nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒01‒22
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Cluster dynamics: learning from Competitiveness Cluster policy. The case of ‘Secure Communicating Solutions’ in the French Provence-Alpes-Côte d’Azur Region By Christian Longhi
  2. Smart Specialisation, seizing new industrial opportunities By Antonio VEZZANI; Marco BACCAN; Alina CANDU; CASTELLI; Mafini DOSSO; Petros GKOTSIS
  3. Heterogeneity in the Internationalization of R&D: Implications for Anomalies in Finance and Macroeconomics By Patrick Grüning
  4. Duplicative research, mergers and innovation By Denicolò, Vincenzo; Polo, Michele
  5. Programas de Financiamiento Productivo a pymes, acceso al crédito y desempeño de las firmas: Evidencia de Argentina By Butler, Ines; Giuliodori, David; Guiñazu, Sebastian; Martinez Correa, Julian; Rodríguez, Alejandro
  6. The organizational design of high-tech startups and product innovation By Grimpe, Christoph; Murmann, Martin; Sofka, Wolfgang
  7. Entrepreneurship and State Taxation By E. Mark Curtis; Ryan Decker
  8. Societal benefits and costs of International Investment Agreements: A critical review of aspects and available empirical evidence By Joachim Pohl
  9. How Firms Grow By Yaniv Yedid-Levi; Stefanie Haller; Doireann Fitzgerald
  10. Politicians and Creative Destruction By Salome Baslandze
  11. Why do firms collaborate with local universities? By Rune Dahl Fitjar; Martin Gjelsvik
  12. Knowledge transfer obstructs knowledge application: Qualitative study on open innovation By Shohei Funatsu; Yasuo Sugiyama
  13. Foreign Ownership and Intra-Firm Union Density in Germany By Jirjahn, Uwe

  1. By: Christian Longhi (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur)
    Abstract: The paper aims to identify the forms and dynamics of the organizational structures of high-tech clusters overtime. Since Markusen (1996), it is well acknowledged that diversity is an emergent property of clusters, but the interactions between local and non-local actors of the clusters are difficult to trace because of lack of relevant data. The cluster policies developed to fix the network failures between the heterogeneous actors – large and small firms, universities, research institutes – of the current processes of innovation provide new information opportunities. In France, Competitiveness Clusters work as a “factories of project”; the information they produce on collective R&D projects applying for subsidies provides a proxy of local and non-local relations of the clusters. Social network analysis is used to infer the organizational structure of the collective learning networks and trace their dynamics. The case studies considered are Sophia-Antipolis and Rousset, two high tech clusters which belong to the same Competitiveness Cluster, ‘Secure Communicating Solutions’ in the Provence-Alpes-Côte d’Azur Region. The paper highlights the decoupling of the two clusters overtime as a consequence of distinctive organizational structures. The diversity of the dynamics of the collective learning networks which emerges through the analysis of the collective R&D projects in the two high tech clusters shows that knowledge creation and innovation can follow different paths and questions the public policies implemented.
    Keywords: Innovation, Collective Learning Networks, Competitiveness Cluster, Social Network Analysis, Rousset,Cluster Policy, Sophia Antipolis
    Date: 2017
  2. By: Antonio VEZZANI (European Commission - JRC); Marco BACCAN (Finlombarda S.p.A. (Italy)); Alina CANDU (Finlombarda S.p.A. (Italy)); CASTELLI (Finlombarda S.p.A. (Italy)); Mafini DOSSO (European Commission - JRC); Petros GKOTSIS (European Commission - JRC)
    Abstract: This study offers a novel analytical approach to inform the regional search for new industrial opportunities, as promoted by smart specialisation in the EU Cohesion policy context. The analysis departs from the challenges of practicing smart specialisation and its entrepreneurial discovery process in a dynamic perspective. It argues that the adoption of a dynamic approach to identify new opportunities implies mapping regional business and innovation assets as well as, assessing their position within the global technological and industrial landscape. The study brings a case study of Lombardy region, spurring the S3 Lab initiative (in collaboration with Baden-Württemberg, Catalonia and Lapland), together with a comparative analysis of its technological profile. The empirical study combines patent data from OECD REGPAT and territorial proprietary micro-data from Lombardy region on firm creation in emerging industries (EI) – new industrial sectors or existing sectors evolving into new industries (European Cluster Observatory). These industries represent a priority area for Lombardy's innovation-led development strategy. The initial observations confirm the importance of such industries in the region; they represent more than one-third of employment, almost a half of the regional value-added and feature together the majority of start-ups, suggesting the relevance of the regional strategic development choices. Also, in terms of productive advantages, Lombardy ranks high in some key EI. The mapping of technological competences through patent indicators, e.g. specialisation, diversification and ability to specialise in fast-growing and niche fields gives relevant insights on the technological potential of the region, providing further guidance for better targeted interventions.
