nep-sbm New Economics Papers
on Small Business Management
Issue of 2016‒04‒16
twelve papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Complementarities in organizational innovation practices: evidence from French industrial firms Complementarities in organizational innovation practices: evidence from French industrial firms By Caroline Mothe; Thu Nguyen Nguyen Thi; Phu Nguyen-Van
  2. The Impact of Innovation in the Multinational Firm By L. Kamran Bilir; Eduardo Morales
  3. Export-Led Innovation Among European Firms. Demand and Technological Learning Effects By Fassio, Claudio
  4. SMALL BUSINESS MANAGEMENT IN RELATIONSHIPS OF MICRO AND MACRO ENVIRONMENT By Anna Wiśniewska-Sałek; Joanna Nowakowska-Grunt; Anna Brzozowska; Robert Sałek
  5. Taking the Leap: The Determinants of Entrepreneurs Hiring their First Employee By Fairlie, Robert W.; Miranda, Javier
  6. Innovation and Performance of Enterprises: The Case of SMEs in Vietnam By Vu, Hoang Nam; Doan, Quang Hung
  7. How mergers affect innovation: Theory and evidence from the pharmaceutical industry By Haucap, Justus; Stiebale, Joel
  8. Velocity shifts in the creative economy: incumbent-entrant dynamics in the emergence of Japanese social games By Ernkvist, Mirko
  9. SME Financing in the EU: Moving beyond one-size-fits-all By Markus Demary; Joanna Hornik; Gibran Watfe
  10. Localization of Collaborations in Knowledge Creation By Inoue, Hiroyasu; Nakajima, Kentaro; Saito, Yukiko Umeno
  11. 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
  12. Capitale umano, innovazione tecnologica e divari economici nell’era post-knowledge? Un’analisi econometrica a livello sub nazionale By Lima, Rita

  1. By: Caroline Mothe (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Thu Nguyen Nguyen Thi (CEPS/INSTEAD - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development); Phu Nguyen-Van (BETA - Bureau d'Economie Théorique et Appliquée - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Organizational innovation favours technological innovation. Yet the question of which organizational practices should be combined—that is, their compatibility—remains unanswered. This empirical investigation of patterns of complementarity considers three organizational practices: business practices, workplace organization, and external relations. Firm-level data drawn from the 2008 French Community Innovation Survey and supermodularity tests confirm the crucial role of organizational innovation in increasing firms’ innovation. The pattern of complementarity among organizational practices differs according to the type of innovation (i.e., product or process), as well as the type of measure used to assess technological innovation performance. These results highlight the complexity of managing organizational practices to encourage firm innovation.
    Keywords: Complementarity, Organizational innovation, Supermodularity, Technological innovation
    Date: 2015
  2. By: L. Kamran Bilir; Eduardo Morales
    Abstract: When firms operate production plants in multiple countries, technological improvements developed in one country may be shared with firm sites abroad for efficiency gain. We develop a dynamic model that allows for such intrafirm transfer, and apply it to measure the impact of innovation on performance for a panel of U.S. multinationals. Our estimates indicate U.S. parent R&D raises performance significantly at firm locations abroad, and also complements R&D by affiliates. Parent R&D is a substantially more important determinant of firm performance than affiliate R&D. We identify these R&D effects using variation in location-specific innovation policies.
    JEL: F00 F23 O30
    Date: 2016–04
  3. By: Fassio, Claudio (LUISS School of European Political Economy)
    Abstract: This paper investigates the effect of exporting activities on the innovation strategies of European firms in France, Germany, Italy, Spain and UK. The paper puts forward the hypothesis that such a positive effect is driven two main mechanisms. The first is a technological learning effect that allows firms active in international markets to benefit from foreign knowledge spillovers in technologically advanced markets and decrease their research cost for the development of innovations. The second is a demand effect induced by fast-growing foreign markets that increase the potential output of firms. The empirical analysis, which addresses important endogeneity issues related with the strategic choice of the markets of destination operated by firms, shows that the two effects induce the adoption of different innovation strategies. While the technological learning effect positively affect the decision of firms to introduce brand new product innovations, the demand effect fosters the adoption of efficiency and imitation strategies. The paper shows that the effect of exporting activity on innovation strategies crucially depends on the type of export destinations. The lower levels of the technological learning effect which is found among the export destinations of Italian and Spanish firms might represent a possible obstacle for the ability of these countries to increase their future innovative capacities.
