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on Small Business Management |
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Issue of 2018‒10‒29
fifteen papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | Ana Fernandez-Zubieta; Irene Ramos-Vielba |
| Abstract: | The economic situation in Spain continued to improve in 2015, with growth in gross domestic product (GDP) of 3.2% - well above the EU-28 average of 2.2% (Eurostat-2016). The budget deficit as a percentage of GDP reduced over the year by 0.9%, reaching a figure of 5.1%. However, government debt increased to 99.8% of GDP. The unemployment rate has improved considerably over the last year (by 9.8%), but remains among the highest in the EU-28. Spanish business relies heavily on small and medium enterprises (SMEs), particularly micro-companies of less than ten employees (EC, 2016a). Although the share of SMEs in Spain is similar to other EU Member States (MS), the role of SMEs in employment creation and value added is high in European terms (EC, 2016a). There is a significant productivity gap between large enterprises and micro-companies in Spain. Additionally, Spanish firms show a growth rate below the European average (EC, 2016a). Entrepreneurship performance indicators show that Spain is increasing its business creation rate, but it is suffering from increasing firm destruction and decreasing firm survival rates (see section 1.1.2). Self-employment figures have remained quite stable over the crisis period, representing 17.7% of total employment in 2008 and 17.4% in 2015 (OECD, 2016a). However, lack of access to the labour market underlies the increasing figures of entrepreneurship ‘out of need’ (GEM, 2014). Research and innovation (R&I) investment figures remain far from pre-crisis period levels, in both total and relative terms (see section 2). Gross Expenditure on Research and Development (GERD) has declined by 9.8% between 2010 and 2015, reaching a figure of EUR 13,158 million (similar to the levels of 2007). In relative terms, R&D investments declined up to 1.22% of GDP, returning to 2006 levels. This decline in R&D investments indicates that it will be very difficult for Spain to meet the GERD target of 2% of GDP by 2020, which was set in the Spanish Strategy for Science, Technology and Innovation (EECTI) (2013–2020). GERD is also far from the targets set by the Spanish State Plan of Scientific and Technical Research and Innovation (PECTI) (2013–2016) (1.33% for 2013 and 1.48% for 2016). After a slight increase in 2014, the public budget for R&I declined again in 2015 by 6.6% and remains much lower than in the pre-crisis period. Government budget appropriations or outlays on R&D (GBAORD) reached a total figure of EUR 5,388 million in 2015, lower than in 2003 (EUR 5,742). The declining trend of the public budget for R&D (Presupuestos Generales del Estado – PGE-46) hashalted, but was greatly reduced over the crisis period: from EUR 9,673 million in 2009 to EUR 6,425 million in 2016 (ICONO-Ministry of Finance -MINHAP, 2016). In 2016, the R&I budget represented 1.47% of the total budget, a figure that is lower than for 2001 (1.49%) and far from the maximum of of 2.7% achieved in 2008 (ICONO-MINHAP, 2016). Not surprisingly, the role of government in R&D investment is declining and slipping further behind the EU-28 average. There has also been a considerable reduction in the rate of improvement of the main output indicator of the academic sector (scientific publications), the strongest innovation performance indicator of Spain (EC, 2016b). The annual growth rate of international scientific co-publications per million population has dropped form 12% in 2011 to 4.6% in 2015, decreasing the opportunities of the academic sector to become more competitive in international terms. In fact, growth in Spanish participation in world scientific production started to decline in 2013, slowinging from 3.24% in 2012 to 3.21% in 2013 (FECYT, 2016a). Reduction of investment in R&D by the business sector has continued over the post-crisis period (see section 2.3). Business R&D expenditure (BERD) has been declining since 2008, falling behind the EU-28 average. BERD represented 0.64% of GDP in 2015, less than the figure of 0.74% in 2008 and far from the EU-28 average (1.3% in 2015). Whilst the business sector remains the main source of R&D funds (0.57% of GDP in 2014), this is well below from the EU-28 average (1.13% in 2014). The combination of increasing labour productivity of Spain and high unemployment levels indicates that competitive gains are relatively inefficient. The lack of R&I investments explain the overall declining innovation performance of the Spanish R&I system (EC, 2016 b) and could partially explain this inefficient economic growth. In order to identify the most important challenges of the Spanish R&D system it is necessary to take into account both the already existing long-term challenges of the R&I system (OECD, 2006; EC, 2011; ERAC, 2014) and the effect of the economic crisis on the system. The main weaknesses and opportunities with regard to increasing the level of performance of the Spanish R&I system, as identified by Fernández-Zubieta and colleagues (2017). |
| Date: | 2018–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:ing:wpaper:201702&r=sbm |
| By: | Ugur, Mehmet; Trushin, Eshref |