    Keywords: smart specialisation, emerging industries, regional search, technological specialisation
    JEL: O25 O33 O38 R58
    Date: 2017–11
  3. By: Patrick Grüning (Bank of Lithuania & Faculty of Economics, Vilnius University)
    Abstract: Empirical evidence suggests that investments in research and development (R&D) by older and larger firms are more spread out internationally than R&D investments by younger and smaller firms. In this paper, I explore the quantitative implications of this type of heterogeneity by assuming that incumbents, i.e. current monopolists engaging in incremental innovation, have a higher degree of internationalization in their R&D technologies than entrants, i.e. new firms engaging in radical innovation, in a two-country endogenous growth general equilibrium model. In particular, this assumption allows the model to break the perfect correlation between incumbents’ and entrants’ innovation probabilities and to match the empirical counterpart exactly.
    Keywords: Heterogeneous innovation, Technology spillover, Endogenous growth, Creative destruction, International finance
    JEL: E22 F31 G12 O30 O41
    Date: 2017–10–20
  4. By: Denicolò, Vincenzo; Polo, Michele
    Abstract: We show that in the model of Federico, Langus and Valletti (2017) [A simple model of mergers and innovation, Economics Letters, 157, 136-140] horizontal mergers may actually spur innovation by preventing duplication of R&D efforts. This possibility is more likely, the greater is the value of innovations, the less rapidly diminishing are the returns to R&D, and the more highly correlated are the R&D projects of different firms. Federico, Langus and Valletti (2017) do not obtain this result because they focus only on the case in which the merged firm spreads total R&D expenditure evenly across the individual research units of the merging firms -- a strategy which is optimal, however, only if the returns to R&D diminish sufficiently rapidly.
    Keywords: Horizontal mergers; Innovation
    Date: 2017–12
  5. By: Butler, Ines; Giuliodori, David; Guiñazu, Sebastian; Martinez Correa, Julian; Rodríguez, Alejandro
    Abstract: In the last years, Argentinian’s Government has implemented several productive programs for financing MSMEs. The main objective of these programs was increasing the productivity of firms. However, to the best of our knowledge, there is no work that measures the effectiveness of programs over the beneficiary firms; moreover, the micro data used in this work have not been used ever. In this paper, we evaluate three productive programs: the National Development Fund for Micro, Small and Medium Enterprises (FONAPYME), the Rate Bonus Regime (RBT) and the Reciprocal Guarantee Societies (SGR). On the base of administrative micro data and combining statistical matching techniques with the fixed effects model, we estimate the causal effect of the programs over different variables associated with firm’s productivity. Results show that programs have, on average, positive and significant effects over average employment, average salary, probability of access to credit, and the volume of financial debt. The impact comes mainly from young companies, and specifically in employment, from smaller companies. When comparing the programs, it seems that the RBT rate subsidy is the one with the most profound effects on the overall performance of the firms.
    Keywords: Competitiveness, impact evaluation, employment, firms, fixed effects, productive development policies, propensity score matching.
    JEL: D0 H8 J2 J23
    Date: 2017–12–22
  6. By: Grimpe, Christoph; Murmann, Martin; 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.
    Keywords: middle management,innovation performance,R&D,startups,organizational design,R&D management
    Date: 2017
  7. By: E. Mark Curtis; Ryan Decker
    Abstract: Entrepreneurship plays a vital role in the economy, yet there exists little well-identified research into the effects of taxes on startup activity. Using recently developed county-level data on startups, we examine the effect of states' corporate, personal and sales tax rates on new firm activity and test for cross-border spillovers in response to these policies. We find that new firm employment is negatively—and disproportionately—affected by corporate tax rates. We find little evidence of an effect of personal and sales taxes on entrepreneurial outcomes. Our results are robust to changes in the tax base and other state-level policies.
    Keywords: Labor supply and demand ; Entrepreneurship ; Firm dynamics ; Taxation
    JEL: L26 D22 H71 H25 J23
    Date: 2018–01–11
  8. By: Joachim Pohl
    Abstract: This paper reviews alleged societal benefits and costs of International Investment Agreements (IIAs) as suggested by academia, governments, business and civil society. It sets out the wide range of issues that diverse actors have proposed in the context of assessing the societal benefits and costs of IIAs. The paper analyses and organises the available material generated by these sources to identify and classify the many different issues, summarises available empirical evidence and findings in these sources on the individual aspects, and assesses strengths and weaknesses of the approaches. The paper focuses in particular on the investor protection component of IIAs. The inventory finds that for many claims about the positive or negative impact of IIAs, little robust evidence has been generated to date. The paper highlights methodological challenges and suggests areas where further study would be required to draw firmer conclusions.
    Keywords: bilateral investment treaties, cost-benefit analysis, foreign investment, international investment, international investment law, investment protection, investment treaties, regulatory impact assessments
    JEL: D02 D61 F02 F21 F23 F53 F55 K33 N40 O12 P45 P48
    Date: 2018–01–19
  9. By: Yaniv Yedid-Levi (The University of British Columbia); Stefanie Haller (University College Dublin); Doireann Fitzgerald (Federal Reserve Bank of Minneapolis)
    Abstract: We document a new set of facts about firm dynamics, separating true dynamics from the appearance of dynamics driven by selection. Conditional on survival, total revenue and the number of markets a firm participates in grow with age. However TFP grows very slowly. Meanwhile, there is no statistically significant relationship between prices and age. We use these facts to motivate a model of firm dynamics, where firms differ in their efficiency, and face frictions in entering and expanding sales in markets. This allows us to address the following question: Do successful firms grow because they produce more efficiently, or because they sell more at a given level of efficiency?
