nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒04‒02
seventeen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Is There a Role for Patents in the Financing of Innovative Firms? By Bronwyn H. Hall
  2. International Technology Sourcing and Knowledge Spillovers: Evidence from OECD Countries By Sophia Chen; Estelle Dauchy
  3. Immigrant entrepreneurs, diasporas and exports By Bratti, Massimiliano; De Benedictis, Luca; Santoni, Gianluca
  4. R&D investments and spillovers under endogenous absorptive capacity: Competitive R&D cannot take full-advantage of complementarity in absorptive capacity while cooperative R&D can By Mário Alexandre Patrício Martins da Silva
  5. Entrepreneurial Personality in Predicting Self-Regulation on Small and Medium Business Entrepreneurs in Pekanbaru, Riau, Indonesia By Syarifah Farradinna
  6. Cohesion Policy Meets Heterogeneous Firms By Loredana Fattorini; Mahdi Ghodsi; Armando Rungi
  7. The power paradox : Implicit and explicit power motives, and the importance attached to prosocial organizational goals in SMEs By Hermans, Julie; Slabbinck, Hendrik; Vanderstraeten, Johanna; Brassey, Jacqueline; Dejardin, Marcus; Ramdani, Dendi; van Witteloostuijn, Arjen
  8. Internal and External Determinants of Audit Delay: Evidence from Indonesian Manufacturing Companies By Patricia Diana
  9. Specializing in Generality: Firm Strategies When Intermediate Markets Work By Conti, Raffaele; Gambardella, Alfonso; Novelli, Elena
  10. The Impact of the French Policy Mix on Business R&D: How Geography Matters By Benjamin Montmartin; Marcos Herrera; Nadine Massard
  11. Family firms: the problem of second-generation bosses By Renata Lemos; Daniela Scur
  12. Banche locali e piccole imprese dopo la crisi tra nuove regole e innovazioni digitali By Pietro Alessandrini; Luca Papi
  13. The impact of patent protection on R&D. Evidence using export markets. By Joel Blit; Mikal Skuterud; Jue Zhang
  14. The entrepreneur's experiential diversity and entrepreneurial performance By Spanjer, Anne; van Witteloostuijn, Arjen
  15. Firm Dynamics and Multifactor Productivity: An Empirical Exploration By Pierre St-Amant; David Tessier
  17. The Effect of R&D Growth on Employment and Self-Employment in Local Labour Markets By Tommaso Ciarli; Alberto Marzucchi; Edgar Salgado; Maria Savona

  1. By: Bronwyn H. Hall
    Abstract: It is argued by many that one of the benefits of the patent system is that it creates a property right to invention that enables firms to obtain financing for the development of that invention. In this paper, I review the reasons why ownership of knowledge assets might be useful in attracting finance and then survey the empirical evidence on patent ownership and its impact on the ability of firms to obtain further financing at different stages of their development, both starting up and after becoming established. Studies that attempt to separately identify the role of patent rights and the underlying quality of the associated innovation(s) will be emphasized, although these are rather rare.
    JEL: G24 G32 L26 O34
    Date: 2018–03
  2. By: Sophia Chen; Estelle Dauchy
    Abstract: How much do firms benefit from foreign R&D and through what channel? We construct a global network of corporate innovation using more than 1.5 million patents granted to firms in OECD countries. We test the “international technology sourcing” hypothesis that foreign innovation activities tap into foreign R&D and improve home productivity through knowledge spillovers. We find that firms with stronger inventor presence in technology frontier countries benefit disproportionately more from their R&D. The strength of knowledge spillovers depends on the direction of technology sourcing. Knowledge externality is larger for firms in technology frontier countries than for firms in non-frontier countries.
    Date: 2018–03–12
  3. By: Bratti, Massimiliano (European Commission – JRC); De Benedictis, Luca (University of Macerata); Santoni, Gianluca (CEPII)
    Abstract: In this paper we highlight a new complementary channel to the business and social network effect à la Rauch (2001) through which immigrants generate increased export flows from the regions in which they settle to their countries of origin: they can become entrepreneurs. Using very small-scale (NUTS-3) administrative data on immigrants' location in Italy, the local presence of immigrant entrepreneurs (i.e. firms owned by foreign-born entrepreneurs) in the manufacturing sector, and on trade flows in manufacturing between Italian provinces and more than 200 foreign countries, we assess the causal relationship going from diasporas and immigrant entrepreneurs towards export flows. Both the size of the diaspora and the number of immigrant entrepreneurs have a positive, significant and economically meaningful effect on exports. In particular, we find that increasing the stock of (non-entrepreneur) immigrants by 10% would lead to a 1.7% increase in exports in manufacturing, while increasing the number of immigrant entrepreneurs in manufacturing by 10% would raise exports by about 0.6%.
