nep-sbm New Economics Papers
on Small Business Management
Issue of 2017‒01‒15
twenty papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The role of firms? location on persistency of various types of innovation By Charlie Karlsson; Sam Tavassoli
  2. Interfirm Relationships and Business Performance By Cai, Jing; Szeidl, Adam
  3. How do entrepreneurial bosses influence their employees' future entrepreneurship choices? By Rocha, Vera; van Praag, Mirjam
  4. How Destructive is Innovation? By Daniel Garcia-Macia; Chang-Tai Hsieh; Peter J. Klenow
  5. Service Innovation in Philippine Industries By Serafica, Ramonette B.
  6. Transition Towards a Green Economy in Europe: Innovation and Knowledge Integration in the Renewable Energy Sector By C. Conti; M. L. Mancusi; F. Sanna-Randaccio; R. Sestini; E. Verdolini
  7. China’s Rising IQ (Innovation Quotient) and Growth; Firm-level Evidence By Hui He; Nan Li; Jing Fang
  8. The impacts of the EU ETS on efficiency: An empirical analyses for German manufacturing firms By Löschel, Andreas; Lutz, Benjamin Johannes; Managi, Shunsuke
  9. Spanish Public Policies towards the Promotion of Cloud Computing and Digital Services for SMEs By Serrano Calle, Silvia; Pérez Martínez, Jorge; Frías Barroso, Zoraida
  10. Empirical Analysis on Human Resource Management and ICT Use for Product Innovation among Firms in ASEAN Economies By Idota, Hiroki; Ueki, Yasushi; Shigeno, Hidenori; Bunno, Teruyuki; Tsuji, Masatsugu
  11. Small and Medium Firms, Aggregate Productivity and the Role of Dependencies By Fornaro, Paolo; Luomaranta, Henri
  12. Persistent high-growth firms in China's manufacturing By Daniele Moschella; Federico Tamagni; Xiaodan Yu
  14. Who Creates Jobs? Econometric Modeling and Evidence for Austrian Firm Level Data By Huber, Peter; Oberhofer, Harald; Pfaffermayr, Michael
  15. Australian SME Micro-Offshoring Opportunities in the Philippines: An Expanding Niche Market? By Ross, Peter K.
  16. The impact of broadband and other infrastructure on the location of new business establishments By McCoy, Daire; Lyons, Sean; Morgenroth, Edgar; Palcic, Donal; Allen, Leonie
  17. Active on many foreign markets A portrait of German multi-market exporters and importers from manufacturing industries By Joachim Wagner
  18. Firm Performance in the Western Balkan States: the Impact of European Union Membership and Access to Finance By Peter Howard-Jones; Jens Hoelscher; Dragana Radicic
  19. Developing an Inclusive Innovation Agenda for Canada By Alexander Murray
  20. Environmental disclosure and innovation activity: Evidence from EU corporations By Emiko Inoue

  1. By: Charlie Karlsson; Sam Tavassoli
    Abstract: This paper analyzes the role of regional characteristics on innovation persistency among firms. Using five waves of the Community Innovation Survey in Sweden, we have traced the innovative behavior of firms over a ten-year period, i.e. between 2002 and 2012. On the one hand, we distinguish between four types of innovations: process, product, marketing, and organizational innovations. On the other hand, we considered various regional characteristics including knowledge stock, market thickness, and extent of knowledge spillovers. Using a dynamic Probit model, we found that, in general, those firms located in the regions with higher stock of knowledge, thicker market, and higher extent of knowledge spillovers exhibit higher probability of being a persistent innovators. Such higher persistency is mostly pronounced for product innovators.
    Keywords: location; persistence; innovation; product innovations; process innovations; market innovations; organizational innovations; firms; Community Inno¬vation Survey
    JEL: D22 L20 O31 O32
    Date: 2016–12
  2. By: Cai, Jing; Szeidl, Adam
    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.
