nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒01‒15
eighteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Innovation, Reallocation, and Growth By Acemoglu, Daron; Akcigit, Ufuk; Alp, Harun; Bloom, Nicholas; Kerr, William R.
  2. How Does Firm Survival Differ between Business Takeovers and New Venture Start-ups? By Xi, Guoqian; Block, Jörn; Lasch, Frank; Robert, Frank; Thurik, Roy
  3. Business Dynamic Statistics of Innovative Firms By Nathan Goldschlagy; Elisabeth Perlmanz
  4. Why Did Germany's Hidden Champions Succeed in Globalization? (Japanese) By IWAMOTO Koichi
  5. Stock Market Overvaluation, Moon Shots, and Corporate Innovation By Ming Dong; David Hirshleifer; Siew Hong Teoh
  6. Internationalisation of R&D: A Review of Drivers, Impacts, and new Lines of Research By Dachs, Bernhard
  7. El emprendimiento sénior: Marco conceptual y evidencia empírica By Velilla, Jorge; Sánchez Gracia, Rebeca
  8. Innovation Activity of Firms in the Philippines By Quimba, Francis Mark A.; Albert, Jose Ramon G.; Llanto, Gilberto M.
  9. Labour mobility, skill-relatedness and plant survival over the industry life cycle: Evidence from new Dutch plants By Ron Boschma; Riccardo Cappelli; Anet Weterings
  10. Mainstreaming SMEs: Promoting Inclusive Growth in APEC By Medalla, Erlinda M.; Mantaring, Melalyn C.
  11. ICT Capital Spending, ICT Sector, and Firm Productivity: Evidence from Indonesian Firm-Level Data By Chaikal Nuryakin; Faisal Rachman; Ashintya Damayati; Nia Kurnia; Moslem Afrizal
  12. Efficiency among Japanese SMEs: In the context of the zombie firm hypothesis and firm size By GOTO Yasuo; Scott WILBUR
  13. Firm Productivity and Cities: The Case of Colombia By Jorge Balat; Camila Casas
  14. Knowledge spillovers and patent citations: trends in geographic localization, 1976-2015 By Hyuk-Soo Kwon; Jihong Lee; Sokbae Lee; Ryungha Oh
  15. Firm Size, Bank Size, and Financial Development By Grechyna, Daryna
  16. The organizational design of high-tech startups and product innovation By Grimpe, Christoph; Murmann, Martin; Sofka, Wolfgang
  17. Innovation, Finance, and Economic Growth : an agent based approach By Giorgio Ffagiolo; Daniele Giachini; Andrea Roventini
  18. La transmisión intergeneracional de la actividad emprendedora en las familias españolas By Ferrando-Latorre, Sandra; Velilla, Jorge

  1. By: Acemoglu, Daron; Akcigit, Ufuk; Alp, Harun; Bloom, Nicholas; Kerr, William R.
    Abstract: We build a model of firm-level innovation, productivity growth and reallocation featuring endogenous entry and exit. A new and central economic force is the selection between high- and low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using US Census micro data on firm-level output, R&D and patenting. The model provides a good fit to the dynamics of firm entry and exit, output and R&D. Taxing the continued operation of incumbents can lead to sizable gains (of the order of 1.4% improvement in welfare) by encouraging exit of less productive firms and freeing up skilled labor to be used for R&D by high-type incumbents. Subsidies to the R&D of incumbents do not achieve this objective because they encourage the survival and expansion of low-type firms.
    Keywords: Entry; growth; industrial policy; Innovation; R&D; reallocation; selection
    JEL: E2 L1 O31 O32 O33
    Date: 2017–11
  2. By: Xi, Guoqian (University of Trier); Block, Jörn (University of Trier); Lasch, Frank (Montpellier Business School); Robert, Frank (Montpellier Business School); Thurik, Roy (Erasmus University Rotterdam)
    Abstract: Focusing on entrepreneurship entry modes, we investigate two research questions regarding firm survival: how does the survival probability differ between business takeovers and new venture start-ups? And how do the determinants of survival differ between the two entry modes? Using a large French dataset, we find that business takeovers have a higher survival chance than new venture start-ups. Yet, the differences between two entry modes partially disappear when controlling for differences in founder and firm characteristics. Moreover, we identify differences in the determinants of survival between the two groups, highlighting the distinction between the two forms of entrepreneurship.
