nep-sbm New Economics Papers
on Small Business Management
Issue of 2019‒04‒15
nineteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. FIRM OWNERSHIP AND GREEN PATENTS. DOES FAMILY INVOLVEMENT IN BUSINESS MATTER? By Francesco Aiello; Paola Cardamone; Lidia Mannarino; Valeria Pupo
  2. Measuring Entrepreneurship: Do Established Metrics Capture High-Impact Schumpeterian Entrepreneurship? By Henrekson, Magnus; Sanandaji, Tino
  3. Global innovation networks for Chinese high tech small and medium enterprises: the supportive role of highly skilled migrants and returnees By Lin, Jingyi; Plechero, Monica
  4. Fuel the Engine: Bank Credit and Firm Innovation By Shusen Qi; Steven Ongena
  5. Does combining different types of collaboration always benefit firms? Collaboration, complementarity and product innovation in Norway By Silje Haus-Reve; Rune Dahl Fitjar; Andrés Rodríguez-Pose
  7. Why Are Firms With More Managerial Ownership Worth Less? By Kornelia Fabisik; Rüdiger Fahlenbrach; René M. Stulz; Jérôme Taillard
  8. Who Founds? An Analysis of University and Corporate Startup Entrepreneurs Based on Danish Register Data By Kaiser, Ulrich; Kuhn, Johan Moritz
  9. The Value of Online Banking to Small and Meduim-Sized Enterprises: Evidence From Firms Operating in The UAE From Trade Zones By Parvaneh Shahnoori; Glenn P. Jenkins
  10. Firm heterogeneity and exports in Portugal - Identifying export potential By Frederico Oliveira Torres
  11. Waiting for Godot: the Failure of SMEs in the Italian Manufacturing Industry to Grow By Primo AutoreAuthor-X-Name-First: MaurizioAuthor-X-Name-Last: BaussolaAuthor-Email: maurizio.baussola@unicatt.itAuthor-Workplace-Name: DISCE, Università CattolicaAuthor-Name: Secondo AutoreAuthor-X-Name-First: EleonoraAuthor-X-Name-Last: BartoloniAuthor-Email: bartolon@istat.itAuthor-Workplace-Name: ISTAT, Regional Office for Lombardy; Quarto Autore
  12. An inverted-U effect of patents on economic growth in an overlapping generations model By Yuta Nakabo; Ken Tabata
  13. Networks, Start-Up Capital and Women's Entrepreneurial Performance in Africa: Evidence from Eswatini By Brixiova, Zuzana; Kangoye, Thierry
  14. Network dynamics in collaborative research in the EU, 2003-2017 By Pierre-Alexandre Balland; Ron Boschma; Julien Ravet
  15. Towards a survival capabilities framework: Lessons from the Portuguese Textile and Clothing industry By Arash Rezazadeh; Ana Carvalho
  16. Firms and Wage Inequality in Central and Eastern Europe By Magda, Iga; Gromadzki, Jan; Moriconi, Simone
  17. Valuation of the Quality Attributes of Online Banking Services by Small and Medium Enterprises Engaged in International Trade By Parvaneh Shahnoori; Glenn P. Jenkins
  18. The impact of blackouts on the performance of micro and small enterprises: Evidence from Indonesia By Anna Falentina; Budy Resosudarmo
  19. Does domestic demand matter for firms’ exports? By Paulo Soares Esteves; Miguel Portela; António Rua

  1. By: Francesco Aiello (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Paola Cardamone (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Lidia Mannarino (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Valeria Pupo (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: This paper investigates how family and non-family firms differ in terms of their capability to introduce environmental innovation, which is measured by green patents. The analysis is carried out using a large patenting data set related to the inventions produced by about 4200 Italian manufacturing firms over the period 2009–2017. The results show that family firms are less likely than non-family firms to implement innovations in green technologies. Moreover, the role played by the stock of knowledge and the environmental management system certification differs across firm type.
