nep-sbm New Economics Papers
on Small Business Management
Issue of 2017‒10‒01
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The visible hand of cluster policy makers: An analysis of Aerospace Valley (2006-2015) using a place-based network methodology By Delio Lucena Piquero; Jerome Vicente
  2. Corruption and Firm Financial Performance: New Evidence from Vietnam By Huong Vu Van; Tuyen Quang Tran; Tuan Van Nguyen; Lim Steven
  3. Business performance and angels presence: a fresh look from France 2008–2011 By Nadine Levratto; Luc Tessier; Cécile Fonrouge
  4. The Number of Bank Relationships and Bank Lending to New Firms: Evidence from firm-level data in Japan By OGANE Yuta
  5. "Moderating Business Environment Influence on Individual Entrepreneurial Competence and Entrepreneurial Orientation Toward Business Performance" By Giriati
  6. The returns to entrepreneurship: Evidence from matched person-firm data By Raknerud, Arvid; van Praag, Mirjam
  7. Network-Mediated Knowledge Spillovers: A Cross-Country Comparative Analysis of Information Security Innovations By Lee Branstetter; Neil Gandal; Nadav Kuniesky
  8. Industry in Britain - An Atlas By Sandra Bernick; Richard Davies; Anna Valero
  9. Optimal Financing for R&D-Intensive Firms By Richard T. Thakor; Andrew W. Lo
  10. Employee representation in japanese family and non-family SMEs By Matsuura, Tsukasa; Noda, Tomohiko
  11. Do Non-Compete Covenants Influence State Startup Activity? Evidence from the Michigan Experiment By Carlino, Gerald A.
  12. Public Support to Business R&D and the Economic Crisis: Spanish Evidence By Barajas, Ascensión; Huergo, Elena; Moreno, Lourdes
  13. Social Enterprises and their Eco-systems : A European mapping report By Nadine Richez-Battesti; Francesca Petrella

  1. By: Delio Lucena Piquero; Jerome Vicente
    Abstract: The paper focuses on cluster policies with particular attention to the role of R&D collaborative incentives in the structuring of knowledge networks in clusters. We disentangle the main network failures in regional innovation systems, and discuss the selection procedures designed by policy makers to enhance the production of innovation outputs. We draw evidence from the French Aerospace Valley cluster from 2006 to 2015. The empirical analysis relies on a dataset of 248 granted research consortia, from which we build 4-cohorts knowledge networks enable us evidencing the evolving structural properties of the cluster over time. We suggest avoiding the bias and limitations of 1 and 2-mode network analysis by developing an original place- based network methodology that emphasizes on structural equivalence and groups behaviors. We discuss the results focusing on the convergence degree between the network statistical findings and the policy makersÕ objectives. Finally, the methodology allows us identifying who are the agents of the structural and technological changes observed during the period.
    Keywords: Cluster policy; Networks; Collaborative incentives; Groups behaviors; Aerospace Valley
    JEL: D85 O25 O30 R10
    Date: 2017–09
  2. By: Huong Vu Van (Academy of Finance, Hanoi); Tuyen Quang Tran (University of Economics and Business, Vietnam National University, Hanoi); Tuan Van Nguyen (University of Dalat, Vietnam); Lim Steven (University of Waikato, New Zealand)
    Abstract: Using a nationwide survey of provincial institutional quality and a sample of private manufacturing small and medium scale enterprises (the SMEs), this paper is the first to examine the effects of corruption on financial performance of the Vietnamese private SMEs. Interestingly, contrary to previous findings, the study finds that corruption as measured by a dummy variable does not affect firms’ financial performance after controlling for heterogeneity, simultaneity and dynamic endogeneity. However, we find that the intensity of bribe and many types of corruption have negative impacts on firms’ financial performance. Thus, a typical approach using only a dummy variable of bribe might not adequately evaluate the impact of bribe intensity or even ignored negative impacts of some types of bribe on firms’ financial performance. Our findings imply that anti-corruption measures are necessary to the development of the Vietnamese private SMEs.
