nep-sbm New Economics Papers
on Small Business Management
Issue of 2017‒01‒08
thirty-one papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Characteristics of Finnish startups By Kotiranta, Annu; Pajarinen, Mika; Rouvinen, Petri
  2. The Quality of Regional Government and Firm Performance. By Fernanda Ricotta
  3. Startup Innovation during the Past Economic Crisis By Nabil Abou Lebdi; Katrin Hussinger
  4. Interfirm Relationships and Business Performance By Jing Cai; Adam Szeidl
  5. University spin-off firms in sustainable energy in five countries: What determines their reaching of the market? By Marina Van Geenhuizen; Razie Nejabat
  6. Self-employment effects on regional growth: A bigger bang for a buck? By Tsvetkova, Alexandra; Partridge, Mark; Betz, Michael
  7. Firm patenting activity, metropolitan innovative environment and their effects on business survival in a high-tech industry By Tsvetkova, Alexandra; Thill, Jean-Claude; Conroy, Tessa
  8. Promotion of Innovation and Job Growth in Small and Medium Sized Enterprises in Australia: Evidence and Policy Issues By Harry Bloch; Mita Bhattacharya
  9. Initial aspirations, size, and being a limited-liability company cause growth among startups By Kotiranta, Annu; Pajarinen, Mika; Rouvinen, Petri
  10. Sectorial and regional determinants of firm dynamics in developing countries: evidence for low, medium and high tech manufacturing in Argentina By Calá, Carla Daniela
  11. Business networks, social capital and the productivity of creative industries in Indonesia By Fikri Zul Fahmi
  12. Capability factors in changing patterns of international knowledge relationships among university spin-off firms in Northwest Europe By Marina Van Geenhuizen
  13. Innovation, income and regional development: An assessment of the importance of differences in regional potentials By Andreas P. Cornett; Nils Karl Sørensen
  14. The Effect of Innovation on Productivity: Evidence from Turkish Manufacturing Firms By Fazlıoğlu, Burcu; Dalgıç, Başak; Yereli, Ahmet Burçin
  15. The Real Effects of Capital Requirements and Monetary Policy: Evidence from the United Kingdom By Filippo De Marco; Tomasz Wieladek
  16. Dynamics of technology upgrading of the Central and East European countries in a comparative perspective: analysis based on patent data By Björn Jindra; Iciar Dominguez Lacasa; Slavo Radosevic
  17. Quantifying the effect of labor market size on learning externalities By Jan Cornelius Peters
  18. Clustering of R&D collaboration in Cournot oligopoly By Mauro Caminati
  19. Comparison of smart specialization in coastal regions in Poland By Jacek Soltys; Dorota Kamrowska-Za?uska
  20. How Destructive is Innovation? By Daniel Garcia-Macia; Chang-Tai Hsieh; Peter J. Klenow
  21. Transition Towards a Green Economy in Europe: Innovation and Knowledge Integration in the Renewable Energy Sector By Conti, Chiara; Mancusi, Maria Luisa; Francesca, Sanna-Randaccio; Roberta, Sestini; Elena, Verdolini
  22. Does partisan conflict impact the cash holdings of firms? A sign restrictions approach By Hankins, William; Cheng, Chak; Chiu, Jeremy; Stone, Anna-Leigh
  23. Collective ideation within the context of science and technology park and regional triple helix network By Ger Post; Lotte Geertsen
  24. Financing energy innovation: The role of financing constraints for directed technical change from fossil-fuel to renewable innovation By Noailly, Joëlle; Smeets, Roger
  25. The impacts of the EU ETS on efficiency: An empirical analyses for German manufacturing firms By Löschel, Andreas; Lutz, Benjamin Johannes; Managi, Shunsuke
  26. Estimating corporate profit shifting with firm-level panel data: time trends and industrial heterogeneity By Salvador Barrios; Diego d'Andria
  27. Monopoly Capital and Entrepreneurism: Whither Small Business? By Lambert, Thomas
  28. Asymmetric information and the securitization of SME loans By Ugo Albertazzi; Margherita Bottero; Leonardo Gambacorta; Steven Ongena
  29. Ownership and Enterprise Performance in the Russian Oil Industry 1992-2012 By Nat Moser
  30. Entrepreneurial Intentions in Selected Southeast European Countries By Edo Rajh; Jelena Budak; Jovo Ateljevic; Ljupco Davcev; Tamara Jovanov; Kosovka Ognjenovic
  31. Cluster activities in different institutional environments. Case studies of ICT-Clusters from Austria, Germany, Ukraine and Serbia By Anastasiia Konstantynova; Tine Lehmann

  1. By: Kotiranta, Annu; Pajarinen, Mika; Rouvinen, Petri
    Abstract: In this study, we analyze the characteristics and development of Finnish startups based on firm-level data available in public databases. By startups we refer to young, small, and independent firms holding basic elements for growth. Some 4 000–5 000 of such firms are being established annually, of which 6–7% grow to employ at least 10 workers in three years and have had simultaneously increased their employment by at least 20% per annum. About one third of all startups operate in knowledge intensive services and altogether around 70% in services; only few dozen of new startups are in high-tech manufacturing industries. Approximately 70% of startups survive for at least five years. During this period, their employment has on average doubled. The most intensive growth spurt emerges usually in the very first years after establishing the business. Only a few percent of startups get venture capital investments or public innovation subsidies.