    Keywords: eco-innovation, green patent, family firms
    JEL: O31 C23 G34
    Date: 2019–03
  2. By: Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Sanandaji, Tino (Institute for Economic and Business History Research (EHFF), Stockholm School of Economics)
    Abstract: Are quantitative measures driven by small business activity also valid proxies for high-impact Schumpeterian entrepreneurship? We compile four hand-collected measures of high-impact Schumpeterian entrepreneurship (VC-funded IPOs, self-made billionaire entrepreneurs, unicorn start-ups, and young top global firms founded by individual entrepreneurs) and six measures dominated by small business activity as well as institutional and economic variables for 64 countries. Factor analysis reveals that much of the variation is accounted for by two distinct factors: one relating to high-impact Schumpeterian entrepreneurship and the other relating to small business activity. Except for the World Bank measure of firm registration of limited liability companies quantity-based measures tend to be inappropriate proxies for high-impact Schumpeterian entrepreneurship.
    Keywords: illionaire entrepreneurs; High-impact entrepreneurship; Innovation; Institutions; Schumpeterian entrepreneurship; Self-employment
    JEL: L50 M13 O31 P14
    Date: 2019–04–03
  3. By: Lin, Jingyi (Lund University); Plechero, Monica (University of Florence)
    Abstract: Literature investigating highly skilled Chinese migrants has so far focused on their role as drivers of new entrepreneurship as well as innovation in firms and regions, although their role in supporting small and medium enterprises (SMEs) engagement in global innovation networks (GINs) is still underexplored. The participation in GINs is key for high tech SMEs, which rely on sophisticated knowledge but may not have the same absorptive capacity of large firms and multinational corporations. Based on primary data from a case study on 19 SMEs in the IT and new media industry in Beijing, this paper investigates the role of returnees and highly skilled migrants in supporting the engagement of Chinese high-tech SMEs in GINs. The results reveal the important role of those individuals in bringing SMEs in former international knowledge networks and establishing new linkages for sourcing key knowledge.
    Keywords: lobal innovation networks; GIN; knowledge sourcing; small and medium enterprises; SMEs; Beijing; China; highly skilled migrants; returnees; IT and new media industry
    JEL: F20 O30
    Date: 2019–04–04
  4. By: Shusen Qi (Xiamen University - School of Management); Steven Ongena (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR))
    Abstract: Whether bank credit is suitable to finance business innovation is a key financing question. Using a representative sample of 6,422 small firms across 22 emerging economies, we find that lack of access to credit stifles innovation, especially of the technologically “hard” type. This finding is not driven by sample selection and - given our instrumentation with the presence of local credit registers - it is ostensibly causal. Especially access to credit with longer duration and denominated in foreign currency spurs hard innovation. This detrimental impact of credit constraints on innovation activities is stronger in localities or sectors that are more dependent on external financing, and only holds for firms that are more limited in alternative sources of external financing, including small, private, or unaudited firms, receiving no government subsidy. We further found that institutional contexts can mitigate the negative impact of credit constraints, possibly via providing firms with more alternative financing means. Foreign or transactional banks, or banks in more diversified banking market are found to be better at promoting firm innovation. Lastly, bank credit enabling hard innovation is expected to foster future firm growth.
    Keywords: Bank credit; Innovation; Credit registry; Firm growth
    JEL: G21 O31 O40
    Date: 2018–11
  5. By: Silje Haus-Reve; Rune Dahl Fitjar; Andrés Rodríguez-Pose
    Abstract: Product innovation is widely thought to benefit from collaboration with both scientific and supply-chain partners. The combination of exploration and exploitation capacity, and of scientific and experience-based knowledge, are expected to yield multiplicative effects. However, the assumption that scientific and supply-chain collaboration are complementary and reinforce firm-level innovation has not been examined empirically. This paper tests this assumption on an unbalanced panel sample of 8337 firm observations in Norway, covering the period 2006?2010. The results of the econometric analysis go against the orthodoxy. They show that Norwegian firms do not benefit from doing "more of all" on their road to innovation. While individually both scientific and supply-chain collaboration improve the chances of firm-level innovation, there is a significant negative interaction between them. This implies that scientific and supply-chain collaboration, in contrast to what has been often highlighted, are substitutes rather than complements. The results are robust to the introduction of different controls and hold for all tested innovation outcomes: product innovation, new-to-market product innovation, and share of turnover from new products.
