nep-sbm New Economics Papers
on Small Business Management
Issue of 2018‒12‒24
eleven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Born to be an entrepreneur? How cultural origin affects entrepreneurship By Katharina Erhardt; Simon Haenni
  2. Determinants of Trademarking: Evidence from Arizona and New Mexico Startups By Wang, Haoying; Dou, Shuming
  3. Firm R&D investment and export market exposure By Peters, Bettina; Roberts, Mark J.; Vuong, Van Anh
  4. Firm Leverage and Regional Business Cycles By Giroud, Xavier; Mueller, Holger M
  5. Does persistence in internationalization and innovation influence firms’ performance? By Iandolo, Stefano; Ferragina, Anna Maria
  6. Classifying Firms with Text Mining By Giacomo Caterini
  7. A kis- és középvállalati szektor Magyarországon By Vértesy, László
  8. Brilliant Technologies and Brave Entrepreneurs: A New Narrative for African Manufacturing By Naudé, Wim
  9. Do Standards Improve the Quality of Traded Products? By Anne-Célia Disdier; Carl Gaigné; Cristina Herghelegiu
  10. Trade Liberalization and the Agglomeration of Heterogeneous Entrepreneurs By Toshihiro Okubo; Rikard Forslid
  11. Informing Employees in Small and Medium Sized Firms about Training: Results of a Randomized Field Experiment By van den Berg, Gerard J.; Dauth, Christine; Homrighausen, Pia; Stephan, Gesine

  1. By: Katharina Erhardt; Simon Haenni
    Abstract: Persistent differences in entrepreneurial activity between regions and countries remain unexplained. This paper argues that cultural heritage is an important determinant. We exploit a quasi-experimental setting comparing entrepreneurial activities of individuals with different cultural ancestry from within Switzerland but who live in the same municipality today and are hence exposed to the same economic and institutional environment. We find that individuals with cultural origin on the German-speaking side of the Swiss language border found 20% more firms than their counterparts with cultural origin on the French-speaking side ─ no matter if they currently live in the German-speaking or French-speaking region. These newly founded firms are identical in terms of survival rate, industry composition, legal form, and firm size, independent of the cultural origin of firm founders. A model of entrepreneurial choice suggests that the empirical patterns of firm entry and performance are more likely driven by differences in risk aversion or preferences for entrepreneurship rather than by skill.
    Keywords: Culture, entrepreneurship, natural experiment
    JEL: D22 L26 Z10
    Date: 2018–12
  2. By: Wang, Haoying; Dou, Shuming
    Abstract: Trademarks are considered an important indicator of entrepreneurial innovation, especially among nontechnology-based service firms and startups. Therefore, it is essential to understand the motivations and drivers behind trademark applications to get a grasp of firm innovation behavior. This study focuses on the trademark decisions of startup firms. The paper assembles a unique dataset of startup firms linking firm trademark application and registration information with firm characteristics. The goal is to empirically examine the determinants of startup trademark decisions. The key results show that firm size is important, and startups of 51-200 employees have the highest propensity of seeking trademarks. Startup location, firm age, and firm type also matter. Within our study area, for example, startups in the Phoenix metro area are significantly more likely to file trademark applications than those in the Albuquerque metro area. Technology-related startups find trademarks less attractive compared to other startups.
    Keywords: Startup, Trademarks, Intellectual Property, SMEs
    JEL: L2 L26 O3 O34 R1
    Date: 2018–04–18
  3. By: Peters, Bettina; Roberts, Mark J.; Vuong, Van Anh
    Abstract: In this article we study differences in the returns to R&D investment between firms that sell in international markets and firms that only sell in the domestic market. We use German firm-level data from the high-tech manufacturing sector to estimate a dynamic structural model of a firm's decision to invest in R&D and use it to measure the difference in expected long-run benefit from R&D investment for exporting and domestic firms. The results show that R&D investment leads to a higher rate of product and process innovation among exporting firms and these innovations have a larger impact on productivity improvement in export market sales. As a result, exporting firms have a higher payoff from R&D investment, invest in R&D more frequently than firms that only sell in the domestic market, and, subsequently, have higher rates of productivity growth. The endogenous investment in R&D is an important mechanism that leads to a divergence in the long-run performance of firms that differ in their export market exposure. Simulating the introduction of trade tariffs we find a substantial reduction in firms' productivity growth and incentive to invest in R&D.
