nep-sbm New Economics Papers
on Small Business Management
Issue of 2017‒11‒12
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The impact of investment in innovation on productivity: firm-level evidence from Ireland By Di Ubaldo, Mattia; Siedschlag, Iulia
  2. What Drives Spatial Clusters of Entrepreneurship in China? Evidence from Economic Census Data By Zheng, Liang; Zhao, Zhong
  4. Measuring the Spillovers of Venture Capital By Monika Schnitzer; Martin Watzinger
  5. Can IPR Affect MNE’s Entry Modes? The Chilean Case By Gustavo Canavire-Bacarreza; Luis Castro Peñarrieta
  6. Financial Crises, Bank Lending, and Trade Credit:Evidence from Chinese Enterprises By Yajing Liu; Kenya Fujiwara
  7. The division of labour between academia and industry for the generation of radical inventions By Ugo Rizzo; Nicolò Barbieri; Laura Ramaciotti; Demian Iannantuono
  8. The income return to entrepreneurship – theoretical model and outcomes for Swedish regions By Hårsman, Björn; Mattsson, Lars-Göran; Hovsepyan, Vardan
  9. Bankruptcy Spillovers By Bernstein, Shai; Colonnelli, Emanuele; Giroud, Xavier; Iverson, Benjamin
  10. How Do Accounting and Legal Experts View the Role of Regional Financial Institutions in Supporting SMEs? -Based on a 2016 Questionnaire Study of Accounting and Legal Experts- By Nobuyoshi Yamori; Koji Yoneda
  11. The Oxpecker and the Rhino: The Positive Effects of Symbiotic Mutualism on Organizational Survival By Richard A. Hunt
  12. The growing inequality between firms By Giuseppe Berlingieri; Patrick Blanchenay; Chiara Criscuolo
  13. Unlocking Investment in Intangible Assets By Anna Thum-Thysen; Peter Voigt; Benat Bilbao-Osorio; Christoph Maier; Diana Ognyanova

  1. By: Di Ubaldo, Mattia; Siedschlag, Iulia
    Abstract: This paper examines the relationship between investment in innovation and productivity across firms in Ireland. We estimate a structural model using information from three linked micro data sets over the period 2005-2012 and identify the relationships between investment in innovation, innovation outputs and productivity. Our results indicate that innovation is positively linked to productivity. This result holds for all types of innovation and for both R&D and non-R&D expenditures. The innovation-related productivity gains range from 16.2 per cent to 35.4 per cent. The strongest link between innovation and productivity is found for firms with R&D spending and with product innovation.
    Date: 2017–09
  2. By: Zheng, Liang (Central University of Finance and Economics); Zhao, Zhong (Renmin University of China)
    Abstract: Since Chinese government initiated economic reform in the late 1970s, entrepreneurship and private sectors have emerged gradually and played an increasingly important role in promoting economic growth. However, entrepreneurship is distributed unevenly in China. Using micro data from 2008 economic census and 2005 population census, this paper explains spatial clusters of entrepreneurship for both manufacturing and services. For both sectors, entrepreneurship (measured by new private firms) tends to emerge in places with more relevant upstream and downstream firms. Moreover, Chinitz's (1961) theories are also supported for manufacturing: small upstream and downstream firms seem to be more important for manufacturing entrepreneurship. For both sectors, entrepreneurship is positively related to city size, the share of young adults and the elderly population, and foreign direct investment. More migrants are also found to promote service entrepreneurship. Our paper is the first to consider both manufacturing and service entrepreneurship in China and should be of interest to both local and national policymakers who plan to encourage entrepreneurship.
    Keywords: new firm formation, entrepreneurship, Marshallian effect, Chinitz effect, China
    JEL: L26 L60 L80 R10 R12
    Date: 2017–10
  3. By: Francesco Aiello; Lidia Mannarino; Valeria Pupo (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: This paper estimates the impact of R&D investments on the productivity of European family firms. For the period 2007-2009, we consider a Cobb-Douglas production function augmented by R&D intensity. Specifically, we address the questions of whether the R&D returns of family firms differ from that of non-family firms. Final outcomes suggest that, on average, non-family firms conducting R&D record a productivity gain of about 5-8 % compared to non-innovative firms. Additionally, the innovative family firms are about 6% lower compared to innovative non-family firms. Finally, the rate of return to R&D of family firms is lower than non-family firms.
    Keywords: Productivity, R&D returns, Family firms
    JEL: O30 L60 G34
    Date: 2017–11
  4. By: Monika Schnitzer; Martin Watzinger
    Abstract: We provide the first measurement of knowledge spillovers from venture capital-financed companies onto the patenting activities of other companies. On average, these spillovers are nine times larger than those generated by the R&D investment of established companies. Spillover effects are larger in complex product industries than in discrete product industries. Start-ups with experienced inventors holding a patent at the time of receiving the first round of investment produce the largest spillovers, indicating that venture capital fosters the commercialization of technologies. Methodologically, we contribute by developing a novel definition of the spillover pool, combining citation-based and technological proximity-based approaches.