    Keywords: Innovation, firms, scientific and supply-chain collaboration, interaction, Norway
    JEL: O31 O32 O33
    Date: 2019–04
  6. By: Francesco Aiello (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Paola Cardamone (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Valeria Pupo (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: This paper investigates the determinants of university-industry links in five European countries (France, Germany, Italy, Spain and the UK), using internationally comparable firm-level data for the period 2007-2009. Besides the usual firm-specific variables, it examines the role of meritocratic management practices in firms’ decisions to collaborate in R&D. Firm innovative efforts, the export status and the R&D government support are positively related to business-university links in almost all countries, human capital and firms’ size in two out of five countries under scrutiny, while belonging to science-based sectors does not seem to play a significant role. Importantly, we find that meritocratic managerial practices positively affect the firm-university nexus in Germany, France and UK, while meritocracy does not appear to enhance businesses’ R&D collaboration in Italy and in Spain.
    Keywords: industry-university links, European countries, R&D, manufacturing firms, meritocratic managerial practices
    JEL: O31 D21 C25
    Date: 2019–04
  7. By: Kornelia Fabisik (Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute); Rüdiger Fahlenbrach (Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute); René M. Stulz (Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)); Jérôme Taillard (Babson College)
    Abstract: Using more than 50,000 firm-years from 1988 to 2015, we show that the empirical relation between a firm’s Tobin’s q and managerial ownership is systematically negative. When we restrict our sample to larger firms as in the prior literature, our findings are consistent with the literature, showing that there is an increasing and concave relation between q and managerial ownership. We show that these seemingly contradictory results are explained by cumulative past performance and liquidity. Better performing firms have more liquid equity, which enables insiders to more easily sell shares after the IPO, and they also have a higher Tobin’s q.
    Keywords: Firm valuation, Director and officer ownership, Liquidity, Performance history
    JEL: G30 G32
    Date: 2018–12
  8. By: Kaiser, Ulrich (University of Zurich); Kuhn, Johan Moritz (EPAC)
    Abstract: We compare individuals presently employed either at an university or at a firm from a R&D intensive sector and analyze which of their personal-specific and employer-specific characteristics determine their choice of subsequently founding a startup. Our data set is unusually rich and combines the population of Danish employees with their present employers. We focus on persons who at least hold a Bachelor's degree in engineering, sciences and health and track them over the time period 2001-2012. We show that (i) there are overall little differences between the characteristics of university and corporate startup entrepreneurs, (ii) common factors triggering startup activity of both university and corporate employees are education, top management team membership, previous job mobility and being male, (iii) it is exclusively human capital-related characteristics that affect startup choice of university employees while (iv) the characteristics of the present workplace constitute major factors of entrepreneurial activity.
    Keywords: university startups, corporate startups, founder characteristics
    JEL: L26 I23 O31 O32
    Date: 2019–03
  9. By: Parvaneh Shahnoori (Department of Economics, Eastern Mediterranean University, Mersin 10, Turkey and Payame Noor University, Bandar Abbas, Iran); Glenn P. Jenkins (Department of Economics, Queen's University, Kingston, Canada and Eastern Mediterranean University, North Cyprus)
    Abstract: This study estimates the willingness to pay of small and medium-sized enterprises (SMEs) for a business online banking services. The estimation utilizes a contingent valuation method employing data from 400 SMEs in the United Arab Emirates free zones. An interval regression model is used to identify company characteristics affecting WTP. The results indicate an average WTP for online banking of $518.50 per month. Firms engaging in international trade value these services at least 10% more than those with only domestic operations. Other variables that significantly affect WTP include number of employees and the transportation cost of using traditional branch banking.
