nep-sbm New Economics Papers
on Small Business Management
Issue of 2017‒04‒23
seventeen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The Succession and Business Transformation of Taiwanese SMEs to Reactivate the Entrepreneurial Spirit By Wei, Tsung-Che
  2. Discrimination, social capital, and financial constraints: The case of Viet Nam By Tho Pham; Oleksandr Talavera
  3. R&D heterogeneity and implications for growth By Sigurd Galaasen; Alfonso Irarrazabal
  4. Social networks, geographic proximity, and firm performance in Viet Nam By Emma Howard
  5. Women Directors' Compensation and Firm Performance of an Emerging Economy: India By Rakesh Radav
  6. The Productivity Advantage of Serial Entrepreneurs By Kathryn L. Shaw; Anders Sørensen
  7. Technology and Knowledge Transfers in Production Networks: Case Study on Philippine Food Manufacturing Firms By Rosellon, Maureen Ane D.; Del Prado, Fatima Lourdes E.
  8. Drivers of productivity in Vietnamese SMEs: The role of management standards and innovation By Elisa Calza; Micheline Goedhuys; Neda Trifkovic
  9. Dynamic Entrepreneurship: On the Performance of U.S. Research Joint Ventures By Bray, Jeremy; Link, Albert
  10. Firm Size Distribution, Production Efficiency, and Returns to Scale: A Stochastic Frontier Approach By Hien Thu Pham; Shino Takayama
  11. How Do Financial Institutions and Other Management Supporters Contribute to the Improvement of Business Conditions of Small and Medium Enterprises? Based on the Survey on the Aftermath of the SME Financing Facilitation Act (Japanese) By YAMORI Nobuyoshi
  12. From start-up to scale-up: examining public policies for the financing of high-growth ventures By Gilles Duruflé; Thomas Hellmann; Karen E. Wilson
  13. An empirical study of firms’ absorptive capacity and export diversification By Wallin, Tina
  14. Stratégies de financement des PME et des entrepreneurs du tourisme By OCDE
  15. Access to financial intermediaries and external capital acquisition By Backman , Mikaela; Wallin, Tina
  16. The employment impact of microcredit program participation in Bangladesh: Evidence from a longitudinal household survey By Hussain, A.K.M. Ghulam; Nargis, Nigar; Ashiquzzaman, S.M.; Khalil, Fahad
  17. Entrepreneurial Motivation and Business Performance: Evidence from a French Microfinance Institution By Renaud Bourlès; Anastasia Cozarenco

  1. By: Wei, Tsung-Che
    Abstract: Taiwanese SMEs (small and medium enterprises) have been the source of creativity and the key driving force of economic growth early on in the 1960s, key partners in supply chain and industry clusters later, and recently focal point of local economy, social value, and dreams for young generation. However, based on the “White Paper on Small and Medium Enterprises in Taiwan,†in recent five years, share of SMEs in existence over 20 years was in the range of 21% to 23%, far below the average 35% of large enterprises. This shows the business succession / transition remains a major challenge to SMEs as going concerns. Further, compared to large enterprises, SMEs in existence over 20 years suffered significant sales decline and “the crisis of the elderly age†as their firstgeneration entrepreneurs got into old age and lost their vitality and creativity. It has become an important issue for sustainable development of SMEs to reactivate the entrepreneurial spirit, combined with sound “second-generation succession†and business transformation strategy. In this paper, we use the two key factors of succession and business transformation to analyze how the Taiwanese SMEs to reactivate the entrepreneurial Spirit. The research results provide some policy implications for Succession and transformation of Taiwanese SMEs. These points are suggested as: (1) promote market-oriented business management courses in colleges and universities to cultivate curiosity and creative thinking of potential new generation of successors;(2) form professional succession team in response to new business opportunities; (3) integrate existing knowledge exchange platforms for succession to provide customized mechanisms of knowledge sharing and exchange services required for different types of succession; (4) provide succession planning adviser or match professional managers to succession needs for SMEs' sustainable development as going concerns; (5) encourage new generation successors of SMEs to obtain innovation awards that could reactivate the entrepreneurial spirit; (6) grasp the opportunity of succession and transformation to guide SMEs towards institutionalized management; (7) establish SME succession and transformation follow-up service mechanism linking research institutions, universities and private sector professional consulting companies to meet long term counseling needs for SME succession and transformation; (8) strengthen cross-industry cooperation mechanism for SMEs’ sustainable development in order to guide the SME succession and transformation toward the direction of “professionalism,†“branding,†and “internationalization.â€
