nep-sbm New Economics Papers
on Small Business Management
Issue of 2019‒03‒25
eleven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Asymmetric additionalities between R&D outsourcing locations By María García-Vega; Elena Huergo
  2. The Role of Credit Guarantee Schemes in the Development of Small and Medium-Sized Enterprises with an Emphasis on Knowledge-Based Enterprises By Aboojafari, Roohollah; Daliri, Alireza; Taghizadeh-Hesary, Farhad; Mokhtari, Mohammad; Ekhtiari, Mohsen
  3. Digital platform innovation in European SMEs. An analysis of SME Instrument Business Proposals and Case Studies. By Chiara Eleonora De Marco; Alberto Di Minin; Cristina Marullo; Daniel Nepelski
  4. Transitioning from Solo Self-Employed to Microbusiness Employer: Local Economic Environment or Owner Characteristics? By Henley, Andrew
  5. Identify examples of the favorable impact of the policy of encouraging small and medium-sized enterprises on the socio-economic development of territories abroad By Krasnoselskikh, Alexander (Красносельских, Александр); Tsareva, Yulia V. (Царева, Юлия В.)
  6. Immigrant Entrepreneurs and Innovation in the U.S. High-Tech Sector By Brown, J. David; Earle, John S.; Kim, Mee Jung; Lee, Kyung Min
  7. Psychological Resilience Predicted by Personality Traits, Locus of Control and Self-Regulation of Young Entrepreneurs in Pekanbaru By Syarifah Farradinna
  8. Technological catch-up to the national and regional frontier: Firm-level evidence for India By Shubin Yang; Sandra Lancheros; Chris Milner
  9. Reconsidering the returns to entrepreneurship: Applying a modified version of Lazear’s occupational choice model By Hårsman, Björn; Mattsson, Lars-Göran
  10. The Firm Size and Leverage Relationship and Its Implications for Entry and Concentration in a Low Interest Rate World By Chatterjee, Satyajit; Eyigungor, Burcu
  11. Study on Export Business of Trading Companies (Japanese) By URABE Sumiko

  1. By: María García-Vega; Elena Huergo
    Abstract: This paper empirically examines the additionalities or crowding-out effects of international and national outsourcing of R&D to generate innovation. Using a panel database of about 10,000 Spanish firms for the period 2005-2014, we show that there is asymmetry in the effectiveness of the combined adoption of R&D outsourcing locations. International R&D outsourcing re-inforces the effect of domestic R&D outsourcing. However, national outsourcing does not re-inforce international R&D outsourcing. We next explore sources of additionality. Property Right Theory (PRT) suggests that additionality is high when holdup problems are low. We therefore analyze two important situations where holdup problems are likely to be low: with public foreign providers and in sectors with low technological complexity. Consistent with PRT, our results suggest that additionality is stronger when R&D is acquired from public providers rather than from private providers. Moreover, we find additionality in sectors with medium or low R&D complexity. In sectors with high R&D complexity, domestic and international outsourcing are largely independent. These results also suggest that international R&D outsourcing does not undermine domestic R&D.
    Keywords: Imports of technology; International and national R&D outsourcing; Innovation; Additionality or crowding-out effects. JEL classification: L25; O31; O32
    Date: 2019
  2. By: Aboojafari, Roohollah (Asian Development Bank Institute); Daliri, Alireza (Asian Development Bank Institute); Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Mokhtari, Mohammad (Asian Development Bank Institute); Ekhtiari, Mohsen (Asian Development Bank Institute)
    Abstract: Small and medium-sized enterprises (SMEs) in their growth stage reach the point where, on the one hand, personal resources do not meet their needs, and, on the other, they do not have enough collateral to attract external finance. Access to finance can be facilitated by obtaining loans from financial institutions backed by governmental credit guarantees. Therefore, the development of a sound credit guarantee scheme will be an important step in filling the financing gap of SMEs. We investigate the situation of the credit guarantee scheme for SMEs in Iran by using the available data and interviews with activists from this field with the grounded theory method. We show the weaknesses of the Iranian credit guarantee scheme, and based on the analysis, present solutions and policy recommendations in accordance with the social and economic environment of the Islamic Republic of Iran. The most important problem is the lack of a credit database for comprehensive assessment of SMEs, especially knowledge-based enterprises. The lack of a robust database makes it impossible to carry out a comprehensive evaluation because these models require a large amount of data. The lack of accurate models makes it difficult to rate credit status and thus to issue credit guarantees. In addition, the current level of the capital of the credit guarantee funds in Iran is not sufficient given the large number of SMEs in the country.
