nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒03‒05
sixteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The impact of petty corruption on firm innovation in Vietnam By Nguyen, Ngoc Anh; Doan, Quang Hung; Nguyen, Ngoc Minh; Tran-Nam, Binh
  2. For a transformative Industry & Innovation Strategy By Pietro Moncada-Paterno-Castello; Alex Coad; Antonio Vezzani
  3. Inter-Firm Networks and Firm Performance: The Case of Italy By Chiara Burlina
  4. SMEs and Start-Ups. Importance and Support Policies in European Union and Romania By Herte, Anamaria Diana
  5. Credit constraints, firms investment and growth evidence from survey data By Miguel García-Posada Gómez
  6. The impact of EUREKA projects on the economic performance of R&D SMEs By Michele Cincera; Gilles Eric Fombasso Toyem
  7. The 2017 EU Industrial R&D Investment Scoreboard By Hector Hernandez; Nicola Grassano; Alexander Tuebke; Lesley Potters; Sara Amoroso; Mafini Dosso; Petros Gkotsis; Antonio Vezzani
  8. Weaker jobs, weaker innovation. Exploring the temporary employment-product innovation nexus By Armanda Cetrulo; Valeria Cirillo; Dario Guarascio
  9. Dinner Table Human Capital and Entrepreneurship By Hvide, Hans K
  10. Public financial support and innovation in Colombian manufacturing firms By Barrios, Fernando; Forero, Clemente; Perry, Guillermo
  11. Does Entrepreneurial Logic Impact Funding Evaluation of Startups? By Jain, Rajesh; Mendonca, Valerie; Vohra, Neharika; Sharma, Supriya
  12. Are CEOs More Likely to Be First-Borns? By Custodio, Claudia; Siegel, Stephan
  13. Government Debt and the Returns to Innovation By Croce, Mariano Massimiliano; Nguyen, Thiên Tung; Raymond, Steve; Schmid, Lukas
  14. Technology Polarization By Koki Oikawa; Minoru Kitahara
  15. The 2017 EU Survey on Industrial R&D Investment Trends By Lesley Potters; Nicola Grassano; Alexander Tuebke
  16. Inter-firm Technological Proximity and Knowledge Spillovers By Koki Oikawa

  1. By: Nguyen, Ngoc Anh; Doan, Quang Hung; Nguyen, Ngoc Minh; Tran-Nam, Binh
    Abstract: Corruption has been found to have complex effects on firm innovation.Limited theoretical and empirical evidence to date has been rather inconclusive. This study employs econometric estimation techniques to analyze data from small and medium manufacturing enterprises in Vietnam to assess the impact of petty corruption on firm innovation. The empirical results tend to support the "greasing" impact of corruption on innovation. Specifically, informal payments by Vietnamese firms are shown to encourage overall innovation, product improvement, innovation and new innovation. In view of the commonplace business practice of paying small informal fees to speed up transactions in the inefficient public sector in Vietnam, this finding is not entirely unexpected, though troubling.
    Keywords: Corruption, Viet Nam, Innovation
    JEL: O17 O3
    Date: 2016–06
  2. By: Pietro Moncada-Paterno-Castello (European Commission - JRC); Alex Coad (CENTRUM Católica Graduate Business School, Pontificia Universidad Católica del Perú, Lima, Perú); Antonio Vezzani (European Commission - JRC)
    Abstract: - EU R&D and innovation performance largely depends on industrial specialisation. - The EU needs a long-term strategy to foster industrial competitiveness. - A framework for designing a new transformative industry & innovation policy is proposed.
    Keywords: R&I, Innovation Policy, Industrial Policy, Innovation.
    Date: 2018–02
  3. By: Chiara Burlina
    Abstract: This study investigates a particular type of network, the inter-firm network (IFN), and its impact on performances of Italian firms between 2010-2015. After revising the literature on alliances and networks for what concerns the geographical and industrial dimension, I focus my attention on networks’ performance and innovation propensity. The empirical analysis, based on a sample of about 4,000 firms, is divided in two parts: firstly, applying a “differencein- difference” technique, is tested the impact of being in an IFN; secondly, focusing on year 2013, are measured the different effects of IFN characteristics. Results demonstrate that belonging to an IFN has a positive impact on firms’ growth. Moreover, industry heterogeneity of members and internationalisation scope (rather than innovation) turn out to be the main factors increasing firm’s profitability and economic growth.
