nep-sbm New Economics Papers
on Small Business Management
Issue of 2019‒05‒27
fourteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Technological innovation activities in the EU: a new perspective By Antonio Vezzani; Petros Gkotsis; Hector Hernandez; Pietro Moncada Paterno Castello
  2. Trading activities, productivity and markups: evidence for spanish manufacturing By Juan A. Máñez Castillejo; M. Consuelo Mínguez Bosque; María E. Rochina-Barrachina; Juan A. Sanchis Llopis
  3. Credit Market Access and Efficiency in South Africa By Alex Smith
  4. Place-Based Innovation Ecosystems: Boston-Cambridge Innovation Districts (USA) By Carmelina Bevilacqua; Bruno Monardo; Claudia Trillo
  5. Innovation Offshoring with Fully Endogenous Growth By Colin Davis; Ken-ichi Hashimoto
  6. Patterns of matching interests in the formation of a long-term strategy for innovation development By Kleeva, Ludmila (Клеева, Людмила); Kleev, Ivan (Клеев, Иван); Nikitova, Anna (Никитова, Анна); Krotov, Alexander (Кротов, Александр)
  7. The Rise and Decline of Private Foundations as Controlling Owners of Swedish Listed Firms: The Role of Tax Incentives By Henrekson, Magnus; Johansson, Dan; Stenkula, Mikael
  8. Growth through acquisition of innovations By Galina Besstremyannaya; Richard Dasher; Sergei Golovan
  9. Empresas granulares y desagregación regional: un análisis del caso español By Blanco-Arroyo, Omar; Ruiz-Buforn, Alba; Vidal-Tomás, David; Alfarano, Simone
  10. Is Super-Fast Broadband Negative? An IV-Estimation of the Broadband Effect on Firms' Sales and Employment Level By Nordin, Martin; Grenestam , Erik; Gullstrand , Joakim
  11. Firm Size, Life Cycle Dynamics and Growth Constraints: Evidence from Mexico By Christian Saborowski; Florian Misch
  12. Trade Induced Technological Change: Did Chinese Competition Increase Innovation in Europe? By Douglas L. Campbell; Karsten Mau
  13. Evaluation Tool for Business Success By Miguel Ramirez de la Huerga; Víctor A. Bañuls Silvera; Murray Turoff; Manuel Rincón Roldan
  14. Evaluating Factors of Small and Medium Hospitality Enterprises Business Failure: a conceptual approach By Spyridou, Anastasia

  1. By: Antonio Vezzani (European Commission - JRC); Petros Gkotsis (European Commission - JRC); Hector Hernandez (European Commission - JRC); Pietro Moncada Paterno Castello (European Commission - JRC)
    Abstract: In many EU countries, a high proportion of local inventions are owned by foreign companies. On the contrary, in few countries the number of patents owned is much higher than the local inventions. Companies from Germany and the US are the most frequent foreign owners of patents invented in EU countries. Concentration of patents across companies changes largely from one country to the other. Differences between local inventions and patent ownership, as well as their concentration within countries matter for Innovation policies aiming at closing the EU gap of knowledge creation and technology diffusion.
    Keywords: patents, inventor, ownership, technological innovation, innovation policy, industrial policy
    Date: 2019–04
  2. By: Juan A. Máñez Castillejo (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); M. Consuelo Mínguez Bosque (IVIE, Carrer de la Guàrdia Civil 22, 46020 València (Spain).); María E. Rochina-Barrachina (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Juan A. Sanchis Llopis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: This work analyses the firms’ internationalization strategies of importing intermediates and exporting output, and the potential rewards of these activities in terms of total factor productivity (TFP), as a proxy for marginal costs, and markups. It further deepens into the study of the relationship between internationalization strategies and markups by disentangling whether it operates through affecting firms’ marginal costs and/or firms’ prices. The panel database employed in this paper is the Spanish Survey on Business Strategies (ESEE) for the period 2006- 2014. Results in the paper distinguish between SMEs and large firms and indicate that there is high persistence in the performance of these activities and in firms’ TFP and markups. In addition, the internationalization strategies are especially relevant for SMEs, as for this group we obtain rewards of the two activities in terms of both TFP and markups. Furthermore, we also find that these strategies allow SMEs to charge higher output prices.