    Keywords: Entrepreneurship, growth firm, start-up, enterprise policy
    JEL: D92 L26 L53 M13
    Date: 2016–12–22
  2. By: Fernanda Ricotta
    Abstract: The performance of a firm is influenced by decisions made by the firm itself as well as factors external to it. Firm competencies are important but also competencies that pertain to territories. External factors encompass different aspects of the environmental context in which firms operate, such as physical infrastructures, innovative capacity and efficiency of the public administration. The attention in this paper is on the effect of regional quality of government (QoG) on the Total Factor Productivity (TFP) of firms. The analysis is based on comparable cross-country data of manufacturing firms operating in the seven European countries (Austria, France, Germany, Hungary, Italy, Spain and the United Kingdom) included in the ?European Firms in a Global Economy: internal policies for external competitiveness? (EFIGE) project. The measure of the ?quality of government? is the European quality of government index (EQI), calculated at regional level over twenty-seven EU members. Scholars have demonstrated that the institutional environment affects macro variables such as growth, income level, productivity, innovation activity, investment and trade at the country (Aron 2000; Acemoglu, Johnson and Robinson, 2001; Hall and Jones, 1999; Barbarosa and Faria 2011; Levchenko 2007) as well as at the regional level (Tabellini 2010; Rodríguez-Pose and Di Cataldo 2014; Ketterer and Rodríguez-Pose 2014). The quality of institutions also influences micro variables such as firm performance (Dollar, Hallward-Driemeier, and Mengistae, 2005; Lasagni, Nifo and Vecchione, 2015; Aiello, Pupo and Ricotta, 2014; Manzocchi, Quintieri and Santoni, 2014). Recent studies indicate that there might be a significant difference in the macro- and micro-impacts of institutional quality: better institutional quality that may have beneficial macro-implications, may not necessarily have positive implications for firm performance (Bhaumik and Dimova 2014). Thus, the proper level of analysis to test whether the regional institutional environment affects productivity is to focus on firms (Beugelsdijk 2007). To disentangle internal from external productivity drivers, the multilevel approach is employed. In the econometric specification, the 2008-value of TFP depends on key-drivers of firm performance (size, family-management, group membership, innovations and human capital), on the variable of interest, the indicator of the quality of government, and on control variables at the regional level that, according to the theoretical and empirical literature, may affect firms? economic performance. Results refer to 2008 and show, as expected, the importance of firm-specific determinants of TFP. Results confirm that to be located in a region with high level of R&D and good infrastructure is correlated positively to the firm?s TFP. As far as the specific scope of this paper is concerned, the quality of regional government has a positive impact on firm TFP. This is in line with previous research which underlines the importance of the quality of institutions at the regional level while it contradicts the hypothesis that within country institutional differences do not matter for economic performance (Gennaioli et al, 2013). As far as the EQI components are concerned, corruption and the quality of services appear to be positively correlated to TFP, while the evidence is inconclusive for the impartiality indicator.
    Keywords: Institutions; firm performance; European regions; multilevel model
    JEL: O43 D24 C30
    Date: 2016–12
  3. By: Nabil Abou Lebdi (CREA, Université du Luxembourg); Katrin Hussinger (CREA, Université du Luxembourg)
    Abstract: By the notion of creative destruction, a crisis can stimulate entrepreneurship and innovation through reallocation of unproductive assets to new ventures that exploit emerging opportunities. However, a crisis can also hamper innovation by exacerbated credit market imperfections that affect new innovative ventures disproportionately. This study investigates the innovation behavior of German startups founded during the past economic crisis in 2009. Empirical results show that crisis startup foundations in high-tech sectors are less likely to introduce innovations to the market than ventures started in the pre-crisis period. Yet, the degree of novelty of these product or service innovations is significantly higher as compared to products and services introduced by start-ups founded in pre-crisis years. Moreover, we do not find evidence for necessity entrepreneurship in German low-tech industries.
    Keywords: creative destruction, economic crisis, entrepreneurship, innovation, startups
    JEL: L26 M13 O31
    Date: 2016
  4. By: Jing Cai; Adam Szeidl
    Abstract: We organized business associations for the owner-managers of randomly selected young Chinese firms to study the effect of business networks on firm performance. We randomized 2,800 firms into small groups whose managers held monthly meetings for one year, and into a “no- meetings” control group. We find that: (1) The meetings increased firm revenue by 8.1 percent, and also significantly increased profit, factors, inputs, the number of partners, borrowing, and a management score; (2) These effects persisted one year after the conclusion of the meetings; and (3) Firms randomized to have better peers exhibited higher growth. We exploit additional interventions to document concrete channels. (4) Managers shared exogenous business-relevant information, particularly when they were not competitors, showing that the meetings facilitated learning from peers. (5) Managers created more business partnerships in the regular than in other one-time meetings, showing that the meetings improved supplier-client matching. (6) Firms whose managers discussed management, partners, or finance improved more in the associated domain, suggesting that the content of conversations shaped the nature of gains.
