nep-sbm New Economics Papers
on Small Business Management
Issue of 2016‒04‒04
twenty papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Access to finance and job growth : firm-level evidence across developing countries By Ayyagari,Meghana; Juarros,Pedro Francisco; Martinez Peria,Maria Soledad; Singh,Sandeep
  2. Sectoral Systems or Distance-to-the-Frontier Effects in Innovation? A Comparison of Three Medium-Technology Sectors in Germany, Italy and Spain By Fassio, Claudio
  3. Innovation and collaboration patterns between research establishments By Inoue, Hiroyasu; Nakajima, Kentaro; Saito, Yukiko Umeno
  4. Open Innovation in clusters: The Portuguese case By Santos, Antonio Bob
  5. Debt Concentration of European Firms By Giannetti, Caterina
  6. Taking the Leap: The Determinants of Entrepreneurs Hiring their First Employee By Fairlie, Robert; Miranda, Javier
  7. Asymmetric Investment Responses to Firm-specific Uncertainty By Manuel Buchholz; Lena Tonzer; J. Berner
  8. Firms that went out of business during the crisis By Sabrina Ferretti; Andrea Filippone; Giacinto Micucci
  9. University Innovation and the Professor's Privilege By Hans K. Hvide; Benjamin F. Jones
  10. How Does Innovation Differ across Business Functions? Employee-level Analysis of a Multinational Company By Fulvio Castellacci; Magnus Gulbrandsen; Jarle Hildrum; E. Martinkenaite; Erlend Simensen; Vegard Tveito
  11. Economic Crisis and Firm Exit: Do Intangibles Matter? By Landini, Fabio; Arrighetti, Alessandro; Lasagni, Andrea
  12. Size of Training Firms: The Role of Firms, Luck, and Ability in Young Workers' Careers By Müller, Steffen; Neubäumer, Renate
  13. Worker, Peasant or Entrepreneur? Analysis of the Entrepreneurial Logics and Practices of Family Farmers in Agrarian Reform Cooperatives in the Saiss (Morocco) By Olivier Petit; Valère Martin; Marcel Kuper; Fatah Ameur; Claire Papin-Stammose
  14. The Localization of Interfirm Transaction Relationships and Industry Agglomeration By Nakajima, Kentaro; Saito, Yukiko Umeno; Uesugi, Iichiro
  15. On tax evasion, entrepreneurial generosity and fungible assets By Bittschi, Benjamin; Borgloh, Sarah; Moessinger, Marc-Daniel
  16. Déterminants de la qualité du système d'information comptable dans les PME d'une entité décentralisée : Cas de la cité de Mbanza-Ngungu de 2013-2014 By Mbumba, Richard P.; Mbaka, Ruffin B.
  17. The Adoption and Termination of Profit Sharing for Employees: Does Management's Attitude Play a Role? By Uwe Jirjahn
  18. A study on the Finnish R&D tax credit of the years 2013–2014 By Kuusi, Tero; Pajarinen, Mika; Rouvinen, Petri; Valkonen, Tarmo
  19. Time-period and industry heterogeneity of innovation activity in Japan By Yagi, Michiyuki; Managi, Shunsuke
  20. Policy Brief: Exports and Innovation in Emerging Economies By Voeten, Jaap; Vannoorenberghe, Gonzague

  1. By: Ayyagari,Meghana; Juarros,Pedro Francisco; Martinez Peria,Maria Soledad; Singh,Sandeep
    Abstract: This paper investigates the effect of access to finance on job growth in 50,000 firms across 70 developing countries. Using the introduction of credit bureaus as an exogenous shock to the supply of credit, the paper finds that increased access to finance results in higher employment growth, especially among micro, small, and medium enterprises. The results are robust to using firm fixed effects, industry measures of external finance dependence, and propensity score matching in a complementary panel data set of more than four million firms in 29 developing countries. The findings have implications for policy interventions targeted to produce job growth in micro, small, and medium enterprises.