    Keywords: Exports, imports of intermediates, total factor productivity, markups, output prices, manufacturing, firm-level data
    JEL: D24 F14 L11
    Date: 2019–05
  3. By: Alex Smith
    Abstract: This paper explores whether frictions in the credit market are constraining the efficient allocation of capital in South Africa. The analysis focuses on firm level data for manufacturers. The results indicate that access to finance in South Africa is, for most manufacturing firms, not a major constraint on their business. In fact, South Africa has a lower proportion of firms reporting access to finance constraints than most of its emerging market peers. However, small firms and those receiving payments largely in cash are more likely to report a financing constraint. The extent to which a firm faces financing obstacles does not correlate with variations in the firm level marginal product of capital (MPK), which suggests that credit access is not an important limitation on allocative efficiency in the manufacturing sector. Indeed, smaller firms are found to have a lower MPK, which would explain their relatively higher probability of facing a financing constraint. Furthermore, this paper provides tentative evidence that structural obstacles such as crime and regulatory challenges are constraining the productive allocation of firm capital. The use of a unique firm level dataset was important for understanding the dynamics described above. However, this data was collected in 2007, so the results should be considered tentative as some variables may have changed in the interim
    Date: 2019–05–20
  4. By: Carmelina Bevilacqua; Bruno Monardo; Claudia Trillo
    Abstract: This report focuses on the case study of the Boston area and allows identifying key success factors in the Boston regional innovation ecosystem. It discusses how the macro-innovation eco-ecosystem is composed by a variety of interconnected micro-innovation eco-systems, mutually reinforcing each other and making the entire “territorial†system successful. The spatial configuration of these micro-innovation ecosystems at the urban scale has been specifically investigated, thus leading to theorize that the Innovation District may act as enabler for place-based innovation. Evidence from the Boston case study shows that there is not a single magic recipe for the successful implementation of place-based and social innovation-driven strategies. On the contrary, the variety of place-grounded combinations of micro and macro initiatives, embedded in the social and spatial fine grain of places and encompassing a diversity of actors, can create the conditions enabling places to thrive and local economic activities to grow in a sustainable way.
    Keywords: Place-based, innovation ecosystems, social innovation, innovation districts, US, USA, Boston, S3, Smart Specialisation, territorial system, spatial configuration
    Date: 2019–04
  5. By: Colin Davis; Ken-ichi Hashimoto
    Abstract: In recent years firms have started to offshore their innovation activities to emerging economies. This paper investigates the implications of innovation offshoring for productivity growth in a two-country framework that features a tension between access to technical knowledge and low-cost high-skilled labor in the innovation location decision. Industry and innovation tend to concentrate in the asset-wealthy country when trade costs are relatively high. A positive relationship between innovation costs and industry concentration then ensures that improved international knowledge diffusion coincides with an increase in net offshoring flows in innovation from the asset-wealthy country to the asset-poor country, and potentially with faster productivity growth.
    Date: 2019–05
  6. By: Kleeva, Ludmila (Клеева, Людмила) (The Russian Presidential Academy of National Economy and Public Administration); Kleev, Ivan (Клеев, Иван) (The Russian Presidential Academy of National Economy and Public Administration); Nikitova, Anna (Никитова, Анна) (The Russian Presidential Academy of National Economy and Public Administration); Krotov, Alexander (Кротов, Александр) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The paper examines the development trends of the elements of the national innovation system: research and development, education, innovation infrastructure, which includes small innovative enterprises and their supporting structures, real production, and government bodies of Russia. Particular attention is paid to the reasons for the low innovation activity of domestic enterprises.