    Keywords: exports, immigrants, gravity model, immigrant entrepreneurs, Italy
    JEL: F10 F14 F22 R10
    Date: 2018–01
  4. By: Mário Alexandre Patrício Martins da Silva (Faculdade de Economia do Porto)
    Abstract: We show that the setting up of general conditions on complementarity in absorptive capacity gives rise to different, if not opposite Nash equilibrium outcomes to those found when absorptive capacity is assumed to be determined only by the similarity of R&D orientations. Firms that cooperate in R&D can take full advantage of complementarity in R&D by adopting firm-specific R&D paths, which appears to contradict Kamien and Zang’s (2000) findings, and so would contradict Weithaus’ (2005) predictions. Oddly, firms competing in R&D cannot gain the most from the potential of complementarity in knowledge by not choosing firm-specific R&D approaches in equilibrium under even milder conditions, which is contrary to another prediction of the Kamien and Zang’s and Weithaus’ models.
    Keywords: Absorptive capacity, complementarities, R&D, knowledge spillovers
    JEL: O33
    Date: 2017–11
  5. By: Syarifah Farradinna (Faculty of Psychology, Islamic University of Riau, Pekanbaru-Riau 28284, Indonesia Author-2-Name: Tengku Nila Fadhlia Author-2-Workplace-Name: Faculty of Psychology, Islamic University of Riau, Pekanbaru-Riau 28284, Indonesia Author-3-Name: Azmansyah Author-3-Workplace-Name: Faculty of Economic, Islamic University of Riau, Pekanbaru-Riau 28284, Indonesia)
    Abstract: Objective – The present study was conducted to describe the psychological state of the entrepreneur in the utilization of resource potential and business development, and to identify the personality factors that most influence self-regulation in SMEs entrepreneurs. Methodology/Technique – This study was performed using a measurement scale in order to test the response of the personality factors and self-regulation of entrepreneurs of SMEs in Pekanbaru, Riau. The sample included 152 entrepreneurs of SMEs. Regression analysis was been applied to test the influence of the personality factors contributing towards self-regulation. In addition, descriptive response analysis is used to describe the response shown by the participants regarding the variables measured. Findings – The analysis shows that personality factors (openness to experience, conscientiousness, extraversion, agreeableness) have a significant effect on self-regulation in entrepreneurs in Pekanbaru City. The results also show that the personality factor neuroticism does not have a significant effect on self-regulation in entrepreneurs of SMEs in Pekanbaru, Riau. Novelty – SMEs in Indonesia hold the potential for increasing economic growth. Despite this, the Central Bureau of Statistics has recorded a decrease in the number of new SMEs from 2011 to 2014.
    Keywords: Entrepreneurial Personality; Self-Regulation; Small and Medium Business Entrepreneurs.
    JEL: L20 L26 L29
    Date: 2018–02–24
  6. By: Loredana Fattorini; Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Armando Rungi
    Abstract: In this paper, we empirically test the effects of the EU’s ‘cohesion policy’ on the performance of 273,500 European manufacturing firms after combining regional policy data at NUTS 2 level with firm-level data. In a framework of heterogeneous firms and different absorptive capacity of regions, we show that the financing of ‘cohesion policy’ by the European Regional Development Fund (ERDF) aimed at direct investments in R&D correlates with an improvement of firms’ productivity in a region. Conversely, funding aimed at overall Business Support correlates with negative productivity growth rates. In both cases, we registered an asymmetric impact along the firms’ productivity distribution, where a stronger impact can be detected in the first quartile, i.e. less efficient firms in a region. We finally argue that considering the heterogeneity of firms allows a better assessment of the impact of ‘cohesion policy’ measures.
