nep-sbm New Economics Papers
on Small Business Management
Issue of 2017‒10‒29
seventeen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. BIG Data - BIG Gains? Understanding the Link Between Big Data Analytics and Innovation By Niebel, Thomas; Rasel, Fabienne; Viete, Steffen
  2. Do Bank Shocks Hamper Firms’ Innovation? By Mariana Spatareanu; Vlad Manole; Ali Kabiri
  3. Motivations to Start Businesses: Institutional Context By Aleksandrova, Ekaterina A.; Verkhovskaya, Olga R.
  4. The importance of value creation in smart city initiatives: An ecosystem approach By Oomens, Ivette M. F.; Sadowski, Bert M.
  5. Family firms and access to credit. Is family ownership beneficial? By Pierluigi Murro; Valentina Peruzzi
  6. Financing Innovation through Minority Acquisitions By Ibrahim Bostan; Mariana Spatareanu
  7. Welfare effects of R&D support policies By Takalo, Tuomas; Tanayama, Tanja
  8. Bank Distress and Firm Performance during the Great Recession - Evidence from Ireland By Mariana Spatareanu; Vlad Manole; Ali Kabiri
  9. The Demography of Enterprises and Employment in the European Union Countries By Rafik Abdesselam; Jean Bonnet; Patricia Renou-Maissant
  10. Determining factors for audit opinion in private family and non-family firms. Evidence from Spain. By Santiago Lago-Peñas; Mercedes Mareque Álvarez-Santullano; Elena Rivo-López; Mónica Villanueva-Villar
  11. How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree By Martin Watzinger; Thomas A. Fackler; Markus Nagler; Monika Schnitzer
  12. Investment climate, outward orientation and manufacturing firm productivity: New empirical evidence By Hoang Thanh Mai NGUYEN; Marie-Ange VEGANZONES-VAROUDAKIS
  13. The Importance of Mittelstand Firms for Regional Apprenticeship Activity By Jahn, Vera
  14. Gender, Access to Finance, Occupational Choice, and Business Performance By Nelli S. Gazanchyan; Nigar Hashimzade; Yulia Rodionova; Natalia Vershinina
  15. Firm Innovation under Import Competition from Low-Wage Countries By Ujjayant Chakravorty; Runjuan Liu; Ruotao Tang
  16. ICT Use, Connectivity, and Innovation Capability in Japanese SMEs By Shigeno, Hidenori; Tsuji, Masatsugu; Matsuzaki, Taisuke; Shinohara, Sobee
  17. On the Origins of Entrepreneurship: Evidence from Sibling Correlation By Lindquist, Matthew; Sol, Joeri; van Praag, C. Mirjam; Vladasel, Theodor

  1. By: Niebel, Thomas; Rasel, Fabienne; Viete, Steffen
    Abstract: This paper analyzes the relationship between firms’ use of big data analytics and their innovative performance for product innovations. Since big data technologies provide new data information practices, they create new decision-making possibilities, which firms can use to realize innovations. Applying German firm-level data we find suggestive evidence that big data analytics matters for the likelihood of becoming a product innovator as well as the market success of the firms’ product innovations. The regression analysis reveals that firms which make use of big data have a higher likelihood of realizing product innovations as well as a higher innovation intensity. Interestingly, the results are of equal magnitude in the manufacturing and services industries. The results support the view that big data analytics have the potential to enable innovation.
    Keywords: Big data,data-driven decision-making,innovation,product innovation,firmlevel data
    JEL: D22 L20 O33
    Date: 2017
  2. By: Mariana Spatareanu; Vlad Manole; Ali Kabiri
    Abstract: Using a unique matched bank-firm-innovation data for the UK, this paper finds that bank shocks negatively affected firms’ innovations during the recent crises. After carefully controlling for several potential biases in estimation we find that firms whose relationship banks were distressed patented less, and those patents were of lower technological value, less original and of lower quality. The impact is larger in the case of small and medium enterprises (SMEs). We also show that banks’ specialization in financing innovation mitigates the impact of bank distress on firms’ innovation. The results highlight the significantly negative impact of distress in the banking sector on firm’s innovation and potential future economic growth.
