nep-sbm New Economics Papers
on Small Business Management
Issue of 2016‒05‒28
nineteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Collecting new pieces to the regional knowledge spillovers puzzle: high-tech versus low-tech industries By Carlos Carreira; Luís Lopes
  2. Studying Complementarities between Modes of Innovation Strategies in Transition Economies By Berulava, George; Gogokhia, Teimuraz
  3. Knowledge diversity and firm growth: Searching for a missing link By Grillitsch, Markus; Schubert, Torben; Srholec, Martin
  4. Swimming Upstream Throughout the Turmoil: Evidence on Firm Growth During the Great Recession By A. Arrighetti; F. Landini; A. Lasagni
  5. Knowledge creates markets: The influence of entrepreneurial support and patent rights on academic entrepreneurship By Czarnitzki, Dirk; Doherr, Thorsten; Hussinger, Katrin; Schliessler, Paula; Toole, Andrew A.
  6. Driving business performance: innovation complementarities and persistence patterns By Maurizio Baussola; Eleonora Bartoloni
  7. Self-Selection and Learning-by-Exporting Hypotheses: Micro Level Evidence By Rehman, Naqeeb Ur
  8. The Real Effects of Capital Requirements and Monetary Policy: Evidence from the United Kingdom By De Marco, Filippo; Wieladek, Tomasz
  9. Universities and RIS3: the case of Catalonia and the RIS3CAT Communities By Elisabetta Marinelli; Susana Elena Pérez; Josep Alias
  10. The Economic Impact of Rescue and Recovery Frameworks in the EU By Mihaela Carpus Carcea; Daria Ciriaci; Dimitri Lorenzani; Peter Pontuch; Carlos Cuerpo
  11. The Role of Financial Constraints for Different Innovation Strategies: Evidence for CESEE and FSU Countries By Sandra M. Leitner; Robert Stehrer
  12. Are multinationals better at creating technical linkages with local firms? By Cozza, Claudio; Perani, Giulio; Zanfei, Antonello
  14. RIO Country Report 2015: Finland By Halme Kimmo; Veli-Pekka Saarnivaara; Jessica Mitchell
  15. From Social Innovation to System Innovation: Assisted living experiments in Britain and Norway By Bugge, Markus; Coenen, Lars; Marques, Pedro; Morgan, Kevin
  16. RIO Country Report 2015: Estonia By Ruttas-Küttim Ruuta; Stamenov Blagoy
  17. RIO Country Report 2015: Greece By Tsipouri Lena; Athanasopoulou Sophia; Gampfer Robert
  18. RIO Country Report 2015: Latvia By Gundars Kulikovskis; Diana Petraityte; Stamenov Blagoy
  19. Firms’ Dynamics and Business Cycle: New Disaggregated Data By Lorenza Rossi; Emilio Zanetti Chini

  1. By: Carlos Carreira (GEMF and Faculty of Economics, University of Coimbra, Portugal); Luís Lopes (GEMF and Faculty of Economics, University of Coimbra, Portugal)
    Abstract: This paper revisits the puzzling question regarding the role of spatial agglomeration of production activities and knowledge on firm’s total factor productivity (TFP). In particular, it addresses the overlooked issue of a plausible non-linear effect and different across industries. Using a panel of Portuguese manufacturing firms, we found that specialization economies have a positive impact on firms’ productivity, especially for those operating in medium-high and high-tech sectors. Diversity externalities, for its part, have an inverted U-shaped relationship with firms’ TFP in low, medium-low and medium-high tech sectors. The relationship between regional R&D employment and productivity differs across sectors: in all manufacturing firms and firms from medium-low and high-tech sectors, there is an inverted U-shaped relationship; in low-tech sector, there is a U-shaped relationship and a positive elasticity for any employment level higher than the 20th percentile. Overall, agglomeration economies differ substantially across industries and they are non-linear.