    Keywords: Corruption; financial performance; SMEs; institutional quality; Vietnam
    Date: 2017
  3. By: Nadine Levratto (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Luc Tessier (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Cécile Fonrouge (IRG - Institut de Recherche en Gestion - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12)
    Abstract: Business angels enjoy a strong reputation for being more efficient than other investors among policy makers, practitioners, and scholars. However, due to the limited availability of specific financial data, previous research has barely assessed the impact of angels on companies’ performance. This paper seeks to bridge this gap by providing evidence from a unique dataset made up of 432 angel-backed French companies which are compared to two control groups, one randomly selected and another one consisting of similar enterprises. This double comparison process enables us to purge our analysis of structural effect and to demonstrate the importance of the methodology in generating the sample. Indeed, the results we obtain significantly differ depending on the control group. Our results show that the positive influence of angels depends on the condition of the comparison. The set of BA-backed companies is more likely to exhibit superior performance when it is compared to a random sample whereas the companies’ performance is either identical or worse when it is compared to a sample composed of k-nearest neighbors. In addition, using a quantile regression technique makes it possible to differentiate the effect of business angels based on the distribution of the value of the growth rate.
    Keywords: Business angels,Performance / performance
    Date: 2017–01–25
  4. By: OGANE Yuta
    Abstract: This paper examines how the number of bank relationships affects bank lending to new firms using a unique firm-level data set of more than 1,000 small and medium-sized enterprises (SMEs) incorporated in Japan between April 2003 and June 2008. We employ a two-stage least squares (2SLS) estimator—one of the instrumental variables estimators—to address the possible bias caused by omitted variables and/or reverse causality. We find that an increase in the number of bank relationships increases long-term lending to new firms. We also find that this rise may boost total lending to such firms. Furthermore, the findings in this paper suggest that the most significant difference in the effects of the number of bank relationships on bank lending is the difference between a single bank relationship and multiple bank relationships. We show that these results are unlikely to be driven by omitted variables and/or reverse causality.
    Date: 2017–09
  5. By: Giriati (Faculty of Economics and Business, Universitas Tanjunpura, Indonesia)
    Abstract: "Objective – This article aims to analyze the influence of moderating hostile and dynamic business environment variables on Individual Entrepreneurial Competence (IEC) and Entrepreneurial Orientation (EO) on Business Performance. Methodology/Technique – This study is conducted on Credit Union (microfinance), especially in West Kalimantan, using the Structural Equation Model technique. Findings – The results of the analysis show that the Individual Entrepreneurial Competence variables and Entrepreneurial Orientation have a positive influence on Business Performance. Meanwhile, Individual Entrepreneurial Competence and Entrepreneurial Orientation have a positive and greater influence on Business Performance in hostile environments. On the other hand, Individual Entrepreneurial Competence has a positive effect on Business Performance, but tend to be weak on dynamic environment. The Entrepreneurial Orientation has a positive and stronger impact on Business Performance in a dynamic environment. Novelty – The study helps to develop business environment for nurturing entrepreneurship."
    Keywords: "Individual Entrepreneurial Competence; Entrepreneurial Orientation; Hostile versus Dynamic; Business Performance."
    JEL: I21 L25 L26
    Date: 2017–07–08
  6. By: Raknerud, Arvid; van Praag, Mirjam
    Abstract: Empirical studies show low pecuniary returns of switching from wage employment to entrepreneurship. We reconsider the pecuniary gains of this switching by employing a two-stage procedure, where the randomness in the timing of inheritance transfers is used as an exclusion restriction to identify causal effects. The model is estimated on data covering the whole Norwegian population of individuals matched to the entire population of firms established in the period 2002-2011. The results indicate that the average returns to entrepreneurship are significantly negative for individuals entering entrepreneurship through self-employment and modest, but significantly positive, for incorporated startups.
