nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒07‒23
twenty papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Regional Innovation System in China: Regional comparison of technology, venture financing, and human capital focusing on Shenzhen (Japanese) By MOTOHASHI Kazuyuki
  2. Product innovation by supplying in domestic and foreign markets By Bratti, Massimiliano; Felice, Giulia
  3. The impact of management practices on SME performance By John Forth; Alex Bryson
  4. Bidding against the odds? The impact evaluation of grants for young micro and small firms during the recession By Stjepan Srhoj; Bruno Skrinjaric; Sonja Radas
  5. Strengthening innovation in Poland By Nicola Brandt
  6. Entrepreneurship Culture, Knowledge Spillovers, and the Growth of Regions By Michael, Stuetzer; David, Audretsch; Martin, Obschonka; Samuel, Gosling; Jason, Rentfrow; Jeff, Potter
  7. Obstacles and Enablers of Internationalization of Philippine SMEs Through Participation in Global Value Chains By Canare, Tristan A.; Francisco, Jamil Paulo; Labios, Jean Rebecca
  8. Determinants of overall and sectoral entrepreneurship: evidence from Portugal By Gonçalo Brás; Elias Soukiazis
  9. Public R&D Support and Firms’ Performance A Panel Data Study By Nilsen, Øivind A.; Raknerud, Arvid; Iancu, Diana-Cristina
  10. Determinants of FDI Attraction in the Manufacturing Sector in Mexico, 1999-2015 By Fonseca Felipe J.; Llamosas-Rosas Irving
  11. Beyond R&D:The role of embodied technological change in affecting employment By Gabriele Pellegrino; Mariacristina Piva; Marco Vivarelli
  12. The moral consequences of economic growth on the local business development: A case of Phitsanulok investigation By Bhagaporn Wattanadumrong; Nattachet Poonchareon; Warawude Rurkwararuk
  13. The source of the US /EU Productivity Gap:Less and less effective R&D By Davide Castellani; Mariacristina Piva; Torben Schubert; Marco Vivarelli
  14. Smart specialisation and social innovation: from policy relations to opportunities and challenges By Manfred Spiesberger; Javier Gomez Prieto; Isabelle Seigneur
  15. Government Procurement and the Growth of Small Firms By Fadic, Milenko
  16. Cyclical and Stuctural Variation in Resource Reallocation: Evidence for Europe By Eric Bartelsman; Paloma Lopez-Garcia; Giorgio Presidente
  17. Are Biotechnology Startups Different? By Herv\'e Lebret
  18. Can organisational ambidexterity kill innovation? A case for non-expected utility decision making By Mario Le Glatin; Pascal Le Masson; Benoit Weil
  19. How does innovation occur in India? Evidence from the JIRICO survey By BHARADWAJ, Ashish; KANG, Byeongwoo
  20. Reforms for sustainable productivity growth in Ireland By Ben Westmore; Yosuke Jin

  1. By: MOTOHASHI Kazuyuki
    Abstract: Shenzhen has become a hot spot of innovation in China. In this paper, we characterize Shenzhen innovation by comparing Beijing and Shanghai using patent and venture investment data. First, the role of university and public research institutions is small in the Shenzhen innovation system, as compared to Beijing and Shanghai. In contrast, private high-tech firms such as Huawei, ZTE, and Tencent are leading the innovation scene in Shenzhen. Second, it is found that high-tech startups are geographically concentrated in the Nanshan district, particularly Yuehai JieDao where national level high-tech zones are located. Recently, the number of startups have been increasing and local big firms such as ZTE provide human resources for such startup firms. Third, inventor disambiguated information based on patent data allows us to look at inter organizational talents moves. It is found that such moves tend to occur within short distances, such as within the same district (e.g., Nanshan district). To sum up, Shenzhen has truly become a hot spot of high-tech entrepreneurship and innovation, however, the dynamics are very much regionally bounded. Therefore, it is important to become a local player in order to take advantage of innovation movements in Shenzhen, by means of minority investment by corporate venture capital (CVC) into local startup firms.
    Date: 2018–05
  2. By: Bratti, Massimiliano (European Commission – JRC); Felice, Giulia (Politecnico di Milano)
    Abstract: This paper uses European firm-level survey data to provide some robust empirical evidence that suppliers engaged in production to order (PTO) for foreign firms are more likely to introduce product innovations than those engaged in PTO for domestic firms, even when differences in size, R&D and productivity are controlled for. We propose a demand-driven theoretical explanation based on the interactions between an upstream producer of a specialized input and a downstream producer in a framework of incomplete contracts, agency frictions, and imperfect information.