    Keywords: Crisis of the Elderly Age with Taiwanese SMEs, succession, business transformation, second Entrepreneurial Spirit, Crisis of the Elderly Age with Taiwanese SMEs, succession, business transformation, second Entrepreneurial Spirit
    Date: 2017–02
  2. By: Tho Pham; Oleksandr Talavera
    Abstract: This paper examines the relationship between gender, social capital, and access to finance of micro, small, and medium enterprises in the manufacturing sector in Viet Nam. Our dataset is from the 2011, 2013, and 2015 waves of the Micro, Small, and Medium Enterprise Survey in Viet Nam. Using the Heckman technique to control for sample selection bias, the data do not provide evidence for discrimination against female-owned enterprises in the formal lending market. Specifically, female entrepreneurs have a higher probability of getting a loan and they pay lower interest rates in comparison with male entrepreneurs. No discrimination in formal credit markets may arise from the preference for informal loans over formal loans—that is, entrepreneurs tend to borrow informal loans before applying for formal ones. Further analysis shows that social capital could facilitate loan applications: firms that have a closer relationship with government officials and other business people can get loans of longer duration.
    Date: 2017
  3. By: Sigurd Galaasen; Alfonso Irarrazabal
    Abstract: This paper quantifies the determinants of R&D investment heterogeneity and its implications for growth. We estimate a Schumpeterian growth model with heterogeneous firms, à la Lentz and Mortensen (2008), in which firms differ with respect to innovation efficiency. Using observations on size, productivity, and R&D expenditures from a panel of Norwegian manufacturing firms we find that the model has a good fit to the data. In particular, it fits the distribution of R&D investment (mean, dispersion and skewness) as well as the negative correlation between research intensity and size. Moreover, the model generates firm-level investment responses to R&D subsidies that are in line with micro evidence from a natural experiment. The model estimates imply that a large part of aggregate productivity growth (72 percent) is the result of the market directing R&D resources to the more innovative firms. Finally, we study the link between firm heterogeneity and R&D subsidies, and show that the growth effects of subsidies depend crucially on how the policy influences the equilibrium distribution of firms. We address these questions by estimating an equilibrium model of firm-level innovation and growth. We adopt the micro-macro framework growth in Klette and Kortum (2004). Using observations on size, productivity and R&D expenditures from a panel of Norwegian manufacturing firms, we estimate an extended version of the Klette-Kortum model, developed in Lentz and Mortensen (2008). The model estimates imply that a large part of aggregate productivity growth (72 percent) is the result of the market directing R&D resources to the more innovative firms. Using the estimated model we also show that the growth effects of R&D subsidies depend crucially on how the policy influences the equilibrium distribution of firms.
    Keywords: Norway, Growth, General equilibrium modeling
    Date: 2016–07–04
  4. By: Emma Howard
    Abstract: This paper uses panel data to assess the relative importance of social networks and geographic proximity to micro, small, and medium enterprises in Viet Nam. The results suggest that a larger social network, and hiring employees mainly through social networks, are both correlated with higher value added per worker. The number of government officials and civil servants in a firm’s network emerges as particularly important. When the quality of contacts is controlled for, firms with tighter social networks have, on average, higher value added per worker. The analysis of spatial networks reveals that firms with a lower percentage of customers and suppliers in the same district actually have higher value added per worker. The results suggest that for micro, small, and medium firms in Viet Nam, strong social networks are much more important than geographic proximity.