    Keywords: business networks; field experiment; information diffusion; meetings; peer effects; referrals; Trust
    JEL: D22 L14 O12 O14
    Date: 2016–12
  3. By: Rocha, Vera; van Praag, Mirjam
    Abstract: We adopt a process-based approach to investigate the influence of entrepreneurial bosses on the two main decisions of employees towards becoming entrepreneurs: exit from the current firm and entry into entrepreneurship. In other words, we study the push and pull mechanisms possibly underlying the influence of entrepreneurial bosses. We do so by employing an identification strategy based on comparisons of same-gender matches of bosses and employees, using rich register data for Denmark. We show that same-gender entrepreneurial bosses have a great impact on employees' future entrepreneurship choices, especially among women. We do not find any evidence that female bosses push female employees out of the workplace, by creating a discriminatory environment that forces them to search for alternative career paths. Instead, our analysis finds consistent support for pull mechanisms, with role modeling being the main explanation for the positive influence of female entrepreneurial bosses on female employees' transition into entrepreneurship. We show that the female boss effect is greater than other social interactions identified in prior research. We conclude that entrepreneurial bosses can be role models and female entrepreneurial bosses may thus act as a lever to reducing gender gaps in entrepreneurship rates.
    Keywords: entrepreneurship; female leadership; gender gaps; role models
    JEL: J16 J24 L26 M12 M13
    Date: 2016–12
  4. 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.
    Date: 2017–01
  5. By: Serafica, Ramonette B.
    Abstract: This paper examines the evidence on service innovation using the 2012 Census of Philippine Business and Industry and the 2009 Pilot Survey of Innovation Activities. It reveals the wide variation in R&D intensities and differences in innovation behavior between the manufacturing and services sectors, for example, with respect to information sources and innovation activities. Many similarities were also detected in terms of service product innovation, the popularity of organizational innovation, and the preference for training activities, among others. Looking at structural factors, the probit regression analyses indicate that the size of the firm is a good determinant for all types of innovation. Ownership and age were also significant for certain innovation outputs, which could help inform policies on foreign direct investment and entrepreneurship. The results of this paper reveal the importance of service innovation not only for the services sector but also for the manufacturing sector consistent with servicification. In general, different types of innovation are undertaken by industries for various reasons, and the technological and nontechnological forms of innovation complement each other. If the government aims to promote economy-wide upgrading, support for innovation should not favor only one type of innovation output or activity. Further research on innovation behavior to cover more industries will be useful in developing a comprehensive and more nuanced approach to innovation policy.
    Keywords: Philippines, services, research and development (R&D), innovation, manufacturing, servicification
    Date: 2016
  6. By: C. Conti (Sapienza University of Rome); M. L. Mancusi (Catholic University (Milan) and CRIOS, Bocconi University); F. Sanna-Randaccio (Sapienza University of Rome); R. Sestini (Sapienza University of Rome); E. Verdolini (Fondazione CMCC and Fondazione Eni Enrico Mattei)
    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
    JEL: Q55 Q58 Q42 O31 O33
    Date: 2016–12
  7. By: Hui He; Nan Li; Jing Fang
    Abstract: This paper examines whether the rapid growing firm patenting activity in China is associated with real economic outcome by building a unique dataset uniting detailed firm balance sheet information with firm patent data for the period of 1998-2007. We find strong evidence that within-firm increases in patent stock are associated with increases in firm size, exports, and more interestingly, total factor productivity and new product revenue share. Event studies using first-time patentees as the treatment group and non-patenting firms selected based on Propensity-Score Matching method as the control group also demonstrate similar effects following initial patent application. We also find that although state-owned enterprises (SOEs) on average have lower level of productivity and are less innovative compared to their non-state-owned peers, increases in patent stock tend to be associated with higher productivity growth among SOEs, especially for patents with lower innovative content. The latter could reflect the preferential government policies enjoyed by SOEs.
    Keywords: Technological innovation;China;Business enterprises;Public corporations;Innovation, Growth, Patent, R&D, Productivity, SOE Reforms, China
    Date: 2016–12–22
  8. 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
  9. By: Serrano Calle, Silvia; Pérez Martínez, Jorge; Frías Barroso, Zoraida
    Abstract: The paper focuses on the first public programs in Spain to support the introduction of cloud computing services for small and medium-sized enterprises (SMEs) and micro-SMEs, and facilitating the digital transformation of SMEs, stimulating e-commerce and encouraging competitiveness. The paper analyses how the programs that the Spanish Government launched in 2015 transcend technology and impact over the digital ecosystem, with influences over supply and demand. The paper identifies the main drivers of SMEs providing cloud services and ICT solutions and other key elements that help to understand the eligible portfolio of cloud solutions and authorised providers that will contribute to the digital transformation of Spanish SMEs and micro-SMEs.