    Keywords: buyer, supplier, product innovation, production to order, foreign market
    JEL: D21 D22 F21 L23 O31
    Date: 2018–06
  3. By: John Forth (National Institute of Social and Economic Research); Alex Bryson (University College London, National Institute of Social and Economic Research and Institute for the Study of Labor)
    Abstract: We examine the impact of management practices on firm performance among SMEs in Britain over the period 2011-2014, using a unique dataset which links survey data on management practices with firm performance data from the UK's official business register. We find that SMEs are less likely to use formal management practices than larger firms, but that such practices have demonstrable benefits for those who use them, helping firms to grow and increasing their productivity. The returns are most apparent for those SMEs that invest in human resource management practices, such as training and performance-related pay, and those that set formal performance targets.
    Keywords: SMEs; small and medium-sized enterprises; employment growth; high-growth firms; productivity; workplace closure; management practices; HRM; recession
    JEL: L25 L26 M12 M52 M53
    Date: 2018–05–01
  4. By: Stjepan Srhoj (Department for Economics and Business Economics, University of Dubrovnik); Bruno Skrinjaric (The Institute of Economics, Zagreb); Sonja Radas (The Institute of Economics, Zagreb)
    Abstract: Impact evaluations of entrepreneurship policies targeting young firms have been somewhat neglected thus far in the literature. This paper seeks to contribute to this topic in the context of a long recession period, such as the one experienced in Croatia from 2009 to 2014. These policies awarded small grant amounts for activities such as business plan development, consultancy, marketing and office renovation. Awarding small grant amounts to many firms might be tempting for politicians, but is this political populism or smart policy? This paper estimates the impact of matching grants for business development on three types of outcomes: bank loans, firm survival and firm performance. The full firm-level census dataset was supplemented with entrepreneur-level court register and firm-level data on grant recipients. Policy evaluation was performed using matching techniques with a combination of nearest neighbor and exact matching, and robustness of results was tested using a placebo test and Rosenbaum bounds. The results show that grants had a positive impact on firm survival after the recession, and on obtaining long-term bank loans during the recession. However, no empirical support was found for the grants’ impact on growth in turnover, employment and labor productivity.
    Keywords: grants, recession, young firms, survival, firm performance, bank loans
    JEL: H25
    Date: 2018–05
  5. By: Nicola Brandt
    Abstract: Poland’s catch up with other OECD country has been largely based on productivity growth resulting from restructuring towards more productive sectors and foreign technology absorption. The economy’s own innovation capacity is relatively weak, with low investment in research and development, no tradition of commercialising research and very limited innovation activity within firms. The government plans a higher education reform to strengthen the quality of research output, science-industry cooperation and international collaboration, which are all weak. Considerable EU funding is available to support innovation. Most of it is conditioned on science-industry co-operation, which is showing initial benefits. A lively start-up scene is gradually emerging, and the government foresees considerable public support for venture capital financing. Yet, investment in higher education and research trails behind economies that have been able to build strong science and high-tech start-up activity. Poland’s many small and medium-sized enterprises have particularly low productivity, partly related to weaknesses in vocational training and adult education, as too many workers have weak basic and digital skills. The government's education reform and digital strategy address some of these issues.
    Keywords: higher education, innovation, Poland, research and development, vocational education
    JEL: I23 O31 O32 O4
    Date: 2018–06–29
  6. By: Michael, Stuetzer; David, Audretsch; Martin, Obschonka; Samuel, Gosling; Jason, Rentfrow; Jeff, Potter
    Abstract: An extensive literature has emerged in regional studies linking organization-based measures of entrepreneurship (e.g., self-employment, new start-ups) to regional economic performance. A limitation of the extant literature is that the measurement of entrepreneurship is not able to incorporate broader conceptual views, such as behaviour, of what actually constitutes entrepreneurship. This paper fills this gap by linking the underlying and also more fundamental and encompassing entrepreneurship culture of regions to regional economic performance. The empirical evidence suggests that those regions exhibiting higher levels of entrepreneurship culture tend to have higher employment growth. Robustness checks using causal methods confirm this finding.
