nep-sbm New Economics Papers
on Small Business Management
Issue of 2019‒09‒09
twelve papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  2. Assessing Financing, Innovation and Growth Linkage: New Evidence for Policy By Anabela Santos; Michele Cincera; Giovanni Cerulli
  3. Environmental innovation and firm profitability: An analysis with respect to firm size By Axenbeck, Janna
  4. Synergizing Ventures By Ufuk Akcigit; Emin Dinlersoz; Jeremy Greenwood; Veronika Penciakova
  5. CEO age and organic growth among European firms By Giorgio Barba Navaretti; Davide Castellani; Fabio Pieri
  6. Employment protection and firm-level job reallocation: Adjusting for coverage By Bendicta Marzinotto; Ladislacv Wintr
  7. Factors determining enterprise location choice in Russia By Natalia Davidson; Oleg Mariev
  8. Imported intermediates, technological capabilities and exports: Evidence from Brazilian firm-level data By Torres Mazzi, Caio; Foster-McGregor, Neil
  9. Influence of push and pull factors on female entrepreneurship in Romania By Carbunaru, Andra Florentina
  10. September 11 and the Rise of Necessity Self-Employment among Mexican Immigrants By Wang, Chunbei; Lofstrom, Magnus
  11. International knowledge flows between industry inventors and universities: The role of multinational companies By Fassio, Claudio; Geuna, Aldo; Rossi, Federica
  12. The Role of Commercial Bank in Financing Small Scale Industries By Ruth Asantewaa Owusu

  1. By: Daunfeldt, Sven-Olov (Institute of Retail Economics (Handelns Forskningsinstitut)); Westerberg, Hans (Institute of Retail Economics (Handelns Forskningsinstitut))
    Abstract: The number of refugees in Europe has increased dramatically in recent years, and many countries are facing great challenges to integrating these refugees into their societies. A small group of high-growth firms have at the same time attracted attention because they create the most new jobs at any given point in time. Using matched employer-employee data from Statistics Sweden, we find that these high-growth firms in general are more likely to recruit first-generation immigrants that are unemployed. This provides support for the hypothesis that managers in high-growth firms, to greater extents, recruit marginalized individuals because they want to take advantage of their growth opportunities and therefore do not wait for the best match. Rapidly growing firms are thus less selective in their hiring decisions, and policies that are focused on increasing the number of high-growth firms might also help immigrants who face difficulties entering the labor market.
    Keywords: Firm growth; Gazelles; High-growth firms; Immigration; Integration; Labor market; Matching models; Resource based theory; Interaction effects; Logit; Odds ratio
    JEL: D22 J15 L25 L26
    Date: 2019–08–30
  2. By: Anabela Santos; Michele Cincera; Giovanni Cerulli
    Abstract: Financing, innovation and growth linkage is a multi-stage process. First, access to finance has a leverage effect on innovation and secondly this additional innovation has an impact on growth. However, few authors have assessed the effect of these three components at the same time. Furthermore, the scientific literature usually focuses more on assessing only the effect of one type of source of financing, such as public support or venture capital, on innovation or firm growth. The aim of the present study is to go further and to assess the effect of eight different sources of financing (internal funds, bank loan, credit line, trade credit, grants, equity, leasing and factoring) on innovation and then on firm growth. Using data from the Survey on the Access to Finance of Enterprises and a three-step econometric approach, the study provides evidence that external sources of financing have a positive effect on innovation and then an additional effect on firm growth (turnover and employment). However, not all sources of external financing have the same impact.Equity financing has a larger effect on the strategic decision to innovate, and the highest output additionality on firm turnover growth, when compared to the effects of other sources of financing.Grants registered a moderate effect on innovation and on output additionality on firm growth (both turnover and employment) and its effect does not appear to be statistically different from other financing instruments (excluding equity). Moreover, grants show higher employment growth than turnover. Furthermore, the number of financing instruments used together also seems to matter, revealing that a financing instrument used alone has no effect on innovation. Our findings suggest that state aid to promote R&D and innovation needs to rely on sounder public/private support integration for it to be successful. All these conclusions could be particularly useful for policy-makers since recommendations for a European Innovation CouncilKeywordsFinancing; Innovation; Firm growth; Europe
    Keywords: Innovation, Microfinance, Microfinance in Europe
    Date: 2019
  3. By: Axenbeck, Janna
    Abstract: This paper investigates the effect of environmental innovations on firm profitability with respect to differences between small and medium-sized (SME) and large (LE) enterprises. Using data from the Mannheim Innovation Panel (MIP) 2015, results show that, in general, SME benefit more from environmental innovations than LE. This effect is particularly strong for resource efficiency-improving innovations induced by regulation. These environmental innovations are significantly related to an increase in profits of SME, whilst related to a decrease in profits of LE. A robustness check with data from the MIP 2009, however, does not confirm this result as the effect for LE is insignificant and differences between the two groups cannot be found in this survey wave. A reason why negative effects for LE are observed in the MIP 2015 - but not in the MIP 2009 - might be that most LE had already exploited the potentials of environmental innovations when they were surveyed in the MIP 2015. This is supported by evidence suggesting that size-related differences in the MIP 2015 are driven by a negative relationship between LE's profits and environmental innovations related to externalities that were reduced by innovations in periods before.
