nep-sbm New Economics Papers
on Small Business Management
Issue of 2019‒07‒08
fifteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The emergence of an innovation ecosystem in a low innovation region: Disrupting inertia by a young university By Elisa Villani; Christian Lechner
  2. Closing the Finance Gap by Nudging: Impact Assessment of Public Grants for Women Entrepreneurs By Stjepan Srhoj; Bruno Skrinjaric; Sonja Radas; Janette Walde
  3. R&D FINANCING AND GROWTH By Luca Spinesi; Mario Tirelli
  4. New(s) data for Entrepreneurship Research? An innovative approach to use Big Data on media coverage By Johannes von Bloh; Tom Broekel; Burcu Oezgun; Rolf Sternberg
  5. Cooperating in R&D and Advertising By Parisa Pourkarmi; Gamal Atallah
  6. Firm survival in new EU member states By Eduard Baumohl; Ichiro Iwasaki; Evžen Koèenda
  9. Wage Dynamics Network: SME Credit Constraints in Cyprus During the Period 2010-2013 and Effects on Employment, Wages and Prices By Charalambos P. Charalambous; Marios C. Polemidiotis
  10. Where have all the factories gone?: Growth and concentration of sub-national manufacturing activity in India By K.V. Ramaswamy
  11. Persistence of entrepreneurship in different historical contexts By Michael Fritsch; Korneliusz Pylak; Michael Wyrwich
  12. Working for an entrepreneur: Heaven or Hell? By Nyström, Kristina
  13. Lower bank capital requirements as a policy tool to support credit to SMEs: evidence from a policy experiment By Sandrine Lecarpentier; Mathias Lé; Henri Fraisse; Michel Dietsch
  14. Embodied and Disembodied Technological Change: The Sectoral Patterns of Job-Creation and Job-Destruction By Dosi, Giovanni; Piva, Mariacristina; Virgillito, Maria Enrica; Vivarelli, Marco
  15. Impacts of industry 4.0 investments on firm performance: Evidence from Italy By Marco Bettiol; Mauro Capestro; Eleonora Di Maria; Andrea Furlan

  1. By: Elisa Villani (University of Bologna, Italy); Christian Lechner (Free University of Bolzano, Italy)
    Abstract: Innovation ecosystems are characterised by a variety of complementary actors and relationships among them. Universities are considered a key player in innovation ecosystems for their ability of generating knowledge and qualified expertise for entrepreneurial innovation. While much attention has been paid to mature ecosystems characterised by cutting-edge technologies, the role of less established universities in less innovative regions, characterised by a lack of relationships, familyowned firms, difficult university-industry collaborations, but great potential, has remained very much underexplored. Based on a longitudinal case study of a young university in Italy, this paper aims at contributing to existing literature by looking at the role of the university in defining actors’ positions and relationships in establishing an innovation ecosystem. In doing so, we contribute to existing literature in several ways. First, we highlight that the formation of an innovation ecosystem in a small area highly depends on the university’s potential of disrupting established relationships, creating new ones and, thus, playing an active role in designing the ecosystem. Second, we provide a process-based view for understanding the establishment of an innovation ecosystem through the evolution of interactions, roles and activities. Finally, we describe the micro-dynamics characterising innovation ecosystem emergence and institutionalisation and we show that bottomup approaches are possible as well.
    Keywords: Ecosystems, university, university-industry collaboration, innovation, longitudinal case study
    JEL: M10
    Date: 2019–06
  2. By: Stjepan Srhoj (Department for Economics and Business Economics, University of Dubrovnik); Bruno Skrinjaric (The Institute of Economics, Zagreb); Sonja Radas (The Institute of Economics, Zagreb); Janette Walde (Department of Statistics, Faculty of Economics and Statistics, University of Innsbruck)
    Abstract: Several recent papers draw attention to a lack of rigorous research on public policies supporting women entrepreneurs' competitiveness. This paper evaluates the effect of small business development gender-specific matching grants using a quasi-experimental approach. The grants have a positive effect on firm survival, as well as positive effects on obtaining bank loans, turnover, value added, employment, and total factor productivity. Heterogeneous treatment effects show that the grants increase the chance of young women entrepreneurs' firm survival and are even more effective for firms owned by mature women. Cost-benefit analysis estimates an increase in value added, which outweighs scheme-induced costs by 80% in the short-run and 170% in the long run.