    Keywords: innovation, bank distress, crisis, UK
    JEL: G21 G34 O16 O30
    Date: 2017–09
  3. By: Aleksandrova, Ekaterina A.; Verkhovskaya, Olga R.
    Abstract: This paper presents the results of a research which purpose was to investigate the link between institutional features and the motivation of entrepreneurial activity on the country level. Taking into account Scott's institutional theory, the main factors of the institutional environment were identified. The empirical analysis was conducted using the Global Entrepreneurship Monitor Survey for 2009 - 2014. Using data from various sources, such as GCR, WB, Doing Business, Economic Freedom, Hofstede's Indicators, we determined proxy-variables for every institutional dimension. The results of econometric analysis indicate that the regulatory, normative, and cognitive factors influence not only the level of TEA, but also the share of necessity-driven entrepreneurs.
    Keywords: entrepreneurship, necessity-driven entrepreneurship, institutional, Global Entrepreneurship Monitor Survey, cross-country analysis,
    Date: 2016
  4. By: Oomens, Ivette M. F.; Sadowski, Bert M.
    Abstract: Within the growing literature on smart cities, much research has focused on issues related to the formation stage and the roles of different actors in these initiatives. The large number of failures of smart city initiatives, however, points at an existing gap between the understanding of the formation of these initiatives and the practice of their management. In this context, the purpose of this paper is to address this research gap by discussing determinants of smart city initiatives and the experiences in smart city management. By taking an innovation ecosystem perspective, the paper focuses on the management experiences of four smart city initiatives (WoonConnect, Mobilty Portal, Vehicle2Grid, Straatkubus) in the Netherlands. The empirical research has been undertaken during the period May and June 2016. In linking to the discussion on smart cities, the research shows that most studies on smart cities have focused on the formation stage of the initiative and the roles of partners in these initiatives. In order to better understand problems surrounding smart city projects, it is necessary to examine the fundamental business model underlying these initiatives (i.e. processes of value creation and appropriation) and the role of business partners in these ventures. By using an innovation ecosystem perspective, the paper is able to identify shortcomings of existing approaches in smart city research related to the (static) form of analysis and the firm-level type of analysis. For smart city managers, key issues related to smart city projects are rooted in the second stage of managing these ventures (i.e. the coordination stage) and the role of private firms in this stage.
    Date: 2017
  5. By: Pierluigi Murro (LUMSA University); Valentina Peruzzi (Università Politecnica delle Marche)
    Abstract: This paper investigates the effect of family ownership on credit rationing using a rich sample of Italian manufacturing firms. We find that family ownership increases the probability of credit rationing. Conflicts between large and minority shareholders, family firms’ lack of competencies and conservatism appear to be the main determinants of this result. By contrast, family owners’ long-termism, risk aversion, and relationship lending mitigate the adverse impact of family ownership on firms’ credit availability. Finally, we find that family businesses are more likely to be rationed in provinces with high level of social capital and judicial efficiency, suggesting that delegation problems are mitigated by personal relationships in areas where cooperation mechanisms are weaker.
    Keywords: Family firms, credit rationing, agency conflicts, relationship lending
    JEL: D22 G21 G32
    Date: 2017–10
  6. By: Ibrahim Bostan; Mariana Spatareanu
    Abstract: This study unveils the financing role of minority equity purchases on innovation activities of US target firms. We provide evidence of increased innovation following minority acquisitions accompanied by cash flows to financially constrained target firms, and to firms with relatively small patent portfolios prior to acquisition. To address endogeneity concerns we create matched control groups of firms that were targets of minority acquisitions without cash transfers, and show that the positive effects of minority equity purchases on target firms’ innovation are nonexistent if minority acquisitions are not accompanied by cash flow transfer to target firms. We also create a sample of similar firms which were targets of failed minority acquisitions, and find that those targets experience no change in their innovation activity.