    Keywords: firm performance, total factor productivity, cross-country analysis, convergence, regional policy
    JEL: D22 D24 E23 F15 L25
    Date: 2018–03
  7. By: Hermans, Julie; Slabbinck, Hendrik; Vanderstraeten, Johanna; Brassey, Jacqueline (Tilburg University, School of Economics and Management); Dejardin, Marcus; Ramdani, Dendi; van Witteloostuijn, Arjen (Tilburg University, School of Economics and Management)
    Abstract: We examine the fundamental tension between explicit and implicit power motives; and their combined impact on the importance attached to prosocial organizational goals in small businesses (SMEs). We show that key decision-makers with a dominant implicit power motive attach more importance to the prosocial goals of job creation and taking care of the environment in their businesses. However, we reveal that this positive relationship is moderated by their explicit power motive. Once decision-makers in SMEs consciously seek for power, the positive relationship is neutralized. With these results, we highlight the conceptual and methodological differences between implicit and explicit power motives. We could obtain these results because we developed and validated an innovative implicit motive measurethe Shortened Pictorial Attitude Implicit Association Test (SPA-IAT). Contrary to the currently available implicit motive measures, the SPA-IAT is fast and easy to use and analyze, which makes this novel instrument well suited for research in business settings.
    Date: 2017
  8. By: Patricia Diana (Universitas Multimedia Nusantara, Gading Serpong - Tangerang, 15810, Banten, Indonesia Author-2-Name: Maggy Author-2-Workplace-Name: Universitas Multimedia Nusantara, Gading Serpong - Tangerang, 15810, Banten, Indonesia)
    Abstract: Objective – This study aims to examine and explain the relationship between a company's internal factors such as profitability, solvency and audit committee, and external factors including complexity and size of public accounting firms, with audit delay. Methodology/Technique – The importance of financial information is, in part, due to its utility for assessment of company performance. Hence, financial information should be produced and reported as quickly as possible each year. Findings – This study finds that manufacturing companies with high debt levels and low profitability experience longer audit delay. Moreover, the results in this study show that debt level is the most influential and significant factor with a positive relationship to audit delay. Novelty – This study shows that profitability, the number of members on an audit committees and public accounting firm (KAP) size all have an insignificant negative relationship with audit delay. Further, complexity has an insignificant positive relationship with audit delay.
    Keywords: Profitability; Debt; Complexity; Audit Committees; Audit Delays.
    JEL: M42 M41
    Date: 2018–02–21
  9. By: Conti, Raffaele; Gambardella, Alfonso; Novelli, Elena
    Abstract: This paper studies the relationship between two decisions shaping the organizational configuration of a firm: whether to make the upstream resources more general and deployable to more markets (vs. keeping them tailored to a few markets), and whether to trade with downstream firms as an upstream supplier of intermediate products and services (vs. directly entering downstream markets). While the literature has looked at these two decisions separately, we argue that they depend on each other. This has the important implication that they can generate organizational complementarities, inducing firms to implement them simultaneously. We are motivated in particular by the observation that an increasing number of firms invest in general upstream resources and exploit them as upstream suppliers of intermediate services or products-an organizational configuration resulting from a strategy that we refer to as specialization in generality. Interestingly, the literature following the seminal work by Penrose (1959) and Nelson (1959) has mainly highlighted the use of general upstream resources to enter new downstream markets. We identify the supply and demand conditions under which specialization in generality is instead more likely to emerge: lack of prior downstream assets, on the supply side, and a roughly equal distribution of buyers across intermediate markets (a "broad" demand), on the demand side. We test our predictions using a sample of firms in the U.S. laser industry between 1993 and 2001. A regulatory shock that increases the value of trading relative to downstream entry provides the setting for a quasi-natural experiment, which corroborates our theoretical predictions.
    Date: 2018–03
  10. By: Benjamin Montmartin (SKEMA Business School; Université Côte d’Azur; OFCE Sciences.Po; GREDEG CNRS); Marcos Herrera (CONICET - IELDE; National University of Salta, Argentina); Nadine Massard (GAEL UMR 1215; Université Grenoble Alpes, France)
    Abstract: Based on a spatial extension of an R&D investment model, this paper measures the macroeconomic impact of the French R&D policy mix on business R&D using regional data. Our measure takes into account not only the direct effect of policies but also indirect effects generated by the existence of spatial interaction between regions. Using a unique database containing information on the levels of various R&D policy instruments received by firms in French NUTS3 regions over the period 2001-2011, our estimates of a spatial Durbin model with structural breaks and fixed effects reveal the existence of a negative spatial dependence among R&D investments in regions. In this context, while a-spatial estimates would conclude that all instruments have a crowding-in effect, we show that national subsidies are the only instrument that is able to generate significant crowding-in effects. On the contrary, it seems that the design, size and spatial allocation of funds from the other instruments (tax credits, local subsidies, European subsidies) lead them to act (in the French context) as beggar-thy-neighbor policies.
