nep-sbm New Economics Papers
on Small Business Management
Issue of 2017‒04‒16
twelve papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The impact of investment in knowledge-based capital on productivity: firm-level evidence from Ireland By Siedschlag, Iulia; Di Ubaldo, Mattia
  2. R&D Effects on Firm Productivity, Exports, and OFDI: Korean Firm-Level Analysis By Lee, Seungrae; Park, Ji Hyun; Kim, Hyuk-Hwang; Lee, Joun Won
  3. Investment in knowledge-based capital and its contribution to productivity growth: a review of international and Irish evidence By Siedschlag, Iulia; Lawless, Martina; Di Ubaldo, Mattia
  4. Human capital shortages in the Vietnamese industry. A firm-level analysis. By Antonio Angelino
  5. Financial constraints and productivity: Evidence from Canadian SMEs By Cao, Shutao; Leung, Danny
  6. Joint and Cross-border Patents as Proxies for International Technology Diffusion By Chang, C-L.; McAleer, M.J.; Tang, J-T.
  7. Entrepreneurial skills, technological progress and firm growth By Amaia Iza
  8. The missing middle: Growing and strengthening Viet Nam’s micro, small, and medium-sized enterprises By Catherine Y. Co; Thu Kim Nguyen; Tung Nhu Nguyen; Que Nguyet Tran
  9. Determinants of Demand for Technology in Relationships with Complementary Assets among Japanese Firms By Masayo Kani; Kazuyuki Motohashi
  10. Productivity spillovers in the GVC: The case of Poland and the New EU Member States By Jan Hagemejer
  11. The relevance of personal characteristics and gender diversity for (eco) - innovation activities at the firm-level : Results from a linked employer-employee database in Germany By Horbach, Jens; Jacob, Jojo
  12. The effects of Chinese import penetration on firm innovation: Evidence from the Vietnamese manufacturing sector By Duc Anh Dang

  1. By: Siedschlag, Iulia; Di Ubaldo, Mattia
    Abstract: This paper examines the impact of investment in knowledge-based capital on firm productivity. The analysis is based on a dynamic econometric model estimated with micro-data from Ireland over the period 2006-2012. We use broad measures of investment in knowledge-based capital which include expenditures on R&D, and on non-R&D intangible assets such as computer software, copyrights, patents and licences, royalties and organisational capital. The results indicate that on average, over and above other factors, an increase in investment in knowledge-based capital of 10 per cent increases firm productivity by 2 per cent. The research results indicate that productivity gains linked to investment in KBC are larger for Irish-owned firms in comparison to foreign-owned firms. Further, the estimates indicate that firms’ productivity is more responsive to investment in R&D than to investment in non-R&D intangible assets.
    Date: 2017–04
  2. By: Lee, Seungrae (Korea Institute for International Economic Policy); Park, Ji Hyun (Korea Institute for International Economic Policy); Kim, Hyuk-Hwang (Korea Institute for International Economic Policy); Lee, Joun Won (Korea Institute for International Economic Policy)
    Abstract: This report empirically analyzes the effects of firm R&D on firm performance, particularly on firm productivity, exports, and outward foreign direct investment (OFDI) by using Korean firm-level data. While this report lies in line with prior literatures that examined firm R&D effects on firm performance, we further explores the pathway connection between the two. That is, we not only examine firm R&D effects on particular firm performance, but also study the significance of firm productivity as a pathway that links firm R&D with firm exports and OFDI. Our estimation results indicate that firm R&D significantly heightens firm performance, particularly by showing stronger impact on firm performance over time. On the other hand, by using firm productivity as a mediator variable in a triangular structural equation to estimate direct R&D effects and indirect R&D effects through firm productivity, our results show that firm R&D has significant effects on export and OFDI increase directly and indirectly through firm productivity increase. Examining direct and indirect firm R&D effects across different industry sectors, we found that firm R&D is significantly effective on exports and OFDI among capital-intensive sectors, while it does not exhibit a significant influence among labor-intensive sectors. Our estimation results imply that while R&D promotion policies towards the private sector are effective for improving firm performance, these policies would yield more effective consequences if they are targeted at specific industry sectors. In particular, our results suggest that R&D promotion policies towards firms inside capital-intensive sectors would be more effective on exports and OFDI than policies towards firms inside labor-intensive sectors.
