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on Small Business Management |
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Issue of 2017‒11‒05
nineteen papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | Lars Hornuf; Matthias Schmitt |
| Abstract: | Today, start-ups often obtain financing via the Internet through many small contributions of non-sophisticated investors. Yet little is known about whether these start-ups can ultimately build enduring businesses. In this paper, we hand-collected data from 38 different equity crowdfunding (ECF) portals and 656 firms that ran at least one successful ECF campaign in Germany or the United Kingdom. The evidence shows that German firms that receive ECF stand a higher chance of obtaining follow-up funding through business angels or venture capitalists and have a relatively lower likelihood to survive. We find firm age, the average age of the management team, and excessive funding during the ECF campaign all have a negative effect on firms’ likelihood to obtain post-campaign financing. By contrast, the number of senior managers, registered trademarks, subsequent successful ECF campaigns, crowd exits, and the amount of the funding target all have a positive impact. Subsequent successful ECF campaigns, crowd exits, and the number of venture capital investors are significant predictors reducing firm failure. Finally, we find that some of these factors have a differential impact for Germany and the United Kingdom. |
| Keywords: | equity crowdfunding, follow-up funding, firm survival |
| JEL: | G24 M13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6642&r=sbm |
| By: | Zuzana Brixiova; Balazs Egert |
| Abstract: | This paper develops a model of costly firm creation in an economy with weak institutions, costly business environment as well as skill gaps where one of the equilibrium outcomes is a low-productivity trap. The paper tests the implications of the model using a cross-sectional dataset including about 100 countries. Both theoretical and empirical results suggest that to move the economy into a productive equilibrium, complementarity matters: reforms to improve the business environment tend to be more effective in creating productive firms when accompanied by narrowing skill gaps. Similarly, more conducive business regulations amplify the positive impact on firm creation of better education and reduced skill mismatches. To escape a low-productivity trap, policymakers should thus create a pro-business framework and a wellfunctioning education system. |
| Keywords: | model of start-ups and strategic complements, institutions, education, low-income countries, threshold regression |
| JEL: | L26 J24 J48 O17 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6451&r=sbm |
| By: | Pilar Beneito (Department of Economic Analysis, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); María E. Rochina-Barrachina (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Amparo Sanchis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).) |
| Abstract: | This paper analyses the determinants of firms’ decisions to patent abroad. We use dataspanning 2005-2013 of Spanish firms from PITEC, a panel database carried out by theINE (The National Statistics Institute). We focus on patenting firms and consider thatfirms’ decisions to apply for patents in foreign patent offices may be driven by twokinds of motivations: first, to exploit the patent in international markets where there ispotential demand for the invention and, second, to protect the invention abroad whenthe quality of the invention is high enough. In the first case we refer to market-drivendeterminants and, in the second case, to innovation type-driven determinants. Weempirically analyse these factors using information on firms’ sales in differentgeographic international markets, and also indicators of the quality and scope of theinnovations. We distinguish among EPO, USPTO and PTC patents, and estimate, first,a multivariate probit model to determine the factors underlying the decision to apply forpatents in these foreign offices. Second, we estimate a multivariate model to explain theshares of patent applications in each one of the offices. |
| Keywords: | international patenting, innovative firms, multivariate probit |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1708&r=sbm |
| By: | Spanjer, Anne (Tilburg University, School of Economics and Management) |
| Abstract: | Entrepreneurs can be studied from many angles. We will study the phenomenon of entrepreneurship from the management discipline. We aimed to gain more insight into the relationship between experience and entrepreneurial performance. Thus far, several scholars have highlighted the importance of learning when studying entrepreneurship (e.g. Harrison & Leitch, 2005). As Minniti and Bygrave (2001:7) put it, “entrepreneurship is a process of learning, and a theory of entrepreneurship requires a theory of learning”. The theory of learning they propose is that entrepreneurs learn from their experiences. In order to gain more insight in the relationship between experience and performance, we have focused on several moderators in the experience-performance relationship. We considered the possible different effects of the type of experience when studying the experience-performance relationship, i.e. industry experience, entrepreneurial experience and experience diversity. Furthermore, we analyzed conditional indirect effects on the experience-financial constraints relationship and experience-performance relationship. For example, we analyze how experience is related to a particular type set of skills important in obtaining funding and how this in turn is associated with experienced financial constraints. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:6684507a-1de9-47b5-9da7-38b665555771&r=sbm |