    Keywords: Regional knowledge spillovers, agglomeration economies, low-tech vs. high-tech industries, total factor productivity. JEL Classification:
    Date: 2016–05
  2. By: Berulava, George; Gogokhia, Teimuraz
    Abstract: This paper explores the existing interrelationships between the firm’s innovation activities and productivity performance as well as studies complementarities among innovation strategies in transition economies. Specifically, on the basis of BEEPS V dataset and using extended CDM model, we have investigated the existence of possible complementarities between various types of innovation modes (product, process, marketing and organizational innovations) in their impact on the firm’s productivity. The traditional CDM framework was modified through accounting for the simultaneous occurrence of different types of innovation inputs - in-house and out-house knowledge generation activities - and through the estimation of their joint effects on various modes of innovation. In compliance with the results of previous studies, we find that CDM model properly describes the existing interrelations between the firm’s innovation activity and its productivity performance in transition economies. In particular, our results show that the firm’s decisions on in-house and out-house knowledge development processes are interdependent. The study results suggest that implementation of internal R&D strategy can stimulate not only technological innovations but non-technological innovative activity as well. However, we find that external knowledge acquisition strategy has positive and statistically significant effect on innovation output only when the firm’s innovation mix incorporates non-technological novelties. Our results show that only those modes of innovation output combinations that assume all the types of innovations and/or the combination of process and non-technological innovations have positive and statistically significant impact on the firm’s productivity. Another vital point of this analysis is that conducting either product or process innovation in isolation will result in a negative productivity performance. The important contribution of this paper is that it tests for complementarity between innovation strategies of firms in transition economies. Our tests reveal complementarity between the following two combinations of innovations: product/process and process/non-technological innovations. The key policy implication of our findings is that while performing all the three innovation modes jointly has a positive impact on firm’s performance, economically preferred options are: either to choose pure technological innovation strategy (product&process mode) or to perform strategy focused on organizational restructuring (process/non-technological mode).
    Keywords: R&D, external knowledge acquisition, innovation, productivity, CDM model, complementarity, transition economies
    JEL: C12 L25 O12 O31 P31
    Date: 2016–05–13
  3. By: Grillitsch, Markus (CIRCLE, Lund University); Schubert, Torben (CIRCLE, Lund University); Srholec, Martin (CIRCLE, Lund University)
    Abstract: The link between knowledge and firm growth has been a core topic in economics of innovation for a long time. However, despite strong theoretical arguments, empirical evidence remains inconclusive. One important reason for this conundrum may be the failure of standard indicators to comprehensively capture firm innovation activities. We contribute to overcoming this limitation by zooming in on the knowledge processes that drive variegated forms of innovation and aim thereby to establish a solid relationship with firm growth. The paper draws on the differentiated knowledge base approach, distinguishing between analytical, synthetic, and symbolic knowledge, and measures these types of knowledge with detailed longitudinal linked-employer-employee micro data from Sweden. Econometric findings indicate positive relationships between the three knowledge types, in particular combinations thereof, and firm growth. These relationships remain robust in a wide range of models. Our analysis therefore suggests that the seemingly weak relationship between firm growth and innovation may be explained by the narrow measurement concepts that have dominated in this literature so far.
    Keywords: Knowledge; innovation; firm growth; micro data; Sweden
    JEL: C33 D22 O12 O32 O33
    Date: 2016–04–21
  4. By: A. Arrighetti; F. Landini; A. Lasagni
    Abstract: In contrast to the so-called cleansing effect, during the Great Recession we observe highly heterogeneous firm performances. In particular, a not negligible subset of firms grew considerably despite of the general tendency towards downsizing. In this paper, we explain the behaviour of these swimming upstream firms (SUFs). We obtain three main results. First, SUFs exhibit certain firm-specific characteristics: they are younger and relatively more productive than non-SUFs. Second, SUFs adopt highly proactive strategic profiles, which assign significant importance to activities related to innovation, intangibles, and internationalization. Third, SUFs tend to react to changes in market opportunities, although they suffer from sticky processes of resource reallocation between exiting and surviving firms. Moreover, their growth seems to take place primarily within a regime of cumulative destruction rather than creative destruction. Some of the implications of these results for managers and policy makers are discussed.
    Keywords: crisis, cleansing effect, heterogeneity, growth, firm performance, manufacturing industry
    JEL: D22 L21 L25 O32
    Date: 2016
  5. By: Czarnitzki, Dirk; Doherr, Thorsten; Hussinger, Katrin; Schliessler, Paula; Toole, Andrew A.
    Abstract: We use an exogenous change in German Federal law to examine how entrepreneurial support and the ownership of patent rights influence academic entrepreneurship. In 2002, the German Federal Government enacted a major reform called Knowledge Creates Markets that set up new infrastructure to facilitate university-industry technology transfer and shifted the ownership of patent rights from university researchers to their universities. Based on a novel researcher-level panel database that includes a control group not affected by the policy change, we find no evidence that the new infrastructure resulted in an increase in start-up companies by university researchers. The shift in patent rights may have strengthened the relationship between patents on university-discovered inventions and university start-ups; however, it substantially decreased the volume of patents with the largest decrease taking place in faculty-firm patenting relationships.