    Date: 2019–04
  7. By: Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Johansson, Dan (Örebro University School of Business); Stenkula, Mikael (Research Institute of Industrial Economics (IFN))
    Abstract: Private foundations became a vehicle for the corporate control of large listed firms in Sweden during the post-war era, but in the 1990s, they were replaced by wealthy individuals who either directly own controlling blocks or who own them through holding companies. We study potential explanations for this change and pro­pose two taxation-related candidates: shifts in the relative effective taxation across owner types and the dismantling of the inheritance taxation that prevented the genera­tional transfer of the ownership of large controlling blocks. Our analysis exploits newly computed marginal effective capital income tax rates across capital owners, accounting for all relevant factors, including rules governing tax exemptions. We show that the 1990–91 tax reform, abolition of the wealth tax for controlling owners in 1997, 2003 tax exemption of dividends and capital gains on listed stock for holding companies with a voting or equity share of at least 10 percent, and abolition of the inheritance and gift taxes in 2004 reversed the rules of the game. Recently, control has largely been wielded through direct ownership, and the role of foundations is rapidly declining. These find­ings point to the importance of tax incentives for the use of foundations as the control vehicles of listed firms.
    Keywords: Corporate governance; Entrepreneurship; Family firms; Foundations; Owner-level taxation
    JEL: H20 K34 L26 N44
    Date: 2019–05–20
  8. By: Galina Besstremyannaya (Centre for Economic and Financial Research at New Economic School); Richard Dasher (Stanford University); Sergei Golovan (New Economic School)
    Abstract: The paper develops a model of growth driven by the acquisition of domestic firms by their peers, treating innovations endogenously. The model builds on microeconomic evidence concerning acquisitions in a technology economy, where the acquirers are innovative firms, which regard acquisitions as a complementary strategy to their R&D investments. The targets are small firms with leading positions on markets for their products. The acquirers are capable of further improving the products of their targets. The model includes the government, which collects corporate profit tax and redistributes it to provide subsidies for innovation and for acquisitions. We quantify the model using 1999-2013 financial data for Japanese firms, matched with patents obtained by the firms in that period. The estimates bear out the model's predictions of positive effect of acquisitions on economic growth. The impact of acquisitions on R&D intensity is negative under the substitutability between innovation and acquisition strategies. The effect of government subsidies to encourage acquisitions is linked to the parameters of the cost function and reflects the association between the cost of acquisitions and of R&D.
    Keywords: innovation, endogenous growth, acquisition, social planner, patents
    JEL: O11 O38 O40 O53
    Date: 2018–09
  9. By: Blanco-Arroyo, Omar; Ruiz-Buforn, Alba; Vidal-Tomás, David; Alfarano, Simone
    Abstract: Following the approach proposed by Gabaix (2011), this paper aims to assess the existence of granularity in the business cycle fluctuations of the following Spanish regions: the Community of Madrid, Catalonia, the Basque Country and the Valencian Community. Granular firms are those that represent a marginal proportion of the total number of firms in an economy, but nevertheless have a significant impact on fluctuations in the GDP growth rate. We find that the Basque Country and the Valencian Community are granular economies. The Community of Madrid and Catalonia, however, do not show granular behaviour. Therefore, our work provides evidence of granular behaviour at the regional level.
    Keywords: granularity; granular firms; idiosyncratic shocks; aggregate fluctuations; regions
    JEL: C20 E32
    Date: 2019–05–11
  10. By: Nordin, Martin (Department of Economics, Lund University); Grenestam , Erik (Department of Economics, Lund University); Gullstrand , Joakim (Department of Economics, Lund University)
    Abstract: This study investigates the relationship between super-fast broadband and firms’ sales and employment level in Sweden. It is important to learn more about this recent technological change and few studies has explored the impact of super-fast broadband on firm outcomes. We use the previous roll-out of second-generation internet access to identify the effect of third-generation internet access. The early investments in optic fiber where largely core broadband network investments paving the way for later investments in third-generation broadband technology. Municipalities choosing providers who prioritized cheap technology (broadband over telephone lines, DSL) targeting the many, thus fell behind municipalities choosing providers investing in optic fiber. We find heterogeneity in the broadband effect, but the overall effect is negative. This effect may be associated with the roll-out of 4G mobile broadband in 2011; mobile broadband services are a byproduct of optic fiber because mobile broadband is transmitted from the same high capacity fiber-optic base stations. We suggest that the negative effect found is related to internet use at work and the mixing of private and work related internet use.