    Date: 2017
  10. By: Salome Baslandze (EIEF - Einaudi Institute for Economics a)
    Abstract: Creative destruction and reallocation of resources from less to more productive firms are important drivers of productivity growth (Bartelsman and Doms (2000), Foster et al. (2001), Foster et al. (2008), Lentz and Mortensen (2008), Hsieh and Klenow (2009), etc). In this project, we study the role of frictions that are obstacles to such creative destruction and real-location in Italy. More specifically, inefficiencies of financial intermediation as well as existence of politically connected firms can affect selection of firms into market as well as lead to unequal access to further growth opportunities. This might have adverse effects on aggregate growth due to slower market churning and less competition in the market. Our goal is to understand quantitative importance of different channels through which these frictions shape firm dynamics and productivity growth in Italy. Starting point of our analysis is an empirical investigation of micro-level data from Italy. First, we match social security data on universe of workers from Italy’s Social Security Office (INPS) with firm-level balance sheet data from Centrale dei Bilanci to get a matched employer-employee dataset for the universe of workers in Italy in 1985-2014. To identify political connections at the firm level, we combine this matched employer-employee dataset with administrative data on local politicians from the Ministry of the Interior (RLP). To study firms’ innovation activities we combine the above firm-level data with patents and citations information from PATSTAT. We utilize this comprehensive micro-level dataset to document a set of motivating reduced-form evidence. In particular, among others, we analyze: 1) the characteristics of firms that have political connections in terms of a range of real outcomes, like investment, innovation behavior, productivity growth, etc. 2) firm dynamics in industries/locations where political connections are more prevalent, 3) the link between firms’ connections and ease of access to financing.
    Date: 2017
  11. By: Rune Dahl Fitjar; Martin Gjelsvik
    Abstract: This paper examines why firms sometimes collaborate locally rather than with higher-quality universities at a distance. Existing research has mostly relied on the localised knowledge spillover, or LKS, model to explain this. This model holds that knowledge transfer across distance is costly, and collaborating locally reduces the risk of information loss when the knowledge is transferred. However, there are various other reasons that could also explain the pattern. If the local university can make a useful contribution, firms might choose to look no further. Firms may also see collaboration as a long-term investment, helping to build up research quality at the local university with the hope of benefiting in the future. Finally, firms may want to contribute to the local community. We extend the LKS model with these additional motivations and explore their validity using data from 23 semi-structured interviews of firms that collaborate intensively with lower-tier local universities.
    Keywords: University-industry linkages, Knowledge spillovers, Geographical proximity, Collaboration
    JEL: O32 D21
    Date: 2017–12
  12. By: Shohei Funatsu; Yasuo Sugiyama
    Abstract: The purpose of this study is to examine the relationship between the processes through which a firm introduces or absorbs knowledge, and those through which it is applied within the firm by focusing on the in-bound type of “open innovation” process. Existing studies do not pay much attention to knowledge application and have hardly examined the relationship between knowledge transfer and application. If the transfer and application are qualitatively different, or in a mutually obstructing relationship, knowledge application would require specific management. We offer three key findings based on qualitative analysis of interviews and participant fieldwork data. As a result of the analysis, we assert the following conclusion. First, if the knowledge is more novel to the recipient, the motivation for open innovation increases, but the uncertainty in knowledge application increases at the same time. Second, if the uncertainty in knowledge application is high, or if the knowledge is novel or implicit to the recipient, the need for additional investment by firms such as establishing a new department or managing specialists will increase in order to maintain or accumulate the knowledge. Finally, if the recipient homogenizes to the source as scientific researchers, the homogenization promotes transfer but obstructs application.
    Keywords: open innovation, knowledge transfer, absorptive capacity, knowledge management, grounded theory approach
    Date: 2017–12
  13. By: Jirjahn, Uwe (University of Trier)
    Abstract: From a theoretical viewpoint the relationship between foreign ownership and unionization is ambiguous. On the one hand, foreign owners have better opportunities to undermine workers' unionization. On the other hand, workers of foreign-owned firms have an increased demand for the protection provided by unions. Which of the two opposing influences dominates can vary according to moderating circumstances. This study shows that firm size and industry-level bargaining play a moderating role. The relationship between foreign ownership and unionization is negative in larger firms whereas it is positive in smaller firms. Coverage by industry-level collective bargaining makes a positive relationship both stronger and more likely.
    Keywords: corporate globalization, foreign direct investment, union membership, firm size, centralized collective bargaining
    JEL: F23 J51 J52
    Date: 2017–11

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