    Keywords: intellectual property,patents,technology transfer,policy evaluation
    JEL: O34 O38
    Date: 2016
  6. By: Maurizio Baussola (DISCE, Università Cattolica); Eleonora Bartoloni (ISTAT, Regional Office for Lombardy)
    Abstract: Complementarities between technological and non-technological innovation are crucial determinants of firm performance. This topic has not received the attention that it merits, as the focus has been primarily placed on technological innovation alone or on innovation efforts as measured by R&D or patent activities. The capacities to develop market-oriented behaviour and introduce new organisational innovations are the drivers - together with technological innovation - of a firm's productivity and profitability. We also underline how the impact of such activities is larger when they persist over time, thus introducing a more general concept of innovation persistency. We present an empirical model based on a large and new panel of Italian manufacturing firms covering the period 2000-2012 that enables us to derive the precise impacts of a firm's innovative effort - based on a broad definition that incorporates non-technological innovation and persistence - on its productivity and profitability.
    Keywords: Technological and non-technological innovation, Complementarities, European Community Innovation Survey, Profitability, Productivity, Unbalanced panel data
    JEL: L25
    Date: 2016–03
  7. By: Rehman, Naqeeb Ur
    Abstract: This aim of this empirical paper is to investigate the self-selection and learning-by-exporting hypotheses. This study addresses the reverse causality between innovation, productivity and exporting using micro level data on 29 countries from Eurasia and Central and Eastern Europe (CEE). CDM estimation results suggest that innovation and productivity positively influence the firm’s exporting and vice versa. This study has supported the self-selection and learning-by-exporting hypotheses. Previous studies provided mixed outcome on the analysis of these two major hypotheses. Similarly, innovation by exporting is examined using multiple proxies of innovation such as product/process innovation, R&D and organizational innovation. Findings imply that innovation is an important determinant of firms’ exporting and this outcome is robust across Eurasian and CEE firms. Moreover, foreign owned firms are more likely to export and innovate than domestic firms due to their technological superiority over domestic firms. Concerning policy implications, economic policies should address the firm’s innovation, productivity and exporting performance. This would result in better economic integration between Eurasian and CEE firms. By removing the firm’s barriers such as access to finance, trade regulations and taxation etc would encourage trade networks between Eurasian and CEE firms.
    Keywords: Innovation, productivity and Exporting.
    JEL: F6 O3
    Date: 2016–05–20
  8. By: De Marco, Filippo; Wieladek, Tomasz
    Abstract: We study the effects of bank-specific capital requirements on Small and Medium Enterprises (SMEs) in the UK from 1998 to 2006. Following a 1% increase in capital requirements, SMEs' asset growth contracts by 6.9% in the first year of a new bank-firm relationship, but the effect declines over time. We also compare the effects of capital requirements to those of monetary policy. Monetary policy only affects firms with higher credit risk and those borrowing from small banks, whereas capital requirements affect both. Capital requirement changes, instead, do not affect firms with alternative sources of finance, but monetary policy shocks do.