    Keywords: Banks&Banking Reform,Access to Finance,Labor Policies,Microfinance,Labor Markets
    Date: 2016–03–16
  2. By: Fassio, Claudio (LUISS School of European Political Economy)
    Abstract: This study analyzes empirically whether the Sectoral Systems of Innovation or the Distanceto-the-Frontier perspective more accurately describe the patterns of innovation in medium technology sectors in Germany, Italy and Spain. While the Sectoral Systems of Innovation predicts the existence of technology-related similarities in innovative patterns in the same sectors across countries, the Distance-to-the Frontier suggests the existence of important differences related with the level of technological development of each national sector. Using Community Innovation Survey data and applying an econometric strategy specifically devised for innovations survey I am able to test a set of hypotheses directly related with each of the two theories. The results of the econometric analysis show that relevant differences across countries exist with respect to the intensity of R&D activities and the economic impact of different types of innovations, confirming the Distance-to-the-Frontier hypothesis, while great cross-country similarity emerges among the sources of knowledge used to develop new innovations, in line with the Sectoral Systems of Innovation framework. The results highlight the importance to take into account both frameworks for a useful analysis of innovation within sectors.
    Keywords: Sectoral Systems of innovation; Distance-to-the-Frontier; R&D and productivity
    JEL: L60 O31
    Date: 2014–05–20
  3. By: Inoue, Hiroyasu; Nakajima, Kentaro; Saito, Yukiko Umeno
    Abstract: This study empirically investigates the determinants of the productivity of knowledge creation by collaboration. By using the Japanese patent database, we extracted establishment-level patent co-invention information, and found the following results. First, we find an inverse U-shaped pattern in the relationship between the similarity of knowledge stocks and the quality of patents. That is, moderate diversity in knowledge stocks between establishments rather than extreme similarity or extreme diversity is important for knowledge creation. Second, focusing on the differences in technology class, we find inverse U-shaped pattern only in the high-technology class. This implies that the common knowledge between establishments is important in the invention of high technology patents. Third, we find that the physical distance between collaborating establishments has a negative effect on the quality of patents.
    Keywords: Diversity, Knowledge creation
    JEL: O31 R11 D23
    Date: 2016–03
  4. By: Santos, Antonio Bob
    Abstract: Given the lack of academic research linking open innovation with the clusters literature, this paper analyze the determinants of open innovation adoption in clusters, based on the Portuguese case. This paper is structured as follows: 1) introduction; 2) methodology; 3) theoretical analysis of clusters and open innovation; 4) cluster policy evolution in Portugal; 5) results of an online questionnaire launched to the Portuguese clusters members, identifying the main constraints for the development of open innovation activities; 6) conclusions and implications. The factors that hinder the use of open innovation by clusters members are related to internal problems (e.g., management skills) and external factors (e.g., funding access). This paper also allows the understanding of the importance of belonging to a cluster for the usage of open innovation activities, contributing to the discussion of the necessity of having a more open innovation policy approach in Portugal.
    Keywords: open innovation, clusters, cluster policy, innovation policy
    JEL: O25 O31 O32 O38
    Date: 2015
  5. By: Giannetti, Caterina (LUISS School of European Political Economy)
    Abstract: This paper investigates the level of debt specialization across European firms relying on a cross-country comparable sample of manufacturing firms. We find that a number of firm characteristics – such as firm size and age – help predict the firm composition of the various types of debts (i.e. debt specialization) but not the level of each debt share. In particular, we observe that small and young firms have a more concentrated debt structure (i.e. they rely on few types of debt). However, these relationships are not linear and seem to be U-shaped. We also find that Spanish firms have the most diversified debt structure, and that diversified firms are less likely to experience a severe reduction in turnover.