| By: | Tobias D. Ketterer |
| Abstract: | This paper investigates micro-level effects of export market entry on firm-level productivity. In particular, we study the effects of single and multiple export market entry, and additionally differentiate between the effects of export market entry by destination country. To isolate the impact of participation in foreign markets we employ matching techniques. Using micro-level trade and balance sheet data for firms in Lithuania, we show that single export market entry is linked with larger post-entry productivity growth for new export market entrants, relative to similar non-exporting firms. Moreover, we find support for more learning-by-exporting when looking at firms exporting to more sophisticated markets with presumably higher productivity standards. |
| JEL: | F14 F18 Q56 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:euf:dispap:050&r=sbm |
| By: | Reinhilde Veugelers |
| Abstract: | Over the medium- to longer term, trends in total factor productivity growth and innovation will determine the growth and convergence trajectories of the EU economies. However, already before the crisis, Europe has suffered from disappointing innovation performance and productivity growth, and developments since then have only reinforced this trend. Persistent innovation and productivity growth divergences among EU countries, and in particular euro area countries, raise concerns of rising income differentials and long-term cohesion across countries. In this contribution we will start with describing the major trends of total factor productivity growth in the EU and EURO member countries and compared to its major global competitors. As the creation and adoption of innovations is seen as a major driver of TFP, we will describe the major trends and convergence/divergence in innovation capacity and its components directly. How big are the differences and they diminishing over time, establishing convergence? Are the laggards catching up? Or the leaders forging ahead? The analysis finds that there is substantial heterogeneity in innovation capacity among EU Member States. This heterogeneity is very stable, avoiding strong divergence, but also no consistent convergence signs. The divide between the Innovation Leaders in the North and the Innovation Laggards from the South and the East proves to be difficult to address. |
| JEL: | O33 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:euf:dispap:066&r=sbm |
| By: | Suchita Srinivasan |
| Abstract: | Are environmental regulations imposed on downstream firms effective in spurring innovation in clean technologies by upstream firms? We use a novel firm-level dataset of global scope to study whether environmental regulations have percolated up the automotive global value chain, and led to innovation (measured by patenting in abatement technologies) by suppliers at different levels of the chain. Using a Poisson estimation methodology, we find that suppliers worldwide have responded to increasingly stringent emission standards imposed on automobile manufacturers (also known as original equipment manufacturers, or OEMs) by undertaking more innovation in clean abatement technologies; additionally, we find that the smaller the gap between the average environmental regulation suppliers face from the OEMs,and that in the country where the firm is located, the more the firm innovates. In addition, we provide evidence of a spread of these positive effects of regulation on innovation, with suppliers at different upstream levels responding positively to the downstream standards. This paper has important policy implications for the design of environmental policy instruments to induce innovation in clean technologies by firms along the value chain. |
| Keywords: | Environmental Regulation; Global Value Chains; Patents; Automotive Industry |
| JEL: | Q55 O31 Q58 F23 |
| Date: | 2017–06–14 |
| URL: | http://d.repec.org/n?u=RePEc:gii:ciesrp:cies_rp_52&r=sbm |
| By: | Gavrilova, T.; Alsufiev, A.; Pleshkova, A. |
| Abstract: | This paper is bringing the focus on knowledge management elements and analyses their influence on the performance of the company. Namely knowledge management practices are considered the key element for enhanced innovative performance. The main research method is exploratory factor analysis with preliminary analysis of covariations among variables. Research bases on results of survey conducted among Russian companies during 2017 and intends to reveal interrelationships among KM and Performance constructs that are peculiar for Russian market. |
| Keywords: | knowledge management, organization performance, KM practices, |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:sps:wpaper:8598&r=sbm |