    JEL: D22 L14 O12 O14
    Date: 2016–12
  5. By: Marina Van Geenhuizen; Razie Nejabat
    Abstract: An entrepreneurial perspective to introduction of sustainable energy solutions to the market has been recognized as important for decades, but mainly concerning large firms. Today, attention is increasingly turning to young high-technology ventures which, compared to large incumbents, are more flexible, creative, responsive and willing to take risks enabling them to work as a trigger or accelerator of profound changes. At the same time, these young firms suffer from a lack of resources, specifically investment capital, the last mainly caused by a slow development due to resistance from society, among others, existing energy infrastructures (?valley of death?). In this context, an often advised strategy is to partner with a larger company. This paper explores the time dimension in market introduction of sustainable energy solutions while taking an in-depth approach to collaboration and investment capital amidst a set of other firm-specific and external factors. First, we compare the five countries, Netherlands, Norway, Sweden, Denmark and Finland, with regard to favorable circumstances to adoption of sustainable energy solutions, particularly continuity in supporting policies. Next, we build a carefully selected sample of 37 university spin-off firms representing different ?theoretical positions? regarding country, but also established collaboration networks, amount of investment capital granted, and type of energy system - solar, wind, biomass, etc. - and we apply rough-set analysis as a ?qualitative? causal analysis. In addition, we deploy five in-depth case studies for deepening understanding. We found that out of nine firm-specific and firm-external factors, three factors have a strong influence on speed of market introduction. These are first of all country, but also type of energy technology (system) and richness in collaboration networks. Country was found to have a positive influence on reaching the market at a higher level of innovation (Nordic ?innovation leader? countries) and, conversely, a negative influence at lower levels of innovation (Netherlands and Norway). Furthermore, rich network collaboration turned out to work positively in an already positive situation (?innovation leader? country). Lacking such collaboration contributed to problematic developments, specifically in combination with solar technology. Evidence on influence of lack of capital investment turned out to be rather weak. Further, the case study analysis yielded the additional insight that speed in market introduction may also work negatively, namely, if large amounts of investment capital put pressure on the firm and market introduction occurs actually too early. The paper concludes with issues on ?theoretical? generalization, extending the sample to a larger random sample, and additional research questions.
    Keywords: Sustainable energy (system); young ventures; market introduction; national innovation system; collaboration; investment capital
    JEL: D22 Q42 Q48 M13
    Date: 2016–12
  6. By: Tsvetkova, Alexandra; Partridge, Mark; Betz, Michael
    Abstract: Economic development policies often revolve around supporting small businesses and new firm creation as they are locally grown and likely can be more influenced by state and local policy. Two prominent strands of current research—the regional economic growth and small business/entrepreneurship literatures—elucidate the importance of small, young firms for regional economic performance and the crucial role urban-rural proximity plays in the distribution of growth across space. Keeping these two research traditions in mind, we study the effects of self-employment on job growth in US counties. Our goal is to estimate the net employment spillovers from changes in self-employment (SE) and to compare them to spillovers from changes in wage and salary employment (WS). We ask the following research questions: Do exogenous net changes (shocks) in SE spur larger or smaller changes in employment than do equal changes in WS employment and do these effects vary across the rural-urban hierarchy? The answers to these questions are of paramount importance in devising economic development strategy across urban and rural settings. We use a differencing strategy and an exogenous measure of SE and WS employment shocks to estimate net multiplier effects and to investigate their relationship with proximity to differing-sized urban centers. The analysis uses US county-level data spanning the 2001-2013 period. The results suggest that marginal effects from self-employment are consistently larger than from paid employment, particularly in metropolitan counties. Given the dominant share of paid employment, however, the magnitude of economic impact is greater from wage and salary employment. Distance from urban centers generally offers protection that promotes SE growth but hinders WS employment growth. In an austere fiscal environment, spending a dollar to stimulate SE is likely to have greater returns as opposed to stimulating WS employment if the costs of creating one SE and one WS job are comparable.
    Keywords: self-employment; wage and salary employment; exogenous demand shocks; employment growth; job creation; regional economic growth
    JEL: O1 O51 R11
    Date: 2016–12–23
  7. By: Tsvetkova, Alexandra; Thill, Jean-Claude; Conroy, Tessa
    Abstract: This paper distinguishes between internal (produced within the firm) and external (produced by other firms) knowledge and studies the effects of both knowledge types on survival in a cohort of computer and electronic product manufacturing companies started in 1991 in the continental US metropolitan statistical areas (MSAs). Estimation results suggest that innovative companies face lower hazard but this effect seems to be driven by company’s initial characteristics, as producing more knowledge measured by successful patent applications does not translate into a higher likelihood of survival. In contrast, an innovative environment decreases survival likelihood in the whole sample, yet this result appears to be driven by non-patenting establishments. In the subset of non-patenting firms an innovative environment has a strong negative effect on survival whereas no significant relationship is identified in the subset of innovative firms.
    Keywords: Business survival, knowledge creation, patents, innovative environment
    JEL: L63 O3 O51
    Date: 2016–12–23
  8. By: Harry Bloch; Mita Bhattacharya
    Abstract: Small and medium sized enterprises (SMEs) play a substantial role in Australian growth and job creation. We discuss approaches to understanding the drivers of innovation and then review evidence on the determinants of innovation by Australian SMEs. We also examine the role of these firms in job creation. Against this evidence and the conceptual underpinnings, we then discuss some issues that arise with the government’s current innovation agenda.
    Keywords: Australia; Research and development; SMEs; innovation; innovation policy
    Date: 2016–11
  9. By: Kotiranta, Annu; Pajarinen, Mika; Rouvinen, Petri
    Abstract: In this report, we study the development of Finnish startup firms based on both survey and register data. The sample includes all firms that were founded in the first half of the year 2005, and those firms have been monitored for eight years. We find that entrepreneurs in growth-oriented startups have had typically already some experience from being an entrepreneur or managing business, and have had success in risk-taking activities. Growth-oriented startup firms are in turn more likely to be networked with other firms and institutions, and are already in the startup phase larger than others. Growth-orientation correlates significantly with ex-post growth, but does not boost failure rates. Besides growth-orientation, the larger size of the firm in the startup phase and the limited liability company form correlate significantly positively with ex-post growth.
    Keywords: Entrepreneurship, growth firm, start-up, enterprise policy
    JEL: D92 L26 L53 M13
    Date: 2016–12–22
  10. By: Calá, Carla Daniela
    Abstract: We analyse the determinants of firm dynamics in developing countries using Argentina as an illustrative case. We explain firm entry and exit at the regional level, distinguishing three groups of manufacturing activities: low, medium and high tech. We find that both region -and sector- specific determinants explain firm dynamics, but the impact is not homogeneous across sectors. In particular, for low tech industries, there is a need for explanatory variables that proxy for the specificities of developing economies (poverty, informal economy and idle capacity). We also find evidence of a core-periphery pattern according to which agglomeration economies and previous entries/exits have different effects in core and peripheral regions. These results are relevant for policy makers in developing countries, who should take into account not only the specificities of such economies, but also the regional heterogeneity both in terms of the level of development and industrial composition within the country.