    Keywords: venture capital, spillovers, innovation
    JEL: G24 O30 O31 O32
    Date: 2017
  5. By: Gustavo Canavire-Bacarreza; Luis Castro Peñarrieta
    Abstract: This paper analyzes the effect of stronger Intellectual Property Rights (IPR) on the entry modes chosen by MNEs in the Chilean market. MNEs can choose between exporting, introducing Foreign Direct Investment (FDI) and licensing to a domestic firm in Chile. We use plant-level data for the 2001–2007 and exploite the exogenous reform of IPR in Chile in 2005 to examine the effect of the change in IPR on the overall foreign presence in Chile, controlling for the activities of industries where high levels of technology transfer and imitation are important factors. The main results show that stronger IPR change the mode of entry chosen by MNEs. In this case, FDI is replaced by licensing. This is explained by Chile’s high absorptive capacity during this period. Moreover, we test whether this effect differs across high-tech and low-tech industries and conclude that the displacement of FDI is less severe in high-tech industries.
    Keywords: Technology Licensing, Productivity, Spillovers, Chile
    JEL: O34 O44 C5 K2
    Date: 2017–10–30
  6. By: Yajing Liu (Graduate School of Economics, Kobe University); Kenya Fujiwara (Graduate School of Business Administration, Kobe University)
    Abstract: Using Chinese firm-level data from 2006~2014?which includes the period of the recent financial crisis?we test whether firms, particularly small and medium enterprises (SMEs) that are financially constrained, are more likely to use or depend on trade credit. We also compare enterprises by ownership structure to determine which type of enterprises use trade credit more than bank loans. We then study the effect of the financial crisis of 2008 to observe whether firms increased their use of trade credit right after the crisis. We expect SMEs that are financially constrained to depend more on trade credit during the financial crisis. This may suggest the existence of a substitution relationship between bank loans and trade credit in conditions where enterprises are highly constrained financially or during periods of financial crisis.
    Keywords: Financial Crises, trade credit, bank loans, Chinese industrial enterprises, SMEs
    Date: 2017–10
  7. By: Ugo Rizzo (Department of Economics and Management, University of Ferrara, Italy); Nicolò Barbieri (Department of Economics and Management, University of Ferrara, Italy); Laura Ramaciotti (Department of Economics and Management, University of Ferrara, Italy); Demian Iannantuono (Department of Economics, University of Parma, Italy)
    Abstract: The paper investigates the relationship between radical technological development and public research. This study draws on the theory of recombinant innovation, and builds on two newly developed indicators of radicalness (Verhoeven et al., 2016) to analyse UK patents filed at the European Patent Office. It assesses whether the proximity of the invention to public research is related to a higher probability of the invention being radical. The results show that, depending on the type of novelty embodied by the radical invention (novelty in recombinant rather than novelty in technological origin), different forms of public research relate to the radicalness of invention in different ways. We found also that these relationships are heterogeneous across technological sectors. Policy implications are derived.
    Keywords: Radical invention, novelty, patent, recombination, public research
    JEL: O30 O31 O34
    Date: 2017–11
  8. By: Hårsman, Björn (KTH Royal Institute of Technology and Centre of Excellence for Science and Innovation Studies); Mattsson, Lars-Göran (KTH Royal Institute of Technology, Department of Transport Science); Hovsepyan, Vardan (KTH Royal Institute of Technology, Department of Industrial Economics and Management)
    Abstract: This paper investigates the income return to entrepreneurship and wage employment by means of Lazear’s model of occupational choice. The income return of an actor is defined as the income resulting from the preferred occupational choice divided by the hypothetical income he or she would earn, if for some reason forced to make the opposite choice. We analyze this by deriving theoretical implications of assuming that the skill strengths in Lazear’s model are Fréchet distributed. In the empirical part of the paper, data from the Swedish employment register for individuals having a university exam in electrical engineering is used to compute the return to self-employment and wage employment. The results are reported by a division of Sweden into three regions and for different subgroups by sex, age and earlier experience of self-employment. Our computations show that the average return to entrepreneurship is less than 5 percent for most subgroups of self-employed and the average return to wage employment over 50 percent for more than half of the subgroups. The return to the self-employed hiring at least one person is higher in the Stockholm than the other regions. Self-employed have higher returns if they are males, 45 years or older, or if they have earlier experience of self-employment. The ratio between average income of self-employed and wage employed is less than 1 for almost all subgroups in all regions consistent with our theoretical model. Together with the similarities between computed and observed income distributions for self-employed and wage employed, this supports the Fréchet assumption in our application of Lazear’s model.