    Keywords: contingent valuation method, interval regression model, willingness to pay, business online banking.
    JEL: C13 F10 G21
    Date: 2018–12
  10. By: Frederico Oliveira Torres
    Abstract: For Melitz (2003), the driving force behind a firm’s decision to export is productivity. If firms pass the productivity cut-off, they all export. Nonetheless, empirical studies show that a substantial share of high-productive firms do not export. Using a dataset that covers Portuguese non-financial firms, between 2010 and 2016, we assess which factors determine the export decision, besides productivity. According to our results, firm’s characteristics, such as size, turnover, import as well as export status, age, worker skills and knowledge agglomeration, are crucial in the process of internationalisation of firms.
    Keywords: Exports, firm heterogeneity, firm-level data
    JEL: D22
    Date: 2019–04
  11. By: Primo AutoreAuthor-X-Name-First: MaurizioAuthor-X-Name-Last: BaussolaAuthor-Email: maurizio.baussola@unicatt.itAuthor-Workplace-Name: DISCE, Università CattolicaAuthor-Name: Secondo AutoreAuthor-X-Name-First: EleonoraAuthor-X-Name-Last: BartoloniAuthor-Email: bartolon@istat.itAuthor-Workplace-Name: ISTAT, Regional Office for Lombardy (DISCE, Università Cattolica); Quarto Autore (DISCE, Università Cattolica)
    Abstract: Abstract of the paper. We use a panel of Italian manufacturing firms for the period 2001-2014 to analyse the distribution of firm size, and then test for the validity of Gibrat’s law using unit root tests. Although Gibrat’s Law is rejected and the estimates suggest that small firms grow faster than larger ones, we do not observe a signifi- cant change in the average size of companies at the end of the period under investigation. Also, by using a long-run Transition Probability Matrix, we verify that the steady-state distribution of firm size remains stable. The higher propensity to grow shown by smaller firms is confined to the size class in which the firm is established. We further investigate the relationship between the rate of growth in a firm’s size conditional on specific firm and industry characteristics. Export intensity plays a signifi- cant role in affecting the size growth rate together with industry characteristics related to technological levels. Finally, we esti- mate the probability that a firm increases in size relative to the mean size prevailing in its own size class over a 14-year interval. This approach enables us to highlight those factors that affect this probability, thereby enabling us to underline how Gibrat’s Law tests, although important, require complementary analysis to ascertain whether a firm’s propensity to increase in size is a long run effect and thus a significant modification of the distri- bution of company size or only implies a marginal increase in size within a reference size class.
    Keywords: Gibrat’s Law, Lognormal distribution, firm size dis- tribution.
    JEL: L11 L2 L6
    Date: 2018–03
  12. By: Yuta Nakabo (Faculty of Social Studies, Nara University); Ken Tabata (School of Economics, Kwansei Gakuin University)
    Abstract: This paper analyzes how patent protection affects economic growth in a continuous-time overlapping generations model with lab-equipment type R&D-based growth. We show that increasing patent breadth may generate an inverted-U effect of patents on economic growth, an effect which is partly consistent with an empirically observed nonmonotonic relationship between patent protection and economic growth. This paper also shows that the combinations of heterogeneous households with finite lifetimes and the lab-equipment type R&D specification are relevant for deriving the inverted-U effect of patent protection on economic growth.
