nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒10‒01
twelve papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Young SMEs: Driving innovation in Europe? By Veugelers, Reinhilde; Ferrando, Annalisa; Lekpek, Senad; Weiss, Christoph T.
  2. A heterogeneous coefficient approach to the knowledge production function By Corinne Autant-Bernard; James Lesage
  3. Resource and Competence (Internal) View vs. Environment and Market (External) View when defining a Business By Yngve Dahle; Martin Steinert; Anh Nguyen Duc; Roman Chizhevskiy
  4. Socio-spatial dynamics, networks and modelling of regional milieu By Andrey S. Mikhaylov
  5. The Cyclical Composition of Startups By Eran Hoffmann
  6. Does Foreign Direct Investment Lead to Industrial Agglomeration By Hsu, Wen-Tai; Lu, Yi; Luo, Xuan; Zhu, Lianming
  7. The effect of clusters on the innovation performance of enterprises: traditional vs new industries By Miroslav Žižka; Vladimíra Valentová; Natalie Pelloneová; Eva Štichhauerová
  8. The Right Stuff? Personality and Entrepreneurship By Barton H. Hamilton; Nicholas W. Papageorge; Nidhi Pande
  9. R&D network formation with myopic and farsighted firms By MAULEON Ana,; SEMPERE-MONERRIS Jose J.,; VANNETELBOSCH Vincent,
  10. Collaborative knowledge creation: Evidence from Japanese patent data By Mori, Tomoya; Sakaguchi, Shosei
  11. Do institutional blockholders influence corporate investment? Evidence from emerging markets By Roberto Alvarez; Mauricio Jara; Carlos Pombo
  12. Start-ups in the field of social and economic development of the region: a cognitive model By Ludmila Orlova; Galina Gagarinskaya; Yuliya Gorbunova; Olga Kalmykova

  1. By: Veugelers, Reinhilde; Ferrando, Annalisa; Lekpek, Senad; Weiss, Christoph T.
    Abstract: Using large scale EIB Investment Survey evidence for 2016 covering 8,900 non-financial firms from all size and age classes across all sectors and all EU Member States, we identify different innovation profiles based on a firm's R&D investment and/or innovation activities. We find that "basic" firms - i.e. firms that do not engage in any type of R&D or innovation - are more common among young SMEs, while innovators - i.e. firms that do R&D and introduce new products, processes or services- are more often old and large firms. This hold particularly for "leading innovators", ie those introducing innovations new to the market. To further explore why young SMEs are not more active in innovation, we explore their access to finance. We confirm that young small leading innovators are the most likely to be credit constrained. Grants seem to at least partly addressing the external financing access problem for leading innovators, but not for young SMEs.
    Keywords: young small companies,innovation,access to finance
    JEL: G24 O31 O38
    Date: 2018
  2. By: Corinne Autant-Bernard (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); James Lesage (McCoy College of Business Administration Finance and Economics Department - Texas State University)
    Abstract: Past literature has used conventional spatial autoregressive panel data models to relate patent production output to knowledge production inputs. However, research conducted on regional innovation systems points to regional disparities in both regions ability to turn their knowledge inputs into innovation and to access external knowledge. Applying a heterogeneous coefficients spatial autoregressive panel model, we estimate region-specific knowledge production functions for 94 NUTS3 regions in France using a panel covering 21 years from 1988 to 2008 and 4 high-technology industries. A great deal of regional heterogeneity in the knowledge production function relationship exists across regions, providing new insights regarding spatial spillin and spillout effects between regions. Abstract Past literature has used conventional spatial autoregressive panel data models to relate patent production output to knowledge production inputs. However, research conducted on regional innovation systems points to regional disparities in both regions ability to turn their knowledge inputs into innovation and to access external knowledge. Applying a heterogeneous coefficients spatial autoregressive panel model, we estimate region-specific knowledge production functions for 94 NUTS3 regions in France using a panel covering 21 years from 1988 to 2008 and 4 high-technology industries. A great deal of regional heterogeneity in the knowledge production function relationship exists across regions, providing new insights regarding spatial spillin and spillout effects between regions.