    Keywords: Policy mix evaluation, R&D investment, Spatial panel, French NUTS3 regions
    JEL: H25 O31 O38
    Date: 2018–03
  11. By: Renata Lemos; Daniela Scur
    Abstract: Although family firms are widely praised as the 'backbone of the economy', their productivity is often hampered by weak management. Research by Daniela Scur and Renata Lemos provides new evidence on the performance of 'dynastic' family-owned firms and explores why those led by family bosses adopt fewer structured management practices.
    Keywords: CEO, firm productivity, management
    Date: 2018–03
  12. By: Pietro Alessandrini (Di.S.E.S. - Universita' Politecnica delle Marche); Luca Papi (Di.S.E.S. - Universita' Politecnica delle Marche)
    Abstract: In questo lavoro abbiamo preso in esame l'impatto sul sistema bancario italiano della grande crisi finanziaria e della grande innovazione tecnologica, denominata fintech. Ci siamo chiesti se in questo nuovo contesto possono sopravvivere banche locali fortemente radicate nei territori in stretta relazione con le piccole imprese. L'elaborazione di indicatori di bilancio delle diverse tipologie di banche, distinte per dimensione, dimostra che l'impatto della crisi non ha avuto conseguenze peggiori per le banche piu' piccole rispetto alle maggiori. Piu' della crisi, che ha livellato gli indicatori di rischiosita' bancaria, hanno influito in modo discriminante sulle banche locali le politiche di stabilizzazione anti-crisi: la politica monetaria espansiva e la politica di regolamentazione estesa e invasiva. Tutta questa problematica va rivista considerando la grande trasformazione tecnologica i nuovi prodotti e processi dei fintech. , che sono sempre piu' destinati a incidere anche sulle strutture di intermediazione Con le incognite su nuove opportunita' e nuovi rischi che cio' comporta. Verranno messe in discussione sia il concetto di dimensione strutturale sia la concorrenza non solo tra banche, ma anche tra banche e non banche. The paper deals with the impact on the Italian banking system of two epochal factors: the great financial crisis and the big technological innovation with new financial products and processes, denominated fintech. Our main question concerns the bank-firm relations. In particular we are interested on if and how local banks could be still considered important for small and medium enterprises. Using balance sheet indicators, our conclusion is that the negative impact of the crisis has not been different between small and big banks. The riskiness indicators appear to be leveled at the end of the crisis. Rather than the crisis, the expansive monetary policy and the new regulatory system have produced an asymmetric impact that is penalizing local banks. Moreover, the digital transformation of fintech is expected to influence the financial intermediation structure, with new opportunities and new risks. Both issues on bank size and competition must be entirely revisited.
    Keywords: financial crisis, local banks, regulation, fintech
    JEL: G01 G18 G21 G23
    Date: 2018–03
  13. By: Joel Blit (Department of Economics, University of Waterloo); Mikal Skuterud (Department of Economics, University of Waterloo); Jue Zhang (Department of Economics, University of Waterloo)
    Abstract: We examine the effect of changes in skilled-immigrant population shares in 98 Canadian cities between 1981 and 2006 on per capita patents. The Canadian case is of interest because its `points system’ for selecting immigrants is viewed as a model of skilled immigration policy. Our estimates suggest that the impact of increasing the share of university-educated immigrants on patenting rates is smaller than the impact that both native-borns have in Canada and immigrants have in the U.S.. The modest contribution of Canadian immigrants to innovation is largely explained by the fact that only about one-third of Canadian STEM-educated immigrants find employment in STEM jobs (relative to two-fifths of the Canadian-born and one-half of immigrants in the U.S.). Consistent with this, we find a large and significant effect of STEMeducated immigrants when we also condition on STEM employment. Our results suggest potential benefits from giving employers a role in the selection of skilled immigrants.
