nep-sbm New Economics Papers
on Small Business Management
Issue of 2017‒10‒15
sixteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Localized Knowledge Spillovers: Evidence from the Spatial Clustering of R&D Labs and Patent Citations By Buzard, Kristy; Carlino, Gerald A.; Hunt, Robert M.; Carr, Jake; Smith, Tony E.
  2. Regional Effects of Publicly Sponsored R&D Grants on SME Performance By Gustavsson Tingvall, Patrik; Videnord, Josefin
  3. Older and Slower: The Startup Deficit’s Lasting Effects on Aggregate Productivity Growth By Titan Alon; David Berger; Robert Dent; Benjamin Pugsley
  4. Credit Rationing and Firm Exports: Micro Evidence from SMEs in China By Cheng, Dong; Tan, Yong; Yu, Jian
  5. Export innovation: The role of new imported inputs and multinationality By Castellani, Davide; Fassio, Claudio
  6. Is the demand-pull driver equally crucial for product vs process innovation? By Dawid, Herbert; Pellegrino, Gabriele; Vivarelli, Marco
  7. Mobile Phone Innovation and Entrepreneurship in Sub-Saharan Africa By Asongu, Simplice; Biekpe, Nicholas
  8. Firm heterogeneity and aggregate business services exports : Micro evidence from Belgium, France, Germany and Spain By Andrea Ariu; Elena Biewen; Sven Blank; Guillaume Gaulier; María Jesus González,; Philipp Meinen,; Daniel Mirza; Cesar Martín,; Patry Tello
  9. The need to customise innovation indicators in developing countries By Iizuka, Michiko; Hollanders, Hugo
  10. R&D Subsidies and Firms’ Cost of Debt By Hottenrott, Hanna; Demeulemeester, Sarah
  11. Innovation and industrial dynamics: challenges for the next decade By Pietro Moncada-Paterno-Castello; Nicola Grassano; Antonio Vezzani
  12. Business Cycles and Start-ups across Industries: an Empirical Analysis for Germany By Alexander Konon; Michael Fritsch; Alexander Kritikos
  13. Implementing smart specialisation - thematic platform on industrial modernisation By Fatime Barbara Hegyi; Ruslan Rakhmatullin
  14. 'Distance from the core' and new export survival: Evidence from Chilean exporters By Daniel Goya; Andrés Zahler
  15. The Role of Startups for Local Labor Markets By Carlino, Gerald A.; Drautzburg, Thorsten
  16. Occupational choice of return migrants: Is there a 'Jack-of-all-trades' effect? By Mahe, Clotilde

  1. By: Buzard, Kristy (Syracuse University); Carlino, Gerald A. (Federal Reserve Bank of Philadelphia); Hunt, Robert M. (Federal Reserve Bank of Philadelphia); Carr, Jake (The Ohio State University); Smith, Tony E. (University of Pennsylvania)
    Abstract: Patent citations are a commonly used indicator of knowledge spillovers among inventors, while clusters of research and development labs are locations in which knowledge spillovers are particularly likely to occur. In this paper, we assign patents and citations to newly defined clusters of American R&D labs to capture the geographic extent of knowledge spillovers. Our tests show that the localization of knowledge spillovers, as measured via patent citations, is strongest at small spatial scales and diminishes rapidly with distance. On average, patents within a cluster are about three to six times more likely to cite an inventor in the same cluster than one in a control group. At the same time, the strength of knowledge spillovers varies widely between clusters. The results are robust to the specification of patent technological categories, the method of citation matching and alternate cluster definitions.
    Keywords: spatial clustering; geographic concentration; R&D labs; localized knowledge spillovers; patent citations
    JEL: O31 R12
    Date: 2017–10–03
  2. By: Gustavsson Tingvall, Patrik (The Ratio Institute); Videnord, Josefin (The Ratio Institite)
    Abstract: This paper explores regional variation in the effects of publicly sponsored R&D grants on SME performance. The results suggest that there is no guarantee that the grants will impact firm growth, either positive or negative. Studying the heterogeneity of the results, positive growth effects are most likely to be found for publicly sponsored R&D grants targeting SMEs located in regions abundant with skilled labor, whereas the opposite is found for SMEs located in regions with a limited supply of skilled workers.
