nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒05‒14
seventeen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Competition effect on innovation and productivity - The Portuguese case By Anabela Santos; Michele Cincera; Paulo Neto; Maria Manuel Serrano
  2. Does the Crowd Support Innovation? Innovation Claims and Success on Kickstarter By Yang, Cathy L.; Mukherjee, Anirban; Xiao, Ping; Chattopadhyay, Amitava
  3. Redes de cooperación entre empresas: un estudio aplicado a cinco clusters en Uruguay By Pablo Galaso; Adrián Rodríguez Miranda; Sebastián Goinheix; Camilo Martínez; Santiago Picasso
  4. Innovating not Only in Cities: Evidence from SMEs By François Deltour; Sébastien Le Gall; Virginie Lethiais
  5. Empirical determinants of business insurances in Non-financial Firms: Are they different from derivatives' determinants? By Hassen Raîs
  6. External search strategies: The role of innovation objectives and specialization By Iferd, Younes; Plötz, Patrick
  7. Canada’s 2018 Innovation Policy Report Card By Daniel Schwanen
  8. Innovation, Finance, and Economic Growth : an agent-based model By Giorgio Fagiolo; Daniele Giachini; Andrea Roventini
  9. Economic Challenges of Lagging Regions III: Recent Investment Trends and Needs By Stefan Jestl; Roman Römisch
  10. How Redeployable are Patent Assets? Evidence from Failed Startups By Carlos J. Serrano; Rosemarie Ziedonis
  11. Green Technologies and Smart Specialisation Strategies: A European Patent-Based Analysis of the Intertwining of Technological Relatedness and Key-Enabling-Technologies. By Sandro Montresor; Francesco Quatraro,
  12. Debt Diversification in Public Real Estate Companies By Alexey Zhukovskiy; Heidi Falkenbach; Ranoua Bouchouicha
  13. Contagious Exporting and Foreign Ownership: Evidence from Firms in Shanghai Using a Bayesian Spatial Bivariate Probit Model By Badi H. Baltagi; Peter H. Egger; Michaela Kesina
  14. Does the Utilization of Information Communication Technology Promote Entrepreneurship: Evidence from Rural China By William Barnett; Mingzhi Hu; Xue Wang
  15. Reconciling the Firm Size and Innovation Puzzle By Anne Marie Knott; Carl Vieregger
  16. Online Annex – Economic Challenges of Lagging Regions: Annex II – Econometric Analysis and Supplemental Tables By Stefan Jestl; Roman Römisch
  17. Academic Inventors and the Antecedents of Green Technologies. A Regional Analysis of Italian Patent Data. By Quatraro, Francesco; Scandura, Alessandra

  1. By: Anabela Santos (Université Libre de Bruxelles, iCite); Michele Cincera (Université Libre de Bruxelles, iCite and ECARES); Paulo Neto (Universidade de Évora – Departamento de Economia, UMPP, CEFAGE-UÉ and CIEO-UALG); Maria Manuel Serrano (Universidade de Évora – Departamento de Sociologia, UMPP and SOCIUS-CSG/ISEG-UL)
    Abstract: The aim of the present paper is to assess the effect of competition on innovation (patent applications) and on productivity (Total Factor Productivity and Labour Productivity), using data from 654 Portuguese firms, according to 208 NACE 4-digits sectors, and over the period 2007 to 2015. For this purpose, two different methodological approaches were used, a Poisson regression model for the patent function and a log-log fixed effect model for the productivity function. The results reveal that, on average, competition has a negative, U-shaped form effect on innovation in the short term, and a positive effect in the medium-long term. Nevertheless, the model focusing only on manufacturing sectors shows some differences from the model considering all economic activities, namely a linear positive effect of competition on innovation. Concerning the effect of competition on productivity, a positive effect on Total Factor Productivity emerged from the analysis, while for labour productivity a negative one prevails.
    Keywords: Competition, Innovation, Productivity.