    Keywords: Dinámica Empresarial; Creación de Empresas; Cese de Actividad; Relación Centro-Periferia; Modelo de Panel; Argentina;
    Date: 2018
  11. By: Fikri Zul Fahmi
    Abstract: This study examines the role of social and professional networks in the productivity of creative firms in Indonesia. In so doing, mixed methods are employed, including multilevel modelling as well as qualitative analysis, which is also performed to elaborate further on the process in which networking affects productivity. The Indonesian government promotes traditional businesses as creative industries, but they actually have different characteristics and networks. Therefore, in this paper creative and traditional cultural industries are differentiated. The results of multilevel analysis show that social capital is associated differently with the productivity of both types of industries. Creative industries appear to benefit from friendship, which facilitates their networking and creative processes. Meanwhile, friendship is negatively associated with the productivity of traditional cultural industries. This conclusion is affirmed by the qualitative analysis, which demonstrates that the relationship between friendship and productivity is rather complex. On the one hand, friendship helps firms find and develop their networked consumers. On the other hand, such strong ties between firm owners often lead to social events and gathering and thus, eliminate competition. Further to this, enhancing the productivity of these industries is better done not by forming associations which may only strengthen their bonding ties. Rather, providing common spaces that can facilitate cross-fertilization of ideas in a serendipitous and inclusive climate would be more effective.
    Keywords: creative industries; business networks; social capital; Indonesia
    JEL: D22 R11 L25 L26
    Date: 2016–12
  12. By: Marina Van Geenhuizen
    Abstract: Industrial competence is increasingly dispersed across the globe, urging technology-based firms in Europe to establish international knowledge relationships at larger distances. This paper examines changing patterns of international knowledge relationships and the influence of capability factors of university spin-off firms on building such relationships, using a sample of 105 of such firms. The paper addresses the debate on capabilities among young high-tech ventures in developing an adequate internationalization network, in which opinions are contrasting, like concerning an easy globalization (born-global model) versus a reluctant and step-wise approach. In early patterns, 62 per cent of the sampled firms employed knowledge relationships abroad. The main capability factors affecting these early relationships tend to be PhD education in the founding team, participation in training, and the capability to innovate on a practical and modestly innovative level responding to market demand. The subsequent changes in relationships have led to a high overall internationalization level of 82 per cent five years later, but also reveal diverse trends on the individual level of firms, namely, no change for half of the spin-offs but an increase of spatial reach for only one third. With the aim to explore spatial internationalization patterns and changes herein, we apply logistic regression analysis. Important factors affecting both early and later international networks tend to be entrepreneurial orientation, regarding industry sector and market, while later relationships tend to be path-dependent, i.e. mainly influenced by the previous pattern.
    Keywords: University spin-off firms; Knowledge relationships; Spatial reach; Capability factors
    JEL: D8 L21 L26 M13
    Date: 2016–12
  13. By: Andreas P. Cornett; Nils Karl Sørensen
    Abstract: The purpose of the current paper is to analyze the impact of regional potentials on the process of growth. How are different types of regions (e.g. medium sized [city] regions, rural regions, urban regions or metropolitan and high-tech cluster regions) affected by improved performance, and to what extent can differences be explained by ex-ante difference in income? Based on data from the regional innovation scoreboard (RIS) is this issue addressed relative to the income level, previous growth performance and convergence. In the first part of the paper, the innovation performance of the regions is modelled relative to the income level and the underlying influencing factors are identified. Hereby, we are able to identify strengthens and weaknesses of the innovation structure in different regions. In addition the issues of returns to scale will be considered. In the second part of the paper the innovation performance is related to the process of convergence and divergence. Earlier research has shown that although convergence is present at aggregated European Union level a much more diversified picture is revealed at the disaggregated level. Here it is frequently observed that the more wealthy and central regions move away from the other regions. One of the results is that the economic crisis has reinforced not only intraregional divergence within countries but also the traditional divide between the stronger Northwest European countries and the South and East of Europe. Finally, the paper discusses and evaluates the impact of different types of innovation performance and the level of income on the perspectives of economic growth for different types of regions. A number of scenarios a sketched for the perspectives of the regions depending on endogenous as well as external factor endowment and dynamics.
    Keywords: Innovation- regional income differences - economic growth ? concentration - convergence & divergence
    JEL: R11 R12 R58
    Date: 2016–12
  14. By: Fazlıoğlu, Burcu; Dalgıç, Başak; Yereli, Ahmet Burçin
    Abstract: This paper explores the effects of firms’ innovation activities on their productivity changes systematically for Turkish manufacturing firms differentiating between different typologies of innovation. To do so, we utilize a recent and comprehensive firm level dataset over the period 2003-2014, mainly constructed on the four consecutive waves of the “Community Innovation Surveys”. We employ endogenous switching methodology controlling for endogeneity and selection bias issues as well as analyzing counterfactual scenarios. The main finding of the study points to firm heterogeneity in terms of both propensity to innovate and their benefiting from innovation activities. Our results indicate that all types of innovation activity have positive effects on the productivity of firms with respect to non-innovating firms. Further, we find robust evidence for the differential impact of innovation on firm productivity across different innovation types.
