana
  4. Structural dynamics of the French aerospace sector: A network analysis By Johannes Van Der Pol
  5. Gender Difference in the Managerial Careers of Regular Employees in Japanese Firms: An empirical study using employee-employer matched data (Japanese) By MA Xinxin; INUI Tomohiro
  6. Banking structure, marketization and small business development: Regional evidence from China By Hasan, Iftekhar; Kobeissi, Nada; Wang, Haizhi; Zhou, Mingming
  7. The Bright Side of Patents By Joan Farre-Mensa; Deepak Hegde; Alexander Ljungqvist
  8. Business Practices in Small Firms in Developing Countries By McKenzie, David; Woodruff, Christopher
  9. The debt of Italian non-financial firms: an international comparison By Antonio De Socio; Paolo Finaldi Russo
  10. The dynamics of entrepreneurial careers in high-tech ventures: Experience, education, and exit By Cumming, Douglas; Walz, Uwe; Werth, Jochen Christian
  11. Agglomeration and innovation By Carlino, Gerald; Kerr, William R.
  12. Innovation in Green Energy Technologies and the Economic Performance of Firms By Kruse, Juergen
  13. Lack of Selection and Limits to Delegation: Firm Dynamics in Developing Countries By Ufuk Akcigit; Harun Alp; Michael Peters
  14. Asia SME Finance Monitor 2014 By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  15. Sources of Canadian Economic Growth By Samira Hasanzadeh; Hashmat U. Khan
  16. The Micro Origins of International Business Cycle Comovement By Julian di Giovanni; Andrei A. Levchenko; Isabelle Mejean

  1. By: Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract Generally, establishments can choose among different cooperation partners for innovation. However, the choice of a particular partner is pivotal to the success of any cooperative arrangement for innovation and therefore not an easy one. The ensuing analysis uses a comprehensive firm-level dataset of Central, East and Southeast European (CESEE) and Former Soviet Union (FSU) countries to shed light on the role of different cooperative arrangements – cooperations with domestic suppliers, domestic client firms, foreign suppliers, foreign client firms and with external academic or research institutes – for a product innovators’ success, captured in terms of either annual average sales per new or significantly improved product or, alternatively, the probability of applying for a patent. It demonstrates that the choice of cooperation partner is essential Innovators profit greatly from innovation partnerships with foreign suppliers only in terms of higher sales from novel or improved products but, in turn, are less likely to apply for patents if engaged in cooperative arrangements with foreign suppliers or client firms, indicating that patenting is probably predominantly undertaken by foreign cooperation partners. Furthermore, it highlights that establishment size, ownership structure, trading status or absorptive capacity greatly matter and that the institutional environment is essential for an innovator’s commercial success, which assigns a decisive role to policy-makers in building an environment that helps innovators extract returns to innovations to the fullest extent possible.
    Keywords: product innovators, types of R&D cooperations, innovation success, Central, East and Southeast Europe
    JEL: O30 O32 O34
    Date: 2016–02
  2. By: Warnke, Philine; Koschatzky, Knut; Dönitz, Ewa; Zenker, Andrea; Stahlecker, Thomas; Som, Oliver; Cuhls, Kerstin; Güth, Sandra
    Abstract: The paper revisits the established framework of the national and regional innovation system (NIS/RIS) in the light of recent insights from innovation research in order to increase its capacity for generating meaningful insights for policy makers and other actors wishing to influence innovation capacity of nations, regions or sectors. We review six research strands that challenge the classical NIS/RIS framework by pointing to a wider range of actors, institutions and innovation modes relevant for the innovation landscape: User innovation, social innovation, collaborative innovation, new innovation intermediaries, venture philanthropy, social and relational capital and non-R&D intensive industries. We find that each of these phenomena points to relevant contributions to national or regional innovation capacities that are not well captured by the established NIS/RIS framework. While some aspects could easily be integrated by adding some "arrows and boxes" in the graphics usually used for representing the framework, we find that several phenomena point to the need for a more fundamental revision of the innovation system framework. In particular it emerges that a distinctive assignment of actors to functions in the innovation process is no longer possible. Given, for example, the research insights on user innovation, social innovation and collaborative innovation, societal actors can no longer be assigned to the role of "demand articulation". Rather they actively contribute or sometimes even take over the generation of knowledge and innovation ideas as well as other functions such as financing, e.g. through crowdfunding activities. The broadened view on innovation also requires a wider understanding of the infrastructures and frameworks forming the enabling basis for innovation activities. Social and relational capital for instance that is deeply embedded in the cultural context of a region becomes a key enabler for trustful interactions of the diverse innovation actors such as low R&D intense firms that make huge contributions to innovation and employment but generate their knowledge through interaction with customers. The growing recognition of the economic and social relevance of collaborative and social innovation implies that collaboration platforms become as relevant infrastructures as classical technology transfer schemes. Finally the broadened view on innovation points to a wide range of intermediaries that form the backbone of an innovation system without necessarily seeing innovation as their primary purpose. As a consequence of these insights we suggest a revised innovation system framework. This system captures three types of contributions: Innovation supply and demand, innovation influx and innovation framework. Actors that may provide relevant contributions in one of these domains are grouped in open clouds, emphasizing the fluidity between functions and actors. We hope that this framework will allow for a more meaningful analysis of the innovation capacity of specific NIS/RIS systems.
