nep-sbm New Economics Papers
on Small Business Management
Issue of 2019‒01‒21
fifteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The impact of private R&D on the performance of food-processing firms: Evidence from Europe, Japan and North America By Pedro Andres Garzon Delvaux; Heinrich Hockmann; Peter Voigt; Pavel Ciaian; Sergio Gomez y Paloma
  2. Industry Concentration in Europe and North America By Matej Bajgar; Giuseppe Berlingieri; Sara Calligaris; Chiara Criscuolo; Jonathan Timmis
  3. Firm Size and Innovation in the Service Sector By Audretsch, David; Hafenstein, Marian; Kritikos, Alexander S.; Schiersch, Alexander
  4. From Population Growth to Firm Demographics: Implications for Concentration, Entrepreneurship and the Labor Share By Hugo Hopenhayn; Julian Neira; Rish Singhania
  5. Habitual Entrepreneurs in the Making: How Labour Market Rigidity and Employment Affects Entrepreneurial Re-entry By Wennberg, Karl; Larsson, Anne-Sophie; Fu, Kun
  6. How to be acquired by Google?: Analysis of target firms acquired by Google Inc. By Yeon, Soojung
  7. Upgrading business investment in Turkey By Seyit Mümin Cilasun; Rauf Gönenç; Mustafa Utku Özmen; Mehmed Zahid Samancıoǧlu; Fatih Yilmaz; Volker Ziemann
  8. Financial frictions, cyclical fluctuations, and the growth potential of new firms By Christoph Albert; Andrea Caggese
  9. New Sources of Growth: The Role of Frugal Innovation and Transformational Leadership By Solikin M. Juhro; A. Farid Aulia
  10. Credit constraints and firm exports: Evidence from SMEs in emerging and developing countries By Filomena Pietrovito; Alberto Franco Pozzolo
  11. When Opportunity Moves To Or Away From You: Mechanisms Linking Geographic, Economic, Institutional, And Social Space With Entrepreneurship, Innovation, And Business Performance By Jason Greenberg; Matt Marx
  12. Social Impact Investment in the EU. Financing strategies and outcome oriented approaches for social policy innovation: narratives, experiences, and recommendations By Miguel Poiares Maduro; Giulio Pasi; Gianluca Misuraca
  13. Gender Diversity, Productivity, and Wages in Egyptian Firms By Rami Galal; Mona Said; Susan Joekes; Mina Sami
  14. Higher Education for Smart Specialisation: The case of Centre-Val de Loire, France By Eskarne Arregui-Pabollet; John Huw Edwards; Jean-Marie Rousseau
  15. The Rise and Fall of Family Firms in the Process of Development By Maria Rosaria Carillo; Vincenzo Lombardo; Alberto Zazzaro

  1. By: Pedro Andres Garzon Delvaux (European Commission – JRC); Heinrich Hockmann (Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO) (Halle, Germany)); Peter Voigt (European Commission – DG ECFIN); Pavel Ciaian (European Commission – JRC); Sergio Gomez y Paloma (European Commission – JRC)
    Abstract: This report investigates the impact of corporate research and development (R&D) on firm performance in the food-processing industry. The agro-food industry is usually considered to be a low-tech sector (the share of total output that is attributable to R&D is around 0.27% in the EU). However, the agro-food industry is very heterogeneous. On the one hand, there are many highly innovative food-processing firms with intensive R&D activity and, on the other hand, many food-processing firms derive and adopt innovations from other sectors such as machinery, packaging and other manufacturing suppliers. We perform data envelopment analysis (DEA) with two-step bootstrapping, which allows us to correct the bias in (in)efficiency and generate unbiased estimates for (in)efficiencies. We use a corporate dataset of 307 companies from agriculture and food-processing industries from the EU, the USA, Canada and Japan for the period 1991–2009. The estimates suggest that R&D has a positive effect on firms’ performance, with marginal gains decreasing at the R&D level, and performance differences detected across regions and food sectors. General public expenditure in R&D is also associated with a positive impact on firm performance. As a result, policy support for this type of non-high-tech innovative sector is expected to generate growth. However, results that suggest heterogeneity in R&D effects across EU Member States may point to differences in the implications of innovation policies across EU regions.
