nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒12‒10
fourteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Public and private financing of innovation: Assessing constraints, selection process and firm performance By Anabela Marques Santos
  2. Are Migrant Firms Actually Different From Native Firms? By A. Arrighetti; G. Foresti; S. Fumagalli; A. Lasagni
  3. Entrepreneurial Human Capital and Firm Dynamics By Francisco Queiró
  4. Kartele i patenty a nakłady badawczo-rozwojowe przedsiębiorstw By Karbowski, Adam; Prokop, Jacek
  5. Leverage over the Life Cycle and Implications for Firm Growth and Shock Responsiveness By Kalemli-Ozcan, Sebnem
  6. Exportations et exonérations, les deux vont-elles de pair ? Analyse empirique sur données individuelles d’entreprises françaises By Nadine Levratto; Aziza Garsaa
  7. Agglomeration and Industry Spillover Effects in the Aftermath of a Credit Shock By José Jorge; Joana Rocha
  8. Students? motivations and attitudes toward entrepreneurship at a South African Higher Education Institution By Clarise Mostert; Luzaan Hamilton
  9. Open Innovation System and Entrepreneurship: A case study of the Offshore Renewable Energy By Paul Igwe; Chioma Vivienne Nwokoro
  10. Immigration and Innovation By Michael Landesmann; Sandra M. Leitner
  11. The diffusion of a policy innovation in the energy sector: evidence from the collective switching case in Europe By Silvia Blasi; Silvia Rita Sedita
  12. A review of entrepreneurial knowledge and skills among students at a South African Higher Education Institution By Luzaan Hamilton; Clarise Mostert
  13. Firm survival during economic downturns: Cleansing vs. strategy-based selection By A. Arrighetti; F. Landini; E. Bartoloni
  14. Decomposition analysis of sustainable green technology inventions in China By Fujii, Hidemichi; Managi, Shunsuke

  1. By: Anabela Marques Santos
    Abstract: Using public support as the baseline, the aim of the Ph.D. thesis is firstly to assess its effectiveness in alleviating firms’ financing constraints (Chapter 2) and in enhancing the innovation-growth linkage (Chapter 5), in comparison with other financing sources. Secondly, the research undertaken also explores public policy effectiveness in two periods of time: ex-ante and ex-post analysis. In the former, effectiveness is assessed according to whether the characteristics of the project selected for the subsidy are in line with the policy targets (Chapter 3). In turn, the ex-post analysis assesses firms’ effectiveness in achieving the planned goal and the sustainability of the achieved outcomes (Chapter 4). Chapter 2 provides evidence that, in addition to a guarantee for loans, measures to facilitate equity investments and making existing public measures easier to obtain could be considered as the main solutions for future financing. Tax incentives for financially constrained firms are revealed to be the least important factor. Chapter 3 aims to understand which kinds of projects are selected for an innovation subsidy and if the characteristics of the project selected are in line with the policy target. The results show the selection process seems to be particularly effective in meeting the goals as regards the amount of investment, as well as the expected effect on enhanced internationalization and productivity. Nevertheless, the study also reveals some failures in the selection process, namely in terms of the intensity of the project’s contribution to growth. Chapter 4 assess firm performance after project implementation. Results show that subsidized firms reached targets linked with employment level and sales more easily than labour productivity and value creation. Chapter 5 reveals that equity financing has a greater effect on the strategic decision to innovate and the highest output additionality on firm turnover growth. Grants have a more moderate effect on innovation and firm growth (both turnover and employment).
    Keywords: Innovation; Financing; Venture capital; Public support
    Date: 2018–10–23
  2. By: A. Arrighetti; G. Foresti; S. Fumagalli; A. Lasagni
    Abstract: A matched-pair analysis was performed to verify the existence or not of significant differences between native and migrant companies regarding firm-specific variables and the governance structure. Controlling for firm size, industry and geographical location, we found that proxy values for efficiency, capital intensity of production and services and profitability are not significantly different (or not lower) than those of native-owned small business. Evidence shows that previous studies concerning the diversity of immigrant-owned businesses are likely marked biased by methodological choices that did not take account of the concentration of these companies in “disadvantaged” firm size categories, industries or geographical locations.