    Keywords: new venture start-up, business takeover, firm survival
    JEL: L26 M13
    Date: 2017–11
  3. By: Nathan Goldschlagy; Elisabeth Perlmanz
    Abstract: A key driver of economic growth is the reallocation of resources from low to high productivity activities. Innovation plays an important role in this regard by introducing new products, services, and business methods that ultimately lead to increased productivity and rising living standards. Traditional measures of innovation, particularly those based on aggregate inputs, are increasingly unable to capture the breadth and depth of innovation in modern economies. In this paper, we describe an effort at the US Census Bureau, the Business Dynamics Statistics of Innovative Firms (BDS-IF) project, which aims to address these challenges by extending the Business Dynamics Statistics data to include new measures of innovative activity. The BDS-IF project will produce measures of firm, establishment, and employment flows by firm age, firm size, and industry for the subset of firms engaged in activities related to innovation. These activities include patenting and trademarking, the employment of STEM workers, and R&D expenditures. The exibility of the underlying data infrastructure allows this measurement agenda to be extended to include copyright activity, management practices, and high growth firms.
    Keywords: Firm dynamics, innovation, Longitudinal Business Database, Business Dynamics Statistics
    Date: 2017–01
  4. By: IWAMOTO Koichi
    Abstract: This paper describes the interim results of the analysis on why Germany's Hidden Champions (HC) succeeded in globalization. Compared to Japan's small and mid-sized enterprises (SMEs), Germany's strong SMEs, known as "Hidden Champions," have performed tremendously well in globalization. Where did such performance come from? In this paper, I successfully created a hypothesis which contains system factors, structural factors, and human factors. To confirm my hypothesis, I visited several HCs and interviewed company executives to see if it applied to their companies. These interviews likely covered all of the detailed information on HC, although time consuming. The answers from all HCs were "entrepreneurship." I will switch to using a survey conducted through mail, as the interview survey may be an unreliable method. Furthermore, I will conduct a survey on why Japan's SMEs lag behind globalization in order to compare with the German case.
    Date: 2017–11
  5. By: Ming Dong; David Hirshleifer; Siew Hong Teoh
    Abstract: We test how market overvaluation affects corporate innovative activities and success. Estimated stock overvaluation is very strongly associated with R&D spending, innovative output, and measures of innovative novelty, originality, and scope. R&D is much more sensitive than capital investment to overvaluation. The effects of misvaluation on R&D come more from a non-equity channel than via equity issuance. The sensitivity of R&D and innovative output to misvaluation is greater among growth, overvalued, and high turnover firms. This evidence suggests that market overvaluation may have social value by increasing innovative output and by encouraging firm to engage in ‘moon shots.’
    JEL: D22 D23 G14 G3 G31 G32 O32
    Date: 2017–12
  6. By: Dachs, Bernhard
    Abstract: This paper reviews the growing literature on the internationalisation of R&D in the business sector. By internationalisation of R&D, this paper means the fact that firms conduct research and development at locations outside their home countries. The survey focuses on three issues: first, the drivers of the process at the country, the sectoral and the firm level – why firms go abroad with R&D activities. Second, evidence on the effects of the internationalisation of R&D on the host and home countries of multinational firms. So far, there is a consensus in the literature that R&D internationalisation benefits the host countries. Third, the paper discusses some new lines of research on R&D internationalisation related to the role of indirect funding for R&D, R&D internationalisation in services and multinationals from emerging economies.