    Keywords: small and medium-sized enterprises (SMEs); knowledge-based enterprises; credit guarantee scheme (CGS); comprehensive credit evaluation
    JEL: C52 G32 H81 O10
    Date: 2019–03–13
  3. By: Chiara Eleonora De Marco (Haas School of Business, Garwood Centre for Corporate Innovation, UC Berkeley, CA-US; Institute of Management, Scuola Superiore Sant’Anna, Pisa); Alberto Di Minin (Institute of Management, Scuola Superiore Sant’Anna, Pisa); Cristina Marullo (Institute of Management, Scuola Superiore Sant’Anna, Pisa); Daniel Nepelski (European Commission - JRC)
    Abstract: The study explores how European SMEs applying to the SME Instrument (SMEi) funding scheme under Horizon 2020 innovate use the digital platform business model. The study demonstrates a widespread awareness of the digital platform concept as a tool to be applied to gain momentum and growth, taking advantage of the digital affordances. The main challenges to scale-up include how to manage external communities and orchestrate them in order to build innovation ecosystems; how to find a profitable business model; and secure funding for growth. Firms located in peripheral regions face additional difficulties in finding complementary resources.
    Keywords: digital platform, innovation, SME, H2020, SME Instrument, Europe
    Date: 2019–03
  4. By: Henley, Andrew (Cardiff University)
    Abstract: Only a minority of micro-businesses create jobs for others. This paper addresses whether personal characteristics and resources of the microbusiness owner or the local external economic environment are drivers of job creation. In the UK context of significant growth in self-employment but a declining proportion who create jobs, an investigation using longitudinal data is provided. Individual demographic and resource characteristics are found to be more important, but place effects are relatively weak. Entrepreneurship policy needs to target particular groups, including women and less experienced business owners in their localities.
    Keywords: self-employment, micro-business, job creation, local environment, longitudinal analysis
    JEL: J23 L26 M13 R12
    Date: 2019–02
  5. By: Krasnoselskikh, Alexander (Красносельских, Александр) (The Russian Presidential Academy of National Economy and Public Administration); Tsareva, Yulia V. (Царева, Юлия В.) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: Abroad, stimulating and supporting small and medium-sized businesses has long been one of the most important areas of state policy, including at the level of regions and individual territories. It is at the regional level that the positive economic and social effects resulting from the development of small and medium-sized businesses are most pronounced. On the basis of theoretical and empirical works, devoted to the study of the relationship between business and regional development, the international experience of stimulating small and medium-sized businesses is reviewed and examples of the favorable influence of business policy on the socio-economic development of territories are analyzed.
    Date: 2019–03
  6. By: Brown, J. David (U.S. Census Bureau); Earle, John S. (George Mason University); Kim, Mee Jung (George Mason University); Lee, Kyung Min (George Mason University)
    Abstract: We estimate differences in innovation behavior between foreign versus U.S.-born entrepreneurs in high-tech industries. Our data come from the Annual Survey of Entrepreneurs, a random sample of firms with detailed information on owner characteristics and innovation activities. We find uniformly higher rates of innovation in immigrant-owned firms for 15 of 16 different innovation measures; the only exception is for copyright/trademark. The immigrant advantage holds for older firms as well as for recent start-ups and for every level of the entrepreneur's education. The size of the estimated immigrant-native differences in product and process innovation activities rises with detailed controls for demographic and human capital characteristics but falls for R&D and patenting. Controlling for finance, motivations, and industry reduces all coefficients, but for most measures and specifications immigrants are estimated to have a sizable advantage in innovation.
    Keywords: immigration, entrepreneur, innovation, high-tech, patent
    JEL: F22 J15 J60 J61 L26 O15 O30 O31 O32
    Date: 2019–02
  7. By: Syarifah Farradinna (Universitas Islam Riau Jalan Kaharuddin Nasution no. 113, Pekanbaru, Riau, Indonesia Author-2-Name: Tengku Nila Fadhlia Author-2-Workplace-Name: Fakultas Psikologi, Universitas Islam Riau Jalan Kaharuddin Nasution No. 113, Pekanbaru, Riau, Indonesia Author-3-Name: Dan Azmansyah Author-3-Workplace-Name: Fakultas Ekonomi, Program Studi Manajemen, Universitas Islam Riau Jalan Kaharuddin Nasution No. 113, Pekanbaru, Riau, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - Entrepreneurs are one of the important contributors to increasing non-agricultural economic income and developing micro, small and medium enterprises. In Indonesia, entrepreneurial orientation has empirically proven that psychological factors affect individuals in improving the economy of society. The concept of psychological resilience as the development of models to predict the events and situations of failure. In certain circumstances difficulties cannot be avoided, a person with psychological resilience is able to reduce the problem by creating a new situation. Individuals who have strong personality characteristics thought to be one important factor in the process of creation and development of enterprises. Methodology/Technique - The scale used in this study consisted of a scale big five personality (Openness) McCrae & Costa (2004), The Self-Regulation Questionnaire (SRQ) by Brown et al (1999), The Work Locus of Control Scale (WLCS) by Spector (1988) as modified by Spector (2004), and Connor-Davidson Resilience Scale (CD-RISC) compiled by Connor & Davidson (2003) as modified by Manzano and Ayala (2013). A total of 238 micro businesses have voluntarily participated. Findings - The results of path analysis showed that the openness personality directly (ß = 0.131) was significantly associated with resilience. Similarly, the personality trait through self-regulation shows indirect influence on resilience (p1 p3 0.027 x 0.175 = 0.0047) significantly. Novelty - The contributions of personality openness and self-regulation of the resilience of 0.136 or 13.6%. It can be concluded that indirectly associated the entrepreneur's psychological resilience of the personality trait through self-regulation significantly.