    Keywords: ethnic firms, native firms, immigrant enterpreneurship, matched-pair analysis
    JEL: J15 L25 L26
    Date: 2018
  3. By: Francisco Queiró (Nova School of Business and Economics)
    Abstract: This paper shows that entrepreneurial human capital is a key driver of firm dynamics using administrative panel data on the universe of firms and workers in Portugal. Firms started by more educated entrepreneurs are larger at entry and exhibit higher growth throughout the life cycle. The differences are driven by productivity, are particularly strong in the upper tail of the distribution, and do not hold for more educated workers in general. In addition, they do not appear to be driven by omitted ability or selection. Combining these findings with cross-country data to calibrate a simple model of heterogeneous firms, I find that accounting for the effect of entrepreneurial human capital on firm-level productivity increases the fraction of cross-country income differences explained by human and physical capital from 40% to 65%-76%.
    Keywords: Entrepreneurship; Human Capital; Firm Dynamics; Productivity
    JEL: I2 L2 O4
    Date: 2018–12
  4. By: Karbowski, Adam; Prokop, Jacek
    Abstract: The aim of this paper is to assess the impact of R&D cartel, full industry cartel, and patents on process innovation of companies, and consumer surplus, and total welfare. The reference scenario is here the Cournot rivalry without patent protection of inventions. In this paper, the quadratic costs of production of goods and R&D investments are assumed. The results of modelling and numerical analyses allowed to state that R&D cooperation (in the form of R&D cartel) is more effective and socially preferred instrument to stimulate innovation in the industry than interfirm rivalry motivated by patents. However, in industries characterized by relatively weak or medium knowledge spillovers, the most effective tool to enhance innovation is interfirm rivalry without patents. The latter constitutes one more argument against patents.
    Keywords: research and development; patents; cartels; Cournot competition; quadratic costs
    JEL: L1 O3
    Date: 2018
  5. By: Kalemli-Ozcan, Sebnem
    Abstract: We study the leverage of U.S. firms over their life-cycle and implications for firm growth and responses to shocks. We use a new dataset that matches private firms' balance sheets to U.S. Census Bureau's Longitudinal Business Database (LBD) for the period 2005-2012. A number of stylized facts emerge. First, firm size and leverage are strongly positively correlated for private firms, both in the cross section of firms and over time for a given firm. For public firms, there is a weak negative relation between leverage and size. Second, young private firms borrow more, but firm age has no relation to public firms' leverage. Third, while private firms switch from debt to equity financing as they age, public firms slightly reduce equity financing as they age. Building on this "normal times" benchmark and using the "Great Recession" as a shock to financial conditions, we show that, for private firms, firm size can serve as a good predictor of financial constraints. During the Great Recession, leverage declines for private firms, but not for public firms. We also provide evidence that private firms' growth is positively related to leverage, as they finance their growth during normal times with short-term borrowing, whereas the relationship between leverage and firm growth is negative for public firms. These results suggest that public firms are not financially constrained during normal times or during crisis, but private firms are.
    Keywords: age; census data; Financial constraints; firm life-cycle; leverage; Short-term debt
    JEL: E0
    Date: 2018–11
  6. By: Nadine Levratto; Aziza Garsaa
    Abstract: Exemptions from employers' social security contributions are by far the most important item of business subsidies. Although their direct influence on job creation, which is their primary objective, has been the subject of numerous evaluations, few researches propose to estimate their influence on competitiveness. This article sheds light on the subject by addressing the issue considering the ability of firms to access external markets through exports. To this end, this article proposes an empirical analysis of the determinants of the probability of exporting, the frequency of exports and their intensity resting on micro data for a sample French manufacturing companies over the 2004-2011 period. Our results highlight a negative effect of the exemptions on companies' export commitment. It is confirmed regardless of the indicator, period and sector selected.