    Date: 2017
  5. By: Rakesh Radav (University of Latvia, Department of Management)
    Abstract: This probably maiden study for Indian financial market on executive compensation uses novel approach by using data of women director's compensation of firm listed at Bombay stock exchange (BSE)India. The methodology adopted for this study is multivariate regression method; this method is common for the research on compensation, on the basis of the survey of literature which treats total compensation paid to the director as dependent variable and firm performance as independent variable. This study adds to the literature one more equation that is impact of firm performance (dependent variable) on compensation (independent variable). Further by using the holistic combination which is rare in the literature of executivecompensation, both measures of firm performance mainly accounting measures (EPS, ROCE and RONW) and market measures (P/E, P/BV) gives comprehensive view of firm performance in relation to compensation. The control variables mainly net sales, R and D and total assets are drawn from literature often known as instrumental variable approach in econometrics. The boundary condition for the sample is BSE-500 firms listed at Bombay stock exchange out of this BSE-500 firms sample of 407 firms are used for study.
    Keywords: Corporate governance, emerging economy, executive compensation, firm performance, India, Indian firms, women director
    JEL: G34
    Date: 2017–03
  6. By: Kathryn L. Shaw; Anders Sørensen
    Abstract: Serial entrepreneurs, who open more than one business, are found to have higher sales and higher productivity than novice entrepreneurs, who open one business. Using panel data on entrepreneurs and their firms from Denmark for 2001-2013, the serial entrepreneur has 67% higher sales than the novice, but also opens firms that are larger in terms of the initial capital and labor, and thus is 39% more productive. There are subsets of firms that perform especially well – serial entrepreneurs that hold a portfolio of overlapping ongoing firms perform the best, as do those that open as limited liability firm rather than proprietorships. Female serial entrepreneurs do as well as male serial entrepreneurs relative to the performance of novices of their own genders. The second firms of the serial entrepreneurs also stay in business longer than the first (and only) firms of the novices.
    JEL: G24 J24 L26 M13
    Date: 2017–04
  7. By: Rosellon, Maureen Ane D.; Del Prado, Fatima Lourdes E.
    Abstract: This paper investigates firm-to-firm technology and knowledge sharing in firms from the food manufacturing sector. Traditionally driven by secret recipes and family-grounded procedures, food processing firms are naturally unwilling and indisposed to embrace collaborative undertaking and develop external ties due to perceived risks of leakage of company specific assets. This paper attempts to document the practical experiences of two manufacturing firms and their views on sharing technology and knowledge to their partners in the production network.
    Keywords: Philippines, technology transfer, knowledge transfer, production networks, knowledge sharing, food manufacturing
    Date: 2017
  8. By: Elisa Calza; Micheline Goedhuys; Neda Trifkovic
    Abstract: Using a rich panel dataset of SMEs active in the manufacturing sector in Viet Nam, this paper investigates the drivers of firm productivity, focusing on the role played by international management standards certification. We develop and test the hypothesis that, controlling for technological innovation (product and process) and other variables related to technological capabilities, international standards are still conducive to higher productivity, through improved management practices associated with their adoption. In line with the requirement of continuous improvement implied by most international standards, the main findings show that the possession of an internationally recognized standard certificate leads to significant productivity premium. We further investigate the relationship between technological innovation and standard adoption. We find that the likelihood of certificate adoption is higher when firms implement technological innovations and that the effect of certification on productivity is particularly strong for firms with technological innovation.
    Date: 2017
  9. By: Bray, Jeremy (University of North Carolina at Greensboro, Department of Economics); Link, Albert (University of North Carolina at Greensboro, Department of Economics)
    Abstract: In this paper we present descriptive findings on the research success of U.S. research joint ventures (RJVs). Using survey-based data of a sample of U.S. RJVs, we build on the theory of dynamic entrepreneurship to develop an empirical model of cross-RJV differences in performance. We find that ventures that include a university as a research member are relatively more successful, measured in terms of research goals completed, than ventures that do not. We also find that those RJVs that have a longer research duration and that are led by a firm with prior RJV experience are similarly more successful. Our empirical analysis also shows that membership size is not a significant covariate with research success. We conclude the paper with a call for additional research and with a policy statement that is based on our finding of a positive and significant relationship between university membership and RJV success.