    Keywords: Exports; Innovation strategies; European Union economics
    JEL: F10 O33 P51
    Date: 2015–03–05
  4. By: Anna Wiśniewska-Sałek (Czestochowa University of Technology, Faculty of Management); Joanna Nowakowska-Grunt (Czestochowa University of Technology, Faculty of Management); Anna Brzozowska (Czestochowa University of Technology, Faculty of Management); Robert Sałek (Czestochowa University of Technology, Faculty of Management)
    Abstract: Building the economy of a country and its competitive strength on international markets constitutes the determinant of the economic power of globalization. Countries, wishing to take an active part in creating this power must exert impact on their economy in terms of innovation, entrepreneurship and flexibility of management of their business. However, building the economy of the country begins from the bottom, therefore, from the local – regional industry. In Poland, this industry consists in the enterprises of the SME sector, where there predominate small companies that do not have the financial potential e.g. for the development being the result of using modern technologies. The State (the policy run by the authorities) and aid programs of the European Union have a significant share in the development of such companies. However, the progress in business greatly depends on the enterprise itself and, particularly, the strategy selected as the leading one. The paper is an attempt to select factors both from the micro and macro environment. Degree of dependence and impact of these factors on each other/ the company represents valuable information for those managing small businesses. It may constitute the first step towards the decision in what direction the enterprise will develop or if it will be able to satisfy the requirements set e.g. by the external environment.
    Keywords: small business, business environment, management
    JEL: M21 Q56
  5. By: Fairlie, Robert W. (University of California, Santa Cruz); Miranda, Javier (U.S. Census Bureau)
    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: entrepreneurship, job creation, Kauffman Firm Survey, iLBD, startups, entrepreneurship training, small business, GATE experiment
    JEL: L26
    Date: 2016–03
  6. By: Vu, Hoang Nam; Doan, Quang Hung
    Abstract: Innovation is widely recognized as a key determinant of enterprise performance. It is, however, not clear how innovation affects performance of small-and-medium enterprises (SMEs) in transition economies. Based on data collected from surveys of SMEs in Vietnam from 2005 to 2011 this study shows that the human capital of owners/managers of SMEs, the quality of workers, and public physical infrastructure positively affect innovation and the performance of SMEs. More importantly, the study finds that innovation in products, production process, and marketing is a decisive factor for higher performance of SMEs in Vietnam.
    Keywords: Innovation, SMEs, Vietnam
    JEL: D22 J54 L11 L25 O3
    Date: 2015–01
  7. By: Haucap, Justus; Stiebale, Joel
    Abstract: This papers analyses how horizontal mergers affect innovation activities of the merged entity and its non-merging competitors. We develop an oligopoly model with heterogeneous firms to derive empirically testable implications. Our model predicts that a merger is more likely to be profitable in an innovation intensive industry. For a high degree of firm heterogeneity, a merger reduces innovation of both the merged entity and non-merging competitors in an industry with high R&D intensity. Using data on horizontal mergers among pharmaceutical firms in Europe, we find that our empirical results are consistent with many predictions of the theoretical model. Our main result is that after a merger, patenting and R&D of the merged entity and its non-merging rivals declines substantially. The effects are concentrated in markets with high innovation intensity and a high degree of firm heterogeneity. The results are robust towards alternative specifications, using an instrumental variable strategy, and applying a propensity score matching estimator.
    Keywords: mergers & acquisitions,innovation,R&D incentives,merger policy
    JEL: D22 L13 L4 G34 O31
    Date: 2016
  8. By: Ernkvist, Mirko (The Ratio Institute)
    Abstract: The Japanese innovation system has been characterized as more prone to disruptive innovation by incumbent firms rather than de novo entrepreneurial entrants (H. W. Chesbrough, 1999). We draw upon the notion that creative industry competition in a high velocity environment is fundamentally different from an environment of more moderate velocity, exploring the notion that velocity shifts following disruptive innovation could be a key underlying mechanism for transformation by entrants in institutional settings that favor incumbents. A higher velocity environment provides a cognitive barrier to incumbent firms’ R&D by making established design heuristics obsolete, introducing novel market analytic methods and shifting established industry logics towards speed, constant iteration and services. The velocity shift in the transition from video games to social games required new specialized assets and new ways of accessing customer preferences though real-time data mining techniques that also challenged engrained cognitive frames of how game design should be pursued. Unlike previous disruptive innovation in the game industry, social games enabled new entrants to rapidly become market leaders. The case points towards a more nuanced view of the influence of disruptive innovation during velocity shifts in creative industries. For studies of technological entrepreneurship, this implies that the velocity shifts following disruptive innovation could provide a previously overlooked important mechanism in understanding how entrants have been able to challenge incumbent firms in Japan.