    Keywords: R&D grants; SME; Economic growth; Regional growth; Selective policies
    JEL: H81 O18 O38 O40 R11 R58
    Date: 2017–04–18
  3. By: Titan Alon; David Berger; Robert Dent; Benjamin Pugsley
    Abstract: We investigate the link between declining firm entry, aging incumbent firms and sluggish U.S. productivity growth. We provide a dynamic decomposition framework to characterize the contributions to industry productivity growth across the firm age distribution and apply this framework to the newly developed Revenue-enhanced Longitudinal Business Database (ReLBD). Overall, several key findings emerge: (i) the relationship between firm age and productivity growth is downward sloping and convex; (ii) the magnitudes are substantial and significant but fade quickly, with nearly 2/3 of the effect disappearing after five years and nearly the entire effect disappearing after ten; (iii) the higher productivity growth of young firms is driven nearly exclusively by the forces of selection and reallocation. Our results suggest a cumulative drag on aggregate productivity of 3.1% since 1980. Using an instrumental variables strategy we find a consistent pattern across states/MSAs in the U.S. The patterns are broadly consistent with a standard model of firm dynamics with monopolistic competition.
    JEL: E01 E24
    Date: 2017–09
  4. By: Cheng, Dong; Tan, Yong; Yu, Jian
    Abstract: In this study we examine the effect of credit rationing on export performance for small and medium sized firms in China. We use a detailed firm-level data provided by the Small and Medium-sized Enterprises Dynamic Survey (SMEDS) to conduct this analysis. SMEDS provides firm-specific measures of credit rationing based directly on firm-level responses to the survey rather than indirectly from firm-level financial statements. We find that, at the extensive margin, weak and strong credit rationing reduce SMEs' export probability by 22% and 36%, respectively. At the intensive margin, they decrease SMEs' export values by more than 32% and over 66%, respectively. Different from existing literature, we construct valid firm-level instruments, firm-level housing investments and receivables, for credit rationing rather than using province-level instruments. In addition, credit rationing exhibits heterogeneous impacts on firms with different liquidity ratios, product portfolios, external collateral and capital utilization rates.
    Keywords: SMEs, Strong Credit Rationing, Weak Credit Rationing, Export Performance
    JEL: F10 G20
    Date: 2017–10–12
  5. By: Castellani, Davide (University of Reading); Fassio, Claudio (CIRCLE, Lund University)
    Abstract: This paper focuses on the determinants of export innovation, that is innovation in a firm’s export product portfolio. We argue that this novel measure is an important proxy of the overall competitiveness of exporters. We identify two main factors that contribute to the introduction of export innovations at the firm level: importing new inputs and being part of a multinational group. Based on a sample of more than 14,000 Swedish manufacturing firms over the period 2001-2012, we show that importing new inputs is a key determinant of innovation in exported products, even after controlling for multinationality and a number of other firm characteristics. The effect of new imports is particularly strong for small firms and is mainly due to the import of new intermediate inputs. Being part of a multinational group has instead an ambivalent effect on export innovations of Swedish firms: while small firms acquired by foreign MNEs show a short term reduction in export innovation, this is not true for large firms, which instead increase their export innovation when they establish subsidiaries abroad or become part of a Swedish-owned multinational group.
    Keywords: innovation; importing; exporting; multinational enterprises; Sweden
    JEL: F23 O30
    Date: 2017–10–05
  6. By: Dawid, Herbert (Bielefeld University); Pellegrino, Gabriele (Ecole polytechnique federale de Lausanne); Vivarelli, Marco (UNU-MERIT, Maastricht University, IZA, Bonn, and Universita Cattolica del Sacro Cuore, Institute of Economic Policy, Milano)
    Abstract: While the extant innovation literature has provided extensive evidence of the so-called "demand-pull" effect, the possible diverse impact of demand evolution on product vs process innovation activities has not been yet investigated. This paper develops a formal model predicting a larger inducing impact of past sales in fostering product rather than process innovation. This prediction is then tested through a dynamic microeconometric model, controlling for R&D persistence, sample selection, observed and unobservable individual firm effects and time and sectoral peculiarities. Results are consistent with the model and suggest that an expansionary economic policy may benefit the diffusion of new products or even the emergence of entire new sectors.
