nep-sbm New Economics Papers
on Small Business Management
Issue of 2019‒08‒12
nine papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Industry Dynamics from Resource Redistribution in the Japanese Economy—Empirical research using Economic, Establishment and Enterprise Censuses of Japan (Japanese) By FUKAO Kyoji; KWON Hyeog Ug; KIM Young Gak; IKEUCHI Kenta
  2. Eco-Innovation and Firm Growth in the Circular Economy: Evidence from European SMEs By Pelin Demirel; Gamze Ozturk Danisman
  3. Entrepreneurs (novices vs. experts) and investors: Interaction and rationality dynamics (effectual vs. causal) By Laurence Cohen; Kirsten Burkhardt
  4. The Rush for Patents in the Fourth Industrial Revolution: An Exploration of Patenting Activity at the European Patent Office By Mario Benassi; Elena Grinza; Francesco Rentocchini
  5. Technological regimes and the geography of innovation: a long-run perspective on US inventions By Dario Diodato; Ahmad Andrea Morrison
  6. Knowledge sources and impacts on subsequent inventions: Do green technologies differ from non-green ones? By Nicolò Barbieri; Alberto Marzucchi; Ugo Rizzo
  7. Innovation Union: Costs and Benefits of Innovation Policy Coordination By Teodora Borota; Fabrice Defever; Giammario Impullitti
  8. Lack of Successors, Firm Default, and the Performance of Small Businesses By TSURUTA Daisuke
  9. Mapping the emergence of a new research field: an exploration of the intellectual structure of the B Corp research By Silvia Blasi; Silvia Rita Sedita

  1. By: FUKAO Kyoji; KWON Hyeog Ug; KIM Young Gak; IKEUCHI Kenta
    Abstract: This research analyzes economic dynamism by using establishment-level panel data constructed by using the following censuses conducted by the Japanese government "the Establishment and Enterprise Census of Japan," the "Economic Census for Business Frame," and the "Economic Census for Business Activity." The analysis revealed the following. 1) The majority of employment fluctuations are due to entry and exit of business establishments. Employment fluctuations due to resource allocation among surviving establishments was limited. 2) In the past, the main source of new employment creation was the entrance of single business establishments, but in recent years the role of newly opened branches of large firms has become comparatively larger. 3) Decomposition of labor productivity growth brought about by resource reallocation shows that the average improvement of labor productivity for new entries was 92,000 yen, the effect of resource allocation among surviving establishments was 56,000 yen, but that the exit of the establishments reduced labor productivity by about 137,000 yen. 4) The majority of the improvement in labor productivity was a result of branch establishment. The effect of M & A among the firms is limited and most of the improvements do not involve changes of ownership of the establishments. 5) About 60% of the entry effect was from newly established firms. 6) Labor productivity (added value per employee) is highly skewed among business establishments, and more than half of value-added produced throughout the economy is from 20% of the top business establishments. 7) The growth rate of total factor productivity tends to be higher for industries with larger disparities in labor productivity among business establishments. 8) Most of the entry and exit effects are caused by the entry and exit of the small number of highly productive establishments. It is more prominent in non-manufacturing industries such as the accommodation and food service industry and the wholesale and retail industry.
    Date: 2019–07
  2. By: Pelin Demirel (Dyson School of Design Engineering, Imperial College London, UK.); Gamze Ozturk Danisman (Faculty of Economics Administrative and Social Sciences, Bahcesehir University, Istanbul,Turkey)
    Abstract: As the circular economy (CE) concept gains growing popularity among consumers and producers, small and medium-sized enterprises (SME) increasingly look for ways to reorganize their offering and operations to integrate into the CE. This study examines the impact of (1) circular eco-innovations and (2) external funding available for CE activities on the growth of European SMEs using a dataset of 5100 SMEs across 28 European countries in 2016. Findings reveal that a significant threshold investment (i.e. higher than 10% of revenues) into circular eco-innovations is required for SMEs to benefit from investing into the CE. Moreover, the majority of circular eco-innovations fail to boost the growth rates of SMEs, with the exception of investments into eco-design innovations. While traditional forms of debt and grant finance targeted to CE activities are found to have no or negative impact on the growth of SMEs, equity finance (i.e. angel and venture capital investments) contributes positively to their growth. The study offers insights into the lower levels of SME engagement in the CE as well as policy implications for improving engagement.
    Keywords: Circular Economy, Eco-Innovation, Eco-design, Entrepreneurship, Finance, Growth, SMEs.