    JEL: L10 O31 D24
    Date: 2018–05
  2. By: Yang, Cathy L.; Mukherjee, Anirban; Xiao, Ping; Chattopadhyay, Amitava
    Abstract: Online crowdfunding is a popular new tool for raising capital to commercialize product innovation. Product innovation must be both novel and useful (1-4). Therefore, we study the role of novelty and usefulness claims on Kickstarter. Startlingly, we find that a single claim of novelty increases project funding by about 200%, a single claim of usefulness increases project funding by about 1200%, and the co-occurrence of novelty and usefulness claims lowers funding by about 26%. Our findings are encouraging because they suggest the crowd strongly supports novelty and usefulness. However, our findings are disappointing because the premise of crowdfunding is to support projects that are innovative, i.e. that are both novel and useful, rather than projects that are only novel or only useful.
    Keywords: Crowdfunding; Entrepreneurship; Innovation
    JEL: L26 M13 O30
    Date: 2017–07–01
  3. By: Pablo Galaso (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Adrián Rodríguez Miranda (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Sebastián Goinheix (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Camilo Martínez (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Santiago Picasso (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This research studies the collaborative relationships between firms and organizations interacting in five industrial and service clusters in Uruguay: the rubber and plastic cluster in Montevideo and Canelones, the pharmaceutical industry in Montevideo and Canelones, the dairy industry in the coast and south-west of the country, the hotels and restaurants in Colonia and the cluster of hotels and restaurants in Salto. Data was obtained in a fieldwork where face-to-face interviews were conducted with company managing directors in these five clusters. Subsequently, social network analysis was combined with multivariate regression techniques to estimate the causes and effects of inter-firm cooperation, with special attention to the relationship between innovation and cooperation networks. In addition to identifying sectoral and territorial particularities, results allow to identify several causes and consequences, both of cooperation and innovation activities.
    Keywords: cooperation, inter-firm networks, social network analysis, local development, clusters, Uruguay
    JEL: R11 O31 O32 O54
    Date: 2018–04
  4. By: François Deltour (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes, SSG - Sciences sociales et de gestion - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire); Sébastien Le Gall (LEGO - Laboratoire d'Economie et de Gestion de l'Ouest - UBS - Université de Bretagne Sud - UBO - Université de Brest - Institut Mines-Télécom [Paris] - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire, MARSOUIN - Môle Armoricain de Recherche sur la SOciété de l'information et des usages d'INternet - UR1 - Université de Rennes 1 - UBS - Université de Bretagne Sud - UBO - Université de Brest - Ecole Nationale de la Statistique et de Analyse de l'Information - Rennes - Institut Mines-Télécom [Paris] - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire); Virginie Lethiais (LEGO - Laboratoire d'Economie et de Gestion de l'Ouest - UBS - Université de Bretagne Sud - UBO - Université de Brest - Institut Mines-Télécom [Paris] - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire, MARSOUIN - Môle Armoricain de Recherche sur la SOciété de l'information et des usages d'INternet - UR1 - Université de Rennes 1 - UBS - Université de Bretagne Sud - UBO - Université de Brest - Ecole Nationale de la Statistique et de Analyse de l'Information - Rennes - Institut Mines-Télécom [Paris] - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire)
    Abstract: This article discusses the role played by location of small and medium-sized firms on their propensity to innovate. The research adopts a broad definition of innovation and sets the hypothesis that SMEs' propensity to innovate is not higher in large urban areas than in rural ones. Moreover, reducing SMEs' location to their head office tends to overestimate urban areas' innovativeness. Following the administration of an original regional survey, econometric tests are run on a representative sample of 1,253 SMEs in the French Brittany region, completed by location data proposed by the French National Institute of Statistics (Insee). The results confirm that firms located in the largest urban areas of the region are not more innovative that those located in the most isolated areas. They also partially validate the hypothesis that measuring the firms' location using the location of the head offices leads to overestimate the innovativeness of largest urban areas compared to less urbanized one.
    Keywords: Innovation,Localisation,Petites et moyennes entreprises
    Date: 2017–12
  5. By: Hassen Raîs (ESSCA - Ecole Supérieure des Sciences Commerciales d'Angers - ESSCA)
    Abstract: The scientific literature has extensively studied and analyzed the determinants of risks management and focused mainly on the hedging by derivatives. This research focuses on another kind of hedging, namely business insurances and aims to validated and measure the determinants of the implementation and use of these insurances in the non-financial firms. Based on the results of an empirical survey on practices of risk management in non-financial firms, Tobit models are developed to explain the intensity of the use of business insurances by the theoretical determinants developed by risk management theory. Two types of business insurance are analyzed: the Property and Casualty (P&C) Insurance and the Operating Loss (OL) Insurance. These models measure the relationship between level of hedging and different financial characteristics of the firm. They show that the insurance policies are determined by Investment decisions and financing options for growth, by the convexity of the tax function to pay, and diversification and regulation of the activity sector, and the original result are the convex relationship between the size and the hedging intensity.
