nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒12‒03
eighteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Mobilising European Structural and Investment Funds and Horizon 2020 in support of innovation in less developed regions By Dimitrios Pontikakis; Mathieu Doussineau; Nicholas Harrap; Mark Boden
  2. Innovation and Productivity in the Food vs. the High-Tech Manufacturing Sector By Frick, F.; Jantke, C.; Sauer, J.
  3. Productivity spillovers from multinational activity to local firms in Ireland By Mattia Di Ubaldo; Martina Lawless; Iulia Siedschlag
  4. Refinancing Risk and Debt Maturity Choice during a Financial Crisis By Chala, Alemu Tulu
  5. The Moderating Effect of Collaborative Culture on Supply Chain Collab-oration towards Competitive Advantage: The Conceptual Model By Korakot Wichitpong; Sirijin Wongjarupun; Preeyanuch Apibunyopas
  6. Drawing funding and financing scenarios for effective implementation of Smart Specialisation Strategies By Mathieu Doussineau; Eskarne Arregui-Pabollet; Nicholas Harrap; Fernando Merida
  7. Impact of Capital Structure on Enterprise?s Profitability: Evidence from Warsaw Stock Exchange By Jacek Jaworski; Leszek Czerwonka
  8. Making ideas work for society: University cooperation in knowledge transfer By Ritzen, Jo
  9. Environmental Pollution Policy of Small Businesses in Nigeria and Ghana: Extent and Impact By Uchenna Efobi; Tanankem Belmondo; Emmanuel Orkoh; Scholastica Ngozi Atata; Opeyemi Akinyemi; Ibukun Beecroft
  10. Spinoffs, parents, and institutions: Evidence from the Italian motorcycle industry By Andrea Morrison
  11. Higher Education Instruments and Smart Specialisation Innovative Industrial Doctorates and Higher Technical Institutes in Puglia By Elisabetta Marinelli; Alessio Cavicchi; Annamaria Fiore; Gigliola Paviotti; Elisa Gerussi; Simona Iammarino
  13. An analytical framework to assess the governance of universities and their involvement in Smart specialisation strategies By Eskarne Arregui-Pabollet; Mathieu Doussineau; Markus Dettenhofer
  14. A General Equilibrium Theory of Occupational Choice under Optimistic Beliefs about Entrepreneurial Ability By Michele Dell'Era; Luca David Opromolla; Luís Santos-Pinto
  15. Platform Competition: Who Benefits from Multihoming? By Dana Kassem
  16. Government Ownership, Firm Performance and Corporate Philanthropy in Thai Listed Firms By Usarat Thirathon; Suneerat Wuttichindanon
  17. How do Small Firms Respond to Tax Schedule Discontinuities? Evidence from South African Tax Registers By Wian Boonzaaier; Jarkko Harju; Tuomas Matikka; Jukka Pirttilä
  18. Ownership structure of family business groups of Pakistan By SHAHID HUSSAIN; nabeel safdar

  1. By: Dimitrios Pontikakis (European Commission - JRC); Mathieu Doussineau (European Commission - JRC); Nicholas Harrap (European Commission - JRC); Mark Boden (European Commission - JRC)
    Abstract: How can EU policies support the development of innovation capabilities in less developed regions? This note examines the mobilisation of the EU’s two major innovation support instruments: the European Structural and Investment Funds (ESIF) and Horizon 2020 (H2020). Using data from Eurostat and European Commission administrative data on ESIF and H2020 funding, we observe a number of salient patterns: While newer member states benefit from higher research and innovation allocations from ESIF, participation in H2020 remains a formidable challenge. Across Europe we find that H2020 participation is closely associated with a number of proxies of the development of national and regional innovation systems. With few exceptions (most notably Slovenia and the Czech Republic) newer member states are characterised by lower overall R&D intensity, their research and innovation systems are less internationalised and most R&D is performed by public research institutions rather than businesses. Based on a review of literature on the determinants of participation in the H2020 (and its predecessor Framework Programmes), the history of today's advanced innovation systems and a consideration of the objectives of, modes of intervention of and possible complementarities between ESIF and H2020 we single out international collaboration and business innovation capabilities as important instrumental objectives for development-minded policy.