    Keywords: Research and development, corporate R&D, productivity, technical efficiency, stochastic frontier analysis, DEA, double bootstrapping, agro-food, food-processing industry
    JEL: L66 O16 O30 Q16
    Date: 2018–09
  2. By: Matej Bajgar; Giuseppe Berlingieri; Sara Calligaris; Chiara Criscuolo; Jonathan Timmis
    Abstract: This report presents new evidence on industry concentration trends in Europe and in North America. It uses two novel data sources: representative firm-level concentration measures from the OECD MultiProd project, and business-group-level concentration measures using matched Orbis-Worldscope-Zephyr data. Based on the MultiProd data, it finds that between 2001 and 2012 the average industry across 10 European economies saw a 2-3-percentage-point increase in the share of the 10% largest companies in industry sales. Using the Orbis-Worldscope-Zephyr data, it documents a clear increase in industry concentration in Europe as well as in North America between 2000 and 2014 of the order of 4-8 percentage points for the average industry. Over the period, about 3 out of 4 (2-digit) industries in each region saw their concentration increase. The increase is observed for both manufacturing and non-financial services and is not driven by digital-intensive sectors.
    Keywords: business dynamics, Industry concentration, measurement
    JEL: D4 L11 L25
    Date: 2019–01–21
  3. By: Audretsch, David (Indiana University); Hafenstein, Marian (DIW Berlin); Kritikos, Alexander S. (DIW Berlin); Schiersch, Alexander (DIW Berlin)
    Abstract: A rich literature links knowledge inputs with innovative outputs. However, most of what is known is restricted to manufacturing. This paper analyzes whether the three aspects involving innovative activity - R&D; innovative output; and productivity - hold for knowledge intensive services. Combining the models of Crepon et al. (1998) and of Ackerberg et al. (2015), allows for causal interpretation of the relationship between innovation output and labor productivity. We find that knowledge intensive services benefit from innovation activities in the sense that these activities causally increase their labor productivity. Moreover, the firm size advantage found for manufacturing in previous studies nearly disappears for knowledge intensive services.
    Keywords: MSMEs, R&D, service sector, innovation, productivity, entrepreneurship
    JEL: L25 L60 L80 O31 O33
    Date: 2018–12
  4. By: Hugo Hopenhayn; Julian Neira; Rish Singhania
    Abstract: The US economy has undergone a number of puzzling changes in recent decades. Large firms now account for a greater share of economic activity, new firms are being created at a slower rate, and workers are getting paid a smaller share of GDP. This paper shows that changes in population growth provide a unified quantitative explanation for these long-term changes. The mechanism goes through firm entry rates. A decrease in population growth lowers firm entry rates, shifting the firm-age distribution towards older firms. Heterogeneity across firm age groups combined with an aging firm distribution replicates the observed trends. Micro data show that an aging firm distribution fully explains i) the concentration of employment in large firms, ii) and trends in average firm size and exit rates, key determinants of the firm entry rate. An aging firm distribution also explains the decline in labor’s share of GDP. In our model, older firms have lower labor shares because of lower overhead labor to employment ratios. Consistent with our mechanism, we find that the ratio of nonproduction workers to total employment has declined in the US.
    JEL: E13 E20 J11 L16 L26
    Date: 2018–12
  5. By: Wennberg, Karl (Linköping University); Larsson, Anne-Sophie (The Ratio Institute); Fu, Kun (Loughborough University London)
    Abstract: We investigate the impact of country-level labour market regulations on the reentry decision of experienced entrepreneurs, whereby they become habitual entrepreneurs. Multilevel logit models on entry decisions among 15,709 individuals in 29 European countries show that labour market regulations have a positive influence on the decision to reenter into entrepreneurship. This positive impact is stronger among individuals holding wage jobs at the time of re-entry compared to those that do not. Our results indicate that novice and habitual entrepreneurs may respond very differently to labour market rigidity. We discuss and provide tentative explanations for these differences, and outline potential policy implications.
    Keywords: Habitual entrepreneurship; employment; labour market rigidity; institutional context; multilevel modelling
    JEL: J24 J41 K31 L26
    Date: 2018–12–10
  6. By: Yeon, Soojung
    Abstract: Many technological and digital entrepreneurship called 'start-ups' are being established and gone out of business in the market. There are various routes for start-up success and being acquired by other company is a major option for them as an exit strategy. The purpose of this study is to find out the characteristics of firms which succeed in exit by acquisition. To do so, this study selected Google and analyzed 178 completed acquisitions of Google via two-step cluster analysis using variables drawn from a literature review. The two-step cluster analysis resulted in five clusters among Google's acquisitions. The different characteristics among each cluster are explained and the implication of the study is presented.