    Date: 2016
  3. By: Kerr, William R.; Nanda, Ramana
    Abstract: We review the recent literature on the financing of innovation, inclusive of large companies and new startups. This research strand has been very active over the past five years, generating important new findings, questioning some long-held beliefs, and creating its own puzzles. Our review outlines the growing body of work that documents a role for debt financing related to innovation. We highlight the new literature on learning and experimentation across multi-stage innovation projects and how this impacts optimal financing design. We further highlight the strong interaction between financing choices for innovation and changing external conditions, especially reduced experimentation costs.
    Keywords: finance, innovation, entrepreneurship, banks, venture capital, experimentation
    JEL: G21 G24 L26 M13 O31 O32
    Date: 2015–12–11
  4. By: Johannes Van Der Pol (GRETha / UMR 5113 - Groupe de Recherche en Economie Théorique et Appliquée (GREThA) (CNRS /Université de Bordeaux))
    Abstract: The focus of this paper is on the link between network structure and the financial performance of the individual firm. Under the hypothesis that firms access diverse and valuable knowledge through collaboration we analyze how firms pick their collaborators and how knowledge flows impact the financial performance of the firm. First, the evolution of the structure of the collaboration network of the French aerospace sector is analyzed between 1980 and 2013. The global structure is identified and, using an ERGM and clustering identification, the structure of the network is explained. Second, a panel regressions identifies a link between the position of the individual firm inside the network and their financial performance.
    Keywords: Network analysis,ERGM,Network evolution,Dynamic network,Small world,Scale free,Technological diversity,Social network analysis,Firm performance
    Date: 2015–06–10
  5. By: MA Xinxin; INUI Tomohiro
    Abstract: In this paper, we conduct an empirical analysis on the determinants of gender difference in the managerial careers of regular employees in Japanese firms by employing a unique Japanese employer-employee matched data. The main findings from our research are twofold. First, the main determinants of female managerial career success are individual attributes such as human capital, family factors, and work factors such as work hours and work willingness, and this finding is consist with that of previous studies. In addition, Japanese firm attributes such as the union, industry and irregular workers proportion, and firm promotion system, and policy factors such as work-life-balance (WLB) policy and positive action (PA) policy performed by the government also affect the difference in gender managerial career success. Second, results obtained by using the Oaxaca-Blinder decomposition method using the same data set show that both the explained component (by individual or firm characteristics differential) and the unexplained component (this partly reflects gender discrimination effects) by individual or firm characteristics cause the gender difference in high managerial careers. On the other hand, the unexplained component by the individual or firm characteristics differential and Japanese firms' slow promotion system mainly causes the gender difference in low level managerial careers.
    Date: 2016–03
  6. By: Hasan, Iftekhar; Kobeissi, Nada; Wang, Haizhi; Zhou, Mingming
    Abstract: This paper provides an empirical examination of the regional banking structures in China and their effects on entrepreneurial activity. Using a panel of 27 provinces and four directly controlled municipalities from 1997 through 2008, we find that the presence of large banking institutions negatively correlates with small business development in local markets and that this negative relation is driven mainly by participation of large banks in the short-term loan market. Rural banking institutions, in contrast, are found to promote regional entrepreneurial activity. Moreover, large state banks facilitate small business development in concentrated markets. When we interact measures of banking financing by state banks and rural banking institutions with a set of provincial level marketization indexes, we find that extensive marketization, factor market development, and sophistication of legal frameworks mitigate the negative effect of large state banks on small business development. In provinces with advanced market development, efficient factor markets, and favorable institutional settings, the positive effect of rural banking institutions on small business growth is even stronger. Finally, we present evidence that banks do a better job of promoting regional entrepreneurship when it occurs in conjunction with policies to foster innovation activity and assure protection of intellectual property rights.
