nep-sbm New Economics Papers
on Small Business Management
Issue of 2016‒12‒11
fifteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Innovation and Access to Finance By Michele Cincera; Anabela Santos
  2. The contribution of different public innovation funding programs to SMEs' export performance By Liu, Rebecca; Rammer, Christian
  3. Success factors of innovation networks: Lessons from agriculture in Flanders By Lambrecht, Evelien; Kühne, Bianka; Gellynck, Xavier
  4. A Dinâmica Inovativa das Empresas de Pequeno Porte no Brasil By Graziela Ferrero Zucoloto; Mauro Oddo Nogueira
  5. Innovación y emprendedurismo: Ordenando el rompecabezas de la Nueva Gestión Empresarial de la Innovación By Faiña Medín, J. Andres; Losada-Lopez, Chema; Montes-Solla, Paulino
  6. Advanced Manufacturing Activities of Top R&D investors: Geographical and Technological Patterns By Petros Gkotsis; Antonio Vezzani
  7. Drivers, effects and peculiarities of innovation activities in the food industry: a comparison across EU Member States using CIS data By Ciliberti, Stefano; Bröring, Stefanie; Martino, Gaetano
  9. The Innovation-R&D Nexus- Evidence from the Indian Manufacturing Sector By Sunil Kanwar; Shailu Singh
  10. Import, Export and Multinationality. Evidence from Swedish Firms By Castellani, Davide; Fassio, Claudio
  11. Inter-Enterprise Credit and Adjustment During Financial Crises: The Role of Firm Size By Coricelli, Fabrizio; Frigerio, Marco
  12. Recession Propagation in Small Regional Economies: Spatial Spillovers and Endogenous Clustering By Sergei Shibaev
  13. Testing for Agglomeration Economies and Firm Selection in Spatial Productivity Differences: The case of Japan By KONDO Keisuke
  14. KNOWLEDGE BASED ECONOMIC AREAS AND FLAGSHIP UNIVERSITIES: A Look at the New Growth Ecosystems in the US and California By Douglass, John A.
  15. Access to informal venture capital and ambitious entrepreneurship – cross country evidence By Avdeitchikova, Sofia; Nyström, Kristina

  1. By: Michele Cincera (The International Centre for Innovation, Technology and Education Studies (iCite), Solvay Brussels School of Economics and Management, University of Brussels, Belgium); Anabela Santos (The International Centre for Innovation, Technology and Education Studies (iCite), Solvay Brussels School of Economics and Management, University of Brussels, Belgium)
    Abstract: Promoting Research and Development (R&D) activities is the main goal of the EU 2020 Strategy in order to achieve an R&D spending at least 3% of GDP. The Innovation Union is one of the seven flagship initiatives of the EU 2020 Strategy, which has the aims: to improve access to finance for R&D; to get innovative ideas to market; to ensure growth and jobs (European Commission, 2014b). The aim of the present paper is to identify and explain the main mechanisms related to four commitments of Innovation Union: i) Commitment 10 (Put in place EU level financial instruments to attract private finance); ii) Commitment 11 (Ensure cross-border operation of venture capital funds); iii) Commitment 12 (Strengthen cross-border matching of innovative firms with Investors); iv) Commitment 13 (Review State Aid Framework for Research, Development and Innovation). To this purpose, a review of both theoretical and empirical literatures about ’Innovation, Access to Finance and SMEs’ based on more than 80 scientific and other articles and analyses is presented. The paper provides an analysis of the main alternative financial instruments to bank loans, namely Risk-Sharing Facility Financing, Venture Capital, Business Angels and public subsidies. We found some evidence in the literature that Venture Capital could have a limited impact in enhancing innovation in the long-term and that some public support schemes could be more effective than other, depending on the firm’s maturity state.
    Keywords: EU 2020 strategy, innovation, finance, Innovation Union
  2. By: Liu, Rebecca; Rammer, Christian
    Abstract: This paper studies the effects of different public innovation funding programs on the innovation output and export performance of small and medium-sized enterprises (SMEs). We evaluate the effectiveness of regional, national and European funding programs implemented in Germany for both product and process innovations. Our panel study shows that public financial support contributes to higher innovation outputs, which in turn translates into higher export success in later years. This relation however only holds for certain sources of public funding and certain types of innovation output. Innovation support from the European Union and national programs for cutting-edge technology that results in higher sales with new-to-market products shows a significant positive effect on SMEs' export performance. For funding programs run by regional authorities, we find similar though relatively smaller impacts on both innovation output and exporting. Bottom-up funding at the national level-which allows firms to freely define the design of the funded innovation projects in terms of content and cooperation-increases sales with innovations that are only new to the firm, but these innovations have limited impacts on export success. Our results suggest that public innovation programs should challenge SMEs to go for more ambitious innovations in order to strengthen their competitiveness.