    Keywords: Synergies, Horizon 2020, ESIF, Innovation
    Date: 2018–11
  2. By: Frick, F.; Jantke, C.; Sauer, J.
    Abstract: The food sector is considered a mature and a research and development (R&D) extensive industry. Nevertheless, also food companies face numerous challenges and cannot abstain from innovation activity if they want to keep their competitive stance. We examine the impact of innovation on labor productivity in European food companies in comparison to results for firms operating in high-tech sectors. The central motivation of our study is that the observed low R&D intensity in the food sector should be mirrored in different productivity effects of innovation when compared to the high-tech sector. We use microdata from the European Union s Community Innovation Survey (CIS) and apply an endogeneity-robust multi-stage model that has been applied by various recent studies. Our results point out major differences between the examined subsectors. While we find strong positive effects of innovation on labor productivity for food firms, we find insignificant effects in the high-tech sector. This suggests that the returns to innovation might be best evaluated separately by sector rather than for the manufacturing sector as a whole. Acknowledgement :
    Keywords: Labor and Human Capital
    Date: 2018–07
  3. By: Mattia Di Ubaldo (Economic and Social Research Institute); Martina Lawless (Economic and Social Research Institute); Iulia Siedschlag (Economic and Social Research Institute)
    Abstract: As well as their direct effects on output and employment, the attraction of foreign direct investment is sometimes argued to provide further economic benefits through spillover effects that potentially increase the productivity performance of domestic firms. Empirical evidence on these indirect effects has however tended to be mixed. This paper uses Irish firm-level data on both manufacturing and services firms to re-examine and update evidence on intra-industry and intra-region spillovers and then extends the previous research by examining if spillovers are more likely to occur through supply chain linkages. In addition, we consider the heterogeneity of investors and allow the spillover effects to differ for foreign affiliates owned by EU and non-EU based parent companies. Finally, we examine the role of domestic firms’ absorptive capacity in conditioning the effects of spillovers from multinationals on their productivity. Overall, we find limited evidence or a negative link between the presence of foreign-owned firms and the productivity of domestic firms in the same industry or the same region. Examining forward and backward linkages through supply chains indicates that on average, selling to foreign-owned firms had a positive effect while buying from foreign owned firms had a negative effect on the average productivity of domestic firms. Finally, considering the absorptive capacity of domestic firms and allowing the spillover effects to differ depending on the origin of the parent companies, we find that the positive productivity spillovers come from supply chain linkages between domestic firms investing in R&D and foreign affiliates of multinationals with headquarters based outside the EU.
    Keywords: absorptive capacity, Foreign direct investment, productivity spillovers
    JEL: D22 F23 O33
    Date: 2018–11–30
  4. By: Chala, Alemu Tulu (Department of Economics, Lund University)
    Abstract: This paper explores whether refinancing risk is an important determinant of maturity decisions by investigating how firms with refinancing risk choose the maturity of new loans they obtain during the 2007-2009 financial crisis. The firms' refinancing risk is measured by the maturing portion of outstanding long-term debt. The result shows that firms with a high refinancing risk choose longer maturities. This effect is stronger for speculative-grade and low-cash-flow firms. There is also evidence that firms with refinancing risk obtain longer maturities from their relationship lenders.