    Keywords: Capital requirements; Firm-level real effects; prudential and monetary policy.; relationship lending; SMEs
    JEL: E51 G21 G28
    Date: 2016–05
  9. By: Elisabetta Marinelli (European Commission – JRC - IPTS); Susana Elena Pérez (European Commission – JRC - IPTS); Josep Alias (ACUP (Catalan Association of Public Universities))
    Abstract: Regional Smart Specialisation Strategies (RIS3) are aimed at developing nation-al/regional competitive advantages following a vertical prioritisation logic based on the bottom-up identification of a limited set of priorities where regions believe they have potential to obtain a comparative advantage. Priorities are identified and pursued through the interaction of stakeholders across the quadruple helix of government, industry, academia and society at large. This is because entrepreneurial knowledge is most often distributed across a regional system. This cyclical and recursive process of identification and prioritisation is referred to as an Entrepreneurial Discovery Process (EDP). In this context, universities and regions have a unique opportunity to form partnerships, together with the business sector, to maximise the use of European Structural and Investment Funds (ESIF), and particularly the European Regional Development Fund (ERDF), hence contributing to the local knowledge-based development. Although universities are placed in a good position to contribute significantly to the process of local development, it is difficult to evaluate whether and how such potential can be untapped (Kempton et al., 2013). This report, which is based on collaboration between the JRC-IPTS and the Catalan Association of Public Universities (ACUP), contributes to this debate by exploring universities’ role within RIS3 in the case of Catalonia. The paper first assesses the role of universities in the overall design and implementation of the Catalan RIS3 and EDP, and then goes in depth into one of its key instruments, namely the RIS3CAT Communities. Catalonia’s Smart Specialization Strategy (RIS3CAT) lays the framework under which the Government of Catalonia carries out RDI (Research Development and Innovation) policies in the current programming period (2014-2020) and supports the generation and development of innovative projects aiming to further develop the region. RIS3CAT establishes that the sectors defined as strategic for Catalonia are structured into RIS3CAT Communities. Each community is expected to carry out initiatives to facilitate collaboration among sectorial stakeholders, to improve competitiveness and to generate solutions to society’s changing needs. These communities will be one of the key tools through which universities and other stakeholders in strategic sectors are able to apply for ERDF-funded grants. The case of Catalonia is particularly interesting as the region is home to several public universities displaying remarkable differences in terms of size, scientific specialisation and relationship to the territory. In this respect Catalonia provides the opportunity to test how different types of Higher Education Institutions (HEIs) can respond to the RIS3.
    Keywords: universities, smart specialisation strategies, instruments
    Date: 2016–05
  10. By: Mihaela Carpus Carcea; Daria Ciriaci; Dimitri Lorenzani; Peter Pontuch; Carlos Cuerpo
    Abstract: This paper provides empirical support to the important role of efficient pre-insolvency frameworks in fostering a culture of early restructuring and second chances in EU Member States and the positive impact that this has on entrepreneurship, as well as the timeliness and cost of corporate and household deleveraging. The analysis is based on a set of composite indicators measuring specific efficiency aspects of rescue and recovery frameworks. These were built using principal component analysis applied on a comparison of the legal provisions they encompass. Econometric analysis carried out on the basis of these indicators suggests that, across the EU, efficient pre-insolvency frameworks are positively associated with relatively higher levels of entrepreneurship and deleveraging episodes with a relatively milder impact on financial stability and economic activity.
    JEL: C23 D02 G33 K20 K35
    Date: 2015–09
  11. By: Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract Due to information asymmetries between the debtor and potential outside investors, entrepreneurs often face sizeable and insurmountable financing constraints. This is a strong deterrent to either starting new or continuing already ongoing innovation projects which not only stymies entrepreneurs’ own future innovation potentials and growth prospects but also severely harms growth potentials of whole economies, making catching-up an unnecessarily long and arduous process. Against this backdrop, the analysis sheds light on the effects of prevailing credit constraints on different innovation strategies (i.e. R&D-based make versus M&E-based buy strategies) of establishments in Central, East and Southeast Europe (CESEE) and the Former Soviet Union (FSU) during three different economic phases. The results point to the detrimental effect of credit constraints which is particularly strong and consistent for the M&E-based ‘buy innovation strategy’ which dominates in the region, but less pronounced and relevant for the less prevalent R&D-based ‘make innovation strategy’. Furthermore, the analysis identifies firm characteristics that are conducive to innovative activities and demonstrates that establishment size, age, the particular international trading status, ownership status as well as whether subsidies were received are important determinants of different innovation strategies.
    Keywords: credit constraints, R&D-based and M&E-based innovation strategies, Central, East and Southeast Europe, Former Soviet Union
    JEL: G21 O16 O31
    Date: 2016–04
  12. By: Cozza, Claudio (University of Trieste); Perani, Giulio (ISTAT & Eurostat); Zanfei, Antonello (University of Urbino)
    Abstract: Using data on R&D investors active in Italy and controlling for various indicators of absorptive capacity and for the regional distribution of research activities, we show that multinationality is associated with a higher propensity to technical linkage creation. We also find that domestic owned multinationals are more inclined to R&D contracting out, while foreign multinationals are better at developing R&D cooperation with external parties. However, foreign multinationals are less prone than domestic companies to set up linkages with local counterparts. This suggests that while foreign multinationals generally possess advantages in terms of absorptive capacity and economies of common governance, they might as well face relative disadvantages in terms of experience of local contexts, inhibiting their propensity to set up on-site technical linkages.