    Keywords: Public Funding,SMEs,Innovation Outputs,Exporting,Panel Study,Matching
    JEL: O32 O38 F14
    Date: 2016
  3. By: Lambrecht, Evelien; Kühne, Bianka; Gellynck, Xavier
    Abstract: Innovation has been identified as a critical asset for SMEs to survive (Hitt et al., 2001; Lee et al., 2001). However, SMEs that need to improve their innovation process often lack the essential resources to innovate when relying solely on their in-house activities (Batterink et al., 2010). A large body of literature therefore highlights the role of external partnerships, or networks (Lazzarini et al., 2001; Pittaway et al., 2004; Sawhney et al., 2006). Despite the increasing number of studies focusing on the relationship between networking and innovation, there is still considerable ambiguity and debate within literature regarding appropriate network characteristics for successful innovations (Nieto and Santamaria, 2007; Pittaway et al., 2004). Furthermore, the existing studies focus mostly on high tech companies (Edquist 2006, van Galen 2008). The objective of our study is to gain insight into the network characteristics critical for successful innovations within the agricultural sector in Flanders. The study is based on interviews and focus group discussions with farmers and network coordinators active in Flanders. In total, 109 respondents were consulted. This research is based on four innovation characteristics which seem crucial for each innovation (Kanter, 1988). For each of these innovation characteristics, we investigated how networks could contribute, via their network characteristics. The results showed that networks serves as a net for knowledge about e.g. new technologies, or changing legislation in order that farmers are faster aware of developments. When farmers have multiple contacts, they have a higher chance to discover new things. Thereby, it is important that knowledge providers are part of the network and connected with the different actors, and not only provide their information to the farmers as an external actor. Also the face-to-face communication within a network is an essential issue. Furthermore, coalition can play a crucial role for some innovations, as a lot of farmers are not able to implement their idea because for example the retailer or research institute is not supportive or interested. If the farmers set up a self-initiated coalition, it can be easier to initiate the innovative idea. Fourth, it is important that individual actors from the agricultural system revisit their actual role. Successful innovation processes often originate in situations where creativity is not limited within one unit. Based on the findings, recommendations for farmers as well as network coordinators are formulated to increase the innovation capacity.
    Keywords: Innovation, Networks, Success factors, Agriculture, Flanders, Agribusiness,
    Date: 2015–05
  4. By: Graziela Ferrero Zucoloto; Mauro Oddo Nogueira
    Abstract: Este trabalho analisa o perfil inovativo das empresas industriais brasileiras segundo seu porte. Os dados utilizados foram obtidos a partir da Pesquisa de Inovação Tecnológica (Pintec) de 2011, publicada pelo Instituto Brasileiro de Geografia e Estatística (IBGE). As empresas foram agregadas, de acordo com seu porte, em três grupos: micro e pequenas (entre 10 e 99 funcionários), médias (de 100 a 499 empregados) e grandes (500 ou mais empregados). Foram analisadas não somente as taxas de inovação desses grupos mas também o grau de inovatividade, as diferenças nas atividades inovativas empregadas, o grau de cooperação e o uso de incentivos públicos, entre outros. Adicionalmente, o trabalho realiza uma análise setorial das empresas, segundo os portes estabelecidos. Entre os principais resultados, concluiu-se que, apesar de apresentarem taxas de inovação superiores às das pequenas, os esforços inovativos das grandes firmas são, proporcionalmente, mais elevados, com ênfase na aquisição de máquinas e equipamentos (M&E), atividade associada à modernização do processo produtivo. Ainda, as empresas de pequeno porte são as principais responsáveis pela introdução de novos produtos no mercado nacional e mundial, representando cerca de três quartos do total. Em relação ao esforço em pesquisa e desenvolvimento (P&D), nos setores de baixa tecnologia, a distância das micro e pequenas empresas (MPEs) para as grandes é expressiva, enquanto nas indústrias de maior intensidade tecnológica, como a de farmoquímica e farmacêutica e a de informática e eletrônicos, as empresas de menor porte apresentam esforço tecnológico superior ao das grandes empresas. This paper analyzes the innovative performance of Brazilian industrial companies according to their size. We obtained the data from the Innovation Survey 2011, published by the Brazilian Institute of Geography and Statistics (IBGE). We grouped the companies according to their size: micro and small (between 10 and 99 employees), medium (100-499 employees) and large (500 or more employees). The paper not only analyzed the innovation rates of such groups, but the degree of innovativeness, differences in innovative activities, the degree of cooperation, use of public incentives, among others. In addition, the work carries out a sectoral analysis of the companies, according to the established sizes. Among the main results, it concluded that despite the large firms present innovative rates higher than small ones, innovative efforts of these are proportionally higher, with emphasis on the acquisition of machine, which is associated with the modernization of the production process. Still, small businesses are the main responsible for the introduction of new products in the domestic and world market, accounting for about ¾ full. Regarding the R&D efforts in low-tech sectors, the distance of SMEs to large firms is significant, while in the more technology-intensive industries, such as pharmaceutical, information technology and electronics, the smaller companies have technological effort higher than that of large companies.