    Keywords: Refinancing risk; Debt maturity; financial crisis
    JEL: G01 G32 G39
    Date: 2018–11–13
  5. By: Korakot Wichitpong (Kasetsart University); Sirijin Wongjarupun (Kasetsart University); Preeyanuch Apibunyopas (Kasetsart University)
    Abstract: In the current challenging business environment, firms find it difficult to be exclusively. Not only do the firms continue to leverage their internal sources for competitive advantage but also collaborate with partners along the supply chain vertically and horizontally. The collaboration results in revenue enhancements, cost reductions, and operational flexibility, especially, in managing an uncertain demand. Many previous studies have relatively emphasized on the conditions or factors affecting supply chain collaboration but still lacked one of the main supporting elements, known as collaborative culture. Thus, the role of collaborative culture on supply chain collaboration is unclear. The aim of this research is to investigate the moderating effect of the collaborative culture on the relationship between supply chain collaboration and competitive advantages.This paper is proposing a conceptual model to explore the role of collaborative culture. Reviewing literature from the preceding research is employed as the research methodology to construct a conceptual model. Measurement of each latent variable is performed by supply chain collaboration, competitive advantages, and collaborative culture. Supply chain collaboration is analyzed by resource sharing, decision synchronization, and incentive alignment. Competitive advantage is investigated in terms of process efficiency, offering flexibility, business synergy, quality, and innovation. Lastly, the collaborative culture is examined by four factors, namely, collectivism, long-term orientation, power symmetry, and uncertainty avoidance. The implication of this research is to create a better understanding of the role of collaborative culture in order to enhance and sustain supply chain collaboration. Moreover, the results will help in resolving the obstacles of supply chain collaboration and in promoting the positive collaborative culture element(s) to strengthen the collaboration along the supply chain.
    Keywords: Collaborative culture, Supply chain collaboration, Competitive advantage
    Date: 2018–11
  6. By: Mathieu Doussineau (European Commission - JRC); Eskarne Arregui-Pabollet (European Commission - JRC); Nicholas Harrap (European Commission - JRC); Fernando Merida (European Commission - JRC)
    Abstract: Leveraging greater impact from the array of research and innovation funds in the EU is driving efforts to combine such funds and develop synergies at the policy and strategy levels. However, one of the first challenges for policy makers and stakeholders intervening in the support to R&I is to obtain a full picture of all current and planned funding and financing instruments. This report uses the Technology Readiness Level (TRL) framework to characterise the different funding that is available. The major bottlenecks in the innovation process that can arise through the lack of appropriate funding are discussed along with the background and the utility and criticisms of the TRL. The use of TRL to characterise and map research and innovation in the EU provides a useful framework. However, there is a need to broaden the scope of TRL to include commercialisation of new products and services and scale-up business capacities. Furthermore, it is limited by its technology focus, while innovation can embrace many aspects beyond the purely technological. This work has also highlighted many issues that can affect the optimal combination of funds. There is a need for cross-cutting knowledge of the different funds rather than there being ''silo-thinking'' where a person only considers the area in which they directly work and not interrelated areas in other domains. Hand in hand with this is a better understanding of how beneficiaries decided between funding options and the support they may require. This support can include clearer information communicated with regards to the funds and also the financial instruments that are available, such as those implemented by the European Investment bank. Finally, an improved alignment of the rules of participation of the various funds is needed, both between the different funds at the EU level but also with national funding.
    Keywords: EU funding, financing instruments, synergies, Research, innovation, TRL, Smart specialisation strategies, Horizon 2020, ESIF
    Date: 2018–11
  7. By: Jacek Jaworski (WSB University in Gda?sk); Leszek Czerwonka (University of Gda?sk, Faculty of Economics)
    Abstract: The aim of the paper is to diagnose the impact of the capital structure of companies listed on the Warsaw Stock Exchange on their profitability. The ratios used in the profitability measurement are Return on Sales (ROS), Return on Assets (ROA) and Return on Equity (ROE). The capital structure is characterised by the total debt ratio (DR) and long-term debt ratio (LDR). The method of the empirical study is panel analysis of data from financial statements of 372 companies listed in Warsaw in the years 1998 - 2016. As control variables, the size of the company and the rate of its growth were assumed.The results of the study indicate that the impact of the total debt share in the capital structure on profitability is negative. On the other hand, the dependence between profitability and long-term debt is positive. In addition, it has been found out that a greater size of a company results in higher profitability. A similar relationship is observed for the company growth rate.The limitations of the research are: a time-limited and number-limited research sample and lack of consideration in the study of external conditions (e.g. the general economic situation, the industry, internationalisation etc.).