| By: | Gerda Dewit (Department of Economics, Finance and Accounting, Maynooth University.); Dermot Leahy (Department of Economics, Finance and Accounting, Maynooth University.) |
| Abstract: | We develop a model with a large R&D-intensive home ?rm that must decide whether to locate production domestically or to o¤shore it. Poli- cymakers have an interest in the ?rm?s pro?ts, the local external bene?ts generated by the ?rm?s R&D and the employment provided by the do- mestic production facility. We demonstrate that attempts to boost the ?rm?s R&D can encourage the ?rm to o¤shore its production. Hence, we highlight a possible con?ict between two policy objectives: encouraging local R&D and discouraging the o¤shoring of production. In addition, if the government is concerned about the employment large domestic ?rms create, its R&D policy could potentially harm future productivity growth. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n285-17.pdf&r=sbm |
| By: | Matthias Fahn; Valeria Merlo; Georg Wamser |
| Abstract: | This paper shows that the cost of enforcing contracts governing non-financial relationships between firms affects a firm’s financing structure. We analyze the interaction between a firm’s capital structure and the type of contracts it uses to deal with its suppliers. We first develop a theoretical model where a downstream party needs an intermediate good from an upstream party, and this intermediate good can be of high or low quality. Court-enforceable contracts can be used to enforce high quality, but their use is costly. If these costs are too high, relational contracts - self-enforcing informal arrangements that can be sustained in long-term relationships - are needed. Relational contracts, though, can only be sustained if debt is not too high. The reason is that a firm’s commitment in relational contracts is determined by its future profits in the cooperative relationship, and the need to repay debt reduces future profits. We therefore derive the prediction that, on average, higher costs of enforcing formal contracts should be associated with firms having less leverage. We test this prediction with the help of two datasets. First, the Microdatabase Directinvestment (MiDi) provided by Deutsche Bundesbank, which records balance-sheet information on the universe of German investments abroad, including detailed information on external debt and equity capital. Second, the World Bank’s Doing Business Database, which provides information on the average cost of enforcing (formal) contracts between a firm and a supplier of an intermediate good. Using a panel data model for fractional response variables, we can show that an increase in the cost of enforcing contracts in a country makes firms use substantially more equity financing. |
| Keywords: | relational contracts, organizational economics, capital structure, corporate finance |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6562&r=sbm |
| By: | Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Peter H. Egger (ETH Zurice, CEPR, CESifo, GEP); Michaela Kesina (ETH Zurich) |
| Abstract: | This paper studies the determinants of firm-level revenues, as a measure of the performance of firms in China's domestic and export markets. The analysis of the determinants of the aforementioned outcomes calls for a mixed linear-nonlinear econometric approach. The paper proposes specifying a system of equations, which is inspired by Basmann's work and recent theoretical work in international economics and conducts comparative static analyses regarding the role of exogenous shocks to the system to flesh out the relative importance of transmissions across outcomes. |
| Keywords: | Spatial Econometrics, Spillovers, Panel-Data Econometrics, Nonlinear Systems, Firm- Level Sales, Chinese Firms |
| JEL: | C23 C31 D24 L65 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:209&r=sbm |
| By: | Martin Koudstaal (Rabobank); Randolph (R.) Sloof (UvA; Tinbergen Institute, The Netherlands); Mirjam (C.M.) van Praag (Copenhagen Business School) |
| Abstract: | We examine in a large survey (n = 1,928) how contemplative entrepreneurs, managers and employees are in their decision making styles. Besides two well-known subjective measures taken from psychology, we also build on Rubinstein (2016) by including two objective measures derived from response times and the nature of the strategic choices made. Supporting conventional wisdom, we find that entrepreneurs have a stronger subjective Faith in Intuition than others. Their actual action choices are partly in line with this: entrepreneurs make indeed more intuitive choices than managers, but are equally intuitive as employees. At the same time entrepreneurs have response times and a subjective Need for Cognition that (on average) equal those of managers. Together these findings tentatively suggest that entrepreneurs start from a stronger prior intuition, making them ceteris paribus more intuitive than others, but at the same time share with managers a higher need for cognition, and thus take more time to think things over. |
| Keywords: | Response times; contemplativeness; faith in intuition; need for cognition; entrepreneurs; managers; lab-in-the-field experiment |