    Keywords: Absorptive capacity; R&D; technical linkages; Multinationals
    JEL: F10 F23 O33
    Date: 2016–04–27
  13. By: Pietro Moncada Paternò Castello
    Keywords: corporate R&D intensity gap; decomposition; litterature survey; R&D policy
    JEL: O30 O32 O38 O57 F23 R39
    Date: 2016–04–27
  14. By: Halme Kimmo (Ramboll Management Consulting); Veli-Pekka Saarnivaara (Vpsolution); Jessica Mitchell (European Commission – JRC - IPTS)
    Abstract: The 2015 series of RIO Country Reports analyse and assess the policy and the national research and innovation system developments in relation to national policy priorities and the EU policy agenda with special focus on ERA and Innovation Union. The executive summaries of these reports put forward the main challenges of the research and innovation systems.
    Keywords: R&I system, R&I policy, ERA, innovation union, Semester analysis, Finland
    JEL: I20 O30 Z18
    Date: 2016–04
  15. By: Bugge, Markus (NIFU); Coenen, Lars (CIRCLE, Lund University); Marques, Pedro (School of Geography and Planning, Cardiff University); Morgan, Kevin (School of Geography and Planning, Cardiff University)
    Abstract: The aim of this paper is to identify and understand differences and similarities in system innovation policy by comparing state responses to assisted living in two contrasting national systems of care, namely that of the UK and Norway. To do so the paper draws on a number of new theoretical perspectives - including social innovation, socio-technical transitions and embedded state theory – to analyze place-based approaches to experimenting with new solutions and services in respective countries and the way in which different systems of national care lead to significantly different processes and outcomes in the area of ageing.
    Keywords: social innovation; system innovation; strategic niche management; health care
    JEL: I18 O31
    Date: 2016–05–10
  16. By: Ruttas-Küttim Ruuta (Independent Consultant); Stamenov Blagoy (European Commission – JRC - IPTS)
    Abstract: The 2015 series of RIO Country Reports analyse and assess the policy and the national research and innovation system developments in relation to national policy priorities and the EU policy agenda with special focus on ERA and Innovation Union. The executive summaries of these reports put forward the main challenges of the research and innovation systems.
    Keywords: R&I system, R&I policy, ERA, innovation union, Semester analysis, Estonia
    JEL: I20 O30 Z18
    Date: 2016–04
  17. By: Tsipouri Lena (National and Kapodistrian University of Athens); Athanasopoulou Sophia (National and Kapodistrian University of Athens); Gampfer Robert (European Commission – JRC - IPTS)
    Abstract: The 2015 series of RIO Country Reports analyse and assess the policy and the national research and innovation system developments in relation to national policy priorities and the EU policy agenda with special focus on ERA and Innovation Union. The executive summaries of these reports put forward the main challenges of the research and innovation systems.
    Keywords: R&I system, R&I policy, ERA, innovation union, Semester analysis, Greece
    JEL: I20 O30 Z18
    Date: 2016–05
  18. By: Gundars Kulikovskis (FIDEA (Financial and Management Consulting Company)); Diana Petraityte (FIDEA (Financial and Management Consulting Company)); Stamenov Blagoy (European Commission – JRC - IPTS)
    Abstract: The 2015 series of RIO Country Reports analyse and assess the policy and the national research and innovation system developments in relation to national policy priorities and the EU policy agenda with special focus on ERA and Innovation Union. The executive summaries of these reports put forward the main challenges of the research and innovation systems.
    Keywords: R&I system, R&I policy, ERA, innovation union, Semester analysis, Latvia
    JEL: I20 O30 Z18
    Date: 2016–05
  19. By: Lorenza Rossi (Department of Economics and Management, University of Pavia); Emilio Zanetti Chini (Department of Economics and Management, University of Pavia)
    Abstract: We provide stylized facts on firms dynamics by disaggregating U.S. yearly data from 1977 to 2013. To this aim, we use a new unobserved component-based method, encompassing several classical regression-based techniques currently in use. The new time series of Entry and Exit of firms at establishment level are feasible proxies of Business Cycle. Exit is a leading and countercyclical indicator, while Entry is lagging and procyclical. The resulting SVAR analysis supports the recent theoretical findings of the literature on firms dynamics.
    Keywords: C10, C13, E3, E32, E37.
    Date: 2016–05

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