    Keywords: Inter-firm network, Alliances, Performance, Difference-in-Difference, Innovation.
    JEL: C3 L25 P25 R12
    Date: 2018–01
  4. By: Herte, Anamaria Diana
    Abstract: Small and medium-sized enterprises (SMEs) are considered as being the engine of the European economy. They lead to job creation and economic growth, guaranteeing social stability. Nine out of ten enterprises are SMEs, which generate two out of three new jobs. SMEs also stimulate entrepreneurship and innovation, and are therefore very important for boosting competitiveness and employment. Given their importance to Europe's economy, SMEs are a major objective of the European Union's policy. The European Commission has as its major aim to promote entrepreneurship and improve the business environment for SMEs by enabling them to fully realize their potential in today's globalized economy by giving them the opportunity to access funds through various programs. This paper contains some definitions and interpretations of SMEs and start-ups and aims to outline their importance in the contemporary economy as well as their support policies.
    Keywords: SMEs; Start-up concepts and policies, EU, Romania
    JEL: E60 M21
    Date: 2017–11–23
  5. By: Miguel García-Posada Gómez (European Central Bank and Banco de España)
    Abstract: We assess the impact of credit constraints on investment, inventories and other working capital and firm growth with a large panel of small and medium-sized enterprises from 12 European countries for the period 2014-2016. The data come from the Survey on the access to finance of enterprises (SAFE), a survey that is especially designed to analyse the problems in the access to external finance of European SMEs. The key identification challenge is a potential reverse-causality bias, as firms with poor investment and growth opportunities may have a higher probability of being credit constrained. We implement several strategies to overcome this obstacle: proxies for investment opportunities, lagged regressors, random effects and instrumental variables. Our findings suggest that credit constraints, both in bank financing and other financing (e.g. trade credit), have strong negative effects on investment in fixed assets, while the impact on firm growth and working capital is less robust.
    Keywords: investment, firm growth, working capital, ordered probit, instrumental variables
    JEL: G30 G31 G32
    Date: 2018–02
  6. By: Michele Cincera; Gilles Eric Fombasso Toyem
    Abstract: While the benefits of innovative activities are universally acknowledged, current research on how and when governments should intervene to assist firms still has substantial knowledge gaps. In this paper, we consider two forms of government intervention, namely EUREKA network and cluster technological collaborative projects, and assess their impact on the performance of beneficiary firms over the period 2005-2015. The methodology implemented consists in comparing the beneficiaries of projects (which are typically R&D SMEs) with a similar control group, using the difference-in-differences estimation technique. We find that beneficiaries of both network and cluster projects have created on average more jobs and have increased their sales more than non-funded firms over the period of study. We also find that smaller R&D consortia (i.e. network projects) have a positive and greater influence in terms of commercialisation, whereas bigger consortia (i.e. cluster projects) have a positive and greater influence in terms of employment growth. In general, projects of shorter duration (i.e. from one to two years) are those showing the best outcomes compared to projects of longer duration (i.e. from three to seven years).
    Keywords: EUREKA programme, R&D SMEs, Counterfactual analysis, Diff-in-diff estimation, Employment growth, Turnover growth
    Date: 2018–02
  7. By: Hector Hernandez (European Commission - JRC); Nicola Grassano (European Commission - JRC); Alexander Tuebke (European Commission - JRC); Lesley Potters (European Commission - JRC); Sara Amoroso (European Commission - JRC); Mafini Dosso (European Commission - JRC); Petros Gkotsis (European Commission - JRC); Antonio Vezzani (European Commission - JRC)
    Abstract: The 2017 edition of the EU Industrial R&D Investment Scoreboard (the Scoreboard) comprises the 2500 companies investing the largest sums in R&D in the world in 2016/17. These companies, based in 43 countries, each invested over €24 million in R&D for a total of €741.6bn which is approximately 90% of the world’s business-funded R&D. They include 567 EU companies accounting for 26% of the total, 822 US companies for 39%, 365 Japanese companies for 14%, 376 Chinese for 8% and 370 from the rest-of-the-world (RoW) for 13%. This report analyses the main changes in companies’ R&D and economic indicators over the past year and their performance over the past ten years. It also includes results from additional complementary studies on companies’ productivity, their development of ICT-related technologies and scientific publication activity.