    Keywords: technological change, R&D, demand-pull innovation, dynamic two tobit
    JEL: O31 O32
    Date: 2017–09–04
  7. By: Asongu, Simplice; Biekpe, Nicholas
    Abstract: This study assesses how knowledge diffusion modulates the effect of the mobile phone on entrepreneurship in Sub-Saharan Africa with data for the period 2000-2012.The empirical evidence is based on interactive Generalised Method of Moments in which mobile phones are interacted with three knowledge diffusion variables, namely: education, internet penetration and scientific output. Ten variables of entrepreneurship are used. The following three main findings are established. First, the net effects from interacting mobile phones with the internet and scientific publications are negative whereas the corresponding net impact from the interaction between mobile phones and education is positive on the cost of doing business. Second, the mobile phone interacts with education (the internet) to have a positive (negative) net effect on the time needed to construct a warehouse whereas, the corresponding interaction with the internet yields a net negative effect on the time to enforce a contract. Third, there is a positive net effect from the interaction of mobile phones with education on the time to start a business. Given the construction of the education variable, the positive net effects from education are consistent with corresponding negative net effects from the other knowledge diffusion variables. The main policy implication is that mobile phone innovation (by means of internet penetration, scientific output and quality education) decreases constraints of entrepreneurship. Suggestions on how to boost these knowledge diffusion channels are discussed. Other practical and theoretical implications are also covered. To the best our knowledge, this is the first inquiry to assess the relevance of mobile phone innovation in entrepreneurship in Sub-Saharan Africa.
    Keywords: Entrepreneurship; the Mobile Phone; Knowledge Diffusion; Sub-Saharan Africa
    JEL: L59 L98 O10 O30 O55
    Date: 2017–05
  8. By: Andrea Ariu (University of Geneva, Switzerland,Georgetown University, USA and CRENOS, Italy); Elena Biewen (Deutsche Bundesbank); Sven Blank (Deutsche Bundesbank); Guillaume Gaulier (Banque de France and CEPII); María Jesus González, (Banco de España); Philipp Meinen, (Deutsche Bundesbank); Daniel Mirza (University François Rabelais de Tours, LEO-CNRS (Orleans), Banque de France and CEPII.); Cesar Martín, (Banco de España); Patry Tello (Banco de España)
    Abstract: This paper uses detailed micro data on service exports at the firm-destination-service level to analyse the role of firm heterogeneity in shaping aggregate service exports in Belgium, France,Germany and Spain from 2003 to 2007. We decompose the level and the growth of aggregate service exports into different trade margins paying special attention to firm heterogeneity within countries. We find that the weak export growth of France is at least partly due to poor performance by small exporters. By contrast, small exporters are the most dynamic contributors to the aggregate exports of Belgium, Germany and Spain. Our results highlight the importance of firm heterogeneity in understanding aggregate export growth.
    Keywords: service exports, firm heterogeneity, cross-country micro data study
    JEL: F14
    Date: 2017–09
  9. By: Iizuka, Michiko (UNU-MERIT, Maastricht University); Hollanders, Hugo (UNU-MERIT, Maastricht University)
    Abstract: Innovation is becoming more and more important as a driver of economic growth. In developed countries, a diverse set of innovation indicators has been developed to monitor innovation performance and the impact of innovation policies. Developing countries have been late to jump on this bandwagon and are now faced with a set of well-established innovation indicators that might not be that well suited to measure innovation in their economies. Existing innovation indicators can be broadly classified into three different types: Science & Technology (S&T) indicators, Innovation survey indicators, and Composite innovation indicators combining different indicators, including S&T and Innovation survey data, into one indicator. All of these have their own particular strengths and weaknesses, and they score above or below average on a wide range of attributes considered to be favourable, if not downright necessary, for innovation indicators. This paper argues that, for innovation indicators, and for innovation survey indicators in particular, data collection has to be customised to the different socio-economic structures of developing countries. For this, the definition of innovation has to become more inclusive by recognising the multitude of innovation actors and processes in developing countries. Developing countries also need to build competence regarding innovation indicators, not only within their statistical systems but also among their policy makers.
    Keywords: innovation, indicators, developing countries, policy use
    JEL: O38 O32 O29 P47
    Date: 2017–08–10
  10. By: Hottenrott, Hanna; Demeulemeester, Sarah
    Abstract: Information asymmetry and outcome uncertainty increase the cost of debt for R&D. This study shows that recipients of public R&D grants face lower costs of debt. Immediate effects suggest that quality certification explains this observation. For younger ventures certification is accompanied by liquidity effects. Short-term effects stem from grants for research. In addition, longer-term liquidity effects point to grants facilitating young firms’ investments in R&D that advance project maturity.
    JEL: O31 O38 L26 G30
    Date: 2017
  11. By: Pietro Moncada-Paterno-Castello (European Commission - JRC); Nicola Grassano (European Commission - JRC); Antonio Vezzani (European Commission - JRC)
    Abstract: The document provides background information of the content of the 6th European Conference on Corporate R&D (CONCORDi 2017. Seville, 27-29 September 2017). After a short introduction, the challenges that the EU is expected to face over the coming decades are proposed, considering the thematic focus of the selected papers. Then the contents of the papers' contribution are presented. Finally, the key subjects of the contribution by the invited speakers and the policy-stakeholders panellists are introduced.