    Keywords: Earnings distribution; Matched person- firm data; Random effects probit model; Returns to entrepreneurship; Self-employment
    JEL: C23 G32 J31 L26
    Date: 2017–09
  7. By: Lee Branstetter; Neil Gandal; Nadav Kuniesky
    Abstract: A large and growing literature has used patent and patent citation data to measure knowledge spillovers across inventions and organizations, but relatively few papers in this literature have explicitly considered the collaboration networks formed by inventors as a mechanism for shaping and transmitting these knowledge flows. This paper utilizes an approach developed by Fershtman and Gandal (2011) to examine the incidence and nature of knowledge flows mediated by the collaboration networks of inventors active in the information security industry. This is an industry in which a number of nations outside the United States, including Israel, have emerged as important centers of innovation. Using data from U.S. PTO patent grants in information security, we find that the quality of Israeli information security inventions is systematically linked to the structure of the collaborative network generated by Israeli inventors in this sector. Using the Fershtman and Gandal (2011) model, this suggests that there are knowledge spillovers from the network. In some other nations, invention quality is less closely linked to the collaboration networks of inventors. This research highlights the importance of direct interaction among inventors as a conduit for flows of frontier scientific knowledge.
    JEL: O31 O33 O57
    Date: 2017–09
  8. By: Sandra Bernick; Richard Davies; Anna Valero
    Abstract: Living near a productive company can have considerable economic benefits. It means the chance of well-paid jobs, creates opportunities for suppliers of goods and services, and can be a boost to local retailers. This common-sense economic logic explains why policymakers consistently worry about the uneven spread of industry in Britain and, from time to time, conclude that it inefficient and unfair and that something new must be done. Now is one of those moments, with the government shortly set to launch a new "Industrial Strategy" which looks likely to include a new approach to regional policy. But while there is agreement across Britain's political parties that the distribution of industry is a problem, little new analysis on the location and performance of British firms with an explicitly regional focus has been published recently. This paper, part of ongoing work on the economics of British industry at the LSE's Centre for Economic Performance, starts to fill that gap. We present maps and charts setting out the latest data on firm location, together with geographic measures of employment, productivity, and innovation. Ten stylised facts emerge from our analysis, many of which challenge the prevailing wisdom: Finance is far less London-centric than the creative industries; the South-East is not the country's productivity engine, rather a band stretching west from the capital towards Bristol is; the East of England stands out in terms of R&D intensity; and in addition to the North-South divide, disparities between coastal and inland areas are concerning. This clarification of the starting point is just the first step in a data-driven approach to industrial policy. Bigger questions—in particular analysis of the ideal spread of industry that policy should target, and the best tools to get there—loom large and also require new analysis.
    Keywords: productivity, business performance, regional disparities, UK economy, industrial strategy
    JEL: R12 O25 O52
    Date: 2017–09
  9. By: Richard T. Thakor; Andrew W. Lo
    Abstract: We develop a theory of optimal financing for R&D-intensive firms that uses their unique features—large capital outlays, long gestation periods, high upside, and low probabilities of R&D success—that explains three prominent stylized facts about these firms: their relatively low use of debt, large cash balances, and underinvestment in R&D. The model relies on the interaction of the unique features of R&D-intensive firms with three key frictions: adverse selection about R&D viability, asymmetric information about the upside potential of R&D, and moral hazard from risk shifting. We establish the optimal pecking order of securities with direct market financing. Using a tradeoff between tax benefits and the costs of risk shifting for debt, we establish conditions under which the firm uses an all-equity capital structure and firms raise enough financing to carry excess cash. A firm may use a limited amount of debt if it has pledgeable assets in place. However, market financing still leaves potentially valuable R&D investments unfunded. We then use a mechanism design approach to explore the potential of intermediated financing, with a binding precommitment by firm insiders to make costly ex post payouts. A mechanism consisting of put options can be used in combination with equity to eliminate underinvestment in R&D relative to the direct market financing outcome. This optimal intermediary-assisted mechanism consists of bilateral “insurance” contracts, with investors offering firms insurance against R&D failure and firms offering investors insurance against very high R&D payoffs not being realized.