    Keywords: women entrepreneurship, public grants, policy evaluation, gender financing gap, behavioral additionality, nudging
    JEL: B54 J16 H81 L26 L38 H43
    Date: 2019–05
  3. By: Luca Spinesi; Mario Tirelli
    Abstract: R&D investment are an important engine of growth and development.Yet economists have often claimed underinvestment, based on the consideration thatthese projects are more costly to finance, especially, due to the asymmetric informa-tion between inside and outside investors. Coherently, a recent empirical evidence hasshown that firms intensively active in R&D are less leveraged and rely more heavilyon internal finance. Motivated by this evidence, we study the e↵ects of asymmetricinformation and financial frictions within a GE economy of Schumpeterian tradition.The model and equilibrium concept are rich enough to represent investment and in-novation decisions, technology adoption/di↵usion through patent licensing and, mostimportantly, firms’ financial decisions. In this representation, R&D-intensive firmsmight e↵ectively rely more on internal sources and equity than on debt financing, rel-ative to what would happen in frictionless markets. Further, financial decisions a↵ectaggregate investment and income dynamics.
    Keywords: Innovation; R&D; Schumpeterian growth; financial equilibrium; asym-metric information; firm financial structure
    JEL: O33 O34 O41 D53 G32
    Date: 2019–07
  4. By: Johannes von Bloh; Tom Broekel; Burcu Oezgun; Rolf Sternberg
    Abstract: Although conventional register and survey data on entrepreneurship have enabled remarkable insights into the phenomenon, the added value has slowed down noticeably over the last decade. There is a need for fresh approaches utilising modern data sources such as Big Data. Until now, it has been quite unknown whether Big Data actually embodies valuable contributions for entrepreneurship research and where it can perform better or worse than conventional approaches. To contribute towards the exploration of Big Data in entrepreneurship research, we use a newly developed dataset based on publications of the German Press Agency (dpa) to explore the relationship between news coverage of entrepreneurship and regional entrepreneurial activity. Furthermore, we apply sentiment analysis to investigate the impact on sentiment of entrepreneurial press releases. Our results show mixed outcomes regarding the relationship between reporting of entrepreneurial events, i.e., media coverage, and entrepreneurial activity in German planning regions. At this stage, our empirical results reject the idea of a strong relationship between actual entrepreneurial activities in regions and the intensity of it being reported. However, the results also imply much potential of Big Data approaches for further research with more sophisticated methodology approaches. Our paper provides an entry point into Big Data usage in entrepreneurship research and we suggest a number of relevant research opportunities based on our results.
    Keywords: entrepreneurship, media coverage, mass media, Big Data, sentiment analysis, GEM, entrepreneurial ecosystem, region, news data
    JEL: C8 L26 R12
    Date: 2019–06
  5. By: Parisa Pourkarmi (Department of Economics, Carleton University, Ottawa, ON); Gamal Atallah (Department of Economics, University of Ottawa, Ottawa, ON)
    Abstract: This paper studies the impact of cooperative R&D and advertising on innovation and welfare in a duopolistic industry. The model incorporates two symmetric firms producing differentiated products. Firms invest in R&D and advertising in the presence of R&D spillovers and advertising spillovers. Advertising spillovers may be positive or negative. Four cooperative structures are studied: no cooperation, R&D cooperation, advertising cooperation, R&D and advertising cooperation. R&D spillovers and advertising spillovers always increase innovation and welfare if products are highly differentiated and/or spillovers are sufficiently high. The ranking of cooperation settings in terms of R&D, profits and welfare depends on product differentiation, R&D spillovers and advertising externalities. Firms always prefer cooperation on both dimensions, which is socially beneficial only when advertising and R&D spillovers are sufficiently high.
    Keywords: R&D, Advertising, Cooperation, Spillovers, Product differentiation, Innovation, Marketing.
    JEL: D43 L13 O32
    Date: 2019
  6. By: Eduard Baumohl (Národná banka Slovenska, Bratislava); Ichiro Iwasaki (Institute of Economic Research, Hitotsubashi University, Tokyo, Japan); Evžen Koèenda (Institute of Economic Studies, Charles University, Prague, Czech Republic)
    Abstract: We analyze firm survival determinants in four new European Union member states (the Czech Republic, Hungary, Poland, and Slovakia). We employ the Cox proportional hazards model on firm-level data for the period of 2006 to 2015. We show that in all four countries, less concentrated control of large shareholders, higher solvency, and more board directors are linked with the increased probability of firm survival. However, an excessive number of board directors has a detrimental effect. Firms with foreign owners and higher returns on their assets exhibit better survival chances. Conversely, across countries and industries, larger firms and those hiring international auditors have lower probabilities of survival. A number of specific determinants influence firm survival in different ways, emphasizing the importance of country and industry differences when studying firm survival. We also document that in an economic sense, determinants associated with the legal form, ownership structure and corporate governance show the most beneficial effects with respect to firm survival.