    Keywords: R&D choice,Export,Innovation,Productivity,Dynamic structural model
    JEL: F14 L25 O31 O32
    Date: 2018
  4. By: Giroud, Xavier; Mueller, Holger M
    Abstract: This paper shows that buildups in firm leverage predict subsequent declines in aggregate regional employment. Using confidential establishment-level data from the U.S. Census Bureau, we exploit regional heterogeneity in leverage buildups by large U.S. publicly listed firms, which are widely spread across U.S. regions. For a given region, our results show that increases in firms' borrowing are associated with "boom-bust" cycles: employment grows in the short run but declines in the medium run. Across regions, our results imply that regions with larger buildups in firm leverage exhibit stronger short-run growth, but also stronger medium-run declines, in aggregate regional employment. We obtain similar results if we condition on national recessions-regions with larger buildups in firm leverage prior to a recession experience larger employment losses during the recession. When comparing regional firm and household leverage growth, we find qualitatively similar patterns for both. Finally, we find that regions whose firm leverage growth comoves more strongly also exhibit stronger comovement in their regional business cycles.
    Keywords: Business Cycles; Firm leverage
    JEL: E24 E32 G32
    Date: 2018–12
  5. By: Iandolo, Stefano; Ferragina, Anna Maria
    Abstract: In this paper, we analyze the joint effect of persistency in innovation and export on firms’ total factor productivity (measured in accordance with Levinsohn and Petrin, 2003). For this purpose, we use data on Italian manufacturing firms covering an eight-year time span (1998-2006) which allow us to measure the effect of different time activities, both in innovation and in export and the existence of different pathways linking them. We distinguish between persistent and temporary exporting firms as well as frequent and temporary innovators, to test (through OLS and a two-step system GMM) the existence of any combined learning-by-exporting and learning-by-doing effects. We find that persistent innovation efforts seem to be associated with a permanent presence in foreign markets since persistently innovative and exporting firms have better productivity results than persistently exporting (innovating) firms with no persistent innovation (export). Combining both strategies can be an opportunity to internalize knowledge flows coming from long-lasting exposure to foreign markets.
    Keywords: Export,Innovation,Firms,Productivity,GMM
    JEL: F14 F10 F23 O30 D24
    Date: 2018
  6. By: Giacomo Caterini
    Abstract: Statistics on the births, deaths and survival rates of firms are crucial pieces of information, as they enter as an input in the computation of GDP, the identification of each sector’s contribution to the economy, and the assessment of gross job creation and destruction rates. Official statistics on firm demography are made available only several months after data collection and storage, however. Furthermore, unprocessed and untimely administrative data can lead to a misrepresentation of the life-cycle stage of a firm. In this paper we implement an automated version of Eurostat’s algorithm aimed at distinguishing true startup endeavors from the resurrection of pre-existing but apparently defunct firms. The potential gains from combining machine learning, natural language processing and econometric tools for pre- processing and analyzing granular data are exposed, and a machine learning method predicting reactivations of deceptively dead firms is proposed.
    Keywords: Business Demography; Classification; Text Mining
    JEL: C01 C52 C53 C80 G33 L11 L25 L26 M13 R11
    Date: 2018
  7. By: Vértesy, László
    Abstract: In Hungary, more than 670,000 SMEs operate (99% coverage), which employ the 70% of all employees, more than 1.9 million people. The operating small and medium-sized enterprises are characterized by a strong territorial concentration: Central Hungary's weight is outstanding (40%). In the case of organizations, micro-enterprises dominate in all regions, at national level more than 94% of enterprises operate in this form. The main goal is to bring productivity and wage rise simultaneously, thus enabling Hungary to rise above the labor-cost – benefit competitiveness model and the medium-level trap. In terms of its labor productivity per employee, Hungary is somewhat below the average of the Visegrád countries (Czech Republic, Hungary, Poland and Slovakia). In the Visegrád region, the productivity of Hungarian manufacturing SMEs grew to a small extent (2.7%), while the growth rate of the service sector (3.5%) was the highest in the region. Six main themes can be identified, which clearly reduce the domestic and international competitiveness of small and medium-sized enterprises: weaknesses in the state and Union support system, low productivity and wage levels, moderate research and innovation performance, high public burdens and a lot of administrative burden. Therefore, the main objective is to strengthen the competitiveness.