    Date: 2016–11
  5. By: Faiña Medín, J. Andres; Losada-Lopez, Chema; Montes-Solla, Paulino
    Abstract: This essay aims to clarify the puzzle of new principles and techniques in the field of business management of innovation. These new principles and techniques were born in a widely-connected world with an increasing presence of startups and innovative companies in order to meet pervasive market uncertainty and facilitate implementation of “new-to-market” innovations. The focus is placed on the implications for competitive strategy and business management of innovation. Instead of drawing on Schumpeterian concepts, we use the modern notion of “disruptive” innovations (those upsetting the rules of the game and old structures in a business or industry), as well as the principles and techniques recently developed to approach the uncertainties and costs of innovations: customer development and lean startup. We compare two paradigmatic styles of innovation: the startups’ stereotype (the American style) and that of “innovation transfer” (German-European style). Then, we discuss the main orientations of innovation policy with regard to the new industrial initiatives (Industry 4.0 in Germany and Europe and advanced manufacturing in USA) and their counterpoint of startups' innovating creativity across a connected world at the edge of an information revolution.
    Keywords: Innovación, Emprendedurismo, Nueva Gestión Empresarial
    JEL: M13 M15 O31 O32 O38 O39
    Date: 2016–10–27
  6. By: Petros Gkotsis (European Commission – JRC); Antonio Vezzani (European Commission – JRC)
    Abstract: Advanced manufacturing technologies (AMTs) and other key enabling technologies (KETs) are expected to have a major impact on productivity, efficiency, profitability and employment in major industrial sectors worldwide. Thus, development of AMTs and KETs is considered essential if the European Union is to achieve the strategic goals set out in the European Commission’s Employment, Growth and Investment priorities. Indeed, AMTs and KETs are among the top priorities identified as necessary to support the competitiveness of European industries in the context of the European flagship on industrial modernisation. This study builds upon and extends results that were obtained in the context of the Advanced Manufacturing Technologies for Competitiveness AMTEC project, in which the technological profiles of the patent portfolios of the EU Industrial R&D Investment Scoreboard companies were constructed using patent-based analysis. In particular, their technological competences were investigated and it was found that European companies invest in KETs, and in particular in AMTs, as these technologies are considered to be vital for maintaining current competitiveness. However, other countries also invest heavily in AMTs and KETs. It is therefore very important for the EU to define a strategy that aims to find a suitable position in the global value and innovation chains and that selectively augments existing capabilities. To this end, a methodology based on patent analysis was applied to assess the capacity of the world’s top R&D investors in developing AMTs. Particular emphasis was placed on complex AMT patents that also pertain to at least one of the five KETs. These patents are considered important because they represent AMT applications used for the development of KETs in general or, conversely, they represent other KET applications that can be incorporated into AMT systems. The main questions addressed by this study were (1) In which countries are the most important inventors of AMTs and applicants for AMT-related patents located? (2) Is it possible to analyse internationalisation patterns and knowledge flows between world regions and countries? and (3) Are there any special patterns and clusters between AMT-related technological fields and the five core KETs and, if so, which companies are responsible for the development of these technological applications? Developing and patenting AMT-related technologies is particularly important for firms in the Aerospace & defence, Industrials, Automobiles & parts and Electronics & electrical equipment sectors. Moreover, the more specialised a sector is in developing AMT-related technologies, the less internationalised the AMT-related activities of the firms in the sector appear to be. In general AMT-related R&D activities of European- and US-based firms are more internationalised than the activities of Japanese- and Asian-based companies. It was found that many Scoreboard firms based in the USA, Japan, Germany, France and the UK own and develop a large number of AMT-related patents. However, there are also many inventors of AMT-related technologies based in other countries, such as China, India, Canada, Italy, Belgium and Spain. Finally, the ratio of complex AMT patents to the total number of AMT-related patents is close to 8%, the vast majority being patents that relate to micro- and nano-electronics, advanced materials or photonics. Companies that own these complex patents are often relatively small firms that are highly specialised in the development of AMT-related applications.