    Keywords: Knowledge production,spatial econometrics,region-specific parameters
    Date: 2018–09–11
  3. By: Yngve Dahle; Martin Steinert; Anh Nguyen Duc; Roman Chizhevskiy
    Abstract: Startups is a popular phenomenon that has a significant impact on global economy growth, innovation and society development. However, there is still insufficient understanding about startups, particularly, how to start a new business in the relation to consequent performance. Toward this knowledge, we have performed an empirical study regarding the differences between a Resource and Competence View (Internal) vs Environment and Market View (External) when defining a Business. 701 entrepreneurs have reflected on their startups on nine classes of Resources (values, vision, personal objectives, employees and partners, buildings and rental contracts, cash and credit, patents, IPR's and brands, products and services and finally revenues and grants) and three elements of the Business Mission ("KeyContribution", "KeyMarket" and "Distinction"). It seems to be a tendency to favour the Internal View over the External View. This tendency is clearer in Stable Economies (Europe) than in Emerging Economies (South Africa). There seems to be a co-variation between the tendency to favour the Internal View and the tendency to focus on adding Resources. Finally, we found that an order-based analysis seems to explain the differences between the two views better than a number-based method.
    Date: 2018–08
  4. By: Andrey S. Mikhaylov (IKBFU - Immanuel Kant Baltic Federal University)
    Abstract: Spatial networking is the 'new normality' of local innovation systems, featuring a heterogeneous set of inter-organizational ties and a constant circulation of information, knowledge, practices, and other intangible assets of actors engaged in the regional innovation milieu. Understanding the particularities of territorial communities formed clarify the socio-spatial dynamics and the development trajectory of the region, its competitiveness and innovative potential. The study explores the variety of factors that affect the patterns of these socioeconomic interactions, such as the networking objectives, the stakeholders involved, the benefits projected, their spatial embeddedness, as to reduce the equivocality inherent to methodologies of delimitation and subsequent demarcation of spatial-network interactions. The study rests upon analysis of different types of relations formed between heterogeneous actors of regional socioeconomic system, both at inter-firm and inter-organizational level. Providing a classification of major factors that determine the features and patterns of spatial networking, the paper proceeds with discussing the differences in their dynamic configurations using three scholarly concepts – industrial district, business cluster, and global innovation network. The study revealed 20 individual typological characteristics in a group of four determining features of spatial-network interactions – the stakeholders, the linkages, the network, and the context. The typology elaborated is irrelative to the types of spatial networking analyzed, thus, being equally applicable to the modeling of different configurations of entrepreneurial interactions within the regional milieu. Territorial capital assessment requires a holistic approach in determining the socio-spatial dynamics of the regional milieu. This necessitates defragmentation of local ties into value constellations of the single regional socioeconomic and innovation system. The study contributes to the understanding of internal mechanisms of various forms of entrepreneurial networking, providing a set of criteria for integrated evaluation of spatial-network interactions.
    Keywords: territorial capital,spatial dynamics,regional milieu,local networks
    Date: 2018–06–29
  5. By: Eran Hoffmann (Stanford University)
    Abstract: This paper proposes a new theory of business cycles based on the idea that financial uncertainty shocks change the nature of innovation. When investors become more risk tolerant, they fund riskier startups with greater growth potential. As these ambitious startups grow, the initial shock propagates and generates a boom in output and employment. I develop a heterogeneous firm industry model of the US business sector with countercyclical risk premia and innovation by startups and existing firms. The quantitative implementation of the model jointly matches time series properties of stock returns and macroeconomic aggregates, as well as micro evidence on firm cohort growth over the cycle.
    Date: 2018
  6. By: Hsu, Wen-Tai (School of Economics, Singapore Management University); Lu, Yi (Tsinghua University); Luo, Xuan (INSEAD); Zhu, Lianming (Osaka University)
    Abstract: This paper studies the effect of foreign direct investment (FDI) on industrial agglomeration. Using the differential effects of FDI deregulation in 2002 in China on different industries, we find that FDI actually affects industrial agglomeration negatively. This result is somewhat counter-intuitive, as the conventional wisdom tends to suggest that FDI attracts domestic firms to cluster for various agglomeration benefits, in particular technology spillovers. To reconcile our empirical findings and the conventional wisdom, we develop a theory of FDI and agglomeration based on two counter-veiling forces. Technology diffusion from FDI attracts domestic firms to cluster, but fiercer competition drives firms away. Which force dominates depends on the scale of the economy. When the economy is sufficiently large, FDI discourages agglomeration. We find various evidence on this competition mechanism.
