nep-sbm New Economics Papers
on Small Business Management
Issue of 2017‒03‒19
nine papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Firm and Regional Factors of Productivity: A Multilevel Analysis of Tunisian Manufacturing By Mohamed Amara; Khaled Thabet
  2. Which Firms Create the Most Jobs in Developing Countries? Evidence from Tunisia By Bob Rijkers; Hassen Arouri; Caroline Freund; Antonio Nucifora
  3. Is Corruption "Greasing" or "Sanding" the Wheels of Innovation of Firms in MENA? By Tamer Taha
  4. The employment impact of R&D expenditures and capital formation By Mariacristina Piva; Marco Vivarelli
  5. Determinantes y efectos de la productividad en la industria manufacturera uruguaya (2001 -2009) By Leonel Muinelo-Gallo; Macarena Suanes
  6. Understanding the Dynamics of Household Enterprises in Egypt: Birth, Death, Growth and Transformation By Caroline Krafft
  7. The relationship between R&D intensity and profit-sharing schemes: evidence from Germany and the United Kingdom By Übelmesser, Silke; Uebelmesser, Silke
  8. Foreign Rivals are Coming to Town: Responding to the Threat of Foreign Multinational Entry By Cathy Ge Bao; Maggie X. Chen
  9. Intelligence and the Ease of Doing Business: Does Intellectual Class Facilitate Leadership and Entrepreneurship? By Burhan, Nik Ahmad Sufian; Che Razak, Razli; Salleh, Fauzilah; Labastida Tovar, María Elena

  1. By: Mohamed Amara (University of Tunis); Khaled Thabet
    Abstract: In this paper, we use multilevel models to simultaneously analyze individual, sectoral and regional characteristics that might affect the total factor productivity of Tunisian manufacturing firms for the period 1998-2004. Our results show that the individual characteristics of the firm have an important effect on both total factor productivity and labor productivity. We find that the oldest small firms are more productive than larger firms. Regional context has a significant direct impact on firms’ performance. More specifically, industrial density has a positive influence on total factor productivity. Our results show also that interaction effects or indirect effects are mostly driven by sectoral context. The intra-industrial wage disparities are beneficial only for firms with higher human capital and R&D. The interaction effects also show that larger and older firms will benefit more from industrial agglomeration. We conclude that multilevel models better fit our research questions that combine firm and contextual characteristics simultaneously, because they allow firm-specific characteristics to be differently associated to their regional and sectoral contexts.
    Date: 2016–01–09
  2. By: Bob Rijkers (The World Bank); Hassen Arouri; Caroline Freund (World Bank); Antonio Nucifora
    Abstract: This paper examines private sector job creation in Tunisia over the period 1996-2010 using a unique database containing information on all registered private enterprises, including self-employment. In spite of stable GDP growth, overall net job creation was disappointing and firm dynamics were sluggish. The firm size distribution has remained skewed towards small firms, because of stagnation of incumbents and entrants starting small, typically as one-person firms (i.e., self-employment). Churning is limited, especially amongst large firms, and very few firms manage to grow. Post-entry, small firms are the worst performers in terms of job creation, even if they survive. Moreover, the association between productivity, profitability and job creation is feeble, pointing towards weaknesses in the re-allocative process. Weak net job creation thus appears to be due to insufficient firm dynamism rather than excessive job destruction.
    Date: 2015–10
  3. By: Tamer Taha (United Nations University)
    Abstract: In a region with a tradition and abundance of rent-seeking behavior, innovation in MENA countries is key for growth and development. However many inherited institutional barriers are still locking the potentials for a transition towards a knowledge and innovation-based economy. Using recently collected firm-level data from MENA countries, this article explores the effect of institutional obstacles in Egypt and Tunisia on the innovative behavior of firms. Recognizing the potential risk of endogeneity and simultaneity, the paper uses a conditional recursive mixed-process model (CMP) to estimate the micro level interactions that occur between corruption and business permits. The results show a positive effect of corruption on innovation only as a “greasing” mechanism to bypass the bureaucratic obstacles of business permits. Such an effect is even more pronounced if the firm is surrounded by other firms with corrupt practices.
    Date: 2016–03
  4. By: Mariacristina Piva (DISCE, Università Cattolica); Marco Vivarelli (DISCE, Università Cattolica - UNU-MERIT, Maastricht, The Netherlands and IZA, Bonn, Germany)
    Abstract: The aim of this paper is twofold. On the one hand, the economic insights about the employment impact of technological change are disentangled starting from the classical economists to nowadays theoretical and empirical analyses. On the other hand, an empirical test is provided; in particular, longitudinal data - covering manufacturing and service sectors over the 1998-2011 period for 11 European countries - are used to run GMM-SYS and LSDVC estimates. Two are the main results: 1) a significant labour-friendly impact of R&D expenditures (mainly related to product innovation) is found; yet, this positive employment effect appears to be entirely due to the medium-and high-tech sectors, while no effect can be detected in the low-tech industries; 2) capital formation is found to be negatively related to employment; this outcome points to a possible labour-saving effect due to the embodied technological change incorporated in gross investment (mainly related to process innovation).