    Keywords: Digital Economy,Cloud Computing,SME,Public Policy
    JEL: H76 L88 O14
    Date: 2016
  10. By: Idota, Hiroki; Ueki, Yasushi; Shigeno, Hidenori; Bunno, Teruyuki; Tsuji, Masatsugu
    Abstract: To achieve successful innovation, firms in ASEAN countries have to elevate their innovation capability including human resources, business structure of firms, technologies including ICT use by collaborating with outside organizations such as MNCs (Multi-national companies) and university/public research institutes. These outside organizations are termed as external linkages. Based on authors'survey data of five ASEAN economies such as Vietnam, Indonesia, the Philippines, Thailand, and Laos from 2014 to 2015, this paper examines how internal innovation capability such as human resource management (HRM), organizational learning and ICT use enhance product innovation. These factors are used as latent variables in analysis and consist of the following variables:(i) HRM such as recruitment, job training and rewards and 5S; (ii) organizational learning including QC and cross-functional teams;(iii) ICT use such as B2B, B2C, EDI, SCM, ERP, CAD/CAM, groupware, SNS; and (iv) external linkages. This study employs SEM (Structural equation modeling) to analyze the causal relationships not only among the above four latent variables but also between these and innovation.The six hypotheses were postulated. Estimation results demonstrate that organization learning and ICT use enhance product innovation, and particularly, human resource management enhances organization learning.
    Keywords: ICT use,human resource management,external linkages,cross-functional teams,QC,SEM
    JEL: O32 O31 O19
    Date: 2016
  11. By: Fornaro, Paolo; Luomaranta, Henri
    Abstract: We analyze the productivity contribution of firms in the Finnish business sector, using data from 2002 until 2014, and assess the role of the dependency status (i.e. whether they are owned, at least partially, by a mother company) of small and medium enterprises in the manufacturing and services industries, together with the whole private business sector. We find that dependent firms have provided a larger contribution to aggregate productivity growth, compared to the independent ones, regardless of the industry, size class and age groups considered. This result is mainly driven by the better reallocation of labour among dependent companies and by the positive productivity contribution of dependent entrants. Inside the dependent category, the foreign controlled firms contribute more to the aggregate productivity than the other dependent companies due to even more efficient reallocation of labour inputs. Moreover, we find that dependent firms tend to reach their peak productivity earlier than their independent counterparts. Finally, we examine the subgroup of high growing enterprises and find that the positive effect of dependencies on the productivity contribution holds also for this class of firms.
    Keywords: Productivity, decomposition, dependencies, small and medium firms
    JEL: O12 O14 O47
    Date: 2017–01–10
  12. By: Daniele Moschella; Federico Tamagni; Xiaodan Yu
    Abstract: This article investigates the characteristics of high-growth (HG) firms in Chinese manufacturing, and further explores the effects of firm characteristics on persistence of high-growth. We employ a multidimensional definition of HG firms that simultaneously accounts for growth of sales and employment. Exploiting a representative panel covering the period of the Chinaùs miracle, we find that HG firms outperform other firms, showing higher productivity, higher profitability, larger investment intensity, higher sales from product innovation, lower interest expenses and lower leverage. HG firms are also relatively young, larger in size, more often exporters and more concentrated in non-State-controlled companies. However, regression analysis suggests that none of the indicators of structural characteristics and performance considered above displays any statistical association with the ability to persistently replicate high-growth over time. The results speak against the long-run effectiveness of policies supporting the creation and backing of high-growth firms.