    Keywords: broadband; optic fiber; firm output; employment; regional analysis
    JEL: D22 J23 O30 R50
    Date: 2019–05–13
  11. By: Christian Saborowski; Florian Misch
    Abstract: This paper examines the variation in life cycle growth across the universe of Mexican firms. We establish two stylized facts to motivate our analysis: first, we show that firm size matters for development by illustrating a close correlation with state-level per capita incomes. Second, we show that few firms grow as much as their U.S. peers while the majority stagnates at less than twice their initial size. To gain insights into the distinguishing characteristics of the two groups, we then econometrically decompose life cycle growth across firms. We find that firms that have financial access and multiple establishments and that are formal, part of diversified industries and located in population centers can grow at sizeable rates.
    Date: 2019–05–02
  12. By: Douglas L. Campbell (New Economic School (NES)); Karsten Mau (Maastricht University)
    Abstract: Bloom, Draca, and Van Reenen (2016) find that Chinese competition induced a rise in patenting, IT adoption, and TFP by 30% of the total increase in Europe in the early 2000s. We find that the average patents per firm fell by 94% for the most Chinacompeting firms in their sample, but also by 94% for non-competing firms (starting from an initially higher level), and that various intuitive controls, such as controls for sectoral trends, renders the impact on patents-per-firm insignificant. We also find that while TFP appears to be positively correlated with the rise in Chinese competition, IV estimates are inconclusive, and other measures of productivity, such as value-added per worker and profits, are not correlated. Various instrumental and proxy variable approaches also do not support a positive impact of the rise of China on European patents.
    Keywords: Patents, China, Europe, Textiles, Trade Shocks, Manufacturing
    JEL: F14 F13 L25 L60
    Date: 2019–05
  13. By: Miguel Ramirez de la Huerga (MSIG Smart Management S.L. (UPO Spin-Off)); Víctor A. Bañuls Silvera (Department of Business Administration, Universidad Pablo de Olavide); Murray Turoff (New Jersey Institute of Technology (NJIT), USA); Manuel Rincón Roldan
    Abstract: This paper describes the construction of a tool supporting decision making (DSS). The name of the tool ‘’CIBSE’’, comes from the acronym CIA-ISM for Business Success Evaluation, and it evaluates the success rate of entrepreneurial ideas by analyzing the previously modified Business Model Canvas (BMC). Modified Business Model Canvas include financial and no financial dimensions as a way to extend the original BMC. In order to analyze data, a model based on CIA-ISM is used to evaluate scenarios, and it enables the estimation of direct, indirect and cascading effects interrelationships between all dimensions to calculate an indicator of success. Moreover, this tool is able to identify weak and strong points of BMC, which will help to attain the survival goal of undertaking by reducing the level of uncertainty, or in other words, by reducing risk. Paradigm of Design Science has been used as a point of reference to design this tool, along the seven guidelines stated from the conceptualization of goal to the dissemination of results. Although this study is focused on regional context, it is associated with a project of public services of the 4th biggest region of the EU regarding the population size, as well as the 6th biggest region regarding its extent. This approach allows direct access, as well as a privileged access to data, technical resources and professionals to develop the model, tool and perform further validation having data of real projects.
    Keywords: DSS, Entrepreneurship, Modelling, CIA-ISM, Validation, Information Systems, Simulation
    Date: 2019–05
  14. By: Spyridou, Anastasia
    Abstract: The aim of this paper is to present a comparison between macro and micro economic factors as they are suggested by the current literature in corporate failure field. Present study answers two research questions, firstly which the causes of corporate bankruptcies in tourism are, and secondly which metrics could help more on effectively predict a corporate failure. Based on a conceptual approach authors analyze and collect different macro and micro economic factors. Results indicates how strongly the various factors affect the quantity and intensity of bankruptcy applications and suggestions are given on how different models could be developed to predict the risk of bankruptcy in a macro or micro aspect. This is one of the first studies that investigates the effectiveness of different types of Corporate Failure metrics, which has, until now, suffered a dearth of conceptual studies in the field, especially in the context of national economies due to the economic recession.
    Keywords: Corporate Failure; Metric;Micro SMTEs
    JEL: L83 M13 M21 M40
    Date: 2019–04–15

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