    Keywords: Firm R&D; Productivity; Exports; OFDI
    Date: 2015–10–08
  3. By: Siedschlag, Iulia; Lawless, Martina; Di Ubaldo, Mattia
    Abstract: This paper reviews the international evidence on measuring investment in knowledge-based capital (KBC) and its impact on productivity. On this evidence basis, it provides a conceptual framework to analyse Ireland’s performance in this area on macroeconomic, industry and firm levels. The evidence reviewed in this paper indicates that investment in KBC is sizeable and has increased over time in many advanced economies, including Ireland. At the country, sectoral and firm level, the contribution of investment in KBC to productivity growth over and above other factors including investment in tangible capital is documented as important. This paper also reviews and discusses economic framework policies which could incentivise further investment in knowledge-based capital in Ireland.
    Date: 2017–04
  4. By: Antonio Angelino (Università degli Studi di Ferrara)
    Abstract: The access to human capital results to be a fundamental determinant of growth in LDCs enabling conditions for economic diversification and industrial upgrading. Skilled labour shortages generate detrimental dynamics for enterprise development preventing the spillovers arising from the productive interactions with the foreign agents and obstructing the domestic firms’ capabilities to absorb knowledge and technology. At the same time, the presence of an inadequately skilled workforce is combined to a scarce degree of firms’ responsiveness with respect to learning by exporting mechanisms and exploitation of R&D incentives. In this regards, firms are not likely to face undifferentiated human capital constraints. Indeed, the typology and the severity of the obstacles in terms of inadequately educated workforce are likely to be significantly determined by their observable and unobservable attributes. We implement binary discrete choice models on firms’ subjective assessments to evaluate whether and to what extent the attributes of the firms matter in determining the degree of severity of the human capital constraints. The main results of our study, conducted on about 1000 firms in Vietnam, show that the indirect exporters, the firms investing in R&D and the firms located in urban contexts are more likely to report human capital shortages as a major constraint relative to the rest of the firms.
    Keywords: Human capital, Emerging Markets, Industrial Policy, Vietnam, Entrepreneurship
    Date: 2017
  5. By: Cao, Shutao; Leung, Danny
    Abstract: The degree to which financial constraints are binding is often not directly observable in commonly used business data sets (e.g., Compustat). In this paper, we measure and estimate the likelihood of a firm being constrained by external financing using a data set of small and medium-sized Canadian firms. Our measure separates the need for financing from the degree of being constrained, conditional on the need for financing. We find that firm size, the current debt-to-asset ratio and cash flow are robust indicators that can be used as a proxy for financial constraint. The total debt-to-asset ratio is not, however, a statistically significant indicator of financial constraint. In addition, firms with higher cash flow are less likely to need external financing and to be constrained if they do need it. We then estimate the firm-level total factor productivity by taking into account the measured likelihood of binding financial constraints. Coefficient estimates for labor and capital in the structural estimation of production function can be downward biased if financial constraints are omitted, because production inputs are negatively correlated with the likelihood of being constrained by external financing. This in turn leads to an upward bias in total factor productivity, which is about 4 percent according to our estimation. Finally, both investment and employment growth are negatively affected by the measured degree of financial constraints, pointing to the contribution of financial constraints to misallocation.