    Keywords: Industrial R&D, top R&D investors, innovation, company performance, economic and innovation performance
    Date: 2017–12
  8. By: Armanda Cetrulo; Valeria Cirillo; Dario Guarascio
    Abstract: This work explores the relationship between temporary employment and product innovation focusing on five major European economies (France, Germany, Italy, Spain and the Netherlands) observed between 1998 and 2012. Building on the conceptual framework proposed by Kleinknecht et al. (2014), the analysis distinguishes sectors according to their technological characteristics and regimes finding that industries using temporary employment tend to have a weaker product innovation propensity. The negative correlation between temporary employment and innovation is stronger in medium and hightech sectors, identified using both the "Cumulativeness" proxy stemming from Peneder's classification (Peneder, 2010) as well as distinguishing between different Schumpeterian regimes - Schumpeter Mark I vs II - of knowledge accumulation.
    Keywords: product innovation, labor market flexibility, temporary employment
    Date: 2018–02–22
  9. By: Hvide, Hans K
    Abstract: We document three new facts about entrepreneurship. First, a majority of male entrepreneurs start a firm in the same or a closely related industry as their fathers' industry of employment. Second, this tendency is correlated with intelligence: higher-IQ entrepreneurs are less likely to follow their fathers.Third, an entrepreneur that starts a firm in the same 5-digit industry as where his father was employed tends to outperform entrepreneurs in the same industry whose fathers did not work in that industry. We consider various explanations for these facts and conclude that "dinner table human capital", where children obtain industry knowledge through their parents, is an important factor behind what type of firm is started and how well it performs.
    Date: 2018–01
  10. By: Barrios, Fernando; Forero, Clemente; Perry, Guillermo
    Abstract: We evaluate the impact of public financial support, both subsidies and credit, on different types of innovation in Colombian industry. We compare it with the effects of financing innovation with own resources and with private loans, and analyze the issue of crowding-out, for different classes of innovation. To control for potential selection bias, we apply Propensity Score Matching (PSM) techniques to a sample of 9173 manufacturing firms for the period 2011-2012, combining data from two available sources (Development and Technological Innovation Survey –EDIT6- and Annual Manufacturing Survey –EAM-). Results show that public financial support has a significant positive effect on products new for the international market and on process innovations. We further find that allocation of own resources of the firm to innovation activities has a positive effect on a wide variety of forms of innovation. Notwithstanding, its impact is substantially smaller than that of public funding in the cases of products new for the international market and on new processes. Commercial loans for innovation activities have no significant effects on either product or process innovations. Finally, we find that public funding increases the probability of allocating own resources to finance innovation activities, but reduces the probability of using private external sources.
    Keywords: Desarrollo, Economía, Finanzas públicas, Investigación socioeconómica, Sector financiero,
    Date: 2018
  11. By: Jain, Rajesh; Mendonca, Valerie; Vohra, Neharika; Sharma, Supriya
    Abstract: From a neoclassical economics perspective, entrepreneurship involves rational decision-making and entrepreneurs engage in rational, goal-driven behavior. However, such a view is put to test in current, dynamic business environments characterized by high level of uncertainty. Expert entrepreneurs adopt a nimble, iterative and effectual approach to be able to navigate such dynamic environments. While there is growing confidence about the desirable outcomes of an effectual logic, there is limited evidence based understanding of how such a logic is perceived by stakeholders in the entrepreneurial ecosystem. For instance, how do investors assess causal vs. effectual logics of entrepreneurs? This study attempts to pursue this question. We use data from a national level entrepreneurship competition held in India in 2015 to understand the influence of entrepreneurs’ logics on their funding outcomes. We find that the logics of the selected and not selected entries are significantly distinct. Furthermore, results from a binary logistic regression reveal an inclination of investors towards causal logic. Adoption of causal logic increases a startup’s chances of funding by about 50%. Findings are discussed in reference to implications for the current entrepreneurship ecosystem.