| JEL: | L26 C93 D91 M13 |
| Date: | 2017–10–26 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20170100&r=sbm |
| By: | Götz, Georg; Ederington, Josh |
| Abstract: | We develop a model in which ex ante identical firms make endogenous entry and technology adoption decisions. We show that this model is capable of matching the stylized facts in which entry is dispersed over time and that, in many industries, it is the newest firms which are the most likely to exhibit high productivity growth and adopt new innovations (i.e., leapfrogging). We then derive the characteristics of those industries where such leapfrogging is likely to occur. |
| JEL: | L11 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168126&r=sbm |
| By: | Dolores Añón Higón (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Juan A. Mañez (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); María E. Rochina-Barrachina (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Amparo Sanchis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Juan A. Sanchis-Llopis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).) |
| Abstract: | In this article we characterize Total Factor Productivity (TFP) frontier firms at the industry level within the European Union during the period 2003-2014, and explore the determinants of the firms’ distance to the frontier. We find that larger, more capital-intensive, and more labour skilled firms are closer to the productivity frontier. In contrast, older firms are further away from the frontier. In addition, we obtain that a number of countries' economic and institutional factors, such as tertiary education, trade openness, easiness in getting credit and governance quality, all positively affect the catching up of laggards towards the productivity frontier. We also examine the moderating effect of the Great Recession on these determinants and obtain differentiated patterns. |
| Keywords: | TFP, frontier firms, laggard firms, Great Recession, European Union countries |
| JEL: | F43 O47 O52 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1707&r=sbm |
| By: | Johnson, Steven D. |
| Date: | 2015–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genstf:201512101647571246&r=sbm |
| By: | Gerda Dewit (Department of Economics, Finance and Accounting, Maynooth University.); Dermot Leahy (Department of Economics, Finance and Accounting, Maynooth University.); Chris Jones (Aston University, Birmingham, UK); Yama Temouri (.Aston University, Birmingham, UK) |
| Abstract: | This paper provides theoretical and empirical evidence of the link between the use of tax haven subsidiaries by multinational enterprises (MNEs) and firm performance, as measured by total factor productivity. We find that the use of tax havens has no impact on economic dynamism for a sample of MNEs from across the OECD. Our results have significant policy implications in terms of the role of tax havens in the world economy. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:may:mayecw:n284-17.pdf&r=sbm |
| By: | Chang, Jae Hee.; Rynhart, Gary. |
| Keywords: | decent work, enterprise creation, corporate social responsibility, employers organization, armed conflict, peace, Asia |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:994965593502676&r=sbm |
| By: | Maxin, Hannes |
| Abstract: | The present paper solely focuses on the investment decisions of two corporate venture capital firms. These investors have to decide whether to finance a wealthless venture alone or to share the profits and the costs with the other investor, called syndication. The critical point are the innovation objectives of the corporate investors respectively the nature of innovation of the venture. To my knowledge, no other theoretical paper considers such a financing situation consisting of two CVCs. |
| JEL: | G24 M13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168199&r=sbm |
| By: | Andrea Mercatanti (Bank of Italy and Luxembourg Institute of Socio-Economic Research, Program evaluation and Big Data Unit); Taneli Mäkinen (Bank of Italy); Andrea Silvestrini (Bank of Italy) |
| Abstract: | We reinvestigate the question of whether corporate investment during the financial crisis depended to a significant extent, and differently than in the pre-crisis period, on firms' short-term liquidity and indebtedness. Using data on listed firms in the euro area and the United Kingdom, we employ a correlated random coefficient panel data model estimated with instrumental variables in order to address potential endogeneity concerns. First, we find that to attain plausible identification, we must allow for the possibility that the unobserved firm-specific component of investment changed with the onset of the financial crisis. Second, our results suggest that neither cash reserves nor short-term debt, considered separately, were significant determinants of investment. However, we do find evidence of a negative conditional dependence between corporate investment and short-term debt net of cash reserves. |
| Keywords: | capital expenditure, financing constraints, financial crisis, correlated random coefficient, panel data models, instrumental variables |
| JEL: | G01 G31 G32 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1148_17&r=sbm |