    Keywords: Industrial agglomeration; Ellison-Glaeser index; Competition; Foreign direct investment; Special economic zones; WTO; China
    Date: 2018–09–02
  7. By: Miroslav Žižka (Technical University of Liberec); Vladimíra Valentová (Technical University of Liberec); Natalie Pelloneová (Technical University of Liberec); Eva Štichhauerová (Technical University of Liberec)
    Abstract: The present paper assesses the effect of the formation of cluster organisations on the innovation performance of member enterprises in two different industries – the traditional textile manufacturing industry and the new nanotechnology industry. Innovation performance is explored using Data Envelopment Analysis in two phases. In the first phase, it examines the ability of enterprises to transform resources (labour force, long-term capital, intellectual capital) into registered industrial property rights: patents, utility models, industrial designs, and trademarks. In the second phase, it assesses the ability of enterprises to commercialise industrial property rights and generate profits. Innovation performance then integrates both phases. In each industry, two samples were assessed: member enterprises of cluster organisations, and enterprises that operate in the same industry and region but are not members of a cluster organisation. The results of the research show that the existence of a cluster organisation has a greater effect on innovation performance in the traditional textile manufacturing industry. In contrast, in the new nanotechnology industry, the existence of a cluster organisation did not prove to have any significant effect on innovation effectiveness. In this industry, the existence of a cluster organisation had only a partial effect related to better industrial property rights commercialisation. Research shows that the type of industry is an important factor in the innovation performance of clustered enterprises.
    Keywords: innovation effectiveness,data envelopment analysis,innovation efficiency,cluster organisation,industry cluster,textile cluster,nanotechnological cluster,innovation performance
    Date: 2018–06–29
  8. By: Barton H. Hamilton; Nicholas W. Papageorge; Nidhi Pande
    Abstract: We construct a structural model of entry into self-employment to evaluate the impact of policies supporting entrepreneurship. Previous work has recognized that workers may opt for self-employment due to the non-pecuniary benefits of running a business and not necessarily because they are good at it. Other literature has examined how socio-emotional skills, such as personality traits, affect selection into self-employment. We link these two lines of inquiry. The model we estimate captures three factors that affect selection into self-employment: credit constraints, relative earnings and preferences. We incorporate personality traits by allowing them to affect sector-specific earnings as well as preferences. The estimated model reveals that the personality traits that make entrepreneurship profitable are not always the same traits driving people to open a business. This has important consequences for entrepreneurship policies. For example, subsidies for small businesses do not attract talented-but-reluctant entrepreneurs, but instead attract individuals with personality traits associated with strong preferences for running a business and low-quality business ideas.
    JEL: J23 J24 J31 J32
    Date: 2018–09
  9. By: MAULEON Ana, (Université Saint-Louis Bruxelles and CORE); SEMPERE-MONERRIS Jose J., (University of Valencia); VANNETELBOSCH Vincent, (CORE, Université catholique de Louvain)
    Abstract: We study the formation of R&D networks when each firrm benefits from the research done by other firms it is connected to. Firms can be either myopic or farsighted when deciding about the links they want to form. We propose the notion of myopic-farsighted stable set to determine the R&D networks that emerge in the long run. When the majority of firms is myopic, stability leads to R&D networks consisting of either two asymmetric components with the largest component comprises three-quarters of firms or two symmetric components of nearly equal size with the largest component having only myopic firms. But, once the majority of firms becomes farsighted, only R&D networks with two asymmetric components remain stable. Firms in the largest component obtain greater profits, with farsighted firms having in average more collaborations than myopic firms that are either loose-ends or central for spreading the innovation within the component. Besides myopic and farsighted -firms, we introduce yes-firms that always accept the formation of any link and never delete a link subject to the constraint of non-negative profits. We show that yes-firms can stabilize R&D networks consisting of a single component that maximize the social welfare. Finally, we look at the evolution of R&D networks and we find that R&D networks with two symmetric components will be rapidly dismantled, single component R&D networks will persist many periods, while R&D networks consisting of two asymmetric components will persist forever.