    JEL: J61 J18 O31
  14. By: Spanjer, Anne (Tilburg University, School of Economics and Management); van Witteloostuijn, Arjen (Tilburg University, School of Economics and Management)
    Abstract: This study examines the relationship between the entrepreneur’s experiential diversity and entrepreneurial performance. First, we argue that entrepreneurial and industry experiences are positively associated with performance. Second, by combining Lazear’s jacks-of-all-trades theory with the cognition and learning literatures, an inverted U-shaped experience diversity-performance relationship is predicted. The hypotheses are tested using data from the US National Labor Survey Youth 1979 and O*NET. We find that industry experience is positively associated with performance, but entrepreneurial experience is negatively related. Moreover, experience diversity measured in terms of skills is found to be positively associated with performance up to a certain threshold. After this threshold, an increase in an entrepreneur’s experiential diversity lowers performance. Entrepreneurs with 23 different skills have the highest performance. Furthermore, when depreciating for experience, experience diversity measured in terms of both skills and knowledge is found to be positively related to performance.
    Date: 2017
  15. By: Pierre St-Amant; David Tessier
    Abstract: There are indications that business dynamism has declined in advanced economies. In particular, firm entry and exit rates have fallen, suggesting that the creative destruction process has lost some of its vitality. Meanwhile, productivity growth has slowed. Some believe that lower entry and exit rates partly explain the weaker productivity growth. However, the evidence supporting, or invalidating, this view is scarce. In the present paper, we use multi-horizon causality tests and dynamic simulations with Canadian and US data to examine the following question: Do changes to entry and exit rates provide information about, or Granger-cause, future productivity? We do not find significant evidence that entry rates Granger-cause productivity. But we do find evidence that productivity causes entry rates. Using small models with economy-wide data (but not at the sectoral level), we find some evidence that exit rates cause productivity in both countries. This suggests that the decline in productivity growth is partly caused by a decline in the productivity-based exit selection process. However, when other variables, such as measures of the business cycle and the real effective exchange rate, are controlled for, the significance of exit rates in explaining productivity tends to fall. Specifically, business-cycle measures appear to cause both productivity and the exit rate. This suggests that firm dynamics are an intermediate, not an ultimate, cause of productivity growth.
    Keywords: Firm dynamics, Productivity
    JEL: M13 D24 O47
    Date: 2018
  16. By: Mário Alexandre Patrício Martins da Silva (Faculdade de Economia da Universidade do Porto)
    Abstract: In this paper, we explain the analytics of a particular type of mechanism of Open Innovation (OI), namely the management of non-pecuniary exchange of information, and address the relationship between Intellectual Property Rights (IPRs), particularly patent rights, and OI using a static game-theoretic setting of Research and Development competition. We show that, surprisingly perhaps, a rise in the strength of patent protection induces the free sharing and dissemination of technological information and other contributions to the OI development of innovations. Conversely, a fall in the strength of the patent system induces the exercise of traditional IPRs by innovative firms to protect their intellectual assets.
    Keywords: Open innovation; IPRs; knowledge spillovers; R&D
    JEL: O33
    Date: 2017–11
  17. By: Tommaso Ciarli (SPRU, University of Sussex); Alberto Marzucchi (SPRU, University of Sussex); Edgar Salgado (SPRU, University of Sussex); Maria Savona (SPRU, University of Sussex)
    Abstract: The paper investigates the effects of firms’ investment in Research and Development (R&D) on employment dynamics in the British local labour markets (Travel to Work Areas). We distinguish between local areas characterised by the initial level of routinised employment of the workforce. We implement a instrumenting strategy to address endogeneity issues in the relation between innovation and employment. Our results suggest that increases in R&D investments mainly affect routinised areas, where the employment created is low skilled, concentrated in non-tradable sectors (like transport, construction) and services. A significant share of the jobs created is self-employment, concentrated in the 25-34 age cohort. We qualify the effect of R&D on self-employment by looking at local firms’ dynamics, which suggest that the increase in self-employment is reflected in a higher number of micro-firms. Rather, in non-routinized areas, R&D results in the expected increase in the demand of high-skilled workers and a reduced demand of low-skill employment.
    Keywords: Innovation; R&D investments; Employment; Self-employment; Local Labour Markets; Routinisation; Skills
    JEL: O33 J24 D3
    Date: 2018–03

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