    Keywords: Debt specialization; European firms; Firm financing
    JEL: F20 G32
    Date: 2015–03–18
  6. By: Fairlie, Robert; Miranda, Javier
    Abstract: Job creation is one of the most important aspects of entrepreneurship, but we know relatively little about the hiring patterns and decisions of startups. Longitudinal data from the Integrated Longitudinal Business Database (iLBD), Kauffman Firm Survey (KFS), and the Growing America through Entrepreneurship (GATE) experiment are used to provide some of the first evidence in the literature on the determinants of taking the leap from a non-employer to employer firm among startups. Several interesting patterns emerge regarding the dynamics of non-employer startups hiring their first employee. Hiring rates among the universe of non-employer startups are very low, but increase when the population of non-employers is focused on more growth-oriented businesses such as incorporated and EIN businesses. If non-employer startups hire, the bulk of hiring occurs in the first few years of existence. After this point in time relatively few non-employer startups hire an employee. Focusing on more growth- and employment-oriented startups in the KFS, we find that Asian-owned and Hispanic-owned startups have higher rates of hiring their first employee than white-owned startups. Female-owned startups are roughly 10 percentage points less likely to hire their first employee by the first, second and seventh years after startup. The education level of the owner, however, is not found to be associated with the probability of hiring an employee. Among business characteristics, we find evidence that business assets and intellectual property are associated with hiring the first employee. Using data from the largest random experiment providing entrepreneurship training in the United States ever conducted, we do not find evidence that entrepreneurship training increases the likelihood that non-employers hire their first employee.
    Keywords: Business, Social and Behavioral Sciences, entrepreneurship, job creation, Kauffman Firm Survey, iLBD, startups, entrepreneurship training, small business, GATE experiment
    Date: 2016–03–24
  7. By: Manuel Buchholz; Lena Tonzer; J. Berner
    Abstract: This paper analyzes how firm-specific uncertainty affects firms’ propensity to invest. We measure firm-specific uncertainty as firms’ absolute forecast errors derived from survey data of German manufacturing firms over 2007–2011. In line with the literature, our empirical findings reveal a negative impact of firm-specific uncertainty on investment. However, further results show that the investment response is asymmetric, depending on the size and direction of the forecast error. The investment propensity declines significantly if the realized situation is worse than expected. However, firms do not adjust their investment if the realized situation is better than expected, which suggests that the uncertainty effect counteracts the positive effect due to unexpectedly favorable business conditions. This can be one explanation behind the phenomenon of slow recovery in the aftermath of financial crises. Additional results show that the forecast error is highly concurrent with an ex-ante measure of firm-specific uncertainty we obtain from the survey data. Furthermore, the effect of firm-specific uncertainty is enforced for firms that face a tighter financing situation.
    Keywords: risk climate, microeconomic survey data, forecast errors, firm investment, uncertainty
    JEL: D22 D84 E32
    Date: 2016–03
  8. By: Sabrina Ferretti (Bank of Italy); Andrea Filippone (Bank of Italy); Giacinto Micucci (Bank of Italy)
    Abstract: This paper analyzes the Italian companies that filed for bankruptcy or underwent voluntary liquidation between 2008 and 2012 and identifies the main characteristics of this phenomenon. The econometric analysis based on firms’ balance sheet data suggests that the probability of going out of business was greater for smaller and younger companies. Other characteristics being equal, such as size, sector and geographical location, the likelihood of a firm initiating bankruptcy proceedings was more strongly correlated with imbalances in its financial structure such as a high leverage ratio, while a firm’s likelihood of opting for voluntary liquidation was influenced to a greater extent by low profitability.
    Keywords: bankruptcies, liquidations, financial structure
    JEL: G33 L25 K20
    Date: 2016–03
  9. By: Hans K. Hvide; Benjamin F. Jones
    Abstract: National policies take varied approaches to encouraging university-based innovation. This paper studies a natural experiment: the end of the “professor’s privilege” in Norway, where university researchers previously enjoyed full rights to their innovations. Upon the reform, Norway moved toward the typical U.S. model, where the university holds majority rights. Using comprehensive data on Norwegian workers, firms, and patents, we find a 50% decline in both entrepreneurship and patenting rates by university researchers after the reform. Quality measures for university start-ups and patents also decline. Applications to literatures on university technology transfer, innovation incentives, and taxes and entrepreneurship are considered.