    Keywords: Internal and External R&D, Product and Process Innovation, Organizational and Marketing Innovation, Firm Productivity
    JEL: D22 L25 O30
    Date: 2016–12–23
  15. By: Filippo De Marco; Tomasz Wieladek
    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 bankfirm 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, SME real effects, relationship lending, microprudential and monetary policy
    JEL: G21 G28 E51
    Date: 2016
  16. By: Björn Jindra (Copenhagen Business School); Iciar Dominguez Lacasa (University of Bremen); Slavo Radosevic (UCL School of Slavonic and East European Studies)
    Abstract: This working paper explores patterns of technology upgrading as a three-dimensional process which consists of (i) intensity of technology upgrading, (ii) structural change, and (iii) interaction with the global economy. The specificity of our report is that we depict patterns of technology upgrading by relying entirely on patent data. We derive patent indicators to capture the three dimensions. Patent indicators for intensity of technology upgrading trace technological capabilities at the technology frontier (transnational patents) and behind the technology frontier (domestic/resident direct applications to national offices). Structural change in technological knowledge is depicted by the share of transnational patent applications in high technology fields and knowledge-intensive activities and by calculating a technological diversification index. To capture interaction with global economy in the upgrading process indicators measure technological knowledge sourcing across countries and interactions between foreign and indigenous actors. Based on 7 patent indicators covering the three upgrading dimensions the comparative analysis focuses on EU27 and its subregions and on the BRICS countries. According to the results, in 2011 CEECs were quite homogenous in their upgrading paths. A typical CEE economy in 2011 is well behind EU12 in terms of frontier technology intensity, domestic technology intensity, share of high tech patents and technology sourcing abroad. Moreover, its organizational capabilities are often less advanced. The CEE profile is much less coherent in terms of technology diversification/specialization and share of joint inventions. However, differences among CEECs are not significant. Still there are some notable national features. Poland, Romania and Slovenia have above average domestic technological intensity which reflects partly their sizes (Romania and Poland) and specific model of innovation system reliant on domestic R&D intensive firms (Slovenia). Latvia and Lithuania are specific in terms of high share of HTKI patents. CEE technology upgrading as depicted by patents is within the BRIC pattern (with exception of China which in terms of technology upgrading has de facto delinked from BRICS). In the BRIC context, the CEE characterize very open innovation system with a high share of coinventions and foreign actors exploiting local inventions. This reveals weak organizational capabilities to commercialize its own inventions. According to the results CEE grew during 1990s/2008 based on production, not technological capability. Their future growth will increasingly depend on building technological capabilities at world frontier level. Our analysis shows that the basis for such growth exists only to a limited extent and that speed of upgrading towards world frontier activities is well beyond required for catching up. Equally, our analysis shows that solutions for improved technology upgrading will need to be found with their existing innovation model of small open economies integrated into the EU.
    Keywords: Technology upgrading; Central Europe; Eastern Europe
    Date: 2015–02
  17. By: Jan Cornelius Peters
    Abstract: It is well known that wages in large cities are higher than elsewhere. There is only little empirical evidence on the mechanisms behind this phenomena. One channel, that is discussed in the literature, is learning. Provided that individuals learn by interacting with one another, an urban wage growth premium arises if a large labor market increases the speed of interactions between individuals (Glaeser, 1999). To analyze dynamic agglomeration benefits and the importance of learning effects, this paper makes use of a micro econometric framework described by Combes and Gobillon (2015), extents the work by De la Roca and Puga (2013) and, in contrast to previous papers, provides a consistent estimate of the elasticity between wages and the size of the labor market where experience was acquired. The analyzed wages refer to new employment relationships. They indicate how firms value working experience depending on the location where it was acquired. By including fixed effects and further control variables at both, the individual as well as the regional level, endogeneity is reduced. The paper also analyzes whether the value of experience depends not only on the size of the labor market where experience was acquired, but also on the size of the labor market where it is used. The analysis bases on a 5 percent sample of the Integrated Employment Biographies (IEB) of the Institute for Employment Research (IAB) and contains detailed information on the employment biographies from 1975 onwards for a sample of about 350,000 individuals with at least one new employment relationship in Germany between 2005 and 2011. The results indicate that experience acquired in large local labor markets has in fact a significantly higher valued than experience acquired in small labor markets. The elasticity has a fixed component and a component that depends on the size of the labor market where experience is used. The fixed component (about 0.07) points out, that experience acquired in large labor markets is in all regions valued higher than experience acquired in small labor markets. This supports the interpretation that workers learn more by working in large than in small labor markets, and that at least part of the accumulated knowledge are transferable to other regions. The second component suggests that the value of experience increases additionally with the size of the labor market where experience is used. One reasonable explanation is a combination of learning and matching effects. Since jobs in large labor markets are more specialized than jobs elsewhere, workers that worked in a large labor market accumulated knowledge that refers to the ?core task? of a job. The wage premium for this knowledge is supposed to be larger in large labor markets, since it is more likely there than in a smaller labor market, that a firm demands this specific knowledge. Moreover, workers moving from a large to a small labor market may lose since the new job contains a wider range of tasks.
    Keywords: Agglomeration economies; Learning; Urban wage growth premium; Transition to employment
    JEL: R23 J31
    Date: 2016–12
  18. By: Mauro Caminati
    Abstract: This paper complements the Cournot collaboration game outlined in Goyal and Joshi (2003, sect. 4), with the hypothesis that pairwise R&D alliance is constrained by knowledge distance. Potential asymmetry of distance between two knowledge sets is formalized through a quasi-metric in knowldge space. If the knowledge constraints to collaboration are weak enough, the paper replicates the result by Goyal and Joshi (2003, sect. 4), that a ?firm is either isolated, or is connected to every other ?firm in the industry. If absoprtion of ideas from one?s potential partner requires sufficiently high knowledge proximity, the stable R&D networks in Cournot oligopoly are shown to display the clustering property, that is characteristic of real-world industry networks, and of social networks more generally.