    Keywords: Innovations, Patents, Overlapping Generations
    JEL: O31 O34 O40
    Date: 2019–04
  13. By: Brixiova, Zuzana (Technical University of Ostrava, Ostrava, Czech Republik); Kangoye, Thierry (African Development Bank)
    Abstract: This paper analyzes the role of networks in access of women entrepreneurs to start-up capital and firm performance in Eswatini, a country with one of the highest female unemployment rates in Africa. The paper first shows that higher initial capital is associated with better sales performance for both men and women entrepreneurs. Women entrepreneurs start their firms with smaller start-up capital than men and are more likely to fund it from their own sources, which reduces the size of their firm and sales level. However, women with higher education start their firms with more capital than their less educated counterparts. Moreover, women who receive support from professional networks have higher initial capital, while those trained in financial literacy more often access external funding sources, including through their networks.
    Keywords: networks, start-up capital, multivariate analysis, Africa
    JEL: L53 O12
    Date: 2019–03
  14. By: Pierre-Alexandre Balland; Ron Boschma; Julien Ravet
    Abstract: A key objective of the EU Framework Programmes for Research and Innovation is the creation of cross-country research networks. We make use of Social Network tools to describe the evolution of the EU research network across countries on the basis of unique data covering collaborative projects launched during the first four years of implementation of Horizon 2020 and its predecessor programmes, the Sixth and Seventh Framework Programme. We describe the positioning of all EU-countries in the collaborative research network, the positioning of the older member EU-15 and the newer member EU-13 countries in particular, and to what extent the network has been subject to change during the period 2003-2017. EU-15 and EU-13 countries have become more integrated, and some organizations fulfil a bridging function in the EU research network. EU-13 countries are more heavily engaged in parts of the programme on lower complexity research activities.
    Keywords: collaborative research network, European Union, Horizon 2020, Framework Programme, social network analysis, bridging, complexity
    JEL: D85 O33 O38
    Date: 2019–04
  15. By: Arash Rezazadeh (School of Economics and Management and NIPE, University of Minho); Ana Carvalho (University of Minho: School of Economics and Management and NIPE)
    Abstract: Influenced dramatically by the financial crisis and the European sovereign debt crisis, many European industries are now struggling with the new international division of labour that compels the shift of manufacturing to lower labour cost countries. These decisive global challenges underline the need to investigate why some firms can survive such crises while many others fail. Grounded in this narrative, ‘survival’ can be regarded as a period of the firm’s growth and change over time, where it faces a crisis and stiff competition. This view is different from the one that defines the concept of ‘business survival’ as the second stage of the firm’s lifespan, after birth and before success, where it has obtained certain customers having their demanded products or services delivered (Lewis & Churchill, 1983). Survival is of essential significance for the firm since a desirable performance over the surviving period enables eventual success, whilst a poor performance precipitates failure and shutdown (Bo , 2008; Korunka, Kessler, Frank, & Lueger, 2010; Naidoo, 2010). Although the literature is well developed on the structural determinants of firm survival, mostly related to firm age and size, less is known about certain internal capabilities the firm needs to develop in order to compensate for resource scarcity and financial restrictions caused by a crisis or other environmental disruptions. This reinforces the need to provide a more detailed clarification of the concept of ‘business survival’ and explore the capabilities that are vital to the survival of firms in times of struggle.
    Date: 2018
  16. By: Magda, Iga (Warsaw School of Economics); Gromadzki, Jan (Warsaw School of Economics); Moriconi, Simone (IÉSEG School of Management)
    Abstract: Recent studies show that firms are playing an increasingly important role in shaping wage inequality in advanced economies. We contribute to this literature by analysing wage inequality patterns and their firm dimension in Central and Eastern European countries. We use large, linked employer-employee datasets with data from the 2002-2014 period. We find that unlike in many other advanced economies, wage inequality levels have decreased in CEE countries, and particularly in those countries that previously had the highest wage inequality levels. The relative size of the between-firm component varied substantially across countries, and was largest in countries with the highest wage inequality levels. We further estimate the recentered influence function (RIF) regression and the Blinder-Oaxaca decomposition in order to investigate the micro-level determinants of wage inequality. Our findings indicate that the changes in wage inequality levels were mainly attributable to returns to workplace characteristics.