| Abstract: | Public subsidies are expected to stimulate business R&D investment by correcting market failures. However, the existing evidence varies considerably and the causes of heterogeneous effect sizes remain largely unexplored. We draw on the theory of contracts to argue that effect-size heterogeneity is due to different levels of informational rents that heterogeneous firm types can extract in a second-best environment of asymmetric information, risk aversion and incomplete contracting. Using two estimators and a panel dataset of 43,650 R&D-active UK firms from 1998-2012, we report that the effect of the subsidy on innovation inputs (i) is smaller or even negative during economic downturns; (ii) is positive among start-ups, younger and smaller firms, but negative among older and larger firms; and (iii) follows an inverted-U pattern when evaluated against the firm’s R&D intensity. Our findings are consistent across two estimation methods (propensity score matching and double robust estimators) and two innovation inputs (privately-funded R&D investment and employment of scientists and technicians). |
| Keywords: | Contract theory; treatment effect; R&D subsidy; innovation; additionality; |
| Date: | 2018–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:gpe:wpaper:21943&r=sbm |
| By: | M.A. Véganzonès-Varoudakis (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Hoang Thanh Mai Nguyen (KU Leuven - Catholic University of Leuven) |
| Abstract: | Drawing on the World Bank Enterprise Surveys, we revisit the link between firm-level investment climate and productive performance for a panel of enterprises surveyed twice in time in 70 developing countries and 11 manufacturing industries. We take advantage of the time dimension available for an increasing number of countries to tackle the endogeneity issue stressed in previous studies. We also use pertinent econometric techniques to address other biases inherent in the data (e.g.measurement errors, missing observations and multicollinearity). Our results reinforce previous findings by validating, with a larger than usual sample of countries and industries, the importance of a larger set of environment variables. We show that infrastructure quality, information & communication technologies, skills and experience of the labour force, cost of and access to financing, security and political stability, competition and government relation contribute to firms' and countries' performances gap. The empirical analysis also illustrates that firms which choose an outward orientation have higher productivity level. Nevertheless, outward oriented enterprises are more sensitive to investment climate limitations. These findings have important policy implications by showing which dimensions of the business environment, in which industry, could help manufacturing firms to be more competitive in the present context of increasing globalization. |
| Keywords: | Investment climate,outward orientation,total factor productivity,manufacturing,firm-level data |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01618733&r=sbm |
| By: | Richard Fabling (Independent Researcher) |
| Abstract: | Owner-operated firms are an important part of the New Zealand economy. They employ approximately 30% of the private-for-profit workforce, as well as providing jobs and income to the working proprietors themselves. This paper addresses two questions: what characteristics are associated with entrepreneurship (starting a self-employed business); and which sorts of entrepreneurs are more successful (create jobs)? We pay particular attention to differences in start-up and survival rates by business owner sex and ethnicity, but also consider whether other individual characteristics (including age and skill) and prior job characteristics also relate to the decision to start a business or to create jobs. We find substantial negative gaps in entrepreneurship for females and non-European-only ethnicity groups – gaps that arise in large part because of differential rates of entry into self-employment and, in the case of non-European-only ethnicities, higher attrition rates from self-employment after entry. These gaps persist in the presence of controls for skill, prior labour market experience and other individual characteristics. |
| Keywords: | Entrepreneurship; self-employment; job creation; survival; ethnicity; sex; Integrated Data Infrastructure (IDI) |
| JEL: | J23 L26 M13 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:mtu:wpaper:18_12&r=sbm |
| By: | ISHIKAWA Takayuki; EDAMURA Kazuma; TAKIZAWA Miho; MIYAKAWA Daisuke; MIYAGAWA Tsutomu |
| Abstract: | Quality is the most important characteristic of services. Using the survey on customer satisfaction conducted by the Japan Productivity Center, we examine what types of firms tend to provide higher quality services. Our empirical analysis suggests the following three features on the association between firm attributes and the quality of services provided by them. First, firms holding larger liquidity assets tend to provide higher quality service, which implies that customer satisfaction is associated with the accumulation of intangible manageable assets. Second, older firms tend to provide higher quality service, which implies that the accumulation of business experiences leads to higher quality service. Third, while we confirm that firms exhibiting substantially high productivity tend to obtain high customer satisfaction, we also find firms with seemingly low productivity also obtain high customer satisfaction. Such a non-linear relationship between productivity and customer satisfaction depends on industry characteristics. |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:18027&r=sbm |