    Date: 2016–05–02
  6. By: Iferd, Younes; Plötz, Patrick
    Abstract: Firms are increasingly competing in an open innovation environment. Search strategies for external knowledge therefore become decisive for firms' success. Existing research distinguishes between breadth (diversity) and depth (intensity) with which firms deal with external knowledge sources. However, relatively little is known about how mangers can selectively strengthen one of these dimensions. We argue conceptually that the effect of breadth and depth of a research strategy on the innovation performance depends on (1) the type of innovation objectives (explorative vs. exploitative innovation objectives) and (2) the nature of the firm's orientation in drawing on external knowledge (science-based or market-based orientation). We test these hypotheses empirically for a sample of 1,434 manufacturing firms in Germany. Our results show that explorative innovation objectives strengthen the effect of breadth on innovation performance while exploitive objectives increase the depth. Moreover, we find that market-driven strategy favours breadth while science-driven strategy is more prevalent for depth search strategy.
    Keywords: open innovation,exploitative/explorative search strategies,market/science-driven strategies
    Date: 2018
  7. By: Daniel Schwanen (C.D. Howe Institute)
    Abstract: This E-Brief introduces a new innovation policy report card, comparing key policy indicators affecting innovation performance across 14 countries, focusing on the implications for Canada. The report card aims specifically to be useful to policymakers who seek to raise Canadians’ living standards through applying a pro-innovation lens to a suite of public policies. Given that a country’s innovation performance is likely affected by a broad range of policies, such a holistic approach can help avoid a situation in which innovation is promoted through some policies on the one hand, but unwittingly held back by other policies on the other hand.
    Keywords: Innovation and Business Growth
    JEL: D20 F20 H00
  8. By: Giorgio Fagiolo (Laboratory of Economics and Management (LEM)); Daniele Giachini (Scuola Superiore Sant'Anna); Andrea Roventini (Laboratory of Economics and Management (LEM))
    Abstract: This paper extends the endogenous-growth agent-based model in Fagiolo and Dosi (2003) to study the financegrowth nexus. 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 nexu
    Keywords: Agent based model; Innovation; Exploration vs exploitation; Endogenous Growth; Banking sector; Finance Growth Nexus
    JEL: C63 G21 O30 O31
    Date: 2017–11
  9. By: Stefan Jestl (The Vienna Institute for International Economic Studies, wiiw); Roman Römisch (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This report focuses on investment in eight EU Member States and their lagging regions. Additionally, the analysis assesses the regional development strategies of the eight Member States and evaluates the main investment needs and complementary alternative support options of the lagging regions over the next ten years. The analysis is performed in two steps. The first step identifies the investment needs of the lagging regions from the countries’ own as well as from a European perspective. It analyses to what extent and in what form investments in the lagging regions have to be supported in order to satisfy the needs. The identification of investment needs is approached from two sides, a) the countries’ own assessments of investment needs and b) a comparative analysis of the lagging regions with more prosperous EU-28 regions that had similar economic development characteristics as the (Southern) lagging regions. The second step analyses the main national and regional investment trends over the last 10-15 years, and covers different types of investment, depending on whether they are seen from a National Accounts, European or international perspective.
    Keywords: regional economic development, EU, lagging regions, regional policy, economic challenges, investment, foreign direct investment, structural funds
    JEL: E22 F21 R11 R38 R58
    Date: 2017–12
  10. By: Carlos J. Serrano; Rosemarie Ziedonis
    Abstract: Entrepreneurial firms are important sources of patented inventions. Yet little is known about what happens to patents “released” to the market when startups fail. This study provides a first look at the frequency and speed with which patents originating from failed startups are redeployed to new owners, and whether the value of patents is tied to the original venture and team. The evidence is based on 1,766 U.S. patents issued to 285 venture capital-backed startups that disband between 1988 and 2008 in three innovation-intensive sectors: medical devices, semiconductors, and software. At odds with the view that the resale market for patented inventions is illiquid, we find that most patents from these startups are sold, are sold quickly, and remain “alive” through renewal fee payment long after the startups are shuttered. The patents tend to be purchased by other operating companies in the same sector and retain value beyond the original venture and team. We do find, however, that the patents and people sometimes move jointly to a new organization following the dissolution of the original venture, and explore the conditions under which such co-movement is more likely. The study provides new evidence on a phenomenon—of active markets for buying and selling patents—underexplored in the literature and consequential for both entrepreneurial and established firms.