    JEL: L26 O31
    Date: 2016–03
  10. By: Fulvio Castellacci (TIK Centre, University of Oslo); Magnus Gulbrandsen (TIK Centre, University of Oslo); Jarle Hildrum (Telenor Research); E. Martinkenaite (Telenor Research); Erlend Simensen (TIK Centre, University of Oslo); Vegard Tveito (TIK Centre, University of Oslo)
    Abstract: This paper investigates how innovation differs across a company’s business functions. We argue that employees working in different functions of a corporation (e.g. marketing, R&D, top management) differ in terms of the types of innovation they are engaged in, the strategies they adopt to organize their innovative activities, and the factors that spur or hamper their innovation performance. Little is known about this issue, however, which we investigate by making use of a rich novel dataset at the employee-level for the multinational company Telenor. We combine a large survey among nearly 16,000 Telenor employees with an extensive qualitative data collection through interviews in different business units and functions. The empirical results point out the relevance of climate and culture, quality-oriented tasks and external interactions as the key factors supporting employees’ innovation activities. The effects of these factors on innovation are substantially different across business functions of the company.
    Date: 2016–03
  11. By: Landini, Fabio (LUISS School of European Political Economy); Arrighetti, Alessandro (University of Parma, Department of Economics); Lasagni, Andrea (University of Parma, Department of Economics)
    Abstract: The crisis in the Euro area has caused several business closures, especially in the EMU periphery. In this paper we use an original firm-level dataset on Italy to study the determinants of firm exit during the crisis, having a particular focus on the role of intangibles. We argue that intangibles strengthen the firm’s resilience capacity, and this in turn improves the firms’ ability to cope with adverse and unexpected shocks. We obtain two main results: first we show that intangibles significantly reduce the probability of firm exit, especially during the initial phase of the crisis; second, we find that financial constraints become more relevant than intangibles in explaining firm exit at later stages of the crisis. Thus, the process of firm selection during the crisis has undergone a rapid transformation, with distortions that may lead even skilled firms to exit. Some of the implications of these findings for the EU recovery policies are discussed.
    Keywords: intangibles; firm exit; EU crisis; industry dynamics
    JEL: D22 L21 L25 O32
    Date: 2015–10–16
  12. By: Müller, Steffen (IWH Halle); Neubäumer, Renate (University of Koblenz-Landau)
    Abstract: This paper analyzes how life-cycle unemployment of former apprentices depends on the size of the training firm. We start from the hypotheses that the size of training firms reduces long-run cumulated unemployment exposure, e.g. via differences in training quality and in the availability of internal labor markets, and that the access to large training firms depends positively 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 for Germany and find corroborative evidence.