    Date: 2019–06
  3. By: Laurence Cohen (Centre de Recherche Magellan - UJML - Université Jean Moulin - Lyon III - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon); Kirsten Burkhardt (CREGO - Centre de Recherche en Gestion des Organisations [Dijon] - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UB - Université de Bourgogne - UBFC - Université Bourgogne Franche-Comté [COMUE] - UFC - Université de Franche-Comté)
    Abstract: The paper studies the mechanisms that govern the interactions between the entrepreneur (novice or expert) and the specific investors of emerging firms (business angels (BAs) and venture-capital firms (VCs)). Combining both literatures on entrepreneurship and entrepreneurial finance, our aim is to understand if the rationalities of these three actors help them or not to interact, and, to study how they influence each other during the firm's growth. In order to do so, we undertake two processual case studies. Our results show that effectual rationality underlines the interaction between the entrepreneur and the BAs at the creation of the firm, whilst causal rationality is helpful in the search for VC-investors in order to enable the firm's rapid growth. Finally, the BAs (previous successful entrepreneurs) can play the role of an intermediary, helping the novice entrepreneur to move from an effectual to a causal reasoning which help them to attract financing sources from VCs
    Abstract: L'étude focalise son attention sur les mécanismes qui gouvernent les interactions entre l'entrepreneur/fondateur (novice ou expert) et les investisseurs spécifiques dédiés aux firmes émergentes (business angels (BAs) et sociétés de capital-risque (VCs)). En croisant les littératures en entrepreneuriat et finance entrepreneuriale, nous souhaitons comprendre si les rationalités retenues lors des prises de décision par ces trois acteurs (l'entrepreneur novice ou expert, les BAs et les VCs) favorisent ou non leurs interactions et comment ils s'influencent mutuellement au fur et à mesure que la firme se développe. À ce titre, nous procédons à deux études de cas processuelles. Nos résultats montrent principalement que si la rationalité effectuale favorise l'interaction avec les investisseurs tels que les BAs lors de la création de la firme, la rationalité causale s'avère utile dans la recherche de financement auprès des VCs pour placer la jeune entreprise sur une trajectoire de forte croissance. Enfin, les BAs (anciens entrepreneurs à succès) peuvent jouer le rôle d'intermédiaires en aidant l'entrepreneur novice à basculer d'une rationalité effectuale vers une rationalité causale et en facilitant ainsi la recherche de financements auprès des VCs.
    Keywords: growth of the firm,effectuation,venture capital,governance,causation,rationalités effectuale / causale,gouvernance,capital-risque,business angels,croissance de la firme,start-ups
    Date: 2019–05–23
  4. By: Mario Benassi (University of Milan, Italy); Elena Grinza (University of Milan, Italy); Francesco Rentocchini (University of Milan, Italy)
    Abstract: Objectives. The main objective of the present study is to provide a comprehensive coverage of the patenting activity at the European Patent Office by companies in the remit of the fourth industrial revolution (4IR). We also aim at moving forward the understanding of the firm-level patenting activity of 4IR technologies. Methodology. We do so by conducting an empirical assessment of the development of technologies related to the 4IR via the analysis of patents filed at the European Patent Office between 1985 and 2014. We employ a new matched patent-firm data set provided by the Bureau Van Dijk: ORBIS-IP. Findings. In line with results from the recent literature, we find evidence of a surge in patenting activity related to the 4IR in the past three decades, particularly in networked devices. Our results also suggest that firms filing 4IR patents have become progressively younger on average. At the same time, we find a steady growth in the average number of 4IR patent applications filed yearly by each company. Research limits. Our exploration is a first step towards a better comprehension of the 4IR patent arena. Being mainly a “thick” description, we did not analyze antecedents and effects of 4IR patent applications. A comparative and longitudinal analysis of patent applications and patents granted would be a first step in this direction. As a second step, quantitative and qualitative studies on how 4IR patents contribute to firms’ exploration and exploitation capabilities as well as to firm performance would be highly beneficial. Practical implications. Further variance decompositions show that the surge in 4IR patent applications is mainly explained by incumbent firms filing more 4IR patent applications over time, rather than new entrants progressively populating the 4IR world. Finally, we uncover a general trend emerging at the firm level, whereby firms tend to specialize in few technological areas and avoid differentiation. Originality of the study. Despite a surging interest related to the 4IR from different stakeholders (mainly practitioners and policy makers), comparatively less attention has come from academia, which has focused on the single technologies comprising the 4IR such as artificial intelligence, additive manufacturing and the internet of things. Although there is a solid body of scholarship in the area of engineering and information systems that has focused on the topic (see surveys from Lu, 2017 and Liao, 2017), comparatively less studies are available within the management and economics fields. We aim at fill this gap by providing a detailed empirical assessment of the 4IR as a whole. We do so by analyzing patenting activity at the EPO in all the possible technological fields comprising the 4IR. We also attempt a first focus of patenting activity in the 4IR at the firm-level by characterizing companies along several dimensions.
    Keywords: Fourth Industrial Revolution; Industry 4.0; matched patent-firm data; patent applications; EPO.