    JEL: G24 G33 L14 L26 O16 O3
    Date: 2018–04
  11. By: Sandro Montresor; Francesco Quatraro, (University of Turin)
    Abstract: This paper investigates the move of regions towards sustainable growth through their specialisation in new green technologies. In particular, we analyse the role that smart specialisation strategies (S3) can have in this respect by addressing two research questions. First of all, we investigate whether the environmental diversification of regional technologies is, according to the S3 logic, driven by their “relatedness” to existing knowledge of green and non-green nature. Second, we analyse the role of the Key Enabling Technologies (KETs) that S3 policies recommend regions to prioritise, not only in fostering the adoption of environmental technologies, but also in affecting its dependence on the pre-existing knowledge-base. Combining regional patent and economic data for a 34-year panel (1980-2013) of 180 European regions, we find that the relatedness to the existing technological-base of the region actually makes the acquisition of a new green-tech specialisation more probable. This holds true with respect to both the green and non-green extant knowledge, pointing to a regional diversification that also benefits from the “hybridisation” of non-environmental technologies. The latter however requires a higher degree of relatedness than a “pure” green branching process. Regional KETs also help the transition towards sustainable technologies. What is more, they negatively moderate the green impact of the relatedness to pre-existing technologies, of both green and non-green nature, and thus attenuate the boundaries the latter could pose to regions in their environmental specialisation. These results confirm that S3 policies can actually boost the intertwining of a smart and sustainable kind of growth, and that the KETs inclusion within S3 can amplify the virtuous interaction between these two objectives.
    Date: 2018–04
  12. By: Alexey Zhukovskiy; Heidi Falkenbach; Ranoua Bouchouicha
    Abstract: Following the tradition in general finance literature, research on public real estate companies’ capital structure has focused on testing whether established capital structure theories (i.e. the trade-off theory, the pecking order theory, and the market timing theory) can explain the observed leverage ratios and their variation. However, due to ignoring the heterogeneity of leverage, the reported results are mixed Recent financial literature on industrial firms suggests that in addition to the level ratios, the type of debt is also of significance. In this paper, we analyse the debt structures and level of debt diversification in the Public Real Estate Companies as well as their impacts on company performance. We study the degree of debt diversification across different subsamples of Public Real Estate Companies, i.e. whether they tend to borrow with one type of debt or they choose to diversify across multiple sources. Further, we investigate the persistence of such diversification and look at the phenomena through the prism of capital structure theories, in particular, by addressing the question of how Public Real Estate Companies’ choice of debt type varies with firm characteristics. Finally, we investigate the implications of debt diversification for the cost of capital and growth.
    Keywords: Capital Structure; debt diversification; Public real estate investment; Real Estate Finance
    JEL: R3
    Date: 2017–07–01
  13. By: Badi H. Baltagi; Peter H. Egger; Michaela Kesina
    Abstract: Whether a firm is able to attract foreign capital and whether it may participate at the export market depends on whether the fixed costs associated with doing so are at least covered by the incremental operating profits. This paper provides evidence that success for some firms in attracting foreign investors and in exporting appears to reduce the associated fixed costs with exporting or foreign ownership in other firms. Using data on 8,959 firms located in Shanghai, we find that contagion and spillovers in exporting and in foreign ownership decisions within an area of 10 miles in the city of Shanghai amplify fixed-cost reductions for both exporting as well as foreign ownership of neighboring firms. Contagion among exporters and among foreign-owned firms, respectively, amplify shocks to the profitability of these activities to a large extent. These findings are established through the estimation of a spatial bivariate probit model.