    Keywords: Acquisition,Exit strategy,Startup,Google,Two-step cluster analysis
    Date: 2018
  7. By: Seyit Mümin Cilasun; Rauf Gönenç; Mustafa Utku Özmen; Mehmed Zahid Samancıoǧlu; Fatih Yilmaz; Volker Ziemann
    Abstract: Starting from a low level in early 2000s, Turkey’s total capital stock has since expanded rapidly, but the composition and quality of investment raises questions. This study focuses on business investment, as the main driver of physical and knowledge-based capital formation and, hence, of potential output and the material foundations of well-being. Micro data allow to distinguish four types of firms: small businesses with a high rate of informality, medium-sized family firms, large formal corporations, and skilled start-ups. The relative importance of the challenges facing these different types of firms varies, notably with respect to skill shortcomings, regulatory burdens, labour costs, access to bank lending, over-leveraging and scarce equity capital. Improving the current business environment and overcoming the fragmentation of the business sector will be crucial to upgrade the quality of business investment and to enhance the allocative efficiency of capital formation. This calls for promoting formality, best management practices, the build-up of equity capital, access to long-term bank financing and other market-based financing that can complement traditional bank lending; and a faster and more inclusive transition to the digital economy.
    Keywords: business investment, FDI, firm-level data, R&D, Turkey
    JEL: E2 F21 O16
    Date: 2019–01–23
  8. By: Christoph Albert; Andrea Caggese
    Abstract: We develop a model in which entrepreneurs choose between startup types with heterogeneous short- and long-run growth potential, and we generate testable predictions on the differential effects of financial factors and cyclical fluctuations on these startups. Using a multi-country entrepreneurship survey, we find that, consistent with the model, higher borrowing costs during financial crises negatively affect high-growth startups considerably more than low-growth startups, especially during severe downturns. Our results, supported by additional tests using sector-level financial frictions indicators, uncover a new channel that is potentially important to explain slow recoveries after financial crises.
    Keywords: Financial crisis, entrepreneurship
    JEL: E20 E32 D22 J23 M13
    Date: 2018–12
  9. By: Solikin M. Juhro (Bank Indonesia); A. Farid Aulia (Bank Indonesia)
    Abstract: Untuk dapat bangkit dari permasalahan pasca krisis dan tumbuh secara berkesinambungan, ekonomi suatu negara dituntut untuk mampu beradaptasi dengan perkembangan baru, yang tidak hanya VUCA (Volatile, Uncertain, Complex, and Ambiguous) namun sudah TUNA (Turbulent, Uncertain, Novel, and Ambiguous). Negara dituntut untuk berinovasi, mendayagunakan teknologi yang terus berubah secara kontinu dan eksponensial, serta menciptakan sumber pertumbuhan ekonomi baru yang mampu mendongkrak kesejahteraan masyarakat luas. Hal ini menuntut karakter kepemimpinan transformatif untuk mampu mendorong frugal innovation yang berdampak dan berkelanjutan, yang dapat dijadikan sebagai strategic driver pertumbuhan ekonomi ke depan. Hasil analisis menyimpulkan mengenai pentingnya peran kualitas inovasi dan potensi kepemimpinan sebagai sumber pertumbuhan ekonomi baru. Penelitian ini juga menawarkan pendekatan baru, yaitu Breakthrough Possibility Frontier (BPF) untuk memperlihatkan peran transformational leadership dengan kemampuan melakukan breaktrough dalam mendorong game changing frugal innovation sebagai strategic driver pertumbuhan ekonomi.
    Keywords: pertumbuhan ekonomi, inovasi, frugal innovation, transformational leadership, Breaktrough Possibility Frontier
    JEL: O30 O15 O40 M50
    Date: 2018–08
  10. By: Filomena Pietrovito (University of Molise); Alberto Franco Pozzolo (University of Molise and Centro Studi Luca d'Agliano)
    Abstract: We study the relationship between credit contraints and export behavior using a large and heterogeneous sample of small and medium size firms from 65 emerging and developing countries between 2003 and 2014. We measure credit contraints by means of each firm's self-assessment of whether it is credit rationed, and we follow an instrumental variable approach that uses firm-level instruments to address the potential endogeneity of credit constraints with respect to export performance. We find robust evidence of a negative, statistically and economically significant effect of financial constraints on both the probability that a firm exports (the extensive margin of exports) and the share of exports over total sales (the intensive margin of exports).