    Keywords: Cournot collaboration game, directed knowledge distance, R&D networks, degree assortativity, clustering
    JEL: D85 L13 O30
    Date: 2016–10
  19. By: Jacek Soltys; Dorota Kamrowska-Za?uska
    Abstract: The priorities set by the European Commission for Programming Period 2014-2020 introduced new instruments supporting regional development but also posed new requirements that must be met by European regions. One of them is smart specialization. To implement Strategy for Europe 2020, published by the European Commission in 2010, EU Member States and their regions develop strategies for smart specialization that will show directions for providing support to the strengthening of research, development and innovation. Smart specialization is an important instrument for creating a strategy for the development of innovation at the state and regional level as well as for defining and building the knowledge-based economy. This paper presents analyzes of processes responsible for identifying smart specialization in West Pomeranian and Pomeranian Regions. This article is a continuation and extension of the research on the process of emergence of smart specialization in Pomeranian Region by the inclusion of the West Pomeranian Region into this study. Both Regions are situated on the southern coast of the Baltic Sea and are seats of main Polish harbours and shipyards. Their regional capitals Gdansk and Szczecin are emerging metropolitan areas as well as economic engines of polish economy. It is our goal to analyze to what extent emergence of smart specialization is helping to focus development of innovation in areas consistent with their endogenous potentials. The aims of the paper are: comparison of the areas of smart specialization with particular emphasis on the specifics of the seaside location and endogenous potential of both regions, comparison of emergence and the process of selection of smart specialization, including its evaluation. In Pomeranian region the process of emergence of smart specialization was a bottom-up one where Regional Government invited all actors to build a partnership. The result is participation of all stakeholders to identify opportunities and specify areas of development of smart specializations for the Voivodship. In other regions of Poland it was more of a top-down process, conducted by experts and the West Pomeranian Region is an example of this approach. Methodology of the research applied for this study is desk research (analysis of literature, documents and strategies from Voivodeship Marshal Offices from both West Pomeranian and Pomeranian Regions), individual in-depth interviews, participation in the process of emerging of smart specialization in Pomorskie Voivodeship (focus group interviews, workshops, SWOT analysis and Delphi study) and comparative analysis of the process of emergence and selection of the smart specialization in both regions.
    Keywords: smart specialization; coastal regions; maritime economy; regional knowledge-based development; innovation strategy
    JEL: O2 O3 O38
    Date: 2016–12
  20. By: Daniel Garcia-Macia; Chang-Tai Hsieh; Peter J. Klenow
    Abstract: Entrants and incumbents can create new products and displace the products of competitors. Incumbents can also improve their existing products. How much of aggregate productivity growth occurs through each of these channels? Using data from the U.S. Longitudinal Business Database on all non-farm private businesses from 1976–1986 and 2003–2013, we arrive at three main conclusions: First, most growth appears to come from incumbents. We infer this from the modest employment share of entering firms (defined as those less than 5 years old). Second, most growth seems to occur through improvements of existing varieties rather than creation of brand new varieties. Third, own-product improvements by incumbents appear to be more important than creative destruction. We infer this because the distribution of job creation and destruction has thinner tails than implied by a model with a dominant role for creative destruction.
    JEL: E24 O3 O4 O5
    Date: 2016–12
  21. By: Conti, Chiara; Mancusi, Maria Luisa; Francesca, Sanna-Randaccio; Roberta, Sestini; Elena, Verdolini
    Abstract: A major concern regarding innovation in clean technologies in the EU is that the fragmentation of its innovation system may hinder knowledge flows and, consequently, spillovers across member countries. A low intensity of knowledge flows across EU states can negatively impact their technological base, suppressing opportunities for further innovations and hindering the movement towards the technological frontier. This paper evaluates the fragmentation of the EU innovation system in the field of renewable energy sources (RES) by examining the intensity and direction of knowledge spillovers over the years 1985-2010. We modify the original double exponential knowledge diffusion model to provide information on the degree of integration of EU countries’ innovation efforts and to assess how citation patterns changed over time. We show that EU RES inventors have increasingly built “on the shoulders of the other EU giants”, intensifying their citations to other member countries and decreasing those to domestic inventors. Furthermore, the EU strengthened its position as source of RES knowledge for the US. Finally, we show that this pattern is peculiar to RES, with other traditional (i.e. fossil-based) energy technologies behaving in a completely different way.
    Keywords: Knowledge Spillovers, Renewable Energy Technologies, Fossil Energy Technologies, EU Innovation, Research and Development/Tech Change/Emerging Technologies, Q55, Q58, Q42, O31, O33,
    Date: 2016–12–15
  22. By: Hankins, William (University of Alabama); Cheng, Chak (University of South Carolina); Chiu, Jeremy (Bank of England); Stone, Anna-Leigh (Samford University)
    Abstract: This paper explores how US partisan conflict impacts the cash management decisions of US firms. Using a sign restrictions approach to identify structural shocks to partisan conflict, we find that an exogenous 10% rise in the Partisan Conflict Index above trend is associated with a 0.4 percentage point increase in average cash-to-total assets above trend. These baseline results hold for both the mean and median ratio of cash-to-total assets for all firms in our sample, across the total assets distribution, as well as for different classifications of firms. Additionally, we conduct a series of robustness checks, including a firm-level regression analysis, all of which uphold these results. Our findings reinforce the signalling effect that political dysfunction can have on corporate managers.