    Keywords: firm survival, new EU member states, survival and exit determinants, hazards model
    JEL: D22 G01 G33 G34 P34
  7. By: Tenzin Phuntsho; Karma Yezer
    Abstract: Small enterprises play a vital role in economic development as they can provide the economy with efficiency, innovation, competition and employment. Entrepreneurs are responsible for the success of their businesses and have to face up with definite challenges in doing so. The four factors have been pre-determined based on review of the literatures. The four factors selected for the study were: Collateral/Security requirement, Interest rate, Literacy level, and the Credit Process. To know which factors affect access to credit among small business, survey was conducted in selected towns of Chukha district. Data was collected using structured questionnaires from 59 randomly selected respondents of Tsimasham, Chukha and Gedu towns. The statistical tools like correlation, mean and percentage were used for data analysis. Analyzed data is presented in tabular form, graph and chart. Key Words: Access to Credit, Business Credit and Small Enterprises Policy
    Date: 2019–06
  8. By: Matteo Deleidi; Mariana Mazzucato
    Abstract: The paper investigates the determinants of economic growth from both a theoretical and an empirical perspective. The paper combines the Sraffian supermultiplier model of growth with the Neo-Schumpeterian framework that emphasizes the entrepreneurial role of the state. We aim to detect the macroeconomic effect generated by alternative fiscal policies: generic ones and “mission-oriented” ones. Using a SVAR model for the US economy for the 1947–2018 period, we show that mission-oriented policies produce a larger positive effect on GDP (fiscal multiplier) and on private investment in R&D (crowd-in effect) than the effect produced by generic public expenditures.
    Keywords: Mission-oriented innovation policies, Sraffian supermultiplier, SVAR, fiscal multiplier, crowding-in effect.
    JEL: C32 E22 E62 O25 O30
    Date: 2019–06
  9. By: Charalambos P. Charalambous (Central Bank of Cyprus); Marios C. Polemidiotis (Central Bank of Cyprus)
    Abstract: In the context of its participation in the ESCB Wage Dynamics Network (WDN), the Central Bank of Cyprus (CBC) conducted a survey regarding the wage- and price-setting policies of domestic firms covering the period 2010-2013. This paper focuses on the behaviour of small- and medium-sized enterprises (SMEs) employing between 3-19 workers driven by changes in financing conditions. This is particularly important given the unprecedented shock to the banking system following the March 2013 events. The survey results suggest that, in the run up to the crisis, SMEs focused primarily on the use of price reduction strategies in an attempt to increase or maintain their volume of sales as a response to a shift in demand from SMEs to larger firms. SMEs also resorted to cost reduction strategies, including wage cuts. Since 2012, SMEs increased the average wage cut to broadly match the reduction in prices. Overall, the survey suggests that SMEs’ ability to maintain adequate liquidity for operational purposes via significant price and cost reductions, allowed a share of SMEs to overcome the obstacles related to the tighter financing conditions following the crisis.
    Keywords: wages, labour, prices, crisis, small- and medium-sized enterprises, access to finance, credit constraints, bail-in.
    JEL: D21 E30 G21 G32 J21 J30
    Date: 2017–10
  10. By: K.V. Ramaswamy (Indira Gandhi Institute of Development Research)
    Abstract: The spatial distribution of manufacturing across the states of India is analyzed covering the period 2004-05 to 2015-16. We found that the spatial concentration of manufacturing activity has increased since 2004-05. More industrialized states (example Maharashtra, Gujarat and Tamil Nadu) are found to have continued their dominance measured in terms of their share of output, factories and workers in manufacturing. They are observed to have captured a greater share of incremental growth of factories and workers. This outcome may be attributed to their comparative advantage due to agglomeration economies. Differences in the net entry of factories (and workers) in registered and unregistered segments of manufacturing are observed between different states of India. The estimates of net entry of factories in five selected industry groups in registered manufacturing are found to be consistent with agglomeration at the sectoral level.
    Keywords: Agglomeration, Concentration, Inequality, Spatial, Manufacturing, Net Entry
    JEL: O14 O17 O25 R12
    Date: 2019–05
  11. By: Michael Fritsch; Korneliusz Pylak; Michael Wyrwich
    Abstract: Persistence of entrepreneurship over longer periods of time could indicate a culture of entrepreneurship among the local population that may be an important factor for regional development, but does persistence of economic activity require cultural transmission? We exploit the diverse historical developments in the territory that is Poland today to analyze the level and the sources of persistence from the 1920s until today. Persistence is mainly found in those regions that were part of Germany before World War II. This persistence is noticeable despite the exchange of most of the pre- war population, ruling out that persistence is driven by transmission of culture. In most regions that were already part of Poland before World War II, the relationship between historical and current levels of entrepreneurship is not significant. Persistence of entrepreneurship is related to the historical success of regions, which we capture by the pre-war level of and self- employment in manufacturing industries, particularly in those that can be regarded as knowledge intensive. Our main conclusion is that persistence of entrepreneurship requires a certain level of successful economic development that we capture by the degree of industrialization in the early 20th century, but it does not necessarily require persistence of the local population.