    Keywords: disruptive innovation; social games; velocity shifts; industry emergence
    JEL: L26 L82 M12 N85 O32
    Date: 2015–12–31
  9. By: Markus Demary (Cologne Institute for Economic Research); Joanna Hornik (College of Europe, Department of European Economic Studies); Gibran Watfe (College of Europe, Department of European Economic Studies)
    Abstract: The proposal for a European Capital Markets Union (CMU) carries large potential economic benefits from enhancing the financing possibilities for Small and Medium-Sized Enterprises (SMEs). By deepening the capital markets and strengthening crossborder integration, the European Commission hopes to stimulate economic growth and boost employment. In this paper, we discuss to what extent these goals can be achieved, in light of the complex business environment of European SMEs. We outline the different types of SMEs in terms of their financing structures as well as the pervasive differences across the EU, concluding that any policy approach must take into account the diversity of the companies’ financing needs and the market realities in the Member States. We argue that the CMU is likely to have a heterogeneous impact, with some types of SMEs and certain regions gaining more than others.
    Keywords: Capital Markets Union, SME financing, European integration
    JEL: O16 F21 E61 G32
    Date: 2016–03
  10. By: Inoue, Hiroyasu; Nakajima, Kentaro; Saito, Yukiko Umeno
    Abstract: This study investigates the localization of collaboration in knowledge creation by using the data on Japanese patent applications. Applying distance-based methods, we obtained the following results. First, collaborations are significantly localized at the 5% level with a localization range of approximately 100 km. Second, the localization of collaboration is observed in most technologies. Third, the extent of localization was stable from 1986–2005 despite extensive developments in information and communications technology that facilitate communication between remote organizations. Fourth, the extent of localization is substantially greater in inter-firm collaborations than in intra-firm collaborations. Furthermore, in inter-firm collaborations, the extent of localization is greater in collaborations with small firms. This result suggests that geographic proximity mitigates the firm-border effects in collaborations, especially for small firms.
    Keywords: Knowledge creation, Collaboration, Geographic frictions, Firm-border effects
    JEL: R12 O31
    Date: 2016–03
  11. 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 prepolicy 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.
    Date: 2016–03
  12. By: Lima, Rita
    Abstract: During the last forty years there was a broad consensus in the academic literature that human capital is an important determinant of productivity and other economic outcomes, both at the individual and at the aggregate level, and that its role was particularly crucial to reduce regional growth disparities. Nowadays, although the production and use of human capital is at the core of value-added activities, innovation is at the core of firms’ and nations’ strategies for economic growth in a new “post-knowledge” era. Bearing this evidence in mind and using recent GMM-SYS panel data procedures, this paper presents a dynamic specification for the period 1970-2009 in which we used as dependent variable a proxy of Italian cross-country disparities in economic performance (such as the gap in the annual percentage growth rate of GDP between Italian regions and Germany, the innovation leader country) and indicator of innovation activity (such as the ratio of public and private R&D expenditure to gross fixed investments) and human capital (such as the ratio of people graduated in science and technology subjects to active people aged 25-64) as predetermined and endogenous variables. The results reveal that the well known North-South duality in terms of human capital differentials is always important spillover in defining regional competitiveness and economic growth, but in a world where information is ubiquitous and knowledge is increasingly shared, those regions located in an economic periphery that experience lower returns to skill attainment and hence have reduced incentives for human capital investments and agglomerations (like Sicily) have to look for new sources of advantage (such as R&D) to gain a competitive edge.
    Keywords: Capitale Umano, R&S, Modello di regressione pooled, Stimatore GMM-SYS
    JEL: C1 C18 I25 O11 O30
    Date: 2016–04–06

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