    Keywords: Productivity, Financial constraint, Production function,
    Date: 2017
  6. By: Chang, C-L.; McAleer, M.J.; Tang, J-T.
    Abstract: With the advent of globalization, economic and financial interactions among countries have become widespread. Given technological advancements, the factors of production can no longer be considered to be just labor and capital. In the pursuit of economic growth, every country has sensibly invested in international cooperation, learning, innovation, technology diffusion and knowledge, and outward direct investment. In this paper, we use a panel data set of 40 countries from 1981 to 2008 and a negative binomial model, using a novel set of cross-border patents and joint patents as proxy variables for technology diffusion, in order to investigate such diffusion. The empirical results suggest that, if it is desired to shift from foreign to domestic technology, it is necessary to increase expenditure on R&D for business enterprises and higher education, exports and technology. If the focus is on increasing bilateral technology diffusion, it is necessary to increase expenditure on R&D for higher education and technology. It is also found that outward foreign direct investment has no significant impact on either joint or cross-border patents, whereas inward foreign direct investment has a significant negative impact on cross-border patents but no impact on joint patents. Moreover, government expenditure on higher education has a significant impact on both cross-border and joint patents
    Keywords: International Technology Diffusion, Exports, Imports, Joint Patent, Cross-border Patent, R&D, Negative Binomial Panel Data
    JEL: F14 F21 O30 O57
    Date: 2016–12–01
  7. By: Amaia Iza
    Abstract: One recent empirical regularity is that Örm-growth is negatively related to Örmís age. Besides, employment-age proÖles are áatter in less developed economies, but it is also observed áatter employmentage proÖles among fast growing economies rather than in slow growing economies. This paper develops an occupational choice life-cycle model based on Guner et al. (2015), where entrepreneursískills determine entrepreneurial technology in a similar way to Poschke (2015). We consider that exogenous technological advances imply a higher degree of complexity. Entrepreneursí skills determine the degree of complexity they can manage. As in Guner et al. (2015), entrepreneurs invest in their skills over their life-cycle. But, unlike Guner et al. (2015), entrepreneursí skills depreciation depends also on the rhythm at which skills of newborn entrepreneurs are growing. The empirical implication of the stationary equilibrium concerning Örm growth is consistent with these observed facts This paper develops an occupational choice life-cycle version of Lucas (1978) span-of-control model based on the assumption that entrepreneurs' skills determine entrepreneurial technology in a similar way to Poschke (2015). We consider that there are exogenous technological advances in the economy and that new advances imply a higher degree of complexity. Entrepreneurs' skills determine the degree of complexity they can manage and, hence, the degree of adoption of new technologies. As in Guner et al. (2015), entrepreneurs invest in their skills over their life-cycle. But, unlike Guner et al. (2015), entrepreneurs' skills investment also depends on the depreciation of their relative skill with respect to newborn entrepreneurs' skills. Faster exogenous growth of technological advances can lead to a higher firms' productivity growth over their life cycle, but also may imply a higher depreciation of old entrepreneurs abilities. We analyze the empirical implications of the stationary equilibrium concerning firms' age-TFP profile, employment-age profile, managers' income life-cycle profile, and aggregate TFP growth depending on the country's level of development and growth rate of technological advances.
    Keywords: European countries and the US., Miscellaneous, Growth
    Date: 2016–07–04
  8. By: Catherine Y. Co; Thu Kim Nguyen; Tung Nhu Nguyen; Que Nguyet Tran
    Abstract: We study the exporting and subcontracting decisions, mark-ups, market concentration, and growth of a panel of Vietnamese private micro, small, and medium-sized enterprises. Our main findings are as follows. First, we find that among subcontractors, subcontracting is a supplementary rather than primary activity. Second, there is strong evidence that the propensity to export increases with managers’ or owners’ knowledge of customs law. Third, all else equal, mark-ups are lower for larger micro, small, and medium-sized enterprises. Fourth, there is significant home province bias in the sales of Viet Nam’s micro, small, and medium-sized enterprises. Membership of business associations and having internationally recognized quality certifications attenuate the size of the home market bias. Fifth, a significant number of enterprises did not grow or even contracted in size between 2010 and 2014. Finally, we find no evidence that inspections deter enterprises from expanding beyond their core competencies.