    Keywords: Small and medium-sized enterprises, SME, economy, employment, competitiveness, R&D, taxation
    JEL: H0 H21 O4 O40 P42
    Date: 2018
  8. By: Naudé, Wim (Maastricht University)
    Abstract: In this paper I argue that the manufacturing sector still has an important role to play in Africa's development. Despite failing to industrialize in the past, there may be a new window of opportunity. This is due to the convergence of what has been called 'brilliant' new technologies associated with the Fourth Industrial Revolution (4IR) and a resurgence of start-up entrepreneurship. In this light I (i) show why manufacturing is vital for African economies, (ii) critically analyse the nature and impact, both in terms of opportunities and risks, of the new technologies associated with the 4IR for Africa; (iii) describe the resurgence of technological start-up entrepreneurship in Africa and (iv) call for policy support in the form of complimentary investments and regulations to allow entrepreneurs to utilize opportunities and to minimize threats. In short, a new narrative for African manufacturing is possible.
    Keywords: technology, industry 4.0, entrepreneurship, development, Africa
    JEL: O33 O14 O55 L52 L26
    Date: 2018–11
  9. By: Anne-Célia Disdier; Carl Gaigné; Cristina Herghelegiu
    Abstract: Quality-focused non-tariff measures are increasingly adopted by policy makers to address market failures. This paper tests for their selection and quality effects in a context of information asymmetry regarding product attributes. Our theory reveals that the enforcement of quality standards (QSs) induces the exit of lowquality firms but also that of some high-quality ones. The overall quality effect is therefore ambiguous. Using French firm data, we find that the QSs imposed by destination countries increase the probability, volume and value of exports of high-productivity medium-quality firms at the expense of low-productivity highquality firms. QSs improve the average quality of exported consumption goods.
    Keywords: Firm exports; quality standards; information asymmetry; product quality
    Date: 2018–12
  10. By: Toshihiro Okubo (faculty of economics, keio university); Rikard Forslid (Department of Economics, Stockholm University)
    Abstract: This paper introduces spatial sorting of heterogeneous entrepreneurs (firms) in the "foot-loose entrepreneur" trade and geography model. The model generates agglomeration from a uniform space contrary to the "footloose capital" model. The model also generates spatial sorting in reverse productivity order with the least productive entrepreneur being the first to relocate.
    Keywords: Agglomeration, Heterogeneous firms, Trade liberalization
    JEL: F12 F15 F21 R12
  11. By: van den Berg, Gerard J. (University of Bristol); Dauth, Christine (Institute for Employment Research (IAB), Nuremberg); Homrighausen, Pia; Stephan, Gesine (Institute for Employment Research (IAB), Nuremberg)
    Abstract: We analyze a German labor market program that subsidizes skill-upgrading occupational training for workers employed in small and medium sized enterprises. This WeGebAU program reimburses training costs but take-up has been low. In an experimental setup, we mailed 10,000 brochures to potentially eligible workers, informing them about the importance of skill-upgrading occupational training in general and about WeGebAU in particular. Using combined survey and register data, we analyze the impact of receiving the brochure on workers' awareness of the program, on take-up of WeGebAU and other training, and on job characteristics. The survey data reveal that the brochure more than doubled workers' awareness of the program. We do not find effects on WeGebAU program take-up or short-run labor market outcomes in the register data. However, the information treatment positively affected participation in other (unsubsidized) training among employees under 45 years.
    Keywords: information treatment, wages, skills, employment, randomized controlled trial
    JEL: J24 J65
    Date: 2018–11

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