    Keywords: Partisan conflict; cash holdings; economic policy uncertainty; VAR; sign restrictions
    JEL: E32 G30 G32
    Date: 2016–12–29
  23. By: Ger Post; Lotte Geertsen
    Abstract: Organizations want to have access to each other?s resources and so they establish different forms of collaboration strategies (Podolny & Page, 1998). Knowledge sharing and also collaboration are dependent on an organizations? social network and the proximity within this network. A central element in the theory of clustering is the idea that physical clustering of businesses within specialized sectors is a source for regional economic growth (Porter, 1998). The spatial proximity of companies and institutions within related industries create a specific setting in which learning, knowledge sharing and mutual competition are encouraged (Raaijmakers, 2012). Additionally, active participation within the innovation eco system of a Science & Technology park provides actors access to knowledge, facilities and complementary contacts and network structures (Post, 2009). Collective ideation helps an organization to improve the positioning within the technological field and economic market (Alexy et al., 2013), especially within an innovation ecosystem because actors are dependent on each other's behavior (Pisano & Teece, 2007) to be successful in innovation. This research focuses on the question how to design the collective ideation process in particular to foster interactions within the context of a science & technology parks? this research is based 16 semi-structured interviews, conducted at all development stages (idea, startup, grow and mature) of Dutch science & technology parks with stakeholders from different perspectives, based on the triple-helix structure (government, industry, research). The study describes how multiple stakeholders benefit from collective ideation, what mechanisms and tools used in practice and also descibes prerequisites and limitations of collective ideation, This research contributes to consisting literature in three different ways. First, this research builds on theory on how to produce ideas as it offers an structural overview of the process and of the underexplored process-based facilitators (benefits, boundaries, strategies, mechanisms, deliverables) in the process of collective ideation (Harvey, 2014). This research can add a new collaboration method which can be a standard tool in the competitive toolbox of the organization (Alexy et al., 2013). Second, this research provides a new template of collective ideation and a new design of the creative process at the group (Harvey, 2014) and how this can be embedded in strategy (Alexy et al., 2013). Next to that, as relationships strongly depend on knowledge brokering within a network, this research extends understanding in the stickiness of knowledge (Zahra & Nambisan, 2011). It adds new insights on how these networks can be governed successfully (Alexy et al., 2013). Third, the concept of collective ideation is empirically tested at Science and Technology parks which provides a new framework that will help platforms to become more successful (Gawer & Cusumano, 2014). In other words, this research contributes on how to organize innovative activity and open innovation (Alexy et al., 2013; Chesbrough, 2003; Dahlander & Gann, 2010; Laursen & Salter, 2006).
    Keywords: Ideation; proximity; collaboration; cluster; science and technologiy park
    JEL: O31 O32
    Date: 2016–12
  24. By: Noailly, Joëlle; Smeets, Roger
    Abstract: Addressing both the challenge of climate change and the world's growing energy needs will only be possible by achieving a breakthrough in clean technologies in order to deliver safe, clean and sustainable energy for future generations. Such a large-scale technological transition will require massive investments in research and development (R&D) of clean energy production. Within the sector of electricity generation, renewable (REN) energy technologies, such as solar, wind or geothermal energy, can provide a clean alternative to electricity produced from carbon-intensive fossil-fuels (FF). Nonetheless, private firms' investments in advancing innovation for renewable energy technologies face important challenges. [...]
    Date: 2016
  25. By: Löschel, Andreas; Lutz, Benjamin Johannes; Managi, Shunsuke
    Abstract: We investigate the effect of the European Union Emissions Trading System (EU ETS) on the economic performance of manufacturing firms in Germany. Our difference-in-differences framework relies on several parametric conditioning strategies and nearest neighbor matching. As a measure of economic performance, we use the firm specific distance to the stochastic production frontier recovered from official German production census data. None of our identification strategies provide evidence for a statistically significant negative effect of emissions trading on economic performance. On the contrary, the results of the nearest neighbor matching suggest that the EU ETS rather had a positive impact on the economic performance of the regulated firms, especially during the first compliance period. A subsample analysis confirms that EU ETS increased the efficiency of treated firms in at least some two-digit industries.
    Keywords: Control of Externalities,Emissions Trading,Economic Performance,Manufacturing,Difference-in-Differences,Nearest Neighbor Matching,Stochastic Production Frontier
    JEL: Q52 D22 Q38 Q48
    Date: 2016
  26. By: Salvador Barrios (European Commission - JRC); Diego d'Andria (European Commission - JRC)
    Abstract: Base erosion and profit shifting (BEPS) undermines tax revenues collection and raise public discontent in times when the tax burden has increased significantly for households in most developed economies. In such context the need to have dependable estimations of profit shifting is warranted both in order to quantify the extent of BEPS and to devise policy measures in order to tackle it. Several studies have assessed the sensitivity of profit shifting activities by multinational companies. Earlier studies have tended to rely on cross-sections of firms, while more recent researches have exploited panel data and, on average, found lower semi-elasticities. The latter has sometimes been interpreted as evidence of a decline in profit shifting during the more recent period. In this paper we argue that such interpretation might be far-fetched and we show that these results can largely be attributed to differences in methods and data used. Our evidence suggests instead that the variability in profit shifting rests primarily on sector heterogeneity and that this may have important methodological and policy implications. We propose an alternative estimation strategy based on multilevel regression analysis exploiting cross-sectoral heterogeneity to yield more robust estimates of profit shifting elasticities. Our multilevel estimates point to an overall semi-elasticity of about -0.47, meaning that for a rise in CIT rate of 10% we expect pre-tax profits to decrease by 4.7%. Our semi-elasticity is lower than the "consensus" estimate of -0.8 and in line with more recent studies that exploit panel data. We find that the semi-elasticities vary significantly across industries with a standard deviation more than ten times the estimated average semi-elasticity. When comparing transfer pricing activities with financial shifting we find the former to be much more sensitive to the tax rate than the latter. We also find that the presence of intangible assets affects transfer pricing elasticities but only when the firm belongs to specific industries.