    Keywords: Firm competitiveness, Export, Exemptions of social security contributions, Microdata, France
    JEL: L21 L25 L53 L6
    Date: 2018
  7. By: José Jorge (Faculdade de Economia, Universidade do Porto); Joana Rocha (Faculdade de Economia, Universidade do Porto)
    Abstract: This paper provides empirical evidence showing that industries with intense strategic complementarities exhibit stronger sensitivity to economic shocks. The Portuguese credit crunch of 2009 represents a negative shock for nonfinancial firms, which has created negative spillover effects among firms. Corporate investment declines significantly in industries with strong strategic complementarities following the onset of the crisis, controlling for firm fixed effects, time varying measures of financial constraints and investment opportunities. Consistent with a causal effect, the decline is greatest for firms in industries with strong strategic complementarities. To address sample selection concerns we consider several sample splits and apply a matching approach to find the best counterfactual, and confirm similar results.
    Keywords: Banking; Financial Crises; Industry Spillovers; Production Externalities; Agglomeration
    JEL: G21 D22 G01 D62 C23
    Date: 2018–11
  8. By: Clarise Mostert (North-West University); Luzaan Hamilton (North-West University)
    Abstract: The fact that entrepreneurship plays a vital role in contributing to the promotion of economic. In recent decades, the South African government has highlighted that entrepreneurship training especially in Higher Education Institutions (HEI?s), is of utmost importance. The decision to be an entrepreneur is determined by specific factors based on an individual?s motivation and attitude. However, in order for HEI?s to create and foster an entrepreneurial culture, it is important to determine the entrepreneurial motivations and attitudes of the students. Descriptive analysis and one-sample t-tests indicated that students at the HEI feel they can easily pursue a career in self-employment if they wished to do so, and that the most important reason for wanting to start their own business was to become an independent person.
    Keywords: Students, motivations, attitudes, entrepreneurship, South Africa, Higher Education Institution
    JEL: L26 I23 I29
    Date: 2018–10
  9. By: Paul Igwe (University of Lincoln); Chioma Vivienne Nwokoro (Eastern Palm University)
    Abstract: This article examines the innovation in the offshore renewable energy (ORE) industry using Open Innovation System (OIS), platforms and network perspective. Despite the benefits of ORE, Operation and Maintenance (O&M) costs account for up to one-third of total wind energy project lifecycle expenditure requiring relationships with multiple external partners to improve the supply chain and O&M activities. Therefore, management of the O&M activities of the supply chain and logistics has become an excellent place to drive efficiency and reduce cost thereby creating innovative products and services, business clusters and job opportunities. Findings show how strategic resources help offshore companies to reduce cost and achieve environmental, economic and social benefit derived from ORE. The OIS is used to explain the importance of new resources in technology, knowledge sharing and relationships, and stresses the role of stakeholders in addressing the challenges. The limitation of this study is related to reliance on secondary data. However, it provided an opportunity to elaborate on OIS theory and reinforces the importance of knowledge sharing, collaboration and network advantage. Overall, this provided insights into the constituent resources needed for successful OIS, regional entrepreneurship and helps move renewable energy research from a technological advancement challenges to a problem of strategic resources and relational capabilities.
    Keywords: Open Innovation System, Regional Entrepreneurship, Dynamic Capabilities, Renewable Energy
    JEL: Q55 R38 Q28
    Date: 2018–10
  10. By: Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Do High-Skilled Third-Country (i.e. Non-EU) Migrants Contribute to Productivity Growth? In order to foster innovation and enhance economic development and growth, attracting skilled professionals from abroad has become an important policy goal in many economies, initiating a global race for talent. This paper looks at the private company sector in a group of 13 old EU Member States and examines the role of high-skilled third-country (HS-TC) migrants for innovation – as captured by real labour productivity and total factor productivity (TFP) growth – between 2004 and 2015. It utilises four different indicators of HS-TC migration and defines high skills in terms of either educational attainment (ISCED classification) or the skills required in an occupation (ISCO classification) which helps identify the presence of a jobs-skills mismatch for HS-TC migrants. Taking into account the endogenous nature of HS-TC migration, we find some selective evidence of a negative causal link between the share of HS‑TC migrants, on the one hand, and labour productivity and TFP growth, on the other. Furthermore, differences in the results for the ISCED- and ISCO-based skills measures point to a non-negligible jobs‑skills mismatch in terms of an over-representation of HS-TC migrants in lower productivity occupations. We also find that HS-TC migrants are relatively less productive than HS EU migrants. Results for selected individual industries are more mixed, with some industries even benefiting in productivity terms from a higher share of HS-TC migrant workers.