    Keywords: Entrepreneurship, Firm growth, High-growth firms, Persistent high-growth firms
    Date: 2017–09–01
  13. By: Shikha Bhardwaj
    Abstract: Succession planning is an integral part of every business but how many houses actually realize this questionable. In India, even the big business houses are comfortable in discussing these matters in board meetings. Business in India is more like a property where one individual owns and further passed on to family member only. In recent past there has been tremendous change in our patterns of succession planning. Thus this article throws some light on these issues of succession planning in family owned businesses in India. The data have been collected from different Small and Medium Enterprises in automotive component Industry. The samples have been chosen out of family owned businesses (FOBs) only. The data have been collected from Delhi and National capital region of India. The data was collected from Chairman, Managing Director, Executive Director and Board members of the enterprises. The data is collected in two forms through Face to face interview with four basic questions. Further the data has been represented by content analysis of the respondents. Key words: Emotions, Succession planning, Family and Stress. Policy
    Date: 2016–09
  14. By: Huber, Peter; Oberhofer, Harald; Pfaffermayr, Michael
    Abstract: This paper offers an empirical analysis of net job creation patterns at the firm level for the Austrian economy between 1993 and 2013 focusing on the impact of firm size and age. We propose a new estimation strategy based on a two-part model. This allows to identify the structural parameters of interest and to decompose behavioral differences between exiting and surviving firms. Our findings suggest that conditional on survival, young Austrian firms experience the largest net job creation rates. Differences in firm size are not able to explain variation in net job creation rates among the group of continuing enterprises. Job destruction induced by market exit, however, is largest among the young and small firms with this effect being even more pronounced during the times of the Great Recession. In order to formulate sensible policy recommendations, a separate treatment of continuing versus exiting firms as proposed by the new two-part model estimation approach seems crucial.(authors' abstract)
    Keywords: Net job creation; firm size; firm age; one-part versus two-part models; Austrian economy; Great Recession
    Date: 2015–09
  15. By: Ross, Peter K.
    Abstract: This paper examines how Filipino-based business process outsourcing centers have been developing services, including offshore "staff leasing" and "co-managed services" arrangements, that are helping to overcome traditional small and medium enterprise (SME) resource constraints. These "micro-offshoring" models greatly reduce transaction costs for Australian SMEs seeking to outsource/offshore former in-house work and appear to be supporting a rapid increase in the number of Australian-based SMEs offshoring professional services to the Philippines. Micro-offshoring further provides job opportunities for Filipino tertiary graduates and entrepreneurial opportunities for local Filipino SMEs looking to enter and tap this market. This research also suggests that it may encourage Australian SMEs to shift to more long-term offshoring models over time, such as local incorporation, and therefore foster foreign direct investment.
    Keywords: Philippines, micro-offshoring, outsourcing, BPO, Australian SMEs, staff leasing, co-managed services
    Date: 2016
  16. By: McCoy, Daire; Lyons, Sean; Morgenroth, Edgar; Palcic, Donal; Allen, Leonie
    Abstract: Can improving local infrastructure in underdeveloped areas encourage entrepreneurial activity? If so, which infrastructures and by how much? This paper analyses the impact on new business establishments of broadband infrastructure, motorways, airports and railways and a range of other local characteristics such as availability of human capital and access to third level educational facilities. The sample period spans the introduction and recent history of broadband in Ireland, and during this period 86% of the current motorway network was constructed. Human capital, measured as the percentage of the population with a third level qualification and proximity to a third level institution prove to be important determinants of new firm establishments. Availability of broadband infrastructure is significant, but its effects may be mediated by the presence of sufficiently high educational attainment in the area. Transport infrastructure access is significant for some sectors. For all sectoral groupings examined, firm establishments seem to favour a more diverse local sectoral mix rather than a concentrated one.
    Keywords: New business establishments,ICT,Infrastructure,Count panel regression model
    JEL: R3 R11 D22
    Date: 2016
  17. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: This paper uses information on more than 160 million export and import transactions by German firms from 2009 to 2012 to document the decisive role of multi-market traders thatare active on many foreign markets, where a market is defined as a combination of a good traded and a country traded with. Using merged information from trade transactions and from surveys conducted by the statistical offices it is shown that, controlling for detailed industry affiliation, the number of foreign markets a firm from manufacturing industries is active on as an exporter or importer is higher in firms that are larger, older and foreign owned and that have higher labor productivity, human capital intensity and R&D intensity. With the exception of labor productivity these results are valid ceteris paribus, too. All these empirical results are in line with hypotheses that are derived from the literature on the links between firm characteristics and the extensive margins of foreign trade.
