nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒07‒16
sixteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Workers' Replacements and Firms' Innovation Dynamics: New Evidence from Italian Matched Longitudinal Data By Elena Grinza; Francesco Quatraro
  2. The Nature of Firm Growth By Benjamin W. Pugsley; Peter Sedlacek; Vincent Sterk
  3. Older and Slower: The Startup Deficit’s Lasting Effects on Aggregate Productivity Growth By Titan Alon; David Berger; Robert Dent; Benjamin Pugsley
  4. Financing innovative business investment in Poland By Antoine Goujard; Pierre Guérin
  5. Firm Growth Dynamics and Financial Constraints: Evidence from Serbian Firms By Milos Markovic; Michael Stemmer
  6. Going Abroad to Innovate? The Role of Entrepreneurial Orientation in Foreign Business Expansion for Japanese Small and Medium-Sized Manufacturers By Yamamoto, Satoshi; Kan, Viktoriya; Bartnik, Roman
  7. Intellectual Property Regimes and Firm Structure By Sourav Bhattacharya; Pavel Chakraborty; Chirantan Chatterjee
  8. Heterogeneity of technology-specific R&D investments. Evidence from top R&D investors worldwide By Petros Gkotsis; Antonio Vezzani
  9. R&D, Embodied Technological Change and Employment: Evidence from Spain By Pellegrino, Gabriele; Piva, Mariacristina; Vivarelli, Marco
  11. Born Globals, BGs: Who Are They? By Hamza El Guili
  12. Family Firms in the Ownership Network: Clustering, Bridging, and Embeddedness By Durand, Rodolphe; Mani, Dalhia
  13. Le policy-mix français de soutien à la R&D privée : quelles réalités pour quels résultats ? By Benjamin Montmartin
  14. The Collaborative Innovation Bloc: A New Mission for Austrian Economics By Elert, Niklas; Henrekson, Magnus
  15. On the Dynamics of Small and Medium-Sized Enterprises: Evidence from Japan By Yamada, Kazuo; El Kalak, Izidin; Takahashi, Hidenori
  16. Access of micro-, small and medium-sized enterprises (MSMEs) to finance in North and Central Asia By Hiroaki Ogawa

  1. By: Elena Grinza; Francesco Quatraro
    Abstract: In this paper, we explore the impact of a firm's workers' replacements on innovation performance, by using rich matched employer-employee panel data for the Veneto region of Italy. We take the well-known resource-based theory of the firm as our departure point, and develop a set of hypotheses which we test empirically with negative binomial regressions. Coherently with our theoretical framework, we find that workers' replacements significantly dampen innovation performance, because they generate losses in the tacit knowledge base of the firm. We also nd that workers' replacements are especially detrimental to large and young rms, because large companies have more hierarchical rigidities and innovative capabilities in young rms are mostly dependent on specific human capital. Finally, our results show that firms' localization in industrial districts significantly mitigates the negative impact of workers' replacements, and that a similar picture emerges when firms are more exposed to knowledge spillovers, particularly of related knowledge.
    Keywords: Workers' replacements, excess worker turnover, innovation performance, tacit knowledge, knowledge spillovers, employer-employee matched longitudinal data.
    JEL: J63 O30
    Date: 2018
  2. By: Benjamin W. Pugsley; Peter Sedlacek; Vincent Sterk
    Abstract: Only half of all startups survive past the age of five and surviving businesses grow at vastly different speeds. Using micro data on employment in the population of U.S. Businesses, we estimate that the lion's share of these differences is driven by ex-ante heterogeneity across firms, rather than by ex-post shocks. We embed such heterogeneity in a firm dynamics model and study how ex-ante differences shape the distribution of firm size, "up-or-out" dynamics, and the associated gains in aggregate output. "Gazelles" - a small subset of startups with particularly high growth potential - emerge as key drivers of these outcomes. Analyzing changes in the distribution of ex-ante firm heterogeneity over time reveals that the birth rate and growth potential of gazelles has declined, creating substantial aggregate losses.
    Keywords: Firm Dynamics, Startups, Macroeconomics, Big Data
    JEL: D22 E23 E24
    Date: 2018–06
  3. By: Titan Alon; David Berger; Robert Dent; Benjamin Pugsley
    Abstract: We investigate the link between declining firm entry, aging incumbent firms and sluggish U.S. productivity growth. We provide a dynamic decomposition framework to characterize the contributions to industry productivity growth across the firm age distribution and apply this framework to the newly developed Revenue-enhanced Longitudinal Business Database (ReLBD). Overall, several key findings emerge: (i) the relationship between firm age and productivity growth is downward sloping and convex; (ii) the magnitudes are substantial and significant but fade quickly, with nearly 2/3 of the effect disappearing after five years and nearly the entire effect disappearing after ten; (iii) the higher productivity growth of young firms is driven nearly exclusively by the forces of selection and reallocation. Our results suggest a cumulative drag on aggregate productivity of 3.1% since 1980. Using an instrumental variables strategy we find a consistent pattern across states/MSAs in the U.S. The patterns are broadly consistent with a standard model of firm dynamics with monopolistic competition.