    Keywords: Firm Behavior,Firm Size,Porter hypothesis,Environmental Technology Adaption,Technological Innovation,Environmental Regulation
    JEL: D22 L25 Q52 Q55 Q58
    Date: 2019
  4. By: Ufuk Akcigit; Emin Dinlersoz; Jeremy Greenwood; Veronika Penciakova
    Abstract: Venture capital (VC) and growth are examined both empirically and theoretically. Empirically, VC-backed startups have higher early growth rates and initial patent quality than non-VC-backed ones. VC-backing increases a startup’s likelihood of reaching the right tails of the firm size and innovation distributions. Furthermore, outcomes are better for startups matched with more experienced venture capitalists. An endogenous growth model, where venture capitalists provide both expertise and financing for business startups, is constructed to match these facts. The presence of venture capital, the degree of assortative matching between startups and financiers, and the taxation of VC-backed startups matter significantly for growth.
    JEL: G24 O31 O32 O40
    Date: 2019–08
  5. By: Giorgio Barba Navaretti; Davide Castellani; Fabio Pieri
    Abstract: We examine the relation between the age of CEOs and firm organic growth. In a large sample of mostly privately held European manufacturing firms with more than 10 employees, we find that firms managed by a young CEO grow faster in terms of both sales and assets. Our results are robust to the inclusion of a large vector of firm and CEO characteristics and to controls for endogeneity, survival bias and time horizon. We submit that this relation is explained by an incentive of young CEOs to boost firm growth in order both to signal their talent in the market for managers and to get a longer stream of future compensation benefits. In turn, this may create an agency problem, due to a divergence of this corporate strategy from shareholders’ targets. Consistently, we find that a concentrated ownership, allowing a more effective monitoring, moderates the negative relation between CEO age and firm organic growth.
    Keywords: Chief Executive Officer, CEO age, organic growth, agency theory, European manufacturing firms
    JEL: G32 G34 L25
    Date: 2019
  6. By: Bendicta Marzinotto; Ladislacv Wintr
    Abstract: This paper finds that employment protection legislation (EPL) had a significant impact on employment adjustment in Europe over 2001-2013, once we account for firm-size related exemptions to EPL. We construct a novel coverage-adjusted EPL indicator and find that EPL hinders employment growth at the firm level and increases the share of firms that remain in the same size class. This suggests that stricter EPL restrains job creation because firms fear the costs of shedding jobs during downturns. We do not find evidence that EPL has positive effects on employment by limiting job losses after adverse shocks. In addition to standard controls for the share of credit-constrained firms and the position in the business cycle, we also control for sizerelated corporate tax exemptions and find that these also significantly constrain job creation among incumbent firms.
    Keywords: employment protection; firm growth; job reallocation.; Employment protection; firm growth; job reallocation
    JEL: J08 D22
    Date: 2019–07
  7. By: Natalia Davidson (Graduate School of Economics and Management, Ural Federal University); Oleg Mariev (Graduate School of Economics and Management, Ural Federal University)
    Abstract: This paper studies determinants of enterprise location decisions in Russia, such as agglomeration levels, home market potential, transport infrastructure and institutional environment. Results confirm that agglomeration levels and home market potential affect foreign firms? location choice and probability that national firms will work in a city. Urbanization economies and home market potential positively affect location choice; localization economies have an inverted U shape. Estimation shows that foreign enterprises are interested in large demand. Under assumption that there are more innovations in diversified cities and cities with favourable business climate, strategic asset seeking might be present. The study confirms negative impact of regional business environment risks on foreign firms? location choice. Results will be useful for regional policy aimed at business development and attracting foreign direct investment.