    Keywords: corporate tax, profit shifting, econometrics, multinationals
    JEL: H25 F23
    Date: 2016–12
  27. By: Lambert, Thomas
    Abstract: There has been a growing literature over the last several years on a possible decline in US entrepreneurship and the reasons for it. US small business formation and the jobs created by small businesses are supposed to be key elements in US economic growth. Many claim that without growth in small businesses and the jobs they provide that the US economy will either not grow at all or only very slowly. Therefore, small business formation is a possible key to understanding capitalism in the 21st century since under monopoly capital there is claimed to be a tendency toward economic stagnation. Some of the general causes mentioned for less US entrepreneurism include high levels of personal debt (mortgages, student loans, credit cards, etc.) among the US populace and the increasing challenges that small businesses face against larger ones. Another concern is the amount of increasing business regulation and government presence in the US economy with which small businesses struggle more than larger ones. If entrepreneurism requires risk taking, then high levels of household debt and large, well-financed potential competitors may be hindering prospective entrepreneurs. This exploratory paper finds that high levels of household debt, the increasing size of existing businesses, and government size are highly correlated with the slowdown in the entry rates of new firms into the US economy since the late 1970s as well as with a slowdown in the job creation rate of these firms.
    Keywords: big business, corporations, entrepreneurism, household debt, monopoly capital, small business
    JEL: B51 L26
    Date: 2017–01–04
  28. By: Ugo Albertazzi; Margherita Bottero; Leonardo Gambacorta; Steven Ongena
    Abstract: Using credit register data for loans to Italian firms we test for the presence of asymmetric information in the securitization market by looking at the correlation between the securitization (risk-transfer) and the default (accident) probability. We can disentangle the adverse selection from the moral hazard component for the many firms with multiple bank relationships. We find that adverse selection is widespread but that moral hazard is confined to weak relationships, indicating that a strong relationship is a credible enough commitment to monitor after securitization. Importantly, the selection of which loans to securitize based on observables is such that it largely offsets the (negative) effects of asymmetric information, rendering the overall unconditional quality of securitized loans significantly better than that of non-securitized ones. Thus, despite the presence of asymmetric information, our results do not accord with the view that credit-risk transfer leads to lax credit standards.
    Keywords: securitization, SME loans, moral hazard, adverse selection
    Date: 2017–01
  29. By: Nat Moser (UCL School of Slavonic and East European Studies)
    Abstract: This paper examines enterprise performance in Russian oil companies between 1992 and 2012. The analysis is based upon longitudinal trend output data, and distinguishes between four different types of owners - outsider private, insider private, federal state and regional state. In comparison with previous studies which considered just 1999-2004, and identified outsider private companies as the best performers, this paper finds that over the longer period 1992-2012 federal state and insider private owned companies actually performed best. The explanation for this relates to ‘institutions’ and the business environment.
    Keywords: Oil; Russia
    Date: 2015–02
  30. By: Edo Rajh (The Institute of Economics, Zagreb, Croatia); Jelena Budak (The Institute of Economics, Zagreb, Croatia); Jovo Ateljevic (Faculty of Economics, University of Banja Luka); Ljupco Davcev (Faculty of Economics, Goce Delcev University in Shtip); Tamara Jovanov (Faculty of Economics, Goce Delcev University in Shtip); Kosovka Ognjenovic (Institute of Economic Sciences, Belgrade)
    Abstract: Entrepreneurship has an increasingly important role in economic growth and development in both developed and underdeveloped countries. In order to explore entrepreneurial intentions and their antecedents in the post-transition context, we have conducted a survey among 1,200 students of economics and business in four Southeast European countries: Bosnia and Herzegovina, Croatia, Macedonia and Serbia. The following scales were included in the highly structured questionnaire: locus of control, risk taking propensity, perceived barriers, perceived support factors, personal attitude towards entrepreneurship, perceived behavioral control, subjective norm and entrepreneurial intention. Collected data were analyzed with multiple regression technique in order to explore the effects of various antecedents on entrepreneurial intention in the context of Southeast European countries. The results indicate that personal attitude towards entrepreneurship, perceived behavioral control and subjective norm positively and significantly affect entrepreneurial intent. Respondents from Bosnia and Herzegovina exhibit higher levels of entrepreneurial intent compared to other observed countries. The findings of our research provide better understanding of entrepreneurial intentions and their antecedents in the specific post-transition context of Southeast European countries. Theoretical and policy implications of the research findings are discussed in the paper.
    Keywords: entrepreneurship, entrepreneurial intentions, survey, post-transition, Southeast Europe
    JEL: L26
    Date: 2016–11
  31. By: Anastasiia Konstantynova; Tine Lehmann
    Abstract: In recent decades? industrial clusters and agglomerations were recognized as drivers of regional and often national economic growth and competitiveness. Based on this cluster policy has been widely used to spur economic change, especially on the sub-national level. The public support to cluster development was widely done following the observed examples in the United States aiming to follow their success stories. Most commonly applied cluster policy approach composed of cluster mapping, establishment of institutions (labelled as cluster initiative/ association) in respective clusters through public-private support of these institutions´ and companies´ activities. However, the implementation of blue-printed cluster policy did not always lead to positive paths of cluster development due to the negligence of country / region specific institutional frameworks. This paper fills this void, by exploring selected cases of cluster associations and how their activities are influenced by different sets of institutional framework conditions. Information and communication technologies (ICT) clusters and their associations in European Union (EU) and Non-EU countries are taken as cases for the analysis.
    Keywords: clusters; cluster policy; cluster association; institutions; ICT
    JEL: R11 R58 O18 M21
    Date: 2016–12

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