    Date: 2018–06
  4. By: Antoine Goujard; Pierre Guérin
    Abstract: Poland’s productivity has grown strongly over the past two decades. However, the public and private capital stock is weak, and investment remains focused on the adoption of existing technologies, which weighs on future productivity gains and innovation. Many micro enterprises have low productivity, and structural bottlenecks reduce start-ups' growth and their chances of survival. The EU and the government are stepping up funding for business research and development, collaboration with the public sector, entrepreneurship and innovation. This is an opportunity to improve the management of public business support, and the large new programmes should be carefully discussed with stakeholders and regularly evaluated to avoid the risks of subsidising low-productivity firms and to strengthen the take up from the most productive small and medium-sized enterprises. The sustainability of this ambitious package of measures will also require significant public revenues and promoting alternative market-based financing instruments will be critical over the medium term. Ongoing improvements in insolvency procedures and efforts to reduce the regulatory burden are set to ease reallocation of resources through the economy. However, the level of state involvement would remain important, and ensuring the independence of the network industry regulators and the Competition Authority and a level playing field between alternative technologies, as well as easing labour mobility would be good moves.
    Keywords: business environment, financial markets, financing, innovation, investment, Poland
    JEL: E22 G24 O16 O38 O44 O47
    Date: 2018–06–29
  5. By: Milos Markovic (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Michael Stemmer (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Using a unique dataset of unlisted Serbian firms during the period between 2005 and 2012, we analyze the impact of internal financial constraints on firm growth with respect to several firm-level characteristics. We also assess potential effects created by the 2008-2009 Global Financial Crisis. To do so, we rely on panel data models, which estimate via GMM cash flow sensitivities of firm growth, following the dynamic specification of Guariglia et al. (2011). Controlling for investment opportunities, our results show that Serbian firms face high financial constraints and exhibit generally a high reliance on retained earnings for firm growth. We do not find evidence for a crisis effect, potentially due to ex ante accumulated internal funds. Conventional firm characteristics such as age, size or overall performance largely determine the dependency on cash for firm growth. Moreover, foreign-owned companies seem to escape the financing gap by tapping other resources. A comparison with Belgian firms contrasts our results with an advanced country setting.
    Keywords: Financial constraints,firm growth,transition countries,dynamic panel data,GMM
    Date: 2017–02
  6. By: Yamamoto, Satoshi; Kan, Viktoriya; Bartnik, Roman
    Abstract: This paper explores why a specific group of highly specialized Japanese toolmakers have chosen to expand their limited customer base to include Germany, despite strong cultural and geographical differences. Analyzing the phenomenon through the theoretical lens of International Entrepreneurship research, we find that compared to existing Japanese customers, Japanese SMEs perceived the German customers as less hierarchically dominant and more open and appreciative of their products. Japanese SMEs cited a highly interactive learning relationship with their German customers as a strong potential source for product and process innovation. In sum, we find that this the aspiration for innovativeness is a key motivator for these specialized Japanese SMEs to expand their business to Germany.
    Keywords: Innovativeness, Internationalization, IEO, Japanese manufacturers, German Customers
    Date: 2018–06
  7. By: Sourav Bhattacharya; Pavel Chakraborty; Chirantan Chatterjee
    Abstract: We use The Patents (Amendment) Act, 2002 in India as a quasi-natural experiment to identify the causal e¤ect of higher incentives for innovation on firm organizational features. We find that stronger intellectual property (IP) protection has a sharper impact on technologically advanced firms, i.e., firms that were a-priori above the industry median in terms of technology adoption. While there is an overall increase in managers' share of compensation, this increase is about 1.6-1.7% more for high-tech firms. This difference can be attributed to a larger increase in performance pay for high-tech firms. The reform also leads to a significant increase in number of managerial layers and number of divisions for high-tech firms relative to low-tech firms, but only the latter effect is correlated with the differential change in managerial compensation. Broadly, we demonstrate that stronger IP protection leads to an increase in both within-firm and between-firm wage inequality, with more robust evidence for between-firm inequality.