    Keywords: unemployment, training, apprenticeship, young workers, mobility, firm size
    JEL: D21 L10 L25 L26 L29 M13
    Date: 2016–03
  13. By: Olivier Petit (UA - Université d'Artois, CLERSE - Centre lillois d'études et de recherches sociologiques et économiques - CNRS - Centre National de la Recherche Scientifique - Université Lille 1 - Sciences et technologies); Valère Martin (UMR G-EAU - Gestion de l'Eau, Acteurs et Usages - CIRAD - Centre de coopération internationale en recherche agronomique pour le développement - Ecole Nationale du Génie Rural des Eaux et Forêts - CEMAGREF-UR IRMO); Marcel Kuper (UMR G-EAU - Gestion de l'Eau, Acteurs et Usages - CIRAD - Centre de coopération internationale en recherche agronomique pour le développement - Ecole Nationale du Génie Rural des Eaux et Forêts - CEMAGREF-UR IRMO); Fatah Ameur (UMR G-EAU - Gestion de l'Eau, Acteurs et Usages - CIRAD - Centre de coopération internationale en recherche agronomique pour le développement - Ecole Nationale du Génie Rural des Eaux et Forêts - CEMAGREF-UR IRMO); Claire Papin-Stammose (UMR G-EAU - Gestion de l'Eau, Acteurs et Usages - CIRAD - Centre de coopération internationale en recherche agronomique pour le développement - Ecole Nationale du Génie Rural des Eaux et Forêts - CEMAGREF-UR IRMO)
    Abstract: The aim of this paper is to analyze the emerging entrepreneurial practices and the underlying logic of family farms in two agrarian reform cooperatives in Morocco. These practices can be explained by the constant negotiation of multiple and sometimes even antagonistic logics (peasant, entrepreneurial, proletarian, capitalistic) within these farms in a context of rapid agrarian change and a juxtaposition of different farm types on the same territory. Five factors illustrate this emergence: (1) the access to credit, (2) the functioning of the farm (rotation of the crops, use of inputs, workforce), 3) the access to groundwater resources, (4) the marketing practices adopted by farmers and (5) the informational factors. The porosity of the peasant and entrepreneurial worlds is the main lesson we can draw from our study. There is a subtle process of hybridization between the peasant and entrepreneurial modes of farming, with a wide range of profiles, ranging from a pure 'peasant', to a pure 'entrepreneur' and in between the peasant-entrepreneur and the entrepreneur-peasant. If we only focus on the political discourse, the trend in the development of new modes of farming seems inescapable. Our study stresses the resistance of practices and logics of peasant modes of farming which can mix with a 'modern' vision of agriculture. However, the siren songs of entrepreneurship can lead to bankruptcy, an exit from agriculture, which could have a strong impact on the social cohesion of the Moroccan society, particularly in rural areas.
    Keywords: Morocco,groundwater economy,innovation,modes of farming,entrepreneurial practices and logics,irrigation,Saiss
    Date: 2015–10–12
  14. By: Nakajima, Kentaro; Saito, Yukiko Umeno; Uesugi, Iichiro
    Abstract: Using a unique and massive dataset on firms' suppliers and customers, we examine the localization of transaction relationships to find the following. First, based on a counterfactual that controls for the location of firms and their potential partners, transaction relationships in about 90 to 95% of the three-digit manufacturing industries are localized within 40km. Second, based on a counterfactual that controls for the average distance of transaction relationships in the entire manufacturing sector, in about 40% of industries transaction relationships are localized. Third, the extent of industry agglomeration and the extent of the localization of transaction relationships are positively correlated.
    Keywords: Interfirm transactions, agglomeration, transaction distance
    JEL: R11
    Date: 2016–03
  15. By: Bittschi, Benjamin; Borgloh, Sarah; Moessinger, Marc-Daniel
    Abstract: We estimate the effects of income from various sources on charitable giving using administrative German income tax data. We demonstrate that charitable contributions are not uniformly affected by different income types. While business and capital income exhibit a positive effect, the remaining income sources do not influence charity on statistically signifcant levels. This exercise is not new and has been conducted for (at least) three different purposes: 1) Relying on the described results, a public finance researcher would state that business and capital income are more prone to tax evasion than the remaining income sources. 2) An entrepreneurship researcher would conclude that business owners are more generous than employees, and 3) a researcher testing the validity of the life cycle theory (or its behavioral counterpart) would refute the fungibility of income. In contrast, we argue that none of these approaches can answer the intended question if solicitation effects of fundraising or measurement error of the income sources are not taken into account. Applying a fixed effect poisson model, we demonstrate that under certain assumptions the results can have a meaningful interpretation.