    Keywords: Exports, Imports, Transaction level data, Germany
    JEL: F14
    Date: 2017–01
  18. By: Peter Howard-Jones (Bournemouth University, Executive Business Centre); Jens Hoelscher (Bournemouth University, Executive Business Centre); Dragana Radicic (University of Cambridge)
    Abstract: This study examines the productivity performance of Balkan firms within and outside the European Union (EU). In addition to evaluating the efficacy of membership it also studies the influence of loans, since evidence suggests a correlation between the macro- economic element of EU membership and the micro influence of loans. A multi treatment model is used to compare the effect on productivity of membership and loans, both separately and collectively, which in the case of loans allows a separate analysis of their influence on firms in non-member states. The use of conditional quantile regressions, which divide a frequency distribution into equal groups each containing the same fraction of the total population, measures the effect on productivity of membership and loans separately as treatment variables. This provides an analysis of where the treatment influence is greatest and identifies the significance of selected control variables on the outcome. The analyses are conducted for firms in all states and disaggregated to provide results for the manufacturing and service sectors. Within the full sample, the findings indicate that EU membership and loans have a positive effect on productivity; membership being more important than loans. Outside the EU, firms in receipt of loans are more productive than those without. However, the significance of both membership and loans is restricted to the lower end of the productivity distribution curve. The manufacturing sample shows that membership is positive across 70% of the distribution, while loans are restricted to the bottom quantiles, with rental capital also positively significant. In the services sector however, membership is significant up to 90% of the distribution, with loans at 60%. Foreign ownership, age and size are also significant across the productivity distribution curve. Policy implications indicate the advantages of EU membership allied to improvements in financial intermediation, particularly within the manufacturing sector.
    Keywords: Transition economies; Firm productivity; EU membership; Access to loans; Multi-level model; Quantile regression
    JEL: C D E F G O
    Date: 2017–01
  19. By: Alexander Murray
    Abstract: Inclusive innovation requires that opportunities for participation in innovation be broadly available and that the benefits of innovation be broadly shared. This report considers a number of innovation policy reforms through the lens of this dual emphasis. For policies that would facilitate both innovation and inclusiveness, there is a strong case for implementation. Policies that might promote innovation at the expense of inclusiveness would require that the trade-off be managed or mitigated. Education and training is a potential area of complementarity between inclusiveness and innovation because a highly skilled population is an important facilitator of both. Clusters pose a potential trade-off between the goals of innovation and inclusion, which must be taken into account in the context of policies aimed at supporting their development. There is no strong case for subsidizing small businesses generally. Instead, targeted support should be provided to help growth-oriented small firms to grow. The scope for further regulatory improvement to enhance innovation may be limited, given what Canada has already done in recent decades. But room for improvement still exists in terms of foreign investment barriers and the speediness and accessibility of the legal system. Government investment can play a productive role in an inclusive innovation system; the government should increase direct funding for basic research, especially in clean energy technology.
    Keywords: Innovation, Income Distribution, Inequality, Education, Clusters, Regulation, Public Policy
    JEL: J68 O31 E24 I28
    Date: 2016–12
  20. By: Emiko Inoue
    Abstract: Innovation is expected to become an essential element in overcoming climate change issue. To examine the factors that might induce such innovation, this study focuses on environmental disclosure and scrutinises how it influences innovation activity. Utilising firm-level panel datasets from EU corporations (fiscal years 2000-08) that were constructed based on the Carbon Disclosure Project data and the EU Industrial R&D Investment Scoreboard, I estimate dynamic panel models using the system GMM estimator. The potential endogeneity issue is addressed in the models. Innovation activity is measured by R&D investment. The results show that corporations that implement a specific environmental disclosure action, namely, disclosing Scope 3 GHGemissions, are more likely to invest in R&D. This study sugg ests that supply chain management is crucial for corporations to enhance their innovation activity. In addition,this study reveals that a policy that stimulates corporate incentives to disclose Scope 3 GHG emissions may be a key to enhancing innovation activity. Since communication between corporations and other stakeholders, which may be enhanced by environmental disclosure , is a significant factor in encouraging corporate innovation activity, it is important to construct a system wherein environmental disclosure is evaluated objectively and corporations with strong environmental performance are adequately rewarded.
    Keywords: innovation;Environmental disc losure;Voluntary action;Endog eneity;Climate change
    Date: 2016–12

This nep-sbm issue is ©2017 by João Carlos Correia Leitão. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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