    Keywords: profitability, return on sales, return on assets, return on equity, leverage, sources of finance, capital structure
    JEL: G32 C23
    Date: 2018–06
  8. By: Ritzen, Jo (UNU-MERIT)
    Abstract: Sustainable economic growth is more brought about by ideas, knowledge and human capital than by physical capital, like machines, buildings or land. Universities are one of the sources of ideas and of human capital. We focus on the third function of universities, next to education and research, in particular on knowledge transfer. Knowledge transfer is highly visible in agglomerations like Silicon Valley. Many countries nowadays have strategies to step up knowledge transfer as a source of sustainable economic growth. Knowledge is recognised to have its strongest potential impact close to the place where it is generated. This makes a university attractive to the region in which it is located. The university contributes to sustainable economic growth not only through the expenditures associated with the running of the university, but perhaps more by the knowledge transfer. This involves amongst others partnerships with business. Knowledge transfer does not come by itself. It requires action and strategy on the part of the university, the region and local public or private actors (businesses and public organisations). It appears that US and UK top-universities are more prominent not only in realising cooperation with business, but also among each other.
    Keywords: Knowledge transfer, innovation, public-private collaboration, university-business cooperation, triple helix
    JEL: I21 I25 O31 O32 O33 O34
    Date: 2018–11–09
  9. By: Uchenna Efobi (Covenant University, Ota, Ogun State, Nigeria); Tanankem Belmondo (MINEPAT, Yaoundé, Cameroon); Emmanuel Orkoh (World Trade Organization, Geneva); Scholastica Ngozi Atata (Abeokuta, Nigeria); Opeyemi Akinyemi (Covenant University, Ota, Ogun State, Nigeria); Ibukun Beecroft (Covenant University, Ota, Ogun State, Nigeria)
    Abstract: This study provides a comprehensive assessment of firms’ operation and environmental protection polices in Nigeria and Ghana, where there has been a rising industrial growth amidst low regulatory and institutional frameworks. We analyze the extents to which firms’ adoption of environmental protection policies affect their performances. We use firm-level data of 842 firms (447 for Nigeria and 395 for Ghana) distributed across different regions of both countries for our descriptive and econometric estimations. We find, among other things, that firms’ adoption of internal policies on environmental protection is dismally low in both Nigeria (32 percent) and Ghana (17 percent), with policies focused on reducing solid (38 percent, Nigeria; and 35 percent, Ghana), gaseous (22 percent, Nigeria; and 44 percent, Ghana), and liquid (24 percent, Nigeria; and 14 percent, Ghana) pollution. Training appears to be an important intervention that can help improve firms’ adoption of such policies. We also found that firms’ adoption and implementation of environmental protection policies significantly improve their performance.
    Keywords: Environment; Green Industrialization; Performance; Pollution; Small Businesses; West Africa
    JEL: H32 L25 Q52 Q53
    Date: 2018–01
  10. By: Andrea Morrison
    Abstract: In this paper we study the impact of spinoff generation events on the performance of parent organizations. Using data from the Italian motorcycle industry (1893-1993), we find that parents have higher survival chances after a spinoff generation event, confirming results from previous studies about other manufacturing industries. We also show that these enhanced survival patterns differ across time and space, and we link these effects to institutional differences: spinoff generation did not determine any survival advantage for parent firms in the Fascist era and in the Turin cluster, while it had an additional positive effect in the Motorvalley cluster. The paper contributes to the literature on spinoff generation and employee mobility and adds to the debate on the role of institutions in evolutionary economic geography, by showing the importance of contextual factors for the performance of parent firms.