    Keywords: Entrepreneurship; Entrepreneurship Culture; Regional Development; Economic Growth
    JEL: L26 M13 N9 N91 O3 O31
    Date: 2018
  7. By: Canare, Tristan A.; Francisco, Jamil Paulo; Labios, Jean Rebecca
    Abstract: Small and medium-sized enterprises (SMEs) are important in many developing countries, including the Philippines. However, this sector remains much less productive than their large counterparts. One factor that can help SMEs achieve higher productivity is to connect them to global value chains (GVCs) through internationalization. However, SMEs are faced with a host of obstacles in trying to participate in GVCs. This paper attempts to determine the challenges and enablers of connecting small and medium businesses to GVCs. It uses data from a survey of Metro Manila SMEs and a set of key informant interviews of SME owners and of government officials tasked to assist SMEs. Findings show that Philippine SMEs are weakly linked to GVCs. The challenges and enablers can be grouped into five themes, namely: (1) competition in ASEAN and East Asia; 2) international standards, regulatory requirements, and local institutions; (3) role of the government; (4) international market demand and inputs supply; and (5) entrepreneurial mindset. Based on the results, some policy implications were formulated.
    Keywords: competition, Philippines, global value chains, SMEs, small and medium enterprises, Philippine SMEs, internationalization, exports
    Date: 2018
  8. By: Gonçalo Brás (Polytechnic Institute of Tomar); Elias Soukiazis (CeBER and Faculty of Economics, University of Coimbra)
    Abstract: As a multidisciplinary concept, entrepreneurship can be explained by numerous factors. Therefore, the aim of this study is to test empirically the determinants of entrepreneurship (overall and sectoral) in the Portuguese economy. Despite the methodological limitations inherent in such studies, which are mainly due to the incompatibility of some series and the temporal limitations of some data, the novelty involving a cross-sectoral view of the entrepreneurial phenomenon fuels this challenge. For this purpose, we employ an estimation approach based on time series models to confirm (or reject) a diversity of hypotheses. The main results indicate that the determinants of entrepreneurship in industry are significantly different from the determinants of entrepreneurship in the service sector in Portugal. On the other hand, the determinants of entrepreneurship in the service sector are very similar to those explaining the overall entrepreneurial activity, due to the high share of services in total economic activity. The main conclusions of the study can guide institutional decision-makers to adopt adequate policies for promoting entrepreneurship in Portugal. Additionally, strategic routes for the sustainable development of entrepreneurial activity are suggested.
    Keywords: entrepreneurship; sectoral entrepreneurship; determinants of entrepreneurship; entrepreneurial activity; business services; time series models.
    JEL: L26 O11 O14
  9. By: Nilsen, Øivind A. (Dept. of Economics, Norwegian School of Economics and Business Administration); Raknerud, Arvid (Statistics Norway); Iancu, Diana-Cristina (Statistics Norway)
    Abstract: We analyse all the major sources of direct and indirect R&D subsidies in Norway in the period 2002-2013 and compare their effects on individual firms’ performance. Firms that received support are matched with a control group of firms that did not receive support using a combination of stratification and propensity score matching. Changes in performance indicators before and after support in the treatment group are compared With contemporaneous changes in the control group. We find that the average effects of R&D support among those who obtained grants and/or subsidies are positive and significant in terms of performance indicators related to economic growth: value added, sales revenue and number of employees. The estimated effects are larger for start-up firms than incumbent firms when the effects are measured as relative effects (in percentage points), but smaller when these effects are translated into level effects. Finally, we do not find positive effects on return to total assets or productivity for firms who received support compared with the control group.
    Keywords: Public policy; Firm performance; Treatment effects; Stratification; Propensity score matching; Productivity
    JEL: C33 C52 D24 O38
    Date: 2018–06–20
  10. By: Fonseca Felipe J.; Llamosas-Rosas Irving
    Abstract: Using an up-to-date database that improves the identification of the destination of the Foreign Direct Investment (FDI) among Mexican states and spatial panel econometric models that quantify the potential interactions and spillover effects, we analyze the main characteristics that help understand the regional distribution of manufacturing FDI in Mexico. Our main findings indicate the presence of a positive spatial relationship among states' FDI; for example, a higher investment creates a positive spillover effect on neighboring states' FDI and positive direct and indirect effects of human capital, agglomeration and states' fiscal margin. Based on the results of this research, key implications for public policy oriented to strengthen the FDI reside in increasing the average education level and improving tax revenue of Mexican states.