    Keywords: tax evasion,entrepreneurial behavior,charitable giving,income fungibility,administrative data,fixed effects poisson model
    JEL: D91 E21 H26 H41 L26
    Date: 2016
  16. By: Mbumba, Richard P.; Mbaka, Ruffin B.
    Abstract: This article tries to identify factors that determine the quality of the accountancy system in Small and Medium sized (SMS) of Mbanza-Ngungu. It also analyzes the structural and behavioral contingency factors likely to influence this system. To achieve this goal, an investigation was carried out on a sample of 50 SMS. The results obtained show that structural contingency factors influence the use of the accountancy system more than behavioral contingency factors.
    Keywords: SME, Accouncy systems, behavioral contingency, structural contingency
    JEL: M00 M13 M40 M41
    Date: 2014–02
  17. By: Uwe Jirjahn
    Abstract: Examinations on the determinants of profit sharing usually focus on objective firm characteristics. Using data from manufacturing firms in Germany, this study shows that managers’ subjective attitudes towards profit sharing also play an important role in the adoption and termination of this payment scheme. Positive management attitudes are associated with an increased likelihood of adopting profit sharing. While to some extent this entails failed experimentation, positive managerial attitudes also substantially contribute to a sustained use of profit sharing. The pattern of results holds even when controlling for a variety of objective firm characteristics.
    Keywords: Profit sharing, management attitude, management discretion, subjective factors, experimentation
    JEL: J33 M52
    Date: 2016
  18. By: Kuusi, Tero; Pajarinen, Mika; Rouvinen, Petri; Valkonen, Tarmo
    Abstract: In this report, we analyze the Finnish R&D tax incentive scheme of the years 2013 and 2014. Under the scheme, firms were eligible for double corporate tax deduction incentive on labor expenses incurred for undertaking R&D activities. Our report consists of a literature review, an empirical analysis of the Finnish register data, and an internet survey. We find that the scheme failed to reach its anticipated impact. The deduction was claimed far less than expected, the actual tax loss being only 8 % of the expected tax loss. Furthermore, our analysis suggests that the R&D tax incentive failed to reach clear, blind spots in the current Finnish, mainly direct-subsidy-based innovation system. Although the scheme’s design does not allow an unambiguous analysis of its impact on the R&D expenditure, our tentative results suggests that its impact remained rather small. The previous, international literature shows that the R&D tax incentives have an increasing effect on the R&D expenditures, but the impact tends not to exceed the amount of the tax subsidy. Based on our results it is unlikely that even a better-designed R&D tax deduction scheme would bring great value-added to the current, Finnish innovation system.
    Keywords: R&D, tax credits
    JEL: O38 H25
    Date: 2016–03–11
  19. By: Yagi, Michiyuki; Managi, Shunsuke
    Abstract: This study examines time-period and industry heterogeneity of innovation activity in Japan from 1964 to 2006 using patent data and non-consolidated firm data. This study focuses on the following three periods, based on changes of the Japanese patent system, in and non-manufacturing industries: I) before 1976; II) 1976–1987; and III) after 1988. Specifically, for each degree of patent protection in each industry, this study examines how innovation activities are affected by the following determinants found in the innovation literature: size, market competition, and search variety (depth and scope). Empirical results show that when using the entire sample from 1964 to 2006, the size effect on innovation is significantly positive. In addition, the effects of market competition and search variety on innovation are inverse-U. When considering time-period heterogeneity, the effects of size and search variety are similar to the entire period; however, the inverse-U effect of market competition is broken after 1988. On the other hand, when considering industry heterogeneity, the effects of size and search variety are similar to the entire sample, but differ between manufacturing and non-manufacturing industries. In addition, the effect of market competition is not statistically significant in either industry.
    Keywords: Patent; Inverse-U relationship; Competition; Search for variety
    JEL: L10 L40 O31
    Date: 2016
  20. By: Voeten, Jaap (Tilburg University, School of Economics and Management); Vannoorenberghe, Gonzague (Tilburg University, School of Economics and Management)
    Date: 2016

This nep-sbm issue is ©2016 by João Carlos Correia Leitão. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.