| By: | Jonathan Eberle (Department of Geography, Philipps University Marburg); Thomas Brenner (Department of Geography, Philipps University Marburg); Timo Mitze (Department of Business and Economics, University of Southern Denmark) |
| Abstract: | This paper analyzes the role played by regional conditioning factors, namely absorptive capacity and economic freedom, for the working of regional policy in Germany. We construct synthetic composite indicators to measure differences in these factors across German regions and stratify regions by their respective values. We then identify the subsample-specific transmission channels of regional policies in a spatial panel vector-autoregressive (VAR) framework and compare the direction and magnitude of effects by impulse-response function analysis and ex-post t-tests. The results point to two main channels of policy impact: While regions with low levels of absorptive capacity and economic freedom benefit from public funding only in terms of a traditional funding channel (i.e. higher investment rates and partly increased human capital levels), the link between regional policy, GDP and technology growth is very weak for these regions. In comparison, our findings hint at significant positive effects on regional GDP per workforce and patent activity for regions with a high absorptive capacity and economic freedom (i.e. a knowledge-based funding channel). This underlines the role of regional conditions for the direction and magnitude of funding effects and should be considered by policy makers as a means to trigger policy effectiveness in times of stagnating or decreasing funding volumes. |
| Keywords: | regional policy, production function, absorptive capacity, economic freedom, SpPVAR, impulse-response functions |
| JEL: | C33 R11 R58 O38 O47 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:pum:wpaper:2018-03&r=sbm |
| By: | Nicolò Gnocato (Bank of Italy); Concetta Rondinelli |
| Abstract: | A recent strand of literature has investigated the granular sources of the business cycle, i.e. to what extent firm-level dynamics have an impact on aggregate fluctuations. From a conceptual point of view, in the presence of fat-tailed firm-size distributions, shocks to large firms may not average out and may then have a direct effect on aggregate fluctuations; in addition, firm-to-firm linkages can propagate shocks to individual firms, leading to movements at the aggregate level. Using Cerved and INPS data, we test the granular hypothesis on a large sample of Italian firms, covering the period 1999-2014. Idiosyncratic Total Factor Productivity (TFP) shocks are found to explain around 30 per cent of aggregate TFP volatility; furthermore, the contribution of these linkages to firm-specific aggregate volatility is more important than that of the direct effect, especially for the manufacturing sector. |
| Keywords: | aggregate fluctuations, firm-level dynamics, productivity |
| JEL: | D24 E32 L25 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1190_18&r=sbm |
| By: | Andrea Lamorgese (Banca d'Italia); Andrea Petrella (Banca d'Italia) |
| Keywords: | agglomeration economies, urban growth, urban productivity premium |
| JEL: | O18 R11 R23 R30 A A A |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_454_18&r=sbm |
| By: | Biljana Jovanovic (National Bank of Republic of Macedonia) |
| Abstract: | Productivity, the efficiency by which firms convert inputs into output is central concept in growth related discussions. This research is focused on analyzing productivity on a sample of Macedonian firms. The goal is twofold – first, to construct productivity indicators by using firm-level data, with special focus to construction of total factor productivity (TFP), and, second to identify productivity determinants specific for Macedonian firms. Results are in line with the global productivity trends –there is significant slowdown in productivity growth in 2016. This is true for labour productivity, as well as for the TFP measure. However, the period is relatively short to conclude that this shift is of permanent, structural nature, especially having in mind the trend of reducing unemployment in the economy. As productivity determinants are concerned, econometric research confirms the importance of financial health, human capital and firms’ size as significant factors that affect the productivity of Macedonian firms. |
| Keywords: | micro data, productivity, total factor productivity |
| JEL: | D22 D24 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:mae:wpaper:2018-05&r=sbm |
| By: | Ugur, Mehmet; Awaworyi Churchill, Sefa; Luong, Hoang Minh |
| Abstract: | Endogenous growth theory and the knowledge capital model predict that research and development (R&D) investment is associated with increasing returns and positive externalities. These insights have informed public support for R&D investment directly and indirectly. We aim to establish where the balance of the evidence lies, the extent to which the evidence has adequate statistical power, and which factors may explain the variation in the empirical findings. Drawing on 983 spillovers and 501 own-R&D effect-size estimates from 60 empirical studies, we find that the average productivity effect of spillovers: (i) is smaller than what is reported in most narrative reviews; (ii) is even smaller when only adequately-powered evidence is considered; (iii) differs by spillover types; and (iv) is not larger than that of own-R&D. We also report that the percentage of adequately-powered evidence is low (30%-55%). We highlight the implications of these findings for future research and public policy design. |