    Keywords: FDI;spatial panel econometric models;spillover effects
    JEL: C21 C23 R12
    Date: 2018–06
  11. By: Gabriele Pellegrino; Mariacristina Piva; Marco Vivarelli
    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
    Date: 2018–06–17
  12. By: Bhagaporn Wattanadumrong (Naresuan University); Nattachet Poonchareon (Department of Economics Faculty of Business, Economics and Communications, Naresuan University); Warawude Rurkwararuk (Department of Business Administration Faculty of Business, Economics and Communications, Naresuan University)
    Abstract: This paper analyses regional investment in Phitsanulok Province located in the lower north of Thailand. Using data for 3,623 local business registered from 1906 to 2015. This study examines their performance of the city growth and socio-economic problems to promote entrepreneurship based on locally-owned (LOEs) enterprises and nonlocally-owned (NLOEs) enterprises. The key determinants are identified using a unique assembled data recorded by local authority recording and comprising all local business sectors over time. The descriptive analytical approach will be applied to full sample (all sectors) and other relevant issues (capital based, size of business into SMEs; Small Medium Enterprises). Most enterprises are small business; while, there are few medium and large sizes in the community areas.The aim of the research is to explore the evolution of local business development in the province and the major determinants to increase the investment into local. The quantitative approach has been investigated together with face to face interview from the purposive samples by sectors. The results show that local entrepreneurs experience the high competitiveness from outsides especially from the large and medium nonlocally-owned enterprises. The development of entrepreneurship in the areas based of Phitsanulok has gradually changed. The huge capital investment from outside has injected into the areas. The phenomenon how the small ? medium enterprises will be survived from the large enterprises dominated into the areas has to be discussed in terms of policy priority actions and the economic and social instruments at the level of economic entities of local business development in the areas. This study briefly examines the city growth of businesses? existence and its changes over time. This approach can be applied to analyze the city growth at provincial-level of the country.
    Keywords: regional investment, SMEs, Phitsanulok, local business development
    JEL: O18 M21 L26
    Date: 2017–07
  13. By: Davide Castellani; Mariacristina Piva; Torben Schubert; Marco Vivarelli
    Abstract: Using data on the US and EU top R&D spenders from 2004 until 2012, this paper investigates the sources of the US/EU productivity gap. We find robust evidence that US firms have a higher capacity to translate R&D into productivity gains (especially in the high-tech industries), and this contributes to explaining the higher productivity of US firms. Conversely, EU firms are more likely to achieve productivity gains through capital-embodied technological change at least in medium and low-tech sectors. Our results also show that the US/EU productivity gap has worsened during the crisis period, as the EU companies have been more affected by the economic crisis in their capacity to translate R&D investments into productivity. Based on these findings, we make a case for a learning-based and selective R&D funding, which - instead of purely aiming at stimulating higher R&D expenditures - works on improving the firms' capabilities to transform R&D into productivity gains.
    Keywords: R&D; productivity; economic crisis; US; EU
    Date: 2018–06–17
  14. By: Manfred Spiesberger (Centre for Social Innovation (ZSI), Vienna (Austria)); Javier Gomez Prieto (European Commission - JRC); Isabelle Seigneur (European Commission - JRC)
    Abstract: In this paper some ongoing tendencies of Social Innovation (SI) in the EU and its relation to the smart specialisation (S3) approach are discussed. The analysis is limited to the energy field, particularly to the context of renewable energy production, energy efficiency measures and heating and cooling. The paper is part of the policy support provided by the Smart Specialisation Platform on Energy (S3PEnergy) to EU regions and member states. Therefore the focus has been put on Smart Specialisation, and the relevance of such SI initiatives for economic development and potential upscaling in regions, and for an increased proactive consumer involvement. Smart specialisation is a regional policy framework for innovation driven growth. It helps to focus resources on key national and regional priorities, challenges, and needs for knowledge-based development. S3 is a bottom-up process relying on an entrepreneurial discovery process, which involves various stakeholders such as businesses, private stakeholders and policy makers for capacity and priority identification. It is evidence based and includes sound identification of priorities, monitoring and evaluation (RIS 3 guide, 2012; OECD, 2013). The social innovation approach is disaggregated here in the categories of organisational, social, financial, educational and business. Case studies were developed to understand the character of those categories.
    Keywords: Social Innovation, Smart Specialisation, Regional Policy, Regional Innovation, Energy Innovation.
    Date: 2018–06
  15. By: Fadic, Milenko
    Abstract: I estimate the causal effects of demand shocks, stemming from government procurement, on the growth of small firms in Ecuador. I assemble a unique dataset using several new administrative sources and, as identification strategy, exploit a governmental procurement process that allocates public contracts through a randomized contest. This paper provides three main contributions to the literature. First, it shows the positive and significant effect of demand shocks on firm growth. On average, an increase in demand of 10% will increase wage expenses by 4% and fixed assets by 5% during the year of the shock. Second, it finds no evidence of spill-over effects from demand shocks on sales to the public or private sector. Finally, as in other studies, it is shown that demand positively impacts firm growth but, contrary to other findings, this effect is temporary and only observed during the year of the shock.