    Keywords: research joint venture (RJV); National Cooperative Research Act (NCRA); R&D; universities; innovation; networks
    JEL: O31 O32 O38
    Date: 2017–04–21
  10. By: Hien Thu Pham (School of Economics, The University of Queensland); Shino Takayama (School of Economics, The University of Queensland)
    Abstract: This paper empirically investigates the relationship between firm size, production efficiency, and returns to scale. Using a recently developed stochastic frontier approach and data from Vietnam, our analysis shows that across all of the sectors we consider, production efficiency is most variable among middle-sized firms, with these firms across all sectors tending to have the lowest production efficiency. While most firms across different sized groups show constant returns-to-scale technologies, our analysis using Spearman coefficients shows that there is a significant difference in technologies and this difference varies substantially across size groups in all sectors. Furthermore, we show that the least-efficient size also differs across sectors. Although our analysis is a snapshot of the Vietnamese manufacturing industry, the diverse production efficiencies in the middle-sized groups can be thought of as a risk that small-sized firms would face in expanding their business.
    Keywords: Firm size distribution, Missing middle, Productivity, Efficiency, Stochastic frontier.
    JEL: D21 D22 L25
    Date: 2017–04–19
  11. By: YAMORI Nobuyoshi
    Abstract: The important role of private financial institutions in supporting poor performing small and medium enterprises (SMEs) to undergo drastic reform is widely recognized, and since the enforcement of the SME Financing Facilitation Act in 2009, changes in loan conditions have been used frequently as a method of financial support. However, some critically argue that since financial institutions are responding frankly to requests for changes in the repayment conditions but not seriously working on supporting SMEs in their business revitalization, the changes in the loan conditions have not become a trigger for fundamental reform of the companies' business, and are used only to postpone the problem. Also, others argue that there is a moral hazard on the SME side because SMEs can avoid short-term financing difficulties and are not serious about working on reform. However, external observers have had limited access to information on the support posture of financial institutions and the reform efforts of SMEs after changes in the loan terms. Therefore, in this paper, using the Survey on the Aftermath of the SME Financing Facilitation Act (conducted by RIETI in October 2014), we analyze how the formulation of management improvement plans and the management support attitudes of financial institutions and other management supporters affect the recovery of SMEs' business conditions and examine what forms of management support will lead to the improvement of these conditions.
    Date: 2017–03
  12. By: Gilles Duruflé; Thomas Hellmann; Karen E. Wilson
    Abstract: We examine the challenge entrepreneurial companies face in going beyond the start-up phase and growing into large successful companies. We examine the long-term financing of these so-called scale-up companies, focusing on the United States, Europe and Canada. We first provide a conceptual framework for understanding the challenges of financing scale-ups. We then show some data about the various aspects of financing scale-ups in the US, Europe and Canada. Finally we raise the question of long-term public policies to support the creation of a better scale-up environment.
    Date: 2017–04
  13. By: Wallin, Tina (Centre for Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School, Sweden)
    Abstract: The purpose of this paper is to study the firms’ internal knowledge in combination with the external knowledge diversity in their region to examine their joint relation to export diversification. Using a data set of the full population of Swedish manufacturing exporters for the period 2003-2013, allows for identifying when firms introduce new products on the export market. The results indicate that firms in the medium-high tech and the medium-low tech manufacturing sectors only benefit from a larger external knowledge diversity if they themselves have some internal knowledge increasing their absorptive capacity. Changing spatial scale or increasing the time lag yields mostly the same results, but extending the external knowledge diversity to include all types of education subjects does not. This further supports the suggested importance of an absorptive capacity to facilitate the acquisition, assimilation and usage of related external knowledge in producing new products.
    Keywords: new product; export diversification; absorptive capacity; related knowledge
    JEL: C33 D22 D83 F14 J24 O31
    Date: 2017–04–06
  14. By: OCDE
    Abstract: L’accès aux financements est un sujet essentiel pour encourager le développement des PME, l’entrepreneuriat et instaurer un secteur du tourisme compétitif, innovant et durable. Ce rapport examine donc les mécanismes permettant d’améliorer l’accès aux financements pour les PME et les entrepreneurs du tourisme à chaque étape du cycle de vie des entreprises, en s’attachant plus particulièrement aux micro- et petites entreprises. Il aborde aussi les questions clés et les considérations d’ordre politique qui favorisent l’amélioration des conditions d’accès, élargissent la palette des instruments financiers disponibles et encouragent le recours à d’autres dispositifs. Dans un certain nombre de pays, des études de cas en matière de financement soutiennent les discussions des politiques et fournissent des informations techniques. Ce rapport tient compte des points de vue des décideurs politiques, des organismes et institutions de financement et du secteur du tourisme, et a bénéficié d'importantes contributions de la part de 21 pays: Allemagne, Autriche, Canada, Chili, Croatie, Danemark, Égypte, Fédération de Russie, France, Grèce, Hongrie, Japon, Mexique, Norvège, Nouvelle-Zélande, Pays-Bas, Philippines, Portugal, Slovénie, Suède et Suisse.