| Keywords: | Knowledge externalities; R&D spillovers; productivity; public policy; meta-analysis; |
| JEL: | C1 D24 O30 O32 O33 |
| Date: | 2018–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:gpe:wpaper:21942&r=sbm |
| By: | Purva Khera |
| Abstract: | Gender gaps in womens’ economic opportunities—labor market and entrepreneurship—have remained high in India. Lack of adequate collateral limits women entrepreneurs’ ability to access formal finance, leaving them to rely on informal sources, constraining their growth. A small-open economy DSGE model is built to investigate the long-run macroeconomic impacts from closing gender gaps in financial access. Results suggest that an increase in women entrepreneurs access to formal credit results in higher female entrepreneurship and employment, which boosts India’s output by 1.6 percent. However, regulations and gender-specific constraints in the labor market limit potential gains as females’ access to quality jobs in the formal sector remains restricted. The paper shows that the factors influencing the number of females are different from those influencing the share of females in formal economic activity. Combining gender-targeted financial inclusion policies with policies that lower constraints on formal sector employment could boost India’s output by 6.8 percent. |
| Date: | 2018–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:18/212&r=sbm |
| By: | Georg von Graevenitz (Queen Mary, University of London); Antanina Garanasvili (Bournemouth University) |
| Abstract: | The European Patent System consists of national patent offices (NPOs) and the supranational European Patent Office (EPO). EPO and the NPOs have granted patents in Europe side-by-side since 1980. The resulting patent system is complicated and less coordinated than might be expected. Firms must consider a number of variables when selecting the route of patenting they take within this system: price, rigour of examination, duration of examination, quality of legal redress. To date there is little descriptive evidence on how firms choose between EPO and national offices. This paper provides a rich descriptive analysis of patenting in Europe. We analyze how origin, size and technological focus of companies, affect how they choose among patent offices within the EPS and report differences in examination durations and grant rates across patent offices. |
| Keywords: | Patents, European Patent System, Validation, Patent Propensity |
| JEL: | O34 O31 L20 K11 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:94&r=sbm |
| By: | Harald Sundmaeker |
| Keywords: | Agribusiness |
| Date: | 2017–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iefi18:276908&r=sbm |
| By: | Michele Dell'Era (National Bank of Slovakia); Luca David Opromolla (Banco de Portugal); Luis Santos-Pinto (Banco de Portugal) |
| Abstract: | This paper studies the impact of optimism on occupational choice using a general equilibrium framework. The model shows that optimism has four main qualitative effects: it leads to a misallocation of talent, drives up input prices, raises the number of entrepreneurs, and makes entrepreneurs worse o . We calibrate the model to match U.S. manufacturing data. This allows us to make quantitative predictions regarding the impact of optimism on occupational choice, input prices, the returns to entrepreneurship,and output. The calibration shows that optimism can explain the empirical puzzle of the low mean returns to entrepreneurship compared to average wages. |
| Keywords: | General Equilibrium; Entrepreneurship; Optimism |
| JEL: | D50 H21 J24 L26 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0111&r=sbm |
| By: | Iftekhar Hasan (Fordham University, Bank of Finland and University of Sydney); Krzysztof Jackowicz (Department of Banking, Insurance and Risk, Kozminski University, Poland); Robert Jagiełło (Warsaw School of Economics and National Bank of Poland); Oskar Kowalewski (IÉSEG School of Management and LEM-CNRS (UMR 9221)); Łukasz Kozłowski (Department of Banking, Insurance and Risk, Kozminski University, Poland) |
| Abstract: | We re-investigate the special role of local banks in shaping the financial constraints of small and medium-sized enterprises (SMEs). Using a comprehensive dataset from an emerging economy, including the information on local bank corrective programs, we find that local banks remain privileged and, most importantly, difficult to replace lenders for SMEs. We show that the deterioration of a SME’s access to bank financing linked to local banks’ corrective programs depends on the presence of other healthy local banks in the SME’s vicinity. Furthermore, we demonstrate that healthy local banks, when their neighboring peers experience financial difficulties, substantially increase lending. |
| Keywords: | Smart Beta, strategic beta, factor investing, factor selection, Bayesian variable selection |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:ies:wpaper:f201806&r=sbm |