    Keywords: Personality Traits; Locus of Control; Self-regulation; Entrepreneurs; Psychological Resilience.
    JEL: M50 M59
    Date: 2019–02–26
  8. By: Shubin Yang; Sandra Lancheros; Chris Milner
    Abstract: This paper studies productivity convergence to the regional and national frontiers among manufacturing firms in India, using panel data over the period 1999 to 2010. We find evidence of convergence by lagging firms to both their national and regional frontiers, with faster convergence to the national frontier than to their regional frontier. We examine the effects of export behaviour on this process of convergence, and the results demonstrate that exporting promotes productivity growth but slows down the convergence process since export firms tend to be nearer to frontiers. We also investigate the effect of outward FDI (OFDI) on firms’ productivity growth and convergence. Likewise, the results show that OFDI facilitates firms’ productivity growth but decelerates the speed of convergence.
    Keywords: Productivity convergence, technology frontiers, globalisation
    Date: 2019
  9. By: Hårsman, Björn (Department of Industrial Economics and Management, KTH Royal Institute of Technology); Mattsson, Lars-Göran (Department of Civil and Architectural Engineering, KTH Royal Institute of Technology)
    Abstract: The paper analyzes a modified version of Lazear’s (2004, 2005) model for occupational choice that includes a utility adjustment factor reflecting non-pecuniary net benefits associated with entrepreneurship. The model is used to derive analytical expressions for the relative income returns to entrepreneurship defined in two ways: in relation to the incomes of observationally similar wage employed and in relation to the counterfactual incomes of entrepreneurs as wage employed. The analysis shows that the upper bound on the income returns defined in counterfactual terms increases with the market value of entrepreneurial talent and that the lower bound decreases with increasing non-pecuniary benefits. If the entrepreneurial incomes are instead related to the incomes of observationally similar wage employed, and if the skill profiles in the population are assumed to follow a Fréchet distribution, then the upper bound on the relative expected returns will decrease with increasing non-pecuniary benefits. We also show that entrepreneurs on average will earn less than observationally similar wage employed even if there are no net benefits and that the associated self-selection bias will increase the higher the fraction of entrepreneurs. Individual-based data from the Swedish employment register is used to calibrate the parameters of the modified Lazear model and to compute the income returns to entrepreneurship. The model-based income distributions for entrepreneurs and wage employed are consistent with the observed distributions.
    Keywords: entrepreneurship; occupational choice; self-employment; self-selection bias; skill distribution; Fréchet distribution; entrepreneurship puzzle; returns to entrepreneurship
    JEL: J24 J30 L26 M13
    Date: 2019–03–13
  10. By: Chatterjee, Satyajit (Federal Reserve Bank of Philadelphia); Eyigungor, Burcu (Federal Reserve Bank of Philadelphia)
    Abstract: Larger firms (by sales or employment) have higher leverage. This pattern is explained using a model in which firms produce multiple varieties and borrow with the option to default against their future cash ow. A variety can die with a constant probability, implying that bigger firms (those with more varieties) have lower coefficient of variation of sales and higher leverage. A lower risk-free rate benefits bigger firms more as they are able to lever more and existing firms buy more of the new varieties arriving into the economy. This leads to lower startup rates and greater concentration of sales.
    Keywords: Startup rates; leverage; firm dynamics
    JEL: E22 E43 E44 G32 G33 G34
    Date: 2019–03–14
  11. By: URABE Sumiko
    Abstract: It's conceivable that trading companies, including specialized trading companies, might support the export of mid-market companies' and SMEs' products, with their functions not exclusive to purchasing and distribution. This paper analyses the realities of the export businesses of trading companies, based mainly on a questionnaire-format survey. Key findings are that, 1) the difference of the trading companies' location, whether urban or rural, is not significant to the strengths or profits of these exporting firms, 2) specialized trading companies reported increased profits and export volume depending on their areas of expertise and the effectiveness of their business styles, 3) a large proportion of export trading companies have handled products of mid-market companies and SMEs in their exporting business, and preferred dealing in these companies' products over those of larger enterprises, 4) Service charges for exporting other company goods vary depending on the characteristics of trading companies, including their areas of expertise and location, and also on features of the product and the trade itself. The above facts suggest that taking advantage of export trading companies could lead to expansion of exports for products of mid-market companies and SMEs, and also benefits small and medium sized manufacturing companies in addition to the export trading companies themselves.
    Date: 2019–01

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