    Date: 2017–04–22
  15. By: Backman , Mikaela (Centre for Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School, Sweden); Wallin, Tina (Centre for Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School, Sweden)
    Abstract: We examine whether low access to financial intermediaries works as an obstacle acquiring financial capital for Swedish firms by using information from the Community Innovation Survey indicating whether firms perceive the acquisition of external capital to be difficult. This perception is explained by the distance to the firms’ nearest financial intermediaries and their total local supply. The results indicate that the distance to banks is related to a larger problem of obtaining external financial capital in rural areas.
    Keywords: financial capital; bank offices; geographical distance; Community Innovation Survey
    JEL: D53 G21 G23 L25 O31
    Date: 2017–04–06
  16. By: Hussain, A.K.M. Ghulam; Nargis, Nigar; Ashiquzzaman, S.M.; Khalil, Fahad
    Abstract: Microcredit program, originating in Bangladesh in the late 1970s, has played an important role to meet the financing needs of the impoverished communities around the world. While the successes and failures of microcredit in lifting the poor out of poverty have been recorded in a wide array of literature, the employment outcome of participating in a microcredit program as a pathway to poverty reduction has been studied much less. Using two waves of longitudinal data on over 2000 households, we examine the employment impact of microcredit program in Bangladesh during 1998-2004. The longitudinal nature of data allows us fixed effects estimation of the effect of microcredit program participation on self-employment hours and household labor income isolating the biases that may result from non-random program placement, censoring in self-employment work hours and income data, and non-random sample selection of households or individuals as participants who already have entrepreneurial skills or pre-existing household conditions favourable to self-employment activities. The fixed effects estimate shows that households that participate in microcredit program work on average 245 hours longer in self-employment activities and earn 9.4% higher labor income than non-participant households. These extra hours are equivalent to around 7 weeks of employment for a person. The income effect of microcredit program participation is more discernible on household labor income than on total household income due to lack of direct link of microcredit program with non-labor income sources such as remittance. The participating households at the bottom of the income distribution appear to have gained more than those at the upper end suggesting equalizing effect of microcredit program participation over and above the positive effect on employment and income growth. Thus microcredit program in Bangladesh has succeeded in providing employment generating capacities to participants and raised the potential for income growth that contributed to poverty reduction.
    Keywords: microcredit,self-employment,labor income,poverty
    JEL: I32 J21 J22 J43 J46
    Date: 2017
  17. By: Renaud Bourlès (Aix-Marseille Univ. (Aix-Marseille School of Economics), CNRS, EHESS and Centrale Marseille); Anastasia Cozarenco (Montpellier Business School, Montpellier Research in Management, and Centre for European Research in Microfinance (CERMi))
    Abstract: This article examines the link between entrepreneurial motivation and business performance in the French microfinance context. Using hand-collected data on business microcredits from a Microfinance Institution (MFI), we provide an indirect measure of entrepreneurial success through loan repayment performance. Controlling for the endogeneity of entrepreneurial motivation in a bivariate probit model, we find that "necessity entrepreneurs" are more likely to have difficulty repaying their microcredits than "opportunity entrepreneurs". However, type of motivation does not appear to make a difference to business survival. We build a stylized model to develop formal arguments supporting this outcome. We test for the robustness of our results using parametric duration models, and show that necessity entrepreneurs experience difficulties in loan repayment earlier than their opportunity counterparts, corroborating our initial findings.
    Keywords: opportunity and necessity entrepreneurs, business microcredit, loan repayment, business survival
    JEL: C30 C41 G21 L26 M13
    Date: 2017–01

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