    Keywords: acquisitions, finance, innovation
    JEL: G34
    Date: 2016–02
  7. By: Takalo, Tuomas; Tanayama, Tanja
    Abstract: We conduct a welfare analysis of R&D subsidies and tax credits using a model of innovation policy in corporating externalities, limited R&D participation and finanial market imperfetions. We estimate the model using R&D projet level data from Finland. The optimal R&D tax credit rate (0.24) is lower than the average R&D subsidy rate (0.36). The intensive, not the extensive margin of R&D is important for poliy. Tax credits and subsidies inrease R&D investments and spillovers compared to laissez-faire but to levels below the first best. R&D support policies don't improve welfare.
    JEL: O38 O31 L53 C31
    Date: 2017–10–16
  8. By: Mariana Spatareanu; Vlad Manole; Ali Kabiri
    Abstract: This paper investigates the impact of bank distress on firms’ performance using unique data during the Great Recession for Ireland. The results show that bank distress, measured as banks’ credit default swap spreads (CDS) has negatively and statistically significantly affected firms’ investment expenditures. Interestingly, firms with access to alternative sources of external finance are not impacted by bank distress. The results are robust to accounting for external finance dependence, demand and trade sensitivities, which affect firm performance and the demand for credit.
    Keywords: firm performance, bank distress, crisis
    JEL: E44 E50 G20
    Date: 2016–01
  9. By: Rafik Abdesselam (Université de Lyon, Lumière Lyon 2, COACTIS, France); Jean Bonnet (Normandie University, UNICAEN, CREM UMR CNRS 6211, France); Patricia Renou-Maissant (Normandie University, UNICAEN, CREM UMR CNRS 6211, France)
    Abstract: The aim of this contribution is to establish a typology of European entrepreneurship countries with respect to variables related to entrepreneurial activity and economic development. Using a combined use of multidimensional data analyses allows to extend the concept of “entrepreneurial regimes” proposed by Audretsch and Fritsch (2002) and leads to distinguish five entrepreneurial regimes. Moreover, in order to better characterize classes, a wide set of illustrative variables representative of national economic development, labour market functioning, formal and unformal institutional environment as well as variables specific to the entrepreneurial population are considered. Finally, discriminant analyzes show that the five explanatory themes that are considered (Innovation, Employment, Formal Institutions, Entrepreneurship and Governance) differentiate the classes and significantly explain the diversity of entrepreneurial regimes. These findings have important implications for the implementation of public policy in order to promote entrepreneurial activity and reduce unemployment.
    Keywords: Entrepreneurship, Cluster analysis, Discriminant analysis, Entrepreneurial regimes
    JEL: L26 C38 O1
    Date: 2017–10
  10. By: Santiago Lago-Peñas; Mercedes Mareque Álvarez-Santullano; Elena Rivo-López; Mónica Villanueva-Villar
    Abstract: This paper analyzes the determining factors for audit opinion in private firms, and whether such factors differ between family and non-family firms. With a sample of 9,873 Spanish firms for the period 2011-2015, the empirical results suggest that auditor tenure and ROA raise the probability of receiving a favorable opinion; and that losses during the previous year, high financial leverage, and hiring one of the so-called “Big 4” auditing firms increase the probability of receiving an unfavorable opinion. Furthermore, we provide evidence that the size of such effects differs between family and non-family firms.
    Keywords: Auditing; Family Business; Agency Theory; Big 4; Audit Opinion.