    Keywords: Intellectual Property Regimes, High-tech and Low-tech firms, Managerial Com- pensation, Span of Control
    JEL: D21 D23 L23 O34
    Date: 2018
  8. By: Petros Gkotsis (European Commission - JRC); Antonio Vezzani (European Commission - JRC)
    Abstract: In this work, we develop and apply a methodology to estimate technology-specific R&D investments at firm level and then use these to test some arguments that have become central in the innovation literature. In particular, we first combine R&D investments with patent data of the world top R&D investors worldwide and show that investment per patent varies greatly both across technologies and across firms developing the same technology. We then use the estimated firm-technology R&D investments to assess how these are related to the international and technological strategies of firms. The estimation strategy makes use of a multilevel framework that allows us to model heterogeneity both at the firm and industry level. In particular, we show that specific firms strategies requires different level of investments and that sector specificities matter in determining R&D per patent investments, economies of scale in knowledge production, and the cost of (further) specialization. Accounting for (un)observed heterogeneity may lead to better policy design and management decisions.
    Keywords: patents, R&D, technology, cost, heterogeneity, internationalization
    Date: 2018–06
  9. By: Pellegrino, Gabriele; Piva, Mariacristina; Vivarelli, Marco
    Abstract: In this work, we test the employment impact of distinct types of innovative investments using a representative sample of Spanish manufacturing firms over the period 2002-2013. Our GMM-SYS estimates generate various results, which are partially in contrast with the extant literature. Indeed, estimations carried out on the entire sample do not provide statistically significant evidence of the expected labor-friendly nature of innovation. More in detail, neither R&D nor investment in innovative machineries and equipment (the so-called embodied technological change, ETC) turn out to have any significant employment effect. However, the job-creation impact of R&D expenditures becomes highly significant when the focus is limited to the high-tech firms. On the other hand - and interestingly - ETC exhibits its labor-saving nature when SMEs are singled out.
    Keywords: Innovation,R&D,Embodied Technological Change,Employment,GMM-SYS
    JEL: O33
    Date: 2018
  10. By: Ludivine Adla (Centre de Recherche Magellan - Université Jean Moulin - Lyon III - Institut d'Administration des Entreprises (IAE) - Lyon); Virginie Gallego-Roquelaure (Centre de Recherche Magellan - Université Jean Moulin - Lyon III - Institut d'Administration des Entreprises (IAE) - Lyon); Ludivine Calamel (GEM - Grenoble Ecole de Management - Grenoble École de Management (GEM))
    Abstract: La route est encore longue avant que la place de choix occupée par les ressources humaines au sein de l'innovation soit reconnue.Cet article vise à comprendre l'influence du dirigeant de PME sur les pratiques de GRH, levier d'innovation. Afin d'appréhender la relation entre le dirigeant et les pratiques de GRH favorisant l'innovation, la théorie des échelons supérieurs a été couplée aux conventions de GRH de Pichault et Nizet (2013), et une étude qualitative a été menée auprès de quatre PME françaises. Les résultats soulignent les caractéristiques du dirigeant influençant la GRH ainsi que ses spécificités au regard d'innovations.
    Keywords: Dirigeant, GRH, Innovation, PME
    Date: 2016–10–19
  11. By: Hamza El Guili (University of Abdelmalek Essasdi, Morocco)
    Abstract: The acceptance and recognition of born global firms (BGs) as relevant and singular organizations across the world’s economy has been flourishing in the recent years. Born globals are commonly entrepreneurial and relatively young small and medium sized enterprises (SMEs), with limited resources. Although these restrictions and constraints, BGs initiate their internationalization process from early stages. Thus, they conduct their internationalization process more rapidly than traditional firms operating in domestic markets and using incremental processes. Nevertheless, theories on BGs are still not fully developed by researchers. Few studies have tried to advance theoretical reflections on born global firms and their internationalization. This paper examines how research on BGs internationalization has emerged and its development over time. Furthermore, it identifies the challenges faced by these firms when they internationalize and gives future research suggestions to academicians for the advance of the research in the internationalization of born global firms.
    Keywords: SMEs, Internationalization, Born globals, Early internationalization
    Date: 2018–05
  12. By: Durand, Rodolphe; Mani, Dalhia
    Abstract: In this paper, we investigate family firms’ position in the intercorporate ownership network. Rooting our predictions in the Behavioral Agency Model and a Network analytical framework, we predict and find that family involvement decreases the likelihood of business group affiliation and of cross-group ties leading to a lower embeddedness within the overall network. We predict and find the opposite effect for community involvement. We use the complete longitudinal dataset of publicly listed firms’ corporate ownership ties in India (2001, 2005, and 2009). Theoretical and substantive contributions are to research on family businesses and to research on interorganizational networks.