    Date: 2018–02–21
  12. By: Custodio, Claudia; Siegel, Stephan
    Abstract: We investigate the link between birth order and the career outcome of becoming Chief Executive Officer (CEO) of a company. We find that CEOs are more likely to be the first-born, i.e., oldest, child of their family. This result holds for family firms, where traditionally the oldest child is appointed to run the family business, but also for non-family firms. We also find that CEOs are significantly less likely to have older brothers (relative to younger brothers) than older sisters (relative to younger sisters). The advantage of being first-born seems to decay over time, consistent with changing family structures and rearing practices as well as changing social norms.
    Keywords: birth order; CEO; family firm; first born; rearing environment; upbringing
    Date: 2018–01
  13. By: Croce, Mariano Massimiliano; Nguyen, Thiên Tung; Raymond, Steve; Schmid, Lukas
    Abstract: Elevated levels of government debt raise concerns about their effects on long-term growth prospects. Using the cross section of US stock returns, we show that (i) high-R&D firms are more exposed to government debt and pay higher expected returns than low-R&D firms; and (ii) higher levels of the debt-to-GDP ratio predict higher risk premia for high-R&D firms. Furthermore, rises in the cost of capital for innovation-intensive firms predict declines in subsequent productivity and economic growth. We propose a production-based asset pricing model with endogenous innovation and fiscal policy shocks that can rationalize key aspects of the empirical evidence. Our study highlights a novel and distinct risk channel shaping the link between government debt and future growth.
    Keywords: Cross Section of Stock Returns; Fiscal Uncertainty; Government Debt; growth; predictability; R&D
    Date: 2018–01
  14. By: Koki Oikawa; Minoru Kitahara
    Abstract: We construct a new method to describe firm distributions within technology fields and investigate the relationship between those distributions and aggregate innovation. To locate firms on a technology space, we apply multidimensional scaling for the inter-firm technological dissimilarity matrices that are computed from patent citation overlaps among firms using the NBER US patent dataset. Our estimated firm distributions show increasing trends in technological distance and polarization on average, where we follow Duclos, Esteban and Ray (2004) to measure polarization. We construct a model of inter-group competition in which polarization stimulates aggregate R&D. The model fits data before 1990 but the impact of polarization is reversed after that. We attribute the structural change to the major patent reform in the United States in 1980s.
  15. By: Lesley Potters (European Commission - JRC); Nicola Grassano (European Commission - JRC); Alexander Tuebke (European Commission - JRC)
    Abstract: This twelfth Survey on Industrial R&D investment trends is based on 151 responses of mainly large firms from a subsample of the 1000 EU-based companies in the 2015 EU Industrial R&D Investment Scoreboard. These 151 companies are responsible for €53.9 billion R&D investment, constituting almost one fourth of the total R&D investment by the 1000 EU Scoreboard companies.
    Keywords: Research and Development, R&D, innovation, expectations, drivers
    Date: 2017–12
  16. By: Koki Oikawa
    Abstract: This paper has two objectives. One is to survey previous studies concerning indicators of technological proximity and distance to identify technological relationships between firms, particularly in terms of spillovers of technology and knowledge. The other objective is to reexamine the spillover effect in research and development by combining the traditional technological proximity with a measurement of within-field technological relationships, which is based on patent citation overlaps. I find that the average technological proximity is increasing over these three decades in the United States and within-field technological proximity shows sizable variations, and that the spillover effect is underestimated unless the changes in within- field proximities are taken into account.Length: 27 pages

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