    Date: 2017
  9. By: Masayo Kani; Kazuyuki Motohashi
    Abstract: There has been growing interest in open innovation, where firms create value by combining internal and external ideas. Technology insourcing, however, has not been satisfactorily investigated in the empirical literature compared to technology outsourcing. In this paper, we examine the determinants of external technology sourcing by the type of counterpart in the new product development (NPD) process. We use a novel dataset at the product level, compiled by the Research Institute of Economy, Trade and Industry in 2011. We distinguish whether the technology partner is also a business partner, such as a supplier or customer. Our findings show that when the technology partner is not a business partner, patents play an important role in moderating the transaction costs in a partnership. On the other hand, when the technology partner is also a business partner, we find cospecialisation of technology and its complementary assets with the partner firm.
    Keywords: technology sourcing, co-specialisation, complementary assets, division of innovative labour
    JEL: D22 L22 O32
    Date: 2017–03
  10. By: Jan Hagemejer
    Abstract: The New Member States have been experiencing firm internationalization not only through inward foreign direct investment but also through exporting, importation of foreign technology in investment goods and increased use of imported intermediates. We argue that there are important productivity spillovers within the global value chains, ie. FDI alone does not tell the whole story of the reallocation processes going on in the economies of the NMS. We augment the standard TFP spillover empirical model with modern measures of GVC participation to contribute to the debate on the 'desired' country/sector/firm position in the GVC. In our study we combine firm-level data with international sectoral input-output data. Firm level data come from the Amadeus database. In order to maximize the number of observations, we combine data from multiple Amadeus waves. The resulting firm-level data sample covers the period of 1997-2011. The study has two parts. In the first part, we analyze the foreign firm producticvity premia over the domestic firms. We check if the foreign productivity premium is affected by the position of the firm in the Global Value Chain and the foreign content of sectoral exports. We do that in order to verify if there are benefits of the positition in the GVC that lead to lowering the productivity gap between foreign and domestic firms. In the second part, we augment the methodology by Smarzynska-Javorcik (2004) with measures of GVC participation to analyze the various channels of internationalization. In order to obtain a measure of total factor productivity we use the now-standard approach by Levinsohn and Petrin (2003). We focus on Poland but we also run the spillover equations on the full New Member States sample and on the individual NMS. All regressions control for country/sector specificity and the business cycles. We show that increased foreign content of exports brings additional productivity gains on top of the ones attributed to exporting and FDI spillovers that are mostly backward in nature. Moreover, we show that in selected cases, participation in the GVC leads to a smaller productivity gap between foreign and domestic firms. In Poland and Hungary the productivity gains for domestic firms are located in production of intermediate goods with high foreign value content as well as in goods located close to the final demand. In many other NMS the benefits are concentrated close to the final demand.
    Keywords: New EU Member States, Trade issues, Growth
    Date: 2016–07–04
  11. By: Horbach, Jens; Jacob, Jojo
    Abstract: "Up to now, the growing literature on the determinants of eco-innovation has not considered the influence of personal characteristics of the employees of a firm. The existing econometric analyses show much 'noise' explaining the driving forces of eco-innovation. The paper tries to open the 'black box' of unexplained heterogeneity. In fact, latent variables such as the greenness of a firm may be explained by the personal characteristics (gender, family status, geographical origin, education etc.) of the staff and the decision makers in a firm. The linked employer-employee database of the Institute for Employment Research (IAB) in Germany allows such an analysis based on data for 2010 and 2012. The results of an econometric analysis show that a high share of high qualified women and a mixed gender composition of the management board are positively correlated to eco-innovation activities. Furthermore, the results confirm that export-oriented firms are more likely to innovate, firms characterized by an over-aging of the staff innovate less and a higher competition pressure leads to more innovations." (Author's abstract, IAB-Doku) ((en))
    JEL: C35 J16 Q55
  12. By: Duc Anh Dang
    Abstract: This paper evaluates the impact of Chinese import penetration on the innovation of Vietnamese manufacturing firms from 2011 to 2015, exploiting variations in import exposure by industry specialization and instrumenting for Chinese import penetration using Chinese global exports. Contrary to the existing literature, the paper finds no systematic evidence that rising imports from China make domestic firms adopt new technologies or innovations in their products.
    Date: 2017

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