nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒11‒26
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The Inverted-U Relationship Between Credit Access and Productivity Growth By Aghion, Philippe; Bergeaud, Antonin; Cette, Gilbert; Lecat, Rémy; Maghin, Helene
  2. What Drives China's Growth? Evidence from Micro-level Data By Tomoyuki Iida; Kanako Shoji; Shunichi Yoneyama
  3. The Determinants of TFP Growth in the Portuguese Service Sector By Ana Martins; Tiago Domingues; Catarina Branco
  4. Intellectual Property Rights and Innovation in Developing Countries: A Panel Analysis By Emna Rassâa; Hafedh Ben Abdennebi
  5. Dynamics of innovative concepts in exploratory projects: managing consistency between originality, collaboration and strategy By Sophie Hooge; Milena Chen; Dominique Laousse
  6. A review of the empirical literature combining economic and environmental performance data at the micro-level By Antoine Dechezleprêtre; Tobias Kruse
  7. Verifying High Quality: Entry for Sale By Norbäck, Pehr-Johan; Persson, Lars; Svensson, Roger
  8. Taxation and Innovation in the 20th Century By Akcigit, Ufuk; Grigsby, John; Nicholas, Tom; Stantcheva, Stefanie
  9. The Role of Female Top Manager in Innovation Activities: Case of CEECs? firms By Marija Becic; Perica Vojinic
  10. Networking theory of innovation in practice A Pan-European overview based on the Community Innovation Survey By Toth, J.; Torok, A.; Balogh, J.M.
  11. Family Firm Performance over the Business Cycle: A Meta-Analysis By Christopher Hansen; Joern H. Block; Matthias Neuenkirch
  13. Prediction Based on Entrepreneurship-Prone Personality Profiles: Sometimes Worse Than the Toss of a Coin By Konon, Alexander; Kritikos, Alexander S.

  1. By: Aghion, Philippe; Bergeaud, Antonin; Cette, Gilbert; Lecat, Rémy; Maghin, Helene
    Abstract: In this paper we identify two counteracting effects of credit access on productivity growth: on the one hand, better access to credit makes it easier for entrepreneurs to innovate; on the other hand, better credit access allows less efficient incumbent firms to remain longer on the market, thereby discouraging entry of new and potentially more efficient innovators. We first develop a simple model of firm dynamics and innovation-base growth with credit constraints, where the above two counteracting effects generate an inverted-U relationship between credit access and productivity growth. Then we test our theory on a comprehensive French manufacturing firm-level dataset. We first show evidence of an inverted-U relationship between credit constraints and productivity growth when we aggregate our data at sectoral level.. We then move to firm-level analysis, and show that incumbent firms with easier access to credit experience higher productivity growth, but that they also experienced lower exit rates, particularly the least productive firms among them. To confirm our results, we exploit the 2012 Eurosystem's Additional Credit Claims (ACC) program as a quasi-experiment that generated exogenous extra supply of credits for a subset of incumbent firms.
    Keywords: credit constraint; firms; growth; interest rate; productivity
    JEL: G21 G32 O40 O47
    Date: 2018–09
  2. By: Tomoyuki Iida (Bank of Japan); Kanako Shoji (Bank of Japan); Shunichi Yoneyama (Bank of Japan)
    Abstract: This paper discusses the sustainability of China fs rapid growth mainly based on the estimation of the corporate-level total factor productivity of Chinese listed firms. Since the 1980s, both capital accumulation and rapid technological progress -- measured as total factor productivity (TFP) -- have contributed to the high growth of the Chinese aggregate output. Should the prediction of the standard growth theory be correct, however, economic growth led by capital accumulation is not likely to be long lasting, hence we mainly focus on firm level TFP growth. As a result, we identify four channels that would continue to promote the TFP growth of the Chinese corporate sector at an aggregate level: (i) declining proportion of low-productivity state-owned enterprises, (ii) continuous influx of highly competent new start-ups, (iii) broad catching up trend among the laggards in the firm distribution, and (iv) innovation spawning R&D activities. These four channels would underpin the medium-term economic growth of the Chinese economy.