    Keywords: entrepreneurship; self-employment; wage employment; regional occupational choice; income return; skill distribution; Fréchet distribution
    JEL: J24 J30 L26 M13
    Date: 2017–10–27
  9. By: Bernstein, Shai (Stanford University); Colonnelli, Emanuele (Stanford University); Giroud, Xavier (MIT); Iverson, Benjamin (Northwestern University)
    Abstract: How do different bankruptcy approaches affect the local economy? Using U.S. Census microdata, we explore the spillover effects of reorganization and liquidation on geographically proximate firms. We exploit the random assignment of bankruptcy judges as a source of exogenous variation in the probability of liquidation. We find that employment declines substantially in the immediate neighborhood of the liquidated establishments, relative to reorganized establishments. The spillover effects are highly localized and concentrate in non-tradable and service sectors, consistent with a reduction in local consumer traffic and a decline in knowledge spillovers between firms. The evidence highlights the externalities that bankruptcy design can impose on non-bankrupt firms.
    Date: 2017–05
  10. By: Nobuyoshi Yamori (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Koji Yoneda (Faculty of Economics, Kumamoto Gakuen University, Japan)
    Abstract: In February 2016 we administered a questionnaire to 700 tax accountants, certified accountants and lawyers, and conducted a study of the actual state of regional revitalization efforts by experts and the issues they faced. In this paper, we use some of the results of this study to analyze the actual state of collaborations between regional financial institutions and accounting/legal experts, and the issues they face, with respect to providing support to regional SMEs (small and medium-sized enterprises). Efforts by regional financial institutions are not always fully visible to experts, and collaboration between experts and regional financial institutions is still developing. In the future, deepened mutual understanding through greater regular contact between them will be important for increasing support capabilities for regional SMEs.
    Keywords: SME support, Region-based relationship banking, Regional finance, Experts, Questionnaire
    Date: 2017–10
  11. By: Richard A. Hunt (Division of Economics and Business, Colorado School of Mines)
    Abstract: The theoretical foundation and empirical thrust of strategic management is largely grounded in competition, competitive positioning and competitive advantage. It is ironic then that symbiotic mutualism - a relationship between individuals of different species, in which both derive benefit - may be more prevalent among surviving firms than zero-sum competition and may be a more potent selective force in determining the sustainability of successful organizational forms. The purpose of this paper is to articulate a framework for the future study of symbiotic mutualism. Extending the perspective of organizational ecology, I will assert that (a) symbiotic mutualism is a necessary but insufficient condition for firm sustainability; (b) organizations can be structured and staffed for symbiotic behaviors; (c) mutualistic proclivities will, on average, result in significantly higher survival rates; and, (d) new firms that fail to adopt a mutualistic orientation face dim prospects for long-term survival.
    Keywords: Mutualism, Symbiosis, Population ecology, Organizational ecology, competition, Predation, Selection, Organizational survival
    Date: 2017–10
  12. By: Giuseppe Berlingieri; Patrick Blanchenay; Chiara Criscuolo
    Abstract: Some firms pay well while others don't; and some are highly productive while many aren't. New research describes an emerging pattern of increasing inequality of wages and productivity between firms in the manufacturing and services sectors of many OECD countries - what they call the 'Great Divergences'.
    Keywords: dispersion, productivity, sorting, wages
    Date: 2017–10
  13. By: Anna Thum-Thysen; Peter Voigt; Benat Bilbao-Osorio; Christoph Maier; Diana Ognyanova
    Abstract: Intangible assets are at the heart of what makes firms competitive. They are vital for productivity and economic growth. A key question is whether the factors that tend to hold back investments in Europe are the same for tangible and intangible assets, i.e. is there a need for specific policy measures addressing intangible assets? This paper provides contextual information concerning intangible assets by discussing conceptual aspects, illustrating recent trends in terms of investments in intangibles and their corresponding impact on productivity and Gross Value Added (GVA) growth. With a view at specific characteristics of intangibles, potential drivers and barriers to investments in intangibles are identified and tested. Evidence from the presented empirical analyses suggests that including intangibles in a source-ofgrowth framework changes the corresponding growth patterns (GVA tends to grow more rapidly and capital deepening becomes the dominant source of growth). Looking at intangibles also helps to improve the understanding of TFP differentials. As regards investments, structural factors tend to matter generally more for intangibles whereas cyclical factors matter more for tangible assets. Against this backdrop, a series of policy-relevant messages has been derived. Overall, however, there is need to enlarge the general understanding of knowledge creation and to further improve the measurement of intangible assets in order to allow sound and evidence-based policy support.
    JEL: E01 E22 O34 O4
    Date: 2017–05

This nep-sbm issue is ©2017 by João Carlos Correia Leitão. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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