    Keywords: banking structure, marketization, small business development, China
    JEL: G21 O16 P23 P25
    Date: 2015–03–27
  7. By: Joan Farre-Mensa; Deepak Hegde; Alexander Ljungqvist
    Abstract: Motivated by concerns that the patent system is hindering innovation, particularly for small inventors, this study investigates the bright side of patents. We examine whether patents help startups grow and succeed using detailed micro data on all patent applications filed by startups at the U.S. Patent and Trademark Office (USPTO) since 2001 and approved or rejected before 2014. We leverage the fact that patent applications are assigned quasi-randomly to USPTO examiners and instrument for the probability that an application is approved with individual examiners’ historical approval rates. We find that patent approvals help startups create jobs, grow their sales, innovate, and reward their investors. Exogenous delays in the patent examination process significantly reduce firm growth, job creation, and innovation, even when a firm’s patent application is eventually approved. Our results suggest that patents act as a catalyst that sets startups on a growth path by facilitating their access to capital. Proposals for patent reform should consider these benefits of patents alongside their potential costs.
    JEL: D23 G24 L26 O34
    Date: 2016–02
  8. By: McKenzie, David (World Bank); Woodruff, Christopher (University of Warwick)
    Abstract: Management has a large effect on the productivity of large firms. But does management matter in micro and small firms, where the majority of the labor force in developing countries works? We develop 26 questions that measure business practices in marketing, stock-keeping, record-keeping, and financial planning. These questions have been administered in surveys in Bangladesh, Chile, Ghana, Kenya, Mexico, Nigeria and Sri Lanka. We show that variation in business practices explains as much of the variation in outcomes – sales, profits and labor productivity and TFP – in microenterprises as in larger enterprises. Panel data from three countries indicate that better business practices predict higher survival rates and faster sales growth. The association of business practices with firm outcomes is robust to including numerous measures of the owner’s human capital. We find that owners with higher human capital, children of entrepreneurs, and firms with employees employ better business practices.
    Keywords: business practices; small enterprises; productivity; management JEL Classification: O12; L26; M20; O17; M53.
    Date: 2016
  9. By: Antonio De Socio (Bank of Italy); Paolo Finaldi Russo (Bank of Italy)
    Abstract: In the run-up to the financial crisis Italian firms significantly increased their debt in absolute terms and in relation to equity and GDP. The positive gap in firms’ leverage between Italy and other euro-area countries has widened in recent years, despite the outstanding debt of Italian firms has decreased since 2011. In this work we document the magnitude of this gap using both aggregate macro data and firm-level information. We find that, controlling for several firm-specific characteristics (i.e. age, profitability, asset tangibility, asset liquidity, turnover growth), the leverage of Italian firms is about 10 percentage points higher than in other euro area countries. Differences are systematically larger among micro and small firms, whereas they are small and weakly significant for firms with assets above 300 million euros.
    Keywords: leverage, financial structure, euro area
    JEL: G32
    Date: 2016–02
  10. By: Cumming, Douglas; Walz, Uwe; Werth, Jochen Christian
    Abstract: We investigate the career dynamics of high-tech entrepreneurs by analyzing the exit choice of entrepreneurs: to found another firm, to become dependently employed, or to act as a business angel. Our detailed data resting on the CrunchBase online database indicate that founders stick with entrepreneurship as a serial entrepreneur or as an angel investor only in cases where the founder (1) had experience either in founding other startups or working for a startup, (2) had a 'jack-of-all-trades' education, or (3) achieved substantial financial success upon a venture capital exit transaction.
    Keywords: entrepreneurship,entrepreneurial spawning,angel finance,venture capital,exit,systemically important financial institutions
    JEL: G24 G34 L26
    Date: 2015
  11. By: Carlino, Gerald; Kerr, William R.
    Abstract: This paper reviews academic research on the connections between agglomeration and innovation. We first describe the conceptual distinctions between invention and innovation. We then discuss how these factors are frequently measured in the data and note some resulting empirical regularities. Innovative activity tends to be more concentrated than industrial activity, and we discuss important findings from the literature about why this is so. We highlight the traits of cities (e.g., size, industrial diversity) that theoretical and empirical work link to innovation, and we discuss factors that help sustain these features (e.g., the localization of entrepreneurial finance).