    JEL: M14 M41 M42
    Date: 2017–10
  11. By: Martin Watzinger; Thomas A. Fackler; Markus Nagler; Monika Schnitzer
    Abstract: We study the 1956 consent decree against the Bell System to investigate whether patents held by a dominant firm are harmful for innovation and if so, whether compulsory licensing can provide an effective remedy. The consent decree settled an antitrust lawsuit that charged Bell with having foreclosed the market for telecommunications equipment. The decree forced Bell to license all its existing patents royalty-free. The compulsory licensing increased follow-on innovation building on Bell patents by 17%. This effect is driven mainly by young and small companies. Yet, innovation increased only outside the telecommunications equipment industry, suggesting that compulsory licensing without structural remedies is ineffective in ending market foreclosure.
    Keywords: innovation, antitrust, intellectual property, compulsory licensing
    JEL: O30 O33 O34 K21 L40
    Date: 2017
  12. By: Hoang Thanh Mai NGUYEN; Marie-Ange VEGANZONES-VAROUDAKIS (Centre d'Etudes et de Recherches sur le Développement International(CERDI))
    Abstract: Drawing on the World Bank Enterprise Surveys (WBES), we revisit the link between investment climate and firm productive performance for a panel of enterprises surveyed twice in 70 developing countries and 11 manufacturing industries. We take advantage of the surveys done at different times in an increasing number of economies, to tackle the endogeneity issue which has been seen as a problem in previous studies. We also use pertinent econometric techniques to address other biases inherent in the data, in particular measurement errors, missing observations, and multicollinearity. Our results reinforce previous findings by validating, with a larger than usual sample of countries and industries, the importance of a larger set of environment variables. We show that infrastructure quality (Infra), information and communication technologies (ICT), skills and experience of the labor force (H), cost of and access to financing (Fin), security and political stability (CrimePol), competition (Comp) and government relation (Gov) contribute to firms’ and countries’ different performances. The empirical analysis also illustrates that firms which chose an outward orientation have higher productivity levels. Nevertheless, outward oriented enterprises are, at the same time, more sensitive to investment climate limitations. These findings have important policy implications by showing which dimensions of the business environment, in which industry, could help manufacturing firms to be more competitive in the present context of increasing globalization.
    Keywords: Investment climate, Outward orientation, Manufacturing, Total factor productivity, Firm survey data.
    JEL: C52 L21 O14 O12 D24
    Date: 2017–10
  13. By: Jahn, Vera
    Abstract: German politicians frequently emphasize the importance of Mittelstand firms for the economy, thereby particularly referring to their enormous engagement in training apprentices. However, there is yet almost no empirical evidence on the question whether Mittelstand firms are in fact excessively active in training apprentices. We study whether the relative importance of owner-managed small and medium sized enterprises has an effect on firms' apprenticeship activity on the county level.
    JEL: C21 D23 I21
    Date: 2017
  14. By: Nelli S. Gazanchyan; Nigar Hashimzade; Yulia Rodionova; Natalia Vershinina
    Abstract: We present a theoretical and empirical analysis of the links between the gender of an entrepreneur, access to finance, occupational choice, and business performance. Our theoretical model predicts that, when lenders discriminate against women entrepreneurs, the average entrepreneurial skill of women who become entrepreneurs or enter paid employment as managers is higher than that of their men counterparts. This suggests that the firms owned or managed by women should perform better than the firms owned or managed by men, ceteris paribus. We find empirical support for the assumptions and the predictions of our model using firm-level data for 28 emerging economies in Europe and Asia; the effect is especially strong in the small and medium enterprises, possibly, because in large firms borrowing is a less essential source of finance. An important policy implication of our findings is that discrimination in the capital market spills over to the labour market, leading to the distortion of occupational choice and inefficiency in allocation of physical and human resources.