    Keywords: Internationalisation, R&D, innovation, foreign-owned firms, outsourcing
    JEL: F23 O31
    Date: 2017–12
  7. By: Velilla, Jorge; Sánchez Gracia, Rebeca
    Abstract: En este trabajo se realiza una revisión de la literatura sobre emprendimiento, mediante la definición y la historia del término “emprendedor”, tanto cronológicamente como desde diferentes campos de estudio, intentando mostrar la importancia de los diferentes usos del término, y dando especial importancia a las características del individuo emprendedor sénior (mayor de 50 años). Posteriormente, usando los datos “Adult Population Survey” del Global Entrepreneurship Monitor para el año 2014, se analiza empíricamente el emprendimiento entre los individuos sénior de países de la OECD. Encontramos que España y Francia muestran los niveles más bajos de emprendimiento sénior, mientras que los más altos se dan en Chile y Méjico. Además, se encuentra que el emprendimiento por oportunidad prevalece sobre el emprendimiento por necesidad entre la población sénior, y también que los factores que impulsan la actividad emprendedora por uno u otro motivo son, en gran medida, diferentes.
    Keywords: Emprendimiento; Emprendimiento sénior; Datos GEM
    JEL: L26
    Date: 2018–01–02
  8. By: Quimba, Francis Mark A.; Albert, Jose Ramon G.; Llanto, Gilberto M.
    Abstract: Set against a rapidly changing global environment, Philippine industries now, more than ever, are facing new demands that will require more innovation for firms to remain competitive across the global market. The PIDS Survey on Innovation Activities (PSIA) conducted among firms in food manufacturing, other manufacturing, ICT, and BPO suggests that in 2015, about 43% of Philippines establishments were innovation-active. Strikingly, the BPO sector spends the most for innovation activities despite it being the least innovation-active among the various sectors at a rate of just 30%. Intellectual property applications have been very low across all industries following firms’ tendency to view their product innovations as trade secrets in order to maintain their competitive edge against rivals. The study also finds that the conduct of knowledge management activities is positively correlated with firm size. Moreover, larger firms tend to rely on internal sources for their information and innovation which is the case with the food processing and automotive sectors. Results of the panel data model explaining innovative behavior among 2015 PSIA firms, that were also part of a pilot survey in 2009, showed that knowledge management activities and firm size are adequate determinants of innovation behavior. Taking all these survey results into perspective, a national policy that is grounded on consultations with all stakeholders in the innovation ecosystem should be pursued. Enabling the business environment through stronger intellectual property rights can also encourage more firms to innovate especially among wary multinational companies.
    Keywords: innovation, Philippines, process innovation, product innovation, micro, small and medium enterprises, industry-academe collaboration
    Date: 2017
  9. By: Ron Boschma; Riccardo Cappelli; Anet Weterings
    Abstract: Labour mobility is often considered a crucial factor for regional development. However, labour mobility is not good per se for local firms. There is increasing evidence that labour recruited from skill-related industries has a positive effect on plant performance, in contrast to intra-industry labour recruits. However, little is known about which types of labour are recruited in different stages of the evolution of an industry, and whether that matters for plant performance. This paper attempts to fill these gaps in the literature using plant-level data for manufacturing and services industries in the Netherlands for the period 2001-2009. Our study focuses on the effects of different types of labour recruits on the survival of new plants. We show that the effects of labour recruits from the same industry and from skill-related and unrelated industries on plant survival vary between the life cycle stages of industries. We also find that inter-regional labour flows do not impact on plant survival.
    Keywords: labour mobility, skill-relatedness, industry life cycle, industrial dynamics, firm survival
    JEL: R11 R12 O18
    Date: 2017–12
  10. By: Medalla, Erlinda M.; Mantaring, Melalyn C.
    Abstract: Small and medium enterprise (SME) development as a major domestic policy objective that is consistent and reinforced within APEC would not only engender inclusive growth but also enable SMEs to become drivers of growth for the domestic, as well as the regional economy. This paper provides a background on the local SME development policy environment and the existing APEC SME activities in the region. It also offers recommendations on how the APEC can further mainstream SMEs in the regional and global market.