    Keywords: Spinoffs, Employee entrepreneurship, Parents, Institutions, Evolutionary economic geography
    JEL: B52 L26 O18 R11
    Date: 2018–11
  11. By: Elisabetta Marinelli (European Commission – JRC); Alessio Cavicchi (Universita di Macerata); Annamaria Fiore (ARTI Puglia); Gigliola Paviotti (Universita di Macerata); Elisa Gerussi (European Commission – JRC Seville); Simona Iammarino (London School of Economics and Political Sciences)
    Abstract: Universities have been mainly included in the S3 debate as creators or vectors of knowledge, their higher education mission has been somewhat overlooked. For this reason, in March 2016, the Joint Research Centre of the European Commission has started a project on the role of Higher Education in Smart Specialisation (HESS). This document reports the action-research activities conducted under the HESS project in the region of Puglia (IT). The authors explored two instruments at the opposite end of the higher education spectrum: Istituti Tecnici Superiori (ITSs), i.e. Higher Technical Institutes, a form of technology-based vocational education and training. Innovative Industrial Doctorates (IIDs). These new instruments have not been explicitly taken into account during the development and early implementation of the strategy; however, it has become increasingly important to reflect on the process of human capital creation for S3. The two instruments appear suited to this reflection as they implement curricula designed in collaboration with the local private sector and with an explicit focus on technological development and employability. The report explores the challenges and opportunities ITSs and IIDs pose, as a first step to understand their potential contribution to Smart Specialisation.
    Keywords: Smart Specialisation, Innovation, Vocational Training, Higher Education, Universities, Puglia, Apulia
    Date: 2018–10
  12. By: Ksenija Vukovi? (Faculty of Organization and Informatics, University of Zagreb); Predrag Vukovi? (Faculty of Teachers Education, University of Zagreb); Tamara ?maguc (Faculty of Organization and Informatics, University of Zagreb)
    Abstract: In this paper we apply a critical analysis of institutional influence in shaping perceptions and social construction of STEM education and entrepreneurship education at high education level in Croatia. The reseach is based on identifying and analysing of qualitative data: policy documents on entrepreneurship education (strategy for entrepreneurship education, curricula) as well as national strategy on education, science and technology. Scientific papers in the field of higher education concerning entrepreneurship education and STEM education in Croatia have also been used. The method we use is critical discourse analysis. The aim of the paper is to identify dominant discourses in entrepreneurship education and STEM education at the university level and their potential impact on students' perceptions of the career choice in STEM and/or entrepreneurship field. We identify high level of symbolic capital for STEM subjects in analysed documents and these are academic disciplines that attract relatively few female students. Social constraints can prevent women converting their cultural capital into economic capital.
    Keywords: STEM education, entreprenurship education, Croatia, discourse analysis
    JEL: A23 L26
    Date: 2018–11
  13. By: Eskarne Arregui-Pabollet (European Commission - JRC); Mathieu Doussineau (European Commission - JRC); Markus Dettenhofer (CEITEC- Central European Institute of Technology)
    Abstract: The renewed EU agenda for higher education (European Commission, 2017) has emphasized that higher education institutions are not contributing as much as they should to innovation in their regions and countries. The engagement of universities in S3 has shown to be particularly important in countries and regions with weaker regional innovation systems and sub-critical public institutional capacity. The ability of universities to bring together education, research and innovation, places them as particularly important stakeholders to contribute to the research and innovation system. Nevertheless, becoming more engaged in regional innovation policies and S3 requires an important strategic vision and institutional change by HEIs to be able to engage in co-creation dynamics with quadruple helix actors. Moreover, the ability of universities to adjust their working agenda could require some change in their common practices. How they can manage this, mandates a governance framework which can allow for agility from institutes steeped in tradition. The issue of governance is complex, multi-dimensional, and often involves changes in policy, behaviour and outreach for a successful implementation of set objectives. Institutional governance in general and for universities in particular, implies setting in motion or overseeing various institutional processes and regulatory provisions to allow for the planned targets and outcomes to be achieved. The current policy brief proposes an analytical framework for university governance allowing the comparison and benchmarking of governance systems across EU member states, which could serve as guidance for university managers and policy makers to design the institutional incentives and funding programmes for increased engagement in S3. This analytical framework is experimented through a survey involving 74 European universities, the analysis of country annual reports of the Research and innovation observatory (RIO) and the knowledge generated in S2E project covering particularly EU13 countries and the higher education for Smart specialisation initiative (HESS). The main results and limits are commented and discussed with some recommendations.