    Keywords: China; Total Factor Productivity; Catching up; R&D
    JEL: N15 O30 O47
    Date: 2018–11–13
  3. By: Ana Martins (GEE - Gabinete de Estratégia e Estudos do Ministério da Economia); Tiago Domingues (GEE - Gabinete de Estratégia e Estudos do Ministério da Economia); Catarina Branco (Nova School of Business and Economics)
    Abstract: As services today are of great complexity and usually a bundle of different individual inputs, it is sometimes hard to identify characteristics for the overall service sector. As such, empirical research on productivity is less common in this sector. Given the connection between Total Factor Productivity (TFP) and economic growth, and the importance of services for overall economic activity, it is crucial to study, at the firm level, which factors may drive TFP growth in this particular sector. Our empirical assessment is based on a firm-level panel dataset covering Portuguese service firms, between 2010 and 2016. We first estimate TFP through the Levinsohn-Petrin (LP) algorithm and compare results amongst different traditional estimating methods. Secondly, we conclude our econometric framework with a fixed-effects estimation, hence, trying to shed further light on the determinants of TFP growth in the Portuguese service sector. We found evidence for a positive correlation between financial health, innovation, wage premium, and TFP growth, whereas capital intensity, training, and age show a non-linear relationship with TFP growth.
    Keywords: Total Factor Productivity; LEVPET; Fixed e ects; Service Sector
    JEL: C33 D22 D24 O47
    Date: 2018–11
  4. By: Emna Rassâa (IHEC, University of Carthage); Hafedh Ben Abdennebi (IHEC, University of Carthage)
    Abstract: Given the importance of innovation for the development and economic growth in developing countries, we therefore consider it necessary to examine the relationship between intellectual property rights (IPR) and innovation. In order to test this relationship, we use of panel data for a sample of 13 developing countries over the period from 1998 to 2011. We make two contributions to the literature. First of all, the majority of empirical studies, using a single indicator of IPR elaborated by Park And Ginarte (1997), usually do not take into account the application of laws on patents filed in the practice. Unlike the previous studies, we incorporate in our work a new indicator developed by Papageorgiadis et al. (2014) which used to measure the intensity of the dimension related to the application of patent systems. We have also used the one developed by Park and Ginarte (1997) that measures the strength of patent regulations. As a second contribution, we add a new factor likely to influence innovation, namely education. The variable of education has not been taken into account in some studies. On the one hand, our empirical results reveal the existence of nonlinear relationships between IPR and innovation and argue, on the other hand, that the economic development, the opening as well as education are essential factors that contribute significantly and positively to innovation in developing countries.
    Keywords: intellectual property rights, innovation, education, developing countries, panel data
    JEL: O31 O34 C23
    Date: 2018–10
  5. By: Sophie Hooge (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); Milena Chen (SNCF : Innovation & Recherche - SNCF); Dominique Laousse (SNCF : Innovation & Recherche - SNCF, 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: Despite the importance of conceptual formulations for exploratory projects, the variety and evolution of concepts generated in an exploratory project to describe the innovative purpose across the whole innovation process is still misunderstood. In this paper, we propose to address this issue of multiplicity and coherence of concept formulation in exploratory projects at three levels - cognitive, managerial and strategic - in order to describe the dynamics of conceptual works. We rely on a on a longitudinal study (7 years) of the innovation capability management in a large established firm, SNCF, the French railroad company. Our main results are i) to give a typology of seven concept formulations; ii) to show that these are interdependent and part of a structured process of building a "desirable unknown" to impact three dimensions: cognitive generative power, collaborative attractiveness for new organizations experimentation, and strategic positioning renewal of the firm in quickly evolving environments; and iii) to explicit specific conceptual formulation patterns that can improve their performance. We thereby contribute to guide practitioners on building conceptual formulations to reach their innovation goals.