    Keywords: Persistence, entrepreneurship, self-employment
    JEL: L26 M13 O1 O18 R11
    Date: 2019–06
  12. By: Nyström, Kristina (The Ratio Institute)
    Abstract: Recruiting employees to an entrepreneurial venture is a challenging task. From the employee’s perspective, accepting a position in an entrepreneurial venture potentially implies considerable uncertainty. This paper provide a literature review and identifies research gaps related to labor mobility of employees into and out of entrepreneurial firms. Who works for an entrepreneur? What are the conditions under which the employees of entrepreneurial firms work? Additionally, labor mobility after an employee works for an entrepreneurial firm is discussed. In conclusion the quality of the jobs generated by entrepreneurial firms may be questionable (and still relatively unexplored in empirical research), but they are nevertheless important from a labor dynamics perspective. Better understanding about motives to work for an entrepreneur, issues related to job security beyond survival rates, and job quality may contribute to ease the recruitment problems that many entrepreneurial firms struggle with. Furthermore, the relevance and potential pros and cons of working for an entrepreneurial firm in future career paths (entrepreneur or employee) needs to be carefully addressed in future research.
    Keywords: entrepreneurship; labor mobility; employees in entrepreneurial firms
    JEL: J21 J62 L26
    Date: 2019–06–19
  13. By: Sandrine Lecarpentier; Mathias Lé; Henri Fraisse; Michel Dietsch
    Abstract: Starting in 2014 with the implementation of the European Commission Capital Requirement Directive, banks operating in the Euro area were benefiting from a 25% reduction (the Supporting Factor or "SF" hereafter) in their own funds requirements against Small and Medium-sized enterprises ("SMEs" hereafter) loans. We investigate empirically whether this reduction has supported SME financing and to which extent it is consistent with SME credit risk. Economic capital computations based on multifactor models do confirm that capital requirements should be lower for SMEs. Taking into account the uncertainty surrounding their estimates and adopting a conservative approach, we show that the SF is consistent with the difference in economic capital between SMEs and large corporates. As for the impact on credit distribution, our differences-in-differences specification enables us to find a positive and significant impact of the SF on the credit supply.
    Keywords: SME finance, Credit supply, Basel III, Credit risk modelling, SME Supporting Factor
    JEL: C13 G21 G33
    Date: 2019
  14. By: Dosi, Giovanni (Sant'Anna School of Advanced Studies); Piva, Mariacristina (Università Cattolica del Sacro Cuore); Virgillito, Maria Enrica (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: This paper addresses, both theoretically and empirically, the sectoral patterns of job creation and job destruction in order to distinguish the alternative effects of embodied vs disembodied technological change operating into a vertically connected economy. Disembodied technological change turns out to positively affect employment dynamics in the "upstream" sectors, while expansionary investment does so in the "downstream" industries. Conversely, the replacement of obsolete capital vintages tends to exert a negative impact on labour demand, although this effect turns out to be statistically less robust.
    Keywords: innovation, disembodied and capital-embodied technological change, employment, job-creation, job-destruction, sectoral interdependencies
    JEL: O14 O31 O33
    Date: 2019–06
  15. By: Marco Bettiol (Department of Economics and Management, University of Padova); Mauro Capestro (Department of Economics and Management, University of Padova); Eleonora Di Maria (Department of Economics and Management, University of Padova); Andrea Furlan (Department of Economics and Management, University of Padova)
    Abstract: The adoption of industry 4.0 technologies is assumed to bring superior competitive advantage for adopting firms as drivers of efficiency, differentiation as well as support to innovation. However, no studies capture the impacts of industry 4.0 technologies on firm’s financial performance. The paper explores the relationship between investments in digital technologies and firm performances, by also examining which are the technologies more likely to be associated with superior performance and eventually the cumulative effect of technologies on performance. Based on unique data gathered in 2017 on a sample of 1,149 Italian firms, results show the positive impacts on adopters’ performance and the role of robotics and laser cutting in this relationship. No cumulative effect (i.e. adopting more than one or two technologies) is instead observed.
    Keywords: digital technologies, performance, strategy, industry 4.0
    Date: 2019–06

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