    Keywords: APEC, inclusive growth, , SMEs, small and medium enterprises
    Date: 2017
  11. By: Chaikal Nuryakin (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta); Faisal Rachman (Institute for Economic and Social Research, Faculty of Economics, University of Indonesia); Ashintya Damayati (Institute for Economic and Social Research, Faculty of Economics, University of Indonesia); Nia Kurnia (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta); Moslem Afrizal (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta)
    Abstract: This study examined the impact of ICT on firm productivity in Indonesia. Using unbalanced panel data of medium and large manufacturing firms, we performed two kinds of estimation. The first estimation is Cobb-Douglas production function with output as the dependent variable. Capital was grouped into non-ICT capital and ICT capital in order to determine the impact of ICT on firm’s output creation. The second estimation used total factor productivity as the dependent variable, where TFP was estimated using Levinsohn-Petrin productivity estimator. As other internal and external factors were added to the regression as control variable, the study provides early evidence that while the impact of R&D and innovation still needs to be further elaborated, ICT capital may have a positive, but not always significant, impact on firm’s production and productivity in Indonesia.
    Keywords: ICT — Productivity — TFP — R&D — Innovation
    JEL: E22 D24 O3
    Date: 2017–10
  12. By: GOTO Yasuo; Scott WILBUR
    Abstract: The "soft budget problem," by which banks loosen their lending stances toward long-term client firms despite worsening business conditions, has been widely discussed in the field of financial studies. In Japan, this problem has attracted attention particularly in connection to so-called "zombie firms," financially weak firms sustained by discounted interest rates and evergreen lending which have become a major research and political interest in recent years. In this paper, we focus on zombie firms among small and medium-sized enterprises (SMEs), a corporate category that has hitherto received less consideration in the discussion about Japan's zombie firms. We find that: (1) many zombie firms exist among SMEs; (2) some zombie firms eventually emerge from zombie status; (3) once a firm becomes a zombie, its probability of exit increases especially among SMEs; and (4) the economic performance of exiting zombie firms is worse than those of exiting non-zombie firms.
    Date: 2017–12
  13. By: Jorge Balat (The University of Texas at Austin); Camila Casas (Banco de la República de Colombia)
    Abstract: In this paper we study the determinants of firm-level productivity in Colombia. We are interested in the effects of agglomeration forces that explain why manufacturing economic activity tends concentrate geographically as well as the effect of forces that can hurt productivity in high-density areas. An unfortunate major example of the latter forces in Colombia is its high levels of crime and terrorist attacks. We carry out this study by exploiting two very rich data sources: a firm-level panel which allows us to estimate firm-level productivity and a panel of municipality characteristics. To address selection and endogeneity issues in the estimation of firm-level productivity we use a control function approach. Our main findings are the following. First, scale economies do not seem to affect firm-level productivity. Second, we do find evidence of location economies (industrial specialization has a positive effect on productivity). Industrial variety, on the other hand, lowers productivity. It seems that firms in Colombia benefit from forming clusters and locating in cities with less industrial variety. We also find non-trivial effects of city fiscal performance, education level and quality, and crime and violent attacks. Classification JEL: R00, R12, R32, O14, L6, C14
    Keywords: Cities, Colombia, Productivity, TFP, Total Factor Productivity, Agglomeration
    Date: 2018–01
  14. By: Hyuk-Soo Kwon (Institute for Fiscal Studies); Jihong Lee (Institute for Fiscal Studies); Sokbae Lee (Institute for Fiscal Studies and Columbia University and IFS); Ryungha Oh (Institute for Fiscal Studies)
    Abstract: This paper examines the trends in geographic localization of knowledge spillovers via patent citations, considering US patents from the period of 1976-2015. Despite accelerating globalization and widespread perception of the "death of distance," our multi-cohort "matched-sample" study reveals signi cant and growing localization effects of knowledge spillovers at both intra- and international levels after the 1980s. We also develop a novel network index based on the notion of "farness," which an instrumental variable estimation shows to be a signifi cant and sizable determinant of the observed trends at the state-sector level.