    Keywords: desirable unknown,KCP workshops,C-K theory,Radical innovation,innovative design,concept,exploratory project,Innovation strategy
    Date: 2018–06–30
  6. By: Antoine Dechezleprêtre; Tobias Kruse
    Abstract: This article reviews the empirical literature combining economic and environmental performance data at the micro-level, i.e. firm- or facility-level. The literature has generally found a positive and statistically significant correlation between economic performance, as measured by stock market returns, and environmental performance, as measured by emissions of pollutants or adoption of international environmental standards. The main reason for this finding seems to be that firms that reduce their material and energy costs experience both better economic performance and lower emissions. There is also evidence that greener firms are able to attract more productive employees and face smaller costs of capital, and that the introduction of green products enhances firms’ profitability. Only a small and recent literature analyses the joint causal impact of environmental regulations on environmental and economic performance. Interestingly, this literature shows that environmental regulations tend to improve environmental performance while not weakening economic performance. However, the evidence so far is limited to a handful of environmental regulations that are not extremely stringent, so the result cannot be easily generalized. More research is needed to assess the joint effects of environmental regulations on environmental and economic performance, to explore the heterogeneity of these effects across sectors, countries and types of policies, and to understand which policy designs allow improving environmental quality while not altering the economic performance of regulated businesses.
    Keywords: environmental performance, firm performance, microdata sources
    JEL: Q50 Q58
    Date: 2018–12–06
  7. By: Norbäck, Pehr-Johan; Persson, Lars; Svensson, Roger
    Abstract: When and how do entrepreneurs sell their inventions? To address this issue, we develop an endogenous entry-sale asymmetric information oligopoly model. We show that low quality inventions are sold directly or used for own entry. Inventors who sell post-entry use entry to credibly reveal information on quality. Incumbents are then willing to pay high prices for high-quality inventions to preempt rivals from obtaining them. Using Swedish data on patents granted to small firms and individuals, we find evidence that high-quality inventions are sold under preemptive bidding competition, post entry.
    Keywords: Acquisitions; Innovation; ownership; patents; Quality; start-ups; Verification
    JEL: G24 L1 L2 M13 O3
    Date: 2018–09
  8. By: Akcigit, Ufuk; Grigsby, John; Nicholas, Tom; Stantcheva, Stefanie
    Abstract: This paper studies the effect of corporate and personal taxes on innovation in the United States over the twentieth century. We use three new datasets: a panel of the universe of inventors who patent since 1920; a dataset of the employment, location and patents of firms active in R&D since 1921; and a historical state-level corporate tax database since 1900, which we link to an existing database on state-level personal income taxes. Our analysis focuses on the impact of taxes on individual inventors and firms (the micro level) and on states over time (the macro level). We propose several identification strategies, all of which yield consistent results: i) OLS with fixed effects, including inventor and state-times-year fixed effects, which make use of differences between tax brackets within a state-year cell and which absorb heterogeneity and contemporaneous changes in economic conditions; ii) an instrumental variable approach, which predicts changes in an individual or firm's total tax rate with changes in the federal tax rate only; iii) event studies, synthetic cohort case studies, and a border county strategy, which exploits tax variation across neighboring counties in different states. We find that taxes matter for innovation: higher personal and corporate income taxes negatively affect the quantity and quality of inventive activity and shift its location at the macro and micro levels. At the macro level, cross-state spillovers or business-stealing from one state to another are important, but do not account for all of the effect. Agglomeration effects from local innovation clusters tend to weaken responsiveness to taxation. Corporate inventors respond more strongly to taxes than their non-corporate counterparts.
    Keywords: business taxation; Corporate taxation; firms; Income taxes; Innovation; inventors; R&D tax credits; state taxation
    JEL: H24 H25 H31 J61 O31 O32 O33
    Date: 2018–09
  9. By: Marija Becic (Department of Economics and Business Economics, University of Dubrovnik); Perica Vojinic (Department of Economics and Business Economics, University of Dubrovnik)
    Abstract: The aim of this paper is to explore whether the gender of top manager plays an important role in innovation activities in selected CEE countries. For this purpose, a framework of logistic binary regressions is applied to the firm-level data from Business Environment and Enterprise Performance Survey (BEEPS). The research assesses the differences in firm innovation activities in CEECs considering the gender structure of the top management. Findings indicate that, on average, there is a lower possibility that a firm innovates when it is governed by a female manager. However, women in top management are underrepresented in all the industries but this is specially the case in highly innovative sectors such as IT industry.