    Keywords: networks, R&D collaborations, oligopoly, myopia, farsightedness
    JEL: C70 L13 L20
    Date: 2018–09–05
  10. By: Mori, Tomoya; Sakaguchi, Shosei
    Abstract: In this paper, we quantitatively characterize the mechanism of collaborative knowledge creation at the individual researcher level a la Berliant and Fujita(2008) by using Japanese patent data. The key driver for developing new ideas is found to be the exchange of differentiated knowledge among collaborators. To stay creative, inventors seek opportunities to shift their technological expertise to unexplored niches by utilizing the differentiated knowledge of new collaborators in addition to their own stock of knowledge. In particular, while collaborators' differentiated knowledge raises all the average cited count, average (technological) novelty and the quantity of patents for which an inventor contributes to the development, it has the largest impact on the average novelty among the three.
    Keywords: Knowledge creation, Collaboration, Differentiated knowledge, Technological novelty, Technological shift, Recombination, Patents, Network, Strategic interactions
    JEL: C33 C36 D83 D85 O31 R11
    Date: 2018–08–29
  11. By: Roberto Alvarez; Mauricio Jara; Carlos Pombo
    Abstract: This paper examines the relation between firm investment ratios and institutional blockholders for a sample of 6,300 publicly traded firms in 16 large emerging markets for the 2004–2016 period. Results show that independent, long-term, and local institutional investors boost investment ratios, which is consistent with the monitoring role and blockholder voice intervention hypotheses. The presence of institutional blockholders, regardless of their monitoring involvement, reduces firmcash flow sensitivity ratios and thus reduces firms’ financial constraints. Minority institutional investors complement the positive effect of blockholders investors. However, the effect on financial constraints decreases as the quality of the country's institutions increases.
    Date: 2018–09
  12. By: Ludmila Orlova (Samara State Technical University); Galina Gagarinskaya (Samara State Technical University); Yuliya Gorbunova (Samara State Technical University); Olga Kalmykova (Samara State Technical University)
    Abstract: The article considers the factors influencing regional development on the part of start-ups, shows a cognitive model of such impact, and gives an analysis of scenario modeling in the Samara Region. The research results are aimed at creating favorable conditions for ensuring the progressive development of a single region and the entire Russian economy. To implement the goal, studies were carried out in the form of an expert survey aimed at assessing the impact of start-ups on regional development. The study included methods of systemic analysis, economic statistics, methods of sociological expert survey, a method of statistical data analysis, a method of qualitative peer review, and a method of cognitive modeling. The article presents the results of scientific research aimed at identifying the mutual influence of the basic factors of regional development and start-ups as an important element of the socioeconomic system. The works of many scholars are devoted to the analysis and research of the problem of innovative entrepreneurship. They reveal the aspects of studying innovative entrepreneurship in the context of improving the effectiveness of innovative activity and motivating entrepreneurship. This study highlights the importance of start-ups for the formation and development of effective regional innovation systems and actualizes investigations related to identifying the main directions in the activities of the region's start-ups. A comparative analysis of the scenarios was carried out and the most effective of them were determined for the Samara Region. The presented research results can be transferred and reproduced in any constituent entity of the Russian Federation. The obtained cognitive models can be used as basic models to back up large administrative decision-making in the field of managing the regional infrastructure for supporting small and medium-sized businesses to improve its adaptability to changes in external and internal factors and to determine the trajectories of sustainable development. In addition, the obtained models can be applied in the field of fundamental research on the functioning and development of regional socioeconomic systems, as well as in applied research in modeling options for sustainable development of regional socioeconomic systems.
    Keywords: cognitive model,factors,start-ups,business,innovative entrepreneurship,social and economic development
    Date: 2018–06–29

This nep-sbm issue is ©2018 by João Carlos Correia Leitão. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.