    Keywords: Innovation, knowledge spillovers, patent citation, agglomeration, network index, farness
    JEL: C36 C81 O33 O34 O51
    Date: 2017–12–06
  15. By: Grechyna, Daryna
    Abstract: Financial intermediation facilitates economic development by providing entrepreneurs with external finance. The relative costs of financing depend on the relative efficiency of the financial sector and the sector using financial intermediation services, the real sector. These costs determine the occupational choices and the set of active firms in the financial and real sectors. A model of firm-size distributions in the financial and real sectors results. This model is calibrated to match facts about the U.S. economy, such as the interest-rate spread and the establishment-size distributions in the financial and real sectors. It is then used to evaluate the importance of the relative technological progress in the financial and real sectors for the dynamics of the average establishment size in the financial sector. The model accounts for 58\% of the reduction in the average establishment size in the U.S. financial sector over 1986-2006 and for a 4.5 persons per establishment decline in the average size of the financial sector establishment in Taiwan over 1971-2011.
    Keywords: economic development; financial development; technological progress; firm-size distributions; interest-rate spreads.
    JEL: E13 O11 O16 O41
    Date: 2017–12–07
  16. By: Grimpe, Christoph; Murmann, Martin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Sofka, Wolfgang
    Abstract: "We investigate whether appointing a middle management level affects startups' innovation performance. Additional hierarchical levels are often suspected to restrict innovative activities. However, founders' capacities for information processing and resource allocation are usually strongly limited while, at the same time, R&D decisions are among the most consequential choices of startups. We argue that middle management is positively related to introducing product innovations because it improves the success rates from recombining existing knowledge as well as managing R&D personnel. In addition, we suggest that the effectiveness of these mechanisms depends on the riskiness of a startup's business opportunity. Based on a sample of German high-tech startups, we find support for our conjectures." (Author's abstract, IAB-Doku) ((en))
    JEL: L26 M13 M12 M51 L22 L23 J21
  17. By: Giorgio Ffagiolo (Scuola Superiore Sant'Anna Pisa Italy); Daniele Giachini (Scuola Superiore Sant'Anna Pisa Italy); Andrea Roventini (Scuola Superiore Sant'Anna Pisa Italy also OFCE Sciences Po Paris)
    Abstract: This paper extends the endogenous-growth agent-based model in Fagiolo and Dosi (2003) to study the finance growthnexus. We explore industries where firms produce a homogeneous good using existing technologies, perform R&D activities to introduce new techniques, and imitate the most productive practices. Unlike the original model, we assume that both exploration and imitation require resources provided by banks, which pool agent savings and finance new projects via loans. We find that banking activity has a positive impact on growth. However,excessive financialization can hamper growth. In- deed, we find a significant and robust inverted-U shaped relation between financial depth and growth. Overall, our results stress the fundamental (and still poorly understood) role played by innovation in the finance-growth nexus.
    Keywords: Agent based models, Innovation, Exploration vs Exploitation, Endogenous Growth, Banking Sector, Finance Growth Nexus
    JEL: C63 G21 O30 O21
    Date: 2017–11–27
  18. By: Ferrando-Latorre, Sandra; Velilla, Jorge
    Abstract: Este trabajo estudia la influencia de la actividad emprendedora de los padres en sus hijos/as en España, es decir la posible existencia de transmisiones intergeneracionales de dicha actividad. Se emplearán los datos de la Encuesta Financiera de las Familias del Banco de España, para los años 2008, 2011 y 2014. Estos datos nos permiten identificar a los individuos emprendedores como todos aquellos que trabajan por cuenta propia. Las posibles transferencias intergeneracionales se estudiarán atendiendo a dos generaciones: la persona de referencia de cada familia, y sus hijos/as. En particular, este trabajo analiza qué factores determinan la actividad emprendedora de los individuos, en función de una serie de factores socio-demográficos de los propios individuos, y de sus padres. Además, se compararán los resultados obtenidos para los años 2008, 2011, y 2014, para analizar los posibles efectos de la crisis económica en el desarrollo de la actividad emprendedora. Los resultados muestran la existencia de transmisiones intergeneracionales en la actividad emprendedora de las familias españolas, especialmente a través de nivel de estudios de los padres, y de su situación laboral. Además, los resultados muestran cómo la ocupación laboral del padre/madre se transfiere a los hijos/as con más fuerza en el ámbito emprendedor.
    Keywords: Emprendimiento; transmisión intergeneracional; Encuesta Financiera de las Familias; España
    JEL: L26
    Date: 2018–01–02

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