    Keywords: Family Firms; Community; Embeddedness; Network
    JEL: M10
    Date: 2018–04–18
  13. By: Benjamin Montmartin (Observatoire français des conjonctures économiques)
    Abstract: La France peut être perçue comme un laboratoire d’expérimentation unique en termes de soutien public à l’investissement en R&D. En effet, depuis la réforme du Crédit d’impôt recherche en 2008, notre pays est devenu le plus généreux en matière d’incitations fiscales à la R&D au sein des pays de l’OCDE (OECD, 2018a. Le seul crédit d’impôt représentait en 2014 (MESRI, 2017) une créance de près de 6 milliards d’euros pour l’Etat et le régime spécifique d’imposition des revenus de concession de brevets (15%) coûte à l’état entre 600 et 800 millions d’euros par an. A ces pertes de revenus fiscaux s’ajoutent les différentes mesures de soutien direct à l’innovation (subventions, prêts à taux bonifiés, etc.) financées principalement via la Banque publique d’investissement (BPI), les Pôles de compétitivité, les collectivités locales et la Commission européenne. Ces aides directes représentaient en 2014 environ 3,5 milliards d’euros. Ainsi, aujourd’hui, le coût de l’ensemble de ces mesures de soutien à l’innovation dépasse nettement les 10 milliards d’euros par an, soit près d’un demi-point de PIB. [Premier paragraphe]
    Keywords: Investissement; Politique territoriale; Crédit d'impôt; Inégalités territoriales; R&D; Recherche privée; Recherche publique; Subventions
    Date: 2018–05
  14. By: Elert, Niklas (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: We argue that scholars in the Austrian tradition of economics should incorporate the notion of a collaborative innovation bloc into their study of spontaneous market order. We demonstrate how successful entrepreneurship depends on an innovation bloc of this kind, a system of innovation that evolves and within which activity takes place through time. The innovation bloc consists of five pools of economic skills from which people are drawn or recruited to form part of a collaborative team, which is necessary if innovation-based venturing is to flourish. The five skills are entrepreneurs, early- and later-stage-financiers, key personnel, and customers. Through real-world examples, we show how the application of the collaborative innovation bloc perspective could help make Austrian economics more concrete, relevant and persuasive, especially in regard to policy prescriptions.
    Keywords: Austrian Economics; Entrepreneurship; Innovation; Institutions; Schumpeterian entrepreneurship; Spontaneous order
    JEL: B53 D20 G32 L23 L26 O33
    Date: 2018–06–20
  15. By: Yamada, Kazuo (Asian Development Bank Institute); El Kalak, Izidin (Asian Development Bank Institute); Takahashi, Hidenori (Asian Development Bank Institute)
    Abstract: We examine how changes in macroeconomic conditions (the global financial crisis) relate to investment and financial decision making for each of the different size categories of small and medium-sized enterprises (SMEs). We use a large dataset of 764,963 observations in Japan for the time period from 2006 to 2014 to understand the heterogeneity of SMEs in financing and investment decision making, such in size, industry, and region. Our findings are of particular importance for regulators because we show that SMEs are dynamic in nature where they change their financial behavior in response to any macroeconomic shock. In addition, we report differences among the different size subsample at the sales growth and state/industry GDP growth levels. Hence, this requires designing a unique set of regulations for each group accordingly to effectively enhance the growth potential for each group and for SMEs as a whole. These findings have implications for lenders, especially banks, which should treat each size group within SMEs differently while lending or assessing creditworthiness.
    Keywords: SMEs; size categories; macro-economic shocks; investment; financing policy; Japan
    JEL: G28 G32 G38
    Date: 2018–03–09
  16. By: Hiroaki Ogawa (Subregional Office for North and Central Asia, ESCAP)
    Abstract: Access to financing is one of the fundamental conditions for individuals and small businesses to be able to invest and become entrepreneurs. Several economies in the Asia-Pacific region, including those in the North and Central Asian subregion, however, lag in facilitating such opportunities for potential entrepreneurs. This situation hampers the private sector’s potential contribution to the development of the country, and impedes the process of inclusive income and wealth creation. It might be tempting to advise countries in North and Central Asia to take advantage of FinTech, and hopefully they should aspire to do so: new advances such as crowdfunding or blockchain technology offer great opportunities and leapfrogging is possible. However, currently most countries in the subregion lack basic infrastructure and essential conditions, such as reliable networks and free Internet, to make such a revolution possible on a massive scale. Hence, Governments should ensure the provision of such infrastructure and promote simpler, better-established technologies, such as mobile payments. Opening the mobile market to experienced foreign companies to provide mobile banking services would be another option with considerable potential. Finally, policymakers should also consider enhancing the Internet so that people really consider it as a trustworthy option to seek investment/financing opportunities. The introduction of frameworks to regulate FinTech, so that investors do not face regulatory uncertainty and feel more empowered to invest, would be welcome. As with other fast-evolving technologies, it would be advisable that they take stock of lessons learned from the experiences of other countries which are ahead of the curve.

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