    Keywords: technological change, employment, sectoral analysis, EU
    JEL: O33
    Date: 2017–01
  5. By: Leonel Muinelo-Gallo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Macarena Suanes (UniversitatAutònoma de Barcelona (Spain). Departamentd’Economia Aplicada)
    Abstract: This paper analyzes the relationship between investment in R&D, innovation generation and productivity changes in Uruguayan manufacturing firms during 2001-2009. The production function structural model is sequentially applied to data from the "Survey of innovation activities in enterprises" of Uruguay. The empirical results suggest a positive link between R&D activities and the generation of technological innovations, as well as a positive effect of the latter on firm’s productivity.
    Keywords: innovation, research, productivity, structural production function model
    JEL: O31 D24 J24 O4
    Date: 2017–01
  6. By: Caroline Krafft (Department of Economics, St. Catherine University)
    Abstract: Micro and small household enterprises play an enormous role in growth and employment in developing economies such as Egypt. Despite the importance of household enterprises, little is known about the creation, survival, and growth of such enterprises. This paper examines the dynamics of household enterprises, using household panel data from 1998, 2006, and 2012 in Egypt. As well as identifying the patterns of enterprise creation, dissolution, and growth, the paper identifies the individual, household, and enterprise characteristics that contribute to these dynamics. The findings demonstrate that the recent economic downturn in Egypt had a strong negative effect on household enterprise survival as well as employment growth within surviving enterprises.
    Date: 2016–03
  7. By: Übelmesser, Silke; Uebelmesser, Silke
    Abstract: We study the determinants of the use of profit sharing schemes (PSS) by exploiting two datasets for Germany and the United Kingdom. Our results replicate studies for the U.S. which report a positive correlation between R&D activity and PSS use. For Germany, Granger-causality tests support a causal interpretation. Similarly to U.S.-based studies, we also find that a firm's turnover is strongly associated with PSS use whereas this does not hold for the age of a firm and its organizational characteristics.
    JEL: L20 J33 O31
    Date: 2016
  8. By: Cathy Ge Bao (University of International Business and Economics); Maggie X. Chen (George Washington University)
    Abstract: This paper quantiÖes the threat of foreign competition by exploring news of foreign multinational investment appearing in over 35,000 newspapers, business presses, magazines, newswires, and other forms of media in 200 countries. Using unique time-variant firm-specic measures of foreign multinational threat, the analysis shows that domestic firms respond to the threats by upgrading productivity, raising innovation, investment and wage rate, and altering product composition. However, the responses exhibit substantial heterogeneity across firms: within each industry, the right tail of the domestic productivity distribution responds by increasing innovation while the left tail escapes competition threats by dropping products, leading to a U-shape relationship between initial productivity and productivity growth. Actual multinational competition, in contrast, leads to product dropping only. These previously unexplored responses to the threat of foreign competition constitute an economically important source of gains from globalization and convey new implications for the timing, evolvement, and form of industrial, trade and investment policies.
    Keywords: threat, foreign investment news, and domestic Örm responses
    JEL: F1 F2 L2 D2
    Date: 2016
  9. By: Burhan, Nik Ahmad Sufian; Che Razak, Razli; Salleh, Fauzilah; Labastida Tovar, María Elena
    Abstract: Does the intelligence quotient (IQ) in a nation regulate the ease of doing business in the society? Based on the normal distribution of IQ scores within a nation, the population was classified into three groups, specifically intellectual class, average ability, and non-intellectual class, which were represented by the 95th, 50th, and the 5th percentiles of IQ level respectively. Using a robust regression method with Huber’s weight function, the impact of each IQ class on the ease of doing business (EDB) index was examined. The sub-indicators of the ten business regulatory environment across 71 countries were studied. In this study, the effect of IQ was controlled for the levels of economic freedom, GDP per capita, freedom of corruption, and tertiary education. Results revealed strong evidence that the IQ of the intellectual class had contributed most to the enhancement of the regulatory environment, which is supportive for entrepreneurship. This result was consistent with the term ‘creative minority’ coined by the prominent historian Arnold Toynbee. It was concluded that the IQ of the people from the intellectual class is the most significant factor for creating a business regulatory environment that favours and eases the new and experienced entrepreneurs. This occurs through their competent and virtuous leadership that enhances the quality and efficiency of institutions across countries.
    Keywords: doing business; entrepreneurship; intelligence; intellectual class; leadership; non-intellectual class; robust regression
    JEL: J24 L26 O11 Z13
    Date: 2017–02

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