    Keywords: export decisions; margin of exports; credit contraints; firm level
    JEL: D22 F10 F14
    Date: 2019–01–11
  11. By: Jason Greenberg; Matt Marx
    Abstract: This technical document provides an assessment of of firm age, and of minority and female-firm ownership in the Census Bureau microdata by by statistically comparing Dunn and Bradstreet (henceforth also referred to as "D&B") data with relevant data from various US Census programs. The D&B data include company profiles for millions of US. and international firms, both public and private. Because the data comprise the basis of D&B's service offerings, considerable resources are invested in its coverage and accuracy. Though not expected to be as complete as the Economic Census ("EC"), Longitudinal Business Database ("LBD"), and Longitudinal Employer-Household Dynamics ("LEHD") data, the coverage in the D&B data is extensive. For this study we have constructed extracts of company information for minority and female owned companies located in states for which LEHD are available. The D&B date were then linked to the Census business register ("SSEL/BR") using name and address matching techniques discussed in greater detail in the original PPS and associated proposal.
    Date: 2017–04
  12. By: Miguel Poiares Maduro (European University Institute); Giulio Pasi (European Commission - JRC); Gianluca Misuraca (European Commission - JRC)
    Abstract: This report presents the results of an exploratory research jointly conducted by the European Commission's Joint Research Centre - Directorate for Growth and Innovation, Human Capital & Employment Unit, and a team of external experts from the European University Institute, School of Transnational Governance. The aim of the study is to review social impact investing strategies being proposed in EU Member States and assess what their impact is or can be in view of possible reforms to be introduced in the European Structural and Investment Funds (ESIF), including how to combine them with the European Fund for Strategic Investments (EFSI). In particular, through insights from a comprehensive review of the landscape on social impact investment across Europe, and the analysis of a case study and a prospective scenario of use, the study represents a first attempt to assess what are the opportunities offered by this growing phenomenon, drawing recommendations in light of the proposal for the new Multi Annual Financial Framework (MFF) for the next programming period. In view of the changes in the structure, governance and modes of implementation of EU investment programmes, and with the purpose of supporting the further development of a social impact investment market, conclusions of the analysis also set the ground for future research directions on how to finance strategies and outcomes oriented approaches for a new generation of innovative social policies, including the need to define a research agenda for developing a monitoring tool and an observatory of the use and impact of social innovation and social impact investment in the EU.
    Keywords: Social Innovation, Impact Investing, Welfare Reforms, Financing Strategies
    Date: 2018–12
  13. By: Rami Galal (American University in Cairo); Mona Said; Susan Joekes; Mina Sami
    Abstract: Women’s employment is not evenly distributed across sectors and this variance in gender diversity can impact firms’ productivity and wages. Using the newly available EC 2013 dataset, this paper explores the relationship between gender diversity, productivity, and wages. Our first finding is that gender diversity is positively associated with productivity and wages in the knowledge-intensive service sector. This result is consistent with the notion that higher gender diversity increases heterogeneity of beliefs and values, and thus may be linked to greater critical thinking required in knowledge-based industries. Our second finding is that there is a negative or no association with productivity and wages among less knowledge-intensive service and both high- and low-tech manufacturing firms. These relationships are robust across different industry classifications and measures of diversity.
    Date: 2018–06–12
  14. By: Eskarne Arregui-Pabollet (European Commission - JRC); John Huw Edwards (European Commission - JRC); Jean-Marie Rousseau (TAO-Itineris)
    Abstract: This report presents the results of the case study in the French region of Centre Val de Loire, analysing the role of its Higher Education Institutions (HEIs) in the design and implementation of the regional Smart Specialisation Strategy (S3). It forms part of the Higher Education for Smart Specialisation (HESS) project, which is managed by the European Commission's Joint Research Centre (JRC) in cooperation with DG Education and Culture.
    Date: 2018–12
  15. By: Maria Rosaria Carillo (University of Naples Parthenope); Vincenzo Lombardo (University of Naples Parthenope); Alberto Zazzaro (University of Naples Federico II, CSEF and MoFiR)
    Abstract: This paper explores the causes and the consequences of the evolution of family firms in the growth process. The theory suggests that in early stages of development, valuable family specific human capital stimulated the productivity of family firms and the development process. However, in light of the rise in the importance of managerial talents for firms' productivity in later stages, family firms generated a misallocation of managerial talents, curbing productivity and economic growth. Evidence supports the dual impact of family firms in the development process and the role of socio-cultural characteristics in observed variations in the productivity of family firms.
    Keywords: Family firms, economic development and growth, culture and social structure, allocation of talents, industrialization
    JEL: D2 J62 L26 O14 O33 O4 Z1
    Date: 2019–01

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