    Keywords: enterprise location choice, cities, agglomeration economies, home market potential, business environment, foreign direct investment, Russia
    JEL: O12 R12 F21
    Date: 2019–07
  8. By: Torres Mazzi, Caio (UNU-MERIT); Foster-McGregor, Neil (UNU-MERIT)
    Abstract: This paper explores how technological capabilities influence the relationship between imported inputs and the export performance of firms. We apply threshold regression techniques to a representative dataset of Brazilian firms and find a strong positive influence of innovation skills on the relationship between imported intermediates and export revenues. We further find that the complementarities between importing and exporting are stronger for firms that export products with a higher scope for quality differentiation. We also observe that technological capabilities are directly correlated with export performance, confirming the view that innovation positively influences firms' international competitiveness. This relationship is not found to be significant for firms that export products with a low scope for quality differentiation and that export to lower income non-OECD markets. Overall, our results suggest that technological capabilities and the quality of imported inputs not only benefit firms directly but also complement each other in enhancing export competitiveness.
    Keywords: imports, exports, productivity, innovation, technological capabilities, Brazil
    JEL: F14 O31 O33 O47
    Date: 2019–08–28
  9. By: Carbunaru, Andra Florentina
    Abstract: When it comes to follow the path of entrepreneurship, there are several factors influencing the decision of female entrepreneurs. The present study aimed to research the importance and influence that two categories of factors are exerting on this decision, as in regards to female entrepreneurs that are Romanian. Through using a questionnaire that evaluated several aspects of those influencing factors grouped as push and pull factors, the results were processed in the SPSS software via various methods such as Correlation tests, Pearson correlation, Factor analysis and linear regression. Those lead to the conclusion that for our particular sample of Romanian female entrepreneurs there are not applicable the same results as the theory implies. In our case, the sample is more focused and motivated by intrinsic benefits rather than extrinsic ones, choosing the entrepreneurial path due to pull factors rather than push ones as the specialty literature reflects.
    Keywords: Extrinsic benefits; Intrinsic benefits; Pull factors; Push factors; Romanian female entrepreneurship;
    JEL: J23 L26
    Date: 2019
  10. By: Wang, Chunbei (University of Oklahoma); Lofstrom, Magnus (Public Policy Institute of California)
    Abstract: Since the September 11 attacks (9/11), the U.S. has seen a tightening of immigration policies. Previous studies find that stricter immigration enforcement has the unintended effect of pushing undocumented immigrants into self-employment. This paper builds on the literature to better understand the changes in the types of self-employment among Mexican immigrants triggered by the tightened immigration enforcement after 9/11. Using a difference-in-differences approach, and the recently developed measures by Fairlie and Fossen [2018] to distinguish between necessity and opportunity self-employment, we find that both necessity and opportunity self-employment increased among Mexican immigrants after 9/11. However, the effect is most prominent on necessity self-employment, consistent with the hypothesis that they are pushed into self-employment as a survival alternative.
    Keywords: mexican immigrants, self-employment, 9/11, tightened immigration policies, necessity
    JEL: J15 L26
    Date: 2019–08
  11. By: Fassio, Claudio; Geuna, Aldo; Rossi, Federica (University of Turin)
    Abstract: We investigate the determinants of industry researchers’ interactions with universities in different localities, distinguishing between local and international universities. We analyze the extent to which local and international interactions are enabled by different types of individual personal networks (education, career based), and by their access to different business networks through their employer companies (local vs. domestic or international multinational company networks). We control for selection bias and numerous other individual and firm-level factors identified in the literature as important determinants of interaction with universities. Our findings suggest that industry researchers’ personal networks play a greater role in promoting interactions with local universities (i.e. in the same region, and other regions in the same country) while researcher employment in a multinational is especially important for establishing interaction with universities abroad.
    Date: 2019–07
  12. By: Ruth Asantewaa Owusu (Saint Mary’s University, 923 Robie Street, Halifax Nova Scotia, Canada)
    Abstract: Bank finance has been found as an important source of funds for most firms in Ghana. The study assessed the impact of GCB SME LOAN on the activities of Small Scale Industries. The study used primary data which were designed and administered to SMEs customers of GCB and staff of GCB. A sample size of 170 made up of 20 staff of GCB bank and 150 owners of SME customers who deal with the bank and have benefited from the SME LOAN SUITE. The study concluded that with the use of GCB SME LOAN, there has been improvement in the profits of both the customers and bank. Also, the study identified four main challenges which were; increased in the amount of money, reduce interest rate, advertisement and extend the period of bridge loan that militate against the GCB SME LOAN of GCB bank. It was recommended that since GCB bank is contributing more to SMEs, they should give in their best to increase the amount of the loan and to extend the period of bridge loan to help boost their outreach.
    Keywords: SMEs, Economic Development, Bank finance
    Date: 2018

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