    Keywords: corporate, R&D, innovation monitoring, analysis, industrial, research
    Date: 2017–09
  12. By: Alexander Konon (German Institute for Economic Research (DIW Berlin)); Michael Fritsch (FSU Jena); Alexander Kritikos (German Institute for Economic Research (DIW Berlin), University of Potsdam, IZA, and IAB)
    Abstract: We analyze whether start-up rates in different industries systematically change with business cycle variables. We mostly find correlations that are consistent with counter-cyclical influences of the business cycle on entries in both innovative and non-innovative industries. Entries into the large-scale industries, including the innovative part of the manufacturing sector, are more strongly influenced by changes in the cyclical component of unemployment, while entries into small-scale industries, like the knowledge intensive services, are merely influenced by changes in the cyclical component of GDP. Business formation may therefore have a stabilizing effect on the economy.
    Keywords: New business formation, Entrepreneurship, business cycle, manu- facturing, services, innovative industries
    JEL: L26 E32 L16 R11
    Date: 2017–10–04
  13. By: Fatime Barbara Hegyi (European Commission - JRC); Ruslan Rakhmatullin (European Commission - JRC)
    Abstract: This paper offers an overview of policy and economic reasons behind the launch of the new Smart Specialisation Platform for Industrial Modernisation. It is argued that modernisation of the European Industry depends upon multiple innovations across many industrial areas linked to emerging value chains. Some European regions have access to leading R&D and upstream innovation facilities; others have industrial skills needed in downstream testing and industrial upscaling. This paper looks at how the new Industrial Modernisation Platform can help European regions to create and/or join transnational networks of knowledge and expertise, and drive the development of transnational and macro-regional value chains. Cooperation and outward-looking disposition promote an understanding of the competitive position of the country/region with regard to others, and with respect to global value chains. The paper summarises the progress made since the formal launch of the new platform in June 2016 and offers an overview of the existing partnerships that are currently supported by the platform.
    Keywords: Regional innovation policy, smart specialisation, industrial policy, trans-regional cooperation, Thematic Smart Specialisation Platform on Industrial Modernisation
    Date: 2017–09
  14. By: Daniel Goya; Andrés Zahler
    Abstract: An important part of aggregate export growth is due to firms adding new varieties to their export baskets. We contribute to the literature on export flow survival by showing that a measure of the 'distance' between a new export and the previous export basket is a significant determinant of the survival of a new firm-product export flow. We present evidence suggesting that the measure we use is a good proxy for the theoretical 'distance from the core' in Eckel and Neary (2010), and that it is capturing technological, rather than demand complementarities across products.
    Keywords: Export diversification, extensive margin, export survival, product proximity.
    JEL: F14 L25 O30
    Date: 2017–10
  15. By: Carlino, Gerald A. (Federal Reserve Bank of Philadelphia); Drautzburg, Thorsten (Federal Reserve Bank of Philadelphia)
    Abstract: We investigate the dynamic response of local U.S. labor markets to increased job creation by new firms and compare the effects to overall labor demand shocks. To account for both dynamic and spatial dependence we develop a spatial panel VAR that builds on recent advances in the VAR literature to identify structural shocks using external instruments. We find that startup shocks have a small but persistent effect on local employment through population growth. Population growth, in turn, is largely driven by immigration. We also investigate how the responses differ by local characteristics such as population density. Finally, we show that startups are not closely linked to innovation.
    Keywords: Startups; entrepreneurship; local labor markets; proxy VAR; spatial panel VAR
    Date: 2017–09–27
  16. By: Mahe, Clotilde (UNU-MERIT, Maastricht University)
    Abstract: Although it has been found that return migrants are more likely to be self-employed than non-migrants, the role of migration episodes per se remains unclear. With reference to Lazear's Jack-of-all-trades hypothesis, this paper examines whether migrants are more likely to choose self-employment upon return because of the diverse work experience they gained abroad. Using the 2012 Egypt Labour Market Panel Survey, seemingly unrelated regression model estimates show that return migrants' greater propensity to be self-employed, to survive or to generate jobs as self-employed might proceed from participating in significantly more occupations, sectors and jobs over their work history than non-migrants. Results hold for non-agricultural activities, rural areas, and controlling for financial resources. In line with Lazear's framework, they confirm that entrepreneurship can be learnt, and that exposure to multiple occupations and industries matters for entering into and persisting in self-employment.
    Keywords: International migration, Return migration, Entrepreneurship, Human capital, North Africa, Egypt
    JEL: F22 J24 L26 O12 O15
    Date: 2017–09–18

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