    JEL: O30 O33 O34
    Date: 2019–06
  5. By: Dario Diodato; Ahmad Andrea Morrison
    Abstract: The geographical distribution of innovative activities is an emerging subject, but still poorly understood. While previous efforts highlighted that different technologies exhibit different spatial patterns, in this paper we analyse the geography of innovation in the very long run. Using a US patent dataset geocoded for the years 1836-2010, we observe that ? while it is true that differences in technologies are strong determinant of spatial patterns ? changes within a technology over time is at least as important. In particular, we find that regional entry follows the technology life cycle. Subsequently, innovation becomes less geographical concentrated in the first half of the life cycle, to then re-concentrate in the second half.
    Keywords: technological regime, spatial patterns of innovation, life cycle, patents, US Economic Geography
    JEL: R11 O11
    Date: 2019–07
  6. By: Nicolò Barbieri (University of Ferrara; SEEDS, Italy); Alberto Marzucchi (SPRU, Science Policy Research Unit, University of Sussex (UK)); Ugo Rizzo (University of Ferrara, and SEEDS, Italy)
    Abstract: The paper investigates the nature and impact of green technological change. We focus on the search and impact spaces of green inventions: we explore the knowledge recombination processes leading to the generation of inventions and their impact on subsequent technological developments. Using a large sample of patents, filed during the period 1980-2012, we employ established patent indicators to capture the complexity, novelty and impact of the invention process. Technological heterogeneity is controlled for by comparing green and non-green technologies within narrow technological domains. We find that green technologies are more complex and appear to be more novel than non-green technologies. In addition, they have a larger and more pervasive impact on subsequent inventions. The larger spillovers of green technologies are explained only partially by novelty and complexity.
    Keywords: environmental inventions, patent data, knowledge recombination, knowledge impact
    JEL: O33 O34 Q55
    Date: 2019–08
  7. By: Teodora Borota; Fabrice Defever; Giammario Impullitti
    Abstract: In this paper, we document large heterogeneity in innovation policy and performance between old and new EU member states, and present firm-level evidence on the close link between foreign direct investment (FDI) spillovers and eastern European _firms' innovation. Guided by these facts and motivated by the pressing debate on further EU integration, we build a two-region endogenous growth model to analyse the gains from innovation policy cooperation in an economic union. The two regions, the West (the old members) and the East (the new post-2004 members), feature firms competing in innovation for market leadership, are integrated via free trade and costly technology transfer via FDI and have different innovation performance and policy. Calibrating the model to reproduce key features of the EU economy, we compare the outcomes of an East-West R&D subsidy war with a cooperation scenario with unified subsidy across regions, and obtain three main results. First, we find that the dynamic gains spurring from the impact of cooperation on the economy's growth rate are sizable and substantially larger than the static gains obtained internalising the strategic motive for subsidies. Second, our model suggests that the presence of FDI and multinational production alleviates the strategic motive and increases the gains from cooperation. Third, separating FDI and innovation policy generates larger gains from cooperation, a policy complementarity driven by the knowledge spillovers carried by FDI.
    Keywords: Optimal innovation policy, growth theory, international policy coordination, EU integration, FDI spillovers
    JEL: O41 O31 O38 F12 F42 F43
    Date: 2019–08
  8. By: TSURUTA Daisuke
    Abstract: We investigate the effects of the lack of successors on small businesses with an elderly manager. Using firm-level data from Japan, which is a country with an ageing population, we find the following results. First, smaller, younger, highly leveraged, and non-growing firms are likely to have no successor. Second, firms with an elderly manager are more likely to exit and default if they have no successors, and this was particularly the case during the period of the global financial crisis around 2009. This result suggests that these firms have less incentive to repay debts because they are not going concerns. As a result of the high probability of default and exit, the annual rate of change in bank borrowing is low if firms with an elderly manager have no successor. Third, using the propensity score matching method, we find that sales growth for firms with no successor is lower than that for other firms.
    Date: 2019–07
  9. By: Silvia Blasi (Department of Economics and Management, University of Padova); Silvia Rita Sedita (Department of Economics and Management, University of Padova)
    Abstract: The paper explores the emergence of a new research field, implementing a bibliometric analysis of the literature on the B Corp. We built a database including 82 articles collected by Scopus and published from 2009 to 2019 that discuss the B Corp, or the benefit corporation, or, more generally, social entrepreneurship. We performed descriptive and citation analyses, with the objective of identifying the roots and the evolution of the concept of B Corp. This emergent field is an important component of the structural change occurring in our society, which, in recent years, has seen the emergence of new for-profit organizational forms with a strong social consciousness. The bibliometric analysis reveals the foundational works and the historical evolution of the research field, which, while rooted in the corporate social responsibility literature, opened up into the analysis of how the legislation, the firm’s strategy, the entrepreneurial orientation, and the policy interventions are intertwined in the concrete development of socially and environmentally conscious businesses.
    Keywords: B Corp, benefit corporation, social entrepreneurship, sustainability, bibliometric analysis
    JEL: M10 M14 L31
    Date: 2019–08

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