    Keywords: process innovation, product innovation, gender diversity, top management, CEECs firms
    JEL: J16 O30
    Date: 2018–10
  10. By: Toth, J.; Torok, A.; Balogh, J.M.
    Abstract: According to the European Innovation Scoreboard report, there is a big difference between the European Union (EU) member states innovation performance. The majority of the Southern-European countries and Member States joined to the EU in 2004 are considered as moderate innovators. On the top of the list there are the Scandinavian and the Benelux countries, the UK and Germany, while Bulgaria and Romania are the modest innovators in Europe. From an innovation point of view food industry is seen as slow one, which is lagging behind the technology pushed possibilities, but sometimes behind the costumers desires and requirements as well. In our research, we determine why the food companies in the examined European countries - do not engage in innovation activities and - if they do so, what are the main drivers of their innovation performance? We use the Community Innovation Survey (CIS) 2012 data and employ double hurdle estimation because of the nature of the innovation distribution. This method also helps in overcoming the selection bias problem, which necessarily occurs in this situation. Results prove that networking scope as well as networking intensity, play important role in explaining innovation performance. The size and market obstacles are also significant factors. Acknowledgement : Research was supported by the National Research, Development and Innovation Office of Hungary (K 120563 - Innovation resilience in food production and consumption)
    Keywords: Research Methods/ Statistical Methods
    Date: 2018–07
  11. By: Christopher Hansen; Joern H. Block; Matthias Neuenkirch
    Abstract: The financial performance of family firms has been widely studied in the literature. Combining the results of 172 primary studies from 38 countries with data about business cycles, we investigated how family firm performance changes over the business cycle. Using meta-analytic estimation methods, we found that family firms slightly outperform nonfamily firms in both economically good and economically difficult times. For non-OECD countries, we found evidence for a countercyclical effect where the relative outperformance of family firms is higher in economically difficult times. No such cyclical effect was found for family firms in OECD countries. Our study extends the literature on how family firm performance depends on macroeconomic factors.
    Keywords: family firms, financial performance, meta-analysis, business cycle
    Date: 2018
  12. By: Elena Karnoukhova (National Research University Higher School of Economics); Anastasia Stepanova (National Research University Higher School of Economics); Maria Kokoreva (National Research University Higher School of Economics)
    Abstract: Innovative companies are a major driver of the global economy. The typical major owner is an institutional investor. In recent years the stakes of institutional owners have increased, which should increase the role of institutional investors. Institutional investors, however, differ. Traditional investment managers, banks, insurance companies and hedge funds have different goals and strategies, so their roles in firms differ significantly. In this article we analyze the difference between technology and non-technology companies to find out the reason for the success of fast-growing corporations. This research uses a Generalized Least Square model on a sample of 12,565 firm-year observations 2004–15, to justify the assumption that different types of investors have different effects on the performance of innovative companies. The research reveals a distinction between the type of investor and the investor strategy. By focusing on the concentration of ownership, we demonstrate the performance effect on different blockholders. Our findings suggest, first, that grey investors decrease firm value; second, that passive independent institutions enhance firm performance in virtue of their active monitoring and long-term investment horizons; third, that innovative firms have different ownership patterns to traditional ones.
    Keywords: ownership structure, institutional investors, innovative companies, ownership concentration
    JEL: G32
    Date: 2018
  13. By: Konon, Alexander (DIW Berlin); Kritikos, Alexander S. (DIW Berlin)
    Abstract: The human personality predicts a wide range of activities and occupational choices—from musical sophistication to entrepreneurial careers. However, which method should be applied if information on personality traits is used for prediction and advice? In psychological research, group profiles are widely employed. In this contribution, we examine the performance of profiles using the example of career prediction and advice, involving a comparison of average trait scores of successful entrepreneurs with the traits of potential entrepreneurs. Based on a simple theoretical model estimated with GSOEP data and analyzed with Monte Carlo methods, we show, for the first time, that the choice of the comparison method matters substantially. We reveal that under certain conditions the performance of aver-age profiles is inferior to the tossing of a coin. Alternative methods, such as directly estimating success probabilities, deliver better performance and are more robust.
    Keywords: advice, personality, entrepreneurship, profiles
    JEL: C15 D81 L26
    Date: 2018–10

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