    Keywords: Advanced Manufacturing Technologies, Key Enabling Technologies, Patents, Industry
    Date: 2016–11
  7. By: Ciliberti, Stefano; Bröring, Stefanie; Martino, Gaetano
    Abstract: Innovation is a clear target of the Europe 2020 growth strategy. It has been widely postulated that cooperation is especially important for innovation in the food industry because it has traditionally been regarded as a “low tech” sector. This paper analyses how different forms of cooperation affect innovation activities in the EU’s food industry. In particular, the study addresses the question of how cooperation between companies and key chain agents influences innovative activity. To do so, we analysed data at the country level drawn from the Community Innovation Survey (CIS). The aggregated data allowed us to investigate national system-level processes that must be considered the outcomes of micro-level decisions and policies. A random effect linear model is formulated and estimated to analyse the panel data obtained from five CIS waves. The model indicates that cooperation with universities positively affects innovative activity and, surprisingly, that government financial support has not been an effective instrument to foster innovation by food companies.
    Keywords: Innovation, food industry, cooperation, supplier integration, Agribusiness,
    Date: 2015–05
  8. By: Cécile Fonrouge (Université du Québec à Trois-Rivières (UQTR))
    Abstract: Crowdfunding is an emerging form of entrepreneurial finance. Financial flows from migrants and their descendants to their homeland are important. Do crowdfunding platforms disrupt this Diaspora financial flow? Our aim is to contrast and compare the sociology of immigration, Diaspora literature and entrepreneurial finance. We have interviewed all the French Diaspora Crowdfunding startups. We highlighted Diaspora motivation typologies and the evolution of these motivations since the beginning of Crowdfunding. By studying this new literature and interviewing key “Fintechs” entrepreneurs of French platforms, we propose a unique description: Diasporas motivations that are applied to Diaspora and trends on Diaspora investment evolution for this new digital industry. The main results are about the equilibrium between emotional and rational motivations for the new generation of migration, the competencies that Diaspora gives back to the country of their origin and the modification of the hierarchy of financing sources due to the possibility to raise money online.
    Keywords: crowdfunding, diaspora
    Date: 2016–11–01
  9. By: Sunil Kanwar (Department of Economics, Delhi School of Economics); Shailu Singh (Department of Economics, Delhi School of Economics)
    Abstract: While there is consensus that innovation is a prime motive force in the process of modern economic growth, there continues to be lack of clarity about how best to capture this process of innovation. Although it is relatively clear that research and development expenditure constitutes an important, perhaps even the most important, input into the innovation process, its relationship with the output of this process remains enigmatic. A sizeable literature considers this relationship in the developed country context, though primarily the US, and sheds light on a number of aspects. Evidence for developing countries, in contrast, is sparse. This study intends to fill this gap by exploring the innovation-R&D relationship as exemplified by the influence of knowledge capital on patents, in the context of the emerging economy of India. Using a relatively large sample of 380 manufacturing firms spanning 22 industries over the recent period 2001-2010, we find weak evidence at best for this relationship. A one unit (dollar or rupee) increase in the knowledge capital stock is likely to raise the expected patent count by only about 0.7%, which given the current average patent count per firm per year, is only a marginal change. In addition, we also find that patent experience and the firm’s access to resources are both strongly significant factors explaining changes in expected patent counts, although their magnitudes are equally small. Our semi-elasticity estimate w.r.t knowledge capital translates to an elasticity of about 0.02 at the means, which is in line with that for enterprises in Spanish manufacturing. However, it is an order of magnitude smaller than the 0.1 to 0.2 reported for the Dutch pharmaceuticals sector, and the 0.3 to 0.6 for firms in the US manufacturing sector. Given the many reasons why most firms appear not to patent even when they conduct some research, policy makers would have to address multiple issues to bring about a more effective conversion of research into formal intellectual property in the developing country context.