    Keywords: Demand Shocks, firm growth, public procurement
    JEL: D22 H54 H57
    Date: 2018
  16. By: Eric Bartelsman (VU Amsterdam); Paloma Lopez-Garcia (ECB); Giorgio Presidente (World Bank)
    Abstract: This paper uses cross-country micro-aggregated data on rm dynamics and productivity from the ECB CompNet database to provide empirical evidence on factor reallocation in the EU. The analysis fi nds that reallocation is towards more productive firms although the magnitude varies across countries and over time. Variation in reallocation is related to structural di fferences in firm size distribution across countries as well as to variation in labor and product market institutions. Productivity enhancing reallocation generally rises in downturns but, similar to findings for the US, it did not pick up in the great recession. The sharp drop in exports and tightness in credit markets are seen to provide a partial explanation for this lack of a silver lining.
    Keywords: Great Recession; Factor Reallocation
    JEL: C8 D24 E32 F4
    Date: 2018–06–17
  17. By: Herv\'e Lebret
    Abstract: In the domain of technology startups, biotechnology has often been considered as specific. Their unique technology content, the type of founders and managers they have, the amount of venture capital they raise, the time it takes them to reach an exit as well as the technology clusters they belong to are seen as such unique features. Based on extensive research from new databases, the author claims that the biotechnology startups are not as different as it might have been claimed: the amount of venture capital raised, the time to exit, their geography are indeed similar and even their equity structure to founders and managers have similarities. The differences still exist, for example the experience of the founders, the revenue and profit level at exit.
    Date: 2018–04
  18. By: Mario Le Glatin (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Pascal Le Masson (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Benoit Weil (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The academic construction of ambidexterity articulated around notions such as exploration, exploitation (J. March 1991) has been flourishing over the years with a strong background in organisational theory to explain levels of performance and innovation. However, they have also made a call for in-depth studies to understand managerial capabilities such as decision-making (Birkinshaw & Gupta 2013; O'Reilly & Tushman 2013; Benner & Tushman 2015) supporting the tension of competing objectives. In this paper, we show that organisational ambidexterity can kill innovation as the underlying decision theories are not fully supporting the nature of decision required in regimes such as contextual ambidexterity (Gibson & Birkinshaw 2004). Two case studies from the aircraft cabin equipment industry are presented and analysed at the project management level with descriptors from organisational ambidexterity and decision-making. We propose to consider unconventional decision theories, taking into account non-expected utilities such as potential regret of imagined prospects, as a means to support management tools enabling ambidexterity at the decisional and contextual levels. First, we show that common decision models based on expected utility encoded in management tools mobilised for contextual ambidexterity can fail to support innovation. Second, we propose that a non-expected utility, such as potential regret of imagined prospects, serves the management of competing exploration/exploitation objectives. Third, the case studies help contouring a management tool extending observed attempts to sustain or extend contextual ambidexterity through unconventional decision-making.
    Keywords: decision,project management,design,ambidexterity,management tool
    Date: 2018–06–19
  19. By: BHARADWAJ, Ashish; KANG, Byeongwoo
    Abstract: Based on the first innovation survey of 1139 firms in India, this paper provides innovation activities in India. Findings in this paper will provide insights to other emerging countries that pursue endogenous innovation.
    Keywords: emerging country, India, innovation, invention, survey
    Date: 2018–01
  20. By: Ben Westmore; Yosuke Jin
    Abstract: The Irish economy has experienced a decline in productivity growth over the past decade. This has mostly reflected the poor performance of local firms, with the large productivity gap between foreign-owned and local enterprises having widened. Given the mobility of foreign-owned firms, achieving sustainable productivity growth requires addressing productivity stagnation in the local business sector. Government policy should ensure high-potential businesses can enter markets and expand unimpeded, and that the most productive firms thrive in the market. To achieve this, some aspects of the regulatory environment for businesses need to be reformed and the quality of Irish infrastructure improved. Access to finance for high-performing firms must be broadened as well, through restoring credit supply in the banking sector, developing equity finance and improving public financial support. It needs to be assured that government policy is also calibrated to encourage productivity-enhancing knowledge spillovers from frontier firms. Trade linkages and research collaboration between foreign-owned and local firms can be better promoted. However, the ability for local firms to absorb new knowledge relies on their investment in knowledge based capital and managerial skills. These can be promoted by greater direct government funding of business R&D, supporting labour mobility across firms, and worker participation in lifelong learning activities.
    Keywords: access to finance, infrastructure, multinational enterprises, productivity growth, regulatory reforms, research collaboration, technology transfer
    JEL: G1 I2 L5 O3 O4
    Date: 2018–07–23

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