    Date: 2018–11
  14. By: Michele Dell'Era; Luca David Opromolla; Luís Santos-Pinto
    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 off. 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
  15. By: Dana Kassem
    Abstract: I ask whether electrification causes industrial development. I combine newly digitized data from the Indonesian state electricity company with rich manufacturing census data. To understand when and how electrification can cause industrial development, I shed light on an important economic mechanism - firm turnover. In particular, I study the effect of the extensive margin of electrification (grid expansion) on the extensive margin of industrial development (firm entry and exit). To deal with endogenous grid placement, I build a hypothetical electric transmission grid based on colonial incumbent infrastructure and geographic cost factors. I find that electrification causes industrial development, represented by an increase in the number of manufacturing firms, manufacturing workers, and manufacturing output. Electrification increases firm entry rates, but also exit rates. Empirical tests show that electrification creates new industrial activity, as opposed to only reorganizing industrial activity across space. Higher turnover rates lead to higher average productivity and induce reallocation towards more productive firms in electrified areas. This is consistent with electrification lowering entry costs, increasing competition and forcing unproductive firms to exit more often. Without the possibility of entry or competitive effects of entry, the effects of electrification are likely to be smaller.
    JEL: D24 L60 O13 O14 Q41
    Date: 2018–11
  16. By: Usarat Thirathon (Kasetsart University); Suneerat Wuttichindanon (Kasetsart University)
    Abstract: Studies in corporate social responsibility (CSR) have been tremendously conducted in both terms of CSR determinants and consequences. The results, however, are inconclusive yet. Rather using an aggregated score, this study focuses on one CSR strategy at a time. Philanthropy is focused because it is extensively chosen. Thailand is a Buddhist-based country and documented that philanthropy outstandingly appears. The disclosures on philanthropy activities are observed. Using a path analysis, this research found that philanthropy makes firm financial performance increased. Firm size and industry are important factors of philanthropy. Large firms and firms in high impact industry (i.e. oil and gas, and chemical) have a higher number of philanthropy activities. Government ownership, however, has no impact on philanthropy. The empirical findings support the corporate visibility as a determinant of CSR.
    Keywords: CSR in Thailand, philanthropy, CSR-CFP link
    JEL: M49
    Date: 2018–11
  17. By: Wian Boonzaaier; Jarkko Harju; Tuomas Matikka; Jukka Pirttilä
    Abstract: We study the responsiveness of small and medium-sized firms to a small-business corporate income tax schedule using population-wide administrative data from South Africa. We find sizeable bunching of firms at the corporate income thresholds where the corporate tax rate increases, implying active responses to corporate income taxes. The observed bunching is very sharp, and reacts immediately to changes in the location of the kink points. These observations suggest that a sizeable part of the response is driven by reporting responses rather than real economic behavior. We find indicative evidence that reporting behavior is linked to underreporting of sales and legal tax-planning activities.
    Keywords: corporate taxation, small firms, emerging economies, bunching
    JEL: H21 H25 H32 O12
    Date: 2018
  18. By: SHAHID HUSSAIN (National University of Sciences and Technology (NUST), NUST Business School); nabeel safdar (National University of Sciences and Technology (NUST), NUST Business School)
    Abstract: This study analysis the family business groups ownership structure in the framework of corporate legal system, regulatory institutions and codes of corporate governance of Pakistan. The study uses unique handpicked data comprising a sample of 326 non-financial firms listed on Pakistan Stock Exchange for a period of 2009-13. The results reveal that Pakistani corporations have high degree of concentration of ownership. The controlling shareholders own about 87 % of firms with 10 % or more shareholding and 60 % of firms with 20 % or more shareholding. Most of the businesses are controlled by families. In 63 % of business group firms, families own 20 % or more top shareholdings. The novel contribution of the study is to develop the ownership structure of family businesses and measure the cash flow leverage, cash flow and voting rights of ultimate owners in family business groups. The study finds the considerable difference in voting and cash flow rights in family business group firms. This has strong implications for regulators, minority shareholders and dispersed investors.
    Keywords: ownership structure, business group, corporate governance, cash-flow rights, minority shareholders, voting rights, family business
    JEL: G32 G34 G38
    Date: 2018–06

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