    Keywords: wages, wage inequality, RIF regression, linked employer-employee data
    JEL: D22 J31 J40
    Date: 2019–03
  17. By: Parvaneh Shahnoori (Department of Economics, Eastern Mediterranean University, Mersin 10, Turkey and Payame Noor University, Bandar Abbas, Iran); Glenn P. Jenkins (Department of Economics, Queen's University, Kingston, Canada and Eastern Mediterranean University, North Cyprus)
    Abstract: This study investigates the important attributes of online banking system for Small and Medium Enterprises (SMEs) and their willingness to pay for each attribute. Zero travel and waiting time, high security, and 24/7 accessibility are the key attributes for this service. The results show that SMEs engaged in international trade value online banking services significantly more than the others. Domestically focused firms value high quality service at about $163 a month while import-focused businesses value such a service at approximately US$646 per month. Export-intensive SMEs value high quality online services 14% further, for an average of $736 per month. Revised paper published as; Valuation of the Quality Attributes of Online Banking Services by Small and Medium Enterprises Engaged in International Trade in the South African Journal of Economics Vol 87; 1 (2019)
    Keywords: Online banking; SME; valuation; service attributes; willingness to pay; international trade; mixed logit model.
    JEL: C13 C25 C93 G21 F10
    Date: 2018–11
  18. By: Anna Falentina; Budy Resosudarmo
    Abstract: Reliability of electricity supply is one of pressing challenges to many micro and small enterprises (MSEs) in developing countries. MSEs play a pivotal role in employment generation in these countries, but productivity of MSEs is relatively low. Little is known about how blackouts affect performance of MSEs. This paper is the first study to estimate the impact of power blackouts on productivity of manufacturing MSEs and to discuss the role of the government in addressing problem. We employ a pseudo-panel dataset covering six firm cohorts within 21 Indonesian national electricity company working areas from 2010 to 2015. Our identification strategy involves first examining blackouts determinants and then using these determinants as instruments in an IV dynamic panel fixed effects estimation while controlling for factors potentially affect productivity and correlated with blackouts. We find that electricity blackouts reduce the average labor productivity and the resultant loss amounts to approximately IDR 71.5 billion (USD 4.91 million) per year in Indonesia. Therefore, it is crucial to improve electricity supply reliability in developing countries. We find that introducing a captive generator as a way to cope with power outages, is positively associated with productivity, and MSEs that have captive generators benefit more when the power supply is poor. Our findings will assist policy makers to prioritize addressing power blackouts relative to other constraints MSEs face.
    Keywords: micro and small enterprises, power blackouts, productivity, captive generators, pseudo-panel data analysis
    JEL: H54 L53 L94
    Date: 2019
  19. By: Paulo Soares Esteves (Banco de Portugal); Miguel Portela (NIPE/Universidade do Minho and IZA Bonn); António Rua (Banco de Portugal & NOVA School of Business and Economics)
    Abstract: The existence of a link between exports and domestic demand challenges the standard theoretical assumption in international trade models and carries out important policy implications. Being a small open economy and one of the hardest hit economies during the latest economic and financial crisis, Portugal is a natural case study for assessing the role of this channel, in particular given the large export market share gains that mitigated the negative effects on economic activity. A key difference of our empirical approach vis-`a-vis previous literature is that the estimated relationship between exports and domestic sales results directly from a monopolistic model of a firm selling to both domestic and external markets. Drawing on an appropriate estimation strategy, it is found a noteworthy negative relationship between domestic demand and firms’ exports covering the manufacturing sector over the period 2009–2016. This result holds for almost all industries although with a heterogeneous magnitude. Aditionally, there is also evidence that this effect is stronger for larger firms.
    Keywords: international trade, firms, exports, domestic demand, foreign demand,panel data.
    JEL: C33 C36 D21 D22 F14 F41
    Date: 2018

This nep-sbm issue is ©2019 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.