    Keywords: agglomeration, clusters, innovation, invention, entrepreneurship
    JEL: J2 J6 L1 L2 L6 O3 R1 R3
    Date: 2015–12–10
  12. By: Kruse, Juergen (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))
    Abstract: In this article, I empirically analyze and compare the impact of innovation in green and non-green energy technologies on the economic performance of firms. My analysis is conducted on a panel of 8,619 patenting firms including 968 green energy patenters from 22 European countries over the period 2003 to 2010. I measure economic firm performance in terms of productivity and use a panel data model based on an extended Cobb-Douglas production function. My results show that green energy innovation has a statistically significant negative impact on economic firm performance. In contrast, non-green energy innovation is shown to have a statistically significant positive impact on economic firm performance. These findings suggest that private economic returns in terms of productivity are lower for green energy than for non-green energy innovation.
    Keywords: green energy technologies; innovation; performance; patents; technological change
    JEL: C33 L25 O31 Q40 Q55
    Date: 2016–02–24
  13. By: Ufuk Akcigit; Harun Alp; Michael Peters
    Abstract: Firm dynamics in poor countries show striking differences to those of rich countries. While few firms indeed experience growth as they age, most firms are simply stagnant in that they neither exit nor expand. We interpret this fact as a lack of selection, whereby producers with little growth potential survive because innovative entrepreneurs do not expand enough to force them out of the market. To explain these differences, we develop a theory whereby firms require managerial inputs for production and countries differ in their managerial delegation possibilities. If delegation of managerial tasks to outside managers is difficult in poor countries, entrepreneurs are forced to rely on their own time to supply managerial services. Improvements in the efficiency of delegation will raise the returns to growing large, induce innovative firms to expand, and thereby force stagnant entrepreneurs out of the market. We prove the existence and uniqueness of the dynamic equilibrium and show analytically how the degree of selection depends on some of the key structural parameters. To discipline the quantitative importance of this mechanism, we calibrate our model to micro data from the US and India. Differences in the efficiency of managerial delegation can explain an important fraction of the differences in plants' life-cycles.
    JEL: O31 O38 O40
    Date: 2016–01
  14. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (Sustainable Development and Climate Change Department, ADB); Asian Development Bank (ADB) (Sustainable Development and Climate Change Department, ADB); Asian Development Bank (ADB)
    Abstract: The Asia SME Finance Monitor 2014 is the knowledge sharing product on small and medium-sized enterprises (SMEs) in Asia and the Pacific, specially focusing on SME access to finance. This publication reviews various country aspects of SME finance covering the banking sector, nonbank sector, and capital markets. It is expected to support evidence-based policy making and regulations on SME finance in the region.
    Keywords: small and medium enterprise, SME, SME finance, micro SME, access to finance, inclusive finance, venture capital
    Date: 2015–09
  15. By: Samira Hasanzadeh (Department of Economics, Carleton University); Hashmat U. Khan (Department of Economics, Carleton University)
    Abstract: We apply modern growth accounting based on the semi-endogenous growth theory of Jones (2002) to determine the sources of Canadian economic growth between 1981- 2013. This framework allows us to distinguish between transition dynamics and steady- state growth, and quantify their respective contributions. We find that over 80% of the total average growth rate of output per worker of 1.24 percentage points has been due to transitional factors. Among these, the bulk of the contribution is attributed to domestic human capital growth driven by educational attainment, and global research and development (R&D) intensity. These two factors have been the primary sources of Canadian economic growth. The growth in capital-output ratio contributed a small share of 0.14 percentage points suggesting a limited role of capital accumulation. The steady-state growth over is attributed to population growth indicating modest scale effects of about 16% of the total average growth. Our results highlight that the future of Canadian productivity growth and the standard of living are closely tied to sustained growth in both domestic human capital and global R&D intensity.
    Keywords: Modern Growth Accounting, Economic Growth
    JEL: O47 O51
    Date: 2016–03
  16. By: Julian di Giovanni; Andrei A. Levchenko; Isabelle Mejean
    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 affiliates 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 non- internationally 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.
    JEL: F44
    Date: 2016–01

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