    Keywords: high-skilled third-country migrants, innovation, EU, real labour productivity growth, total factor productivity growth
    JEL: O15 F22 D24
    Date: 2018–12
  11. By: Silvia Blasi (University of Padova); Silvia Rita Sedita (University of Padova)
    Abstract: This paper investigates the factors that influence the dissemination of an energy policy innovation, the collective switching, adopting the business ecosystem as unit of analysis. Collective switching is a new phenomenon that recent literature has not yet investigated. It is characterised by a group of people with common characteristics that, through an intermediary, negotiates with the energy suppliers and, thanks to its bargaining power, is able to obtain advantageous contracts. The 6C framework is adopted in order to perform a cross-country analysis oriented to single out differences in the collective switching ecosystems. Through a comparative case study analysis, which examines in rich detail 11 European countries’ collective switching campaigns, this work provides an accurate description of the collective switching business ecosystem and the ways it reacts to a policy innovation. Semi-structured interviews, conducted with consumer associations that organised collective switching campaigns, provide insights for the definition of some policy interventions.
    Keywords: Business Ecosystem, policy innovation, collective switching, energy sector, Europe
    JEL: Q40 O52 O57
    Date: 2018–11
  12. By: Luzaan Hamilton (North West University); Clarise Mostert (North West University)
    Abstract: Entrepreneurship are regarded as a key element in fostering economic growth and job creation. However, growth of a country?s economy rely on developing future leaders with the right skills and knowledge to be entrepreneurs. Entrepreneurial knowledge and skills are key attributes for students if they consider self-employment. In South Africa entrepreneurship is common in higher education, however young individuals in South Africa urgently need to be trained, educated and equipped with the necessary entrepreneurial knowledge and skills to foster an entrepreneurial activity in their complex environment. The purpose of this paper is to determine students at a South African HEI perception of their level of entrepreneurial knowledge and skills. A descriptive research design approach was followed. A self-administered questionnaire was used to collect the data from a convenience sample of 338 students at a South African public HEI situated in the Gauteng Province. Data were analysed using descriptive statistics, reliability and validity analysis and a one-sample t-test. The findings infer that at this specific HEI, students feel they have the necessary knowledge and skills to be entrepreneurial. This study contributes by implementing initiatives to equip students with the knowledge and skills they may lack in becoming active individuals in economic growth.
    Keywords: Entrepreneurial knowledge, Entrepreneurial skills, Students, Higher education institutions, South Africa
    JEL: I25 M21 M29
    Date: 2018–10
  13. By: A. Arrighetti; F. Landini; E. Bartoloni
    Abstract: Recessions are complex events that create perturbed and hostile business environments. When faced with such event, firm survival depends only limitedly on production efficiency. Rather, it depends on the ability to cope with such complexity, which is itself a result of the firm’s corporate strategy. In particular, we expect firms adopting a corporate strategy that make relatively large (little) use of skills and capabilities to deal with environmental complexity to be less (more) likely to exit during a downturn than firms that do not. We test these hypotheses on the whole population of Italian manufacturing corporations using an open panel that covers the period 2001-2014. The results provide strong support for our hypotheses. Managerial and policy implications are discussed.
    Keywords: firm survival; corporate strategy; efficiency, recession; cleanisng
    JEL: D24 L11 L25
    Date: 2018
  14. By: Fujii, Hidemichi; Managi, Shunsuke
    Abstract: Sustainable green technology is an important contributor to creating a sustainable society by simultaneously promoting environmental conservation and economic development. This study examines the determinants of sustainable green technology invention in China, with a focus on the differences in green technology development priorities in each five-year plan period. This study uses patent publication data in a patent decomposition analysis framework. We find that sustainable green patent publications increased due to efficiency improvements, the prioritization of sustainable green patents, an increased R&D expenditure share and economic growth, especially during periods of gradual economic development in China. Additionally, we find that the relative priority of R&D shifted from renewable energy technology to pollution abatement and other sustainable green technology in the 12th five-year plan. The different R&D priority trends for sustainable green technologies among the five-year plans can be used to formulate effective policies that promote sustainable green technology invention.
    Keywords: sustainable green technology; patent data; decomposition analysis; China; priority change
    JEL: O32 O44 Q55 Q56
    Date: 2018–11

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.