    Keywords: occupational choice, discrimination, finance, gender, small and medium enterprises
    JEL: J24 J71
    Date: 2017
  15. By: Ujjayant Chakravorty; Runjuan Liu; Ruotao Tang
    Abstract: In recent years, manufacturing firms in the United States have faced increasing import competition from low-wage countries, especially China. Does this competition hurt or help innovation by firms? This paper studies the effect of the surge in imports from China on innovation in the US manufacturing sector. We combine patent, firm and trade data during 1990-2006 for US publicly-listed firms in the Compustat dataset. We find consistent evidence that Chinese import competition had a positive effect on firm innovation, as measured by citation-weighted patent applications. This positive effect persists when we instrument import competition in the US by using Chinese import penetration in the United Kingdom. Next we investigate this relationship between import competition and innovation by considering industry and firm heterogeneity. We find that firms in low-tech industries and those with a lower degree of product differentiation show a significant positive response to import competition. Firms with a higher capital intensity and lower labor productivity also exhibit a greater response. These results are shown to be robust to a variety of measures for import penetration and innovation.
    Keywords: import competition, innovation, international trade, manufacturing firms, patents
    JEL: F10 F14 O31 O32
    Date: 2017
  16. By: Shigeno, Hidenori; Tsuji, Masatsugu; Matsuzaki, Taisuke; Shinohara, Sobee
    Abstract: This paper seeks to construct a new theory on SME innovation by reviewing and comprehending findings and knowledge obtained to date from a unified perspective. Conventional research on innovation in general has focused thematically on individual factors such as absorptive capability, R&D, and open innovation. While this approach has its advantages, it is critical to research innovation as a single process from a broad perspective and framework. This analyzes how SMEs acquire new information and ideas that are the source of innovation, organize and conduct R&D to integrate these ideas with management resources within the frim, and finally, how they produce the concrete output of these steps that lead to the development of new products. Our research especially seeks to answer what elements are needed in this process, and how they should be combined. In addition, this paper focuses on internal innovation capability which includes factors such as technologies that the company own, human resources (human factor), managerial organizational form (organization), leadership, and so on. These factors also consist of detailed sub-factors. The examples of the third layer contain as the following factors, for example. The technological factor includes the following factors: (a) ratio of R&D expenditure to sales; (b) the number of intellectual property right owned; and (c) technical and management systems such as R&D. (ii) Managerial organization indicates whether the managerial organization is designed and functioning to encourage exchange and share information among employees or communications inside the firm for innovation. This consists of the following sub-factors: (d) practicing QC circle; (e) cross-functional team; (f) information sharing system using ICT; and (g) the traditional background to stimulate discussions and communications among sections of the firms. Finally, the human resources is an important factor for engaging in innovation activities as well as for design and managing R&D, which consist of the following sub-factors: (h) ability of top management such as degrees or experiences; (i) leadership of top management; (j) degrees and experiences of employees; and (k) the Human Resource Development scheme (HRD) such as OJT (On-the-job training) or OFFJT (Off-the-job training). This paper particularly focuses on factors such as technology, R&D, and ICT use.
    Keywords: External linkages,SEM,causality,open innovation
    Date: 2017
  17. By: Lindquist, Matthew (Swedish Institute for Social Research, Stockholm University); Sol, Joeri; van Praag, C. Mirjam; Vladasel, Theodor
    Abstract: We assess the broad importance of family and community background for entrepreneurship outcomes. We go beyond traditional, intergenerational associations by estimating sibling correlations in unincorporated and incorporated entrepreneurship using register data from Sweden. Sibling correlations range from 20% to 50%. They are consistently higher for more committed and incorporated entrepreneurship than for less committed or unincorporated entrepreneurship; they are also higher for brothers than sisters. We then assess what factors drive these correlations: parental entrepreneurship, neighborhoods, shared genes and financial resources help explain these high correlations, whereas immigration status, family structure and sibling peer effects have a limited contribution. The higher correlation for incorporated versus unincorporated entrepreneurship is explained mainly by the type of parental entrepreneurial engagement and financial resources, while the gap between brother and sister correlations in unincorporated entrepreneurship is largely driven by the geographic concentration of male dominated industries.
    Keywords: Entrepreneurship; Family Background; Intergenerational Persistence; Neighborhood Effects; Occupational Choice; Sibling Correlations
    JEL: D13 J62 L26
    Date: 2017–10–17

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