    Keywords: firm-level exports, firm-level foreign ownership, contagion, spatial econometrics, Chinese firms
    JEL: C11 C31 C35 F14 F23 L22 R10
    Date: 2018
  14. By: William Barnett (Department of Economics, The University of Kansas; Center for Financial Stability, New York City; IC2 Institute, University of Texas at Austin); Mingzhi Hu (Department of Investment, School of Public Economics and Administration, Shanghai University of Finance and Economics,Shanghai, China;); Xue Wang (Department of Finance; College of Economics, Jinan University, Guangzhou, China;)
    Abstract: Impacts on the probability of transition to entrepreneurship in rural China associated with the utilization of information communication technology (ICT) are estimated using longitudinal data from the China Family Panel Studies (CFPS) survey. We identify cell phone ownership and internet use as proxy variables for ICT utilization and find that cell phone ownership and internet use have positive impacts on entrepreneurship. After controlling for observables and time and regional fixed effects, cell phone users (internet users) are 2.0 (6.4) percentage points more likely to engage in entrepreneurship than the others. Considering that the average entrepreneurship rate for rural households is only 9.5% in the sample, the influence of cell phone ownership and internet use are very strong in the economic sense. Our results are robust to unobservable individual characteristics, model misspecification, and reverse causality of entrepreneurship to ICT utilization. Evidence also suggests that social network and information and knowledge acquisition play the mediating roles in the impact of ICT utilization on entrepreneurship.
    Keywords: ICT; social network; information acquisition; entrepreneurship
    JEL: D10 M51 Q55
    Date: 2018–02
  15. By: Anne Marie Knott; Carl Vieregger
    Abstract: There is a prevailing view in both the academic literature and the popular press that firms need to behave more entrepreneurially. This view is reinforced by a stylized fact in the innovation literature that R&D productivity decreases with size. However, there is a second stylized fact in the innovation literature that R&D investment increases with size. Taken together, these stylized facts create a puzzle of seemingly irrational behavior by large firms—they are increasing spending despite decreasing returns. This paper is an effort to resolve that puzzle. We propose and test two alternative resolutions: 1) that it arises from mismeasurement of R&D productivity, and 2) that firm size endogenously drives R&D strategy, and that the returns to R&D strategies depend on scale. We are able to resolve the puzzle under the first tack--using a recent measure of R&D productivity, RQ, we find that both R&D spending and R&D productivity increase with scale. We had less success with the second tack--while firm size affects R&D strategy in the manners expected by theory, there is no strategy whose returns decrease in scale. Taken together, our results are consistent with the Schumpeter view that large firms are the major engine of growth, they both spend more in aggregate than small firms, and are more productive with that spending. Moreover the prescription that firms should behave more entrepreneurially, should be treated with caution--one small firm strategy has lower returns to scale than its large firm counterpart.
    Date: 2018–04
  16. By: Stefan Jestl (The Vienna Institute for International Economic Studies, wiiw); Roman Römisch (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This report is an annex to wiiw Research Report 423, ‘Economic Challenges of Lagging Regions III Recent Investment Trends and Needs’. Based on spatial econometric methods, it provides estimates and simulations of the investment effects on economic development in the EU lagging regions. It also provides additional data related to the analysis in wiiw Research Report 423.
    Keywords: regional economic development, EU, lagging regions, regional policy, economic challenges, investment, foreign direct investment, structural funds
    JEL: C15 C31 C80 R11 Y10
    Date: 2017–12
  17. By: Quatraro, Francesco; Scandura, Alessandra (University of Turin)
    Abstract: This work investigates the generation of green technologies (GTs) in Italian NUTS 3 regions across time, by focusing on the knowledge generation mechanisms underlying the creation of green patents. Firstly, we hypothesize that inventions in non-green technological domains positively influence the generation of GTs, because the latter occur as the outcome of a recombination process among a wide array of technological domains. Secondly, we hypothesise that the involvement of academic inventors in patenting activity bears positive effects on the generation of GTs, because they are able to manage the recombination across different technological domains. Thirdly, we explore the interaction effect between academic inventors’ involvement and non-green technologies to investigate whether the former are especially relevant in presence of higher or lower levels of the latter. We estimate zero-inflated negative binomial, spatial durbin and logistic regressions on a dataset of 103 Italian NUTS 3 regions for which we collected patent and regional data for the time span 1998-2009. The results suggest that both academic inventors and spillovers from polluting technologies bear positive direct effects on the generation of GTs; moreover, we find that academic inventors compensate for low levels of spillovers.
    Date: 2018–04

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