    JEL: D82 D83 G31 G32 G34 O31 O32
    Date: 2017–09
  10. By: Matsuura, Tsukasa; Noda, Tomohiko
    Abstract: This paper analyzes differences in the effects of employee representations between family firms and non-family firms. First, managers from non-family firms have a more favorable response towards unions as organizations than managers from family firms. Managers from family firms tend to regard unions as harmful to their management, because unions may bring in outsiders, to the detriment of the management. Second, voice-oriented employee associations tend to exist more in non-family firms than in family ones. Third, these associations have a voice effect suppressing turnover rates in non-family firms, though not in family ones.
    Keywords: Family Firm, Employee Representation, Industrial Rotations, Exit-Voice Model
    JEL: J51 J53 L20
    Date: 2017–09–23
  11. By: Carlino, Gerald A. (Federal Reserve Bank of Philadelphia)
    Abstract: This paper examines how the enforceability of employee non-compete agreements affects the entry of new establishments and jobs created by these new firms. We use a panel of startup activity for the U.S. states for the period 1977 to 2013. We exploit Michigan’s inadvertent policy reversal in 1985 that transformed the state from a non-enforcing to an enforcing state as a quasi-natural experiment to estimate the causal effect of enforcement on startup activity. Our findings offer little support for the widely held view that enforcement of non-compete agreements negatively affects the entry rate of new firms or the rate of jobs created by new firms. In a difference-in-difference analysis, we find that a 10 percent increase in enforcement led to an increase of about 1 percent to about 3 percent in the startup job creation rate in Michigan and, in general, to essentially no change in the startup entry rate. Extending our analysis to consider the effect of increased enforcement on patent activity, we find that enforcement had differential effects across technological classifications. Importantly, increased enforcement had a positive and significant effect on the number of quality-adjusted mechanical patents in Michigan, the most important patenting classification in that state.
    Keywords: Startup activity; non-compete agreements; regional economic growth
    JEL: O30 O38 R11
    Date: 2017–09–21
  12. By: Barajas, Ascensión; Huergo, Elena; Moreno, Lourdes
    Abstract: The objective of the present study is to compare the effect of public support of business R&D on technological inputs and outputs before and during the recent economic crisis. To do so, we use information provided by the Centre for the Development for Industrial Technology (CDTI), which is the main public agency in Spain that grants financial aid of its own to companies for the execution of R&D projects. Specifically, we consider firms supported through CDTI programmes for periods the 2002-2005 and 2010-2012. Impact assessment is conducted using "matching" techniques. Our preliminary results suggest that, during the crisis, public support continued to have positive effects on the resources devoted to R&D activities, and also increased the technological outputs obtained from these resources.
    Keywords: Impact assessment, Economic crisis, Public aid, Business R&D
    JEL: H81 L2 O3
    Date: 2017–09–21
  13. By: Nadine Richez-Battesti (LEST - Laboratoire d'économie et de sociologie du travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique); Francesca Petrella (LEST - Laboratoire d'économie et de sociologie du travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This summary presents the main elements of the report on ‘Mapping social enterprises’ produced in 2016, on the basis of a previous report produced in 2014 for the European Commission. Nadine Richez-Battesti and Francesca Petrella have been in charge of the revision process of this report, together with the contribution of national stakeholders through an online and direct consultation undertaken over the months of April, May and June 2016. This report is part of a broader mapping of social enterprises and their eco-systems in Europe, based on the concept of social enterprise as presented in the Commission's Social Business Initiative in 2011. Focusing on France, this report also explains the national use of other broader concepts, such as the social and solidarity economy and its relation to the social enterprise concept of the SBI.
    Keywords: Social enterprises
    Date: 2016

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