    Keywords: Patents, r&d, manufacturing, India
    Date: 2016–11
  10. By: Castellani, Davide (Henley Business School, University of Reading); Fassio, Claudio (CIRCLE, Lund University)
    Abstract: This paper studies the role of imported inputs in explaining firms’ export behaviour. Unlike most of the existing literature we are also able to control for the participation of domestic firms to multinational networks. This allows us to test to what extent the recurrent evidence that importing foster exporting activity is instead a figment of the fact that importers are also part of multinational groups. Our evidence, based on Swedish manufacturing firms, suggests that imported inputs, rather than multinationality, are a key determinant of firms’ export propensity and product scope. This result is particularly strong for SMEs, and it is driven by imported intermediates and (to a lesser extent) capital goods.
    Keywords: importing; exporting; multinational enterprises; Sweden
    JEL: F14 F23 O52
    Date: 2016–12–02
  11. By: Coricelli, Fabrizio; Frigerio, Marco
    Abstract: Analyzing a large firm-level database for European countries, the paper shows that during the Great Recession trade credit amplified the liquidity squeeze on SMEs induced by the contraction of bank credit. Because of their generally weaker bargaining power in the inter-enterprise credit market, SMEs sharply increased their net trade credit and thus transferred financial resources to larger firms. The paper finds that the liquidity squeeze induced by trade credit had large negative effects on real activity by SMEs, contributing to the fall in employment, wages and investments.
    Keywords: Financial crises; SMEs; trade credit
    Date: 2016–12
  12. By: Sergei Shibaev (Queen's University)
    Abstract: This paper develops a statistical model for measuring spatial interactions when estimating macroeconomic regimes and regime shifts. The model is applied to study the contagion and propagation of recessions in small regional economies in the United States from 1990 to 2015. The empirical analysis identifies two geographical concentrations (or clusters) where small regional economies were affected by recessions in similar ways. These clusters are interpreted as groups of regions that are potentially at-risk to collective economic distress, which is useful for national and regional policy makers. The first identified cluster is characterized by regional economies with important roles in the financial sector, while the second cluster is characterized by the oil and gas extraction sector. The empirical findings uncover an important propagation dynamic that would be overlooked if one were to apply the model without the spatial extension developed in this paper. Specifically, the evidence shows significant spatial spillovers between small regional economies, meaning that shocks to regions are expected to be higher, when shocks to neighboring regions are high on average. The magnitude of this effect is amplified for the period spanning and following the Great Recession.
    Keywords: Bayesian statistics, business cycles, endogenous clustering, regime-switching, regional economic analysis, spatial econometrics, time series econometrics
    JEL: C11 C31 C34 E32 R10
    Date: 2016–11
  13. By: KONDO Keisuke
    Abstract: This study explores why firms, on average, are more productive in larger cities. One major explanation is that the higher firm productivity in larger cities is the result of agglomeration economies. However, recent studies have proposed an alternative mechanism of selection; namely, tougher competition in larger cities forces less-productive firms to exit and, as a result, more-productive firms operate in such locations. To distinguish agglomeration economies from firm selection, this study applies a newly suggested quantile approach to the Japanese manufacturing sector. Overall, the empirical results show that agglomeration economies, rather than stronger selection in larger cities, better explain spatial productivity differences in the Japanese manufacturing sector. The findings also show that benefits from agglomeration economies in this sector have decreased as interregional accessibility has increased.
    Date: 2016–11
  14. By: Douglass, John A.
    Keywords: Education
    Date: 2016–10–01
  15. By: Avdeitchikova, Sofia (Oxford Research); Nyström, Kristina (The Ratio Institute)
    Abstract: Many empirical studies have emphasized the importance of institutional venture capital for enabling high growth entrepreneurship and innovation. Yet, there are reasons to believe that provision of informal venture capital will have as significant, if not more significant effect on entrepreneurship. Based on Global Entrepreneurship Monitor data for 33 countries for the years 2001-2010, we study the relationship between the presence of informal investors in a country and the levels of general and ambitious entrepreneurship, defined as entrepreneurs that have intentions to grow their business, internationalize and/or innovate. Some of the main findings are that the overall level of access to informal venture capital is positively related to general entrepreneurship and ambitious entrepreneurship in terms of innovativeness, while access to arms-length money (i.e. informal investments made by work colleagues or strangers) appears to be positively related to ambitious entrepreneurship in terms of job growth expectations. The relationship between availability of arms-length money and the innovativeness of the entrepreneurial activities appears however to be negative.
    Keywords: Venturecapital
    JEL: G24
    Date: 2016–11–21

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