nep-sbm New Economics Papers
on Small Business Management
Issue of 2019‒09‒23
nineteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The link between coworking space demand and venture capital financing: Empirical evidence from European office market By Felix Gauger; Jan-Oliver Strych; Andreas Pfnür
  2. Emerging and Disappearing Work, Thriving and Declining Firms By Enghin Atalay; sarada sarada
  3. Impact of corporate real estate on the firm performance: Theoretical concept and empirical evidence By Andreas Pfnür; Julian Seger; Rianne Appel-Meulenbroek
  4. Geographic Clustering of Firms in China By Douglas Hanley; Chengying Luo; Mingqin Wu
  5. Customer Capital, Markup Cyclicality, and Amplification By Sungki Hong
  6. Dispersion in Financing Costs and Development By Tiago Cavalcanti; Bruno Martins; Cezar Santos; Joseph Kaboski
  7. Are 'sea turtles' slower? Returnee entrepreneurs, venture resources and speed of entrepreneurial entry By Qin, Fei; Wright, M.; Gao, J.
  8. An academic perspective on the entrepreneurship policy agenda: themes, geographies and evolution By Arenal, Alberto; Feijoo, Claudio; Moreno, Ana; Armuña, Cristina; Ramos, Sergio
  9. Capabilities and firm growth: the role of formal collaboration agreements By Roberto Gabriele; Andrea Mazzitelli; Giuseppe Espa; Maria Michela Dickson
  10. Japan's productivity and GDP growth: The role of GBAORD, public and foreign R&D By Ziesemer, Thomas
  11. Firm Dynamics and Productivity Growth during the Industrial Revolution By Reka Juhasz; Mara Squicciarini; Nico Voigtländer
  12. The Effects of Mandating Training in Firms: Theory and Evidence from the Colombian Apprenticeship Program By Santiago Caicedo; Arthur Seibold; Miguel Espinosa
  13. A Study of Big Data for Business Growth in SMEs: Opportunities & Challenges By Iqbal, Muhammad; Alam Kazmi, Syed Hasnain; Manzoor, Dr. Amir; Rehman Soomrani, Dr. Abdul; Butt, Shujaat Hussain; Shaikh, Khurram Adeel
  14. Productivity effects of an exogenous improvement in transport infrastructure: accessibility and the Great Belt Bridge By Bruno de Borger; Ismir Mulalic; Jan Rouwendal
  15. The relative performance of family firms depending on the type of financial market By Lohwasser, Todor S.
  16. Business Formation and Economic Growth Beyond the Great Recession By Aubhik Khan; Julia Thomas; Tatsuro Senga
  17. Corporate real estate specificity, ownership and its contribution to firm performance: empirical evidence from the German capital market By Julian Seger; Andreas Pfnür
  18. The location choice of technology-based firms: a stated choice experiment of science park alternatives By Wei Keat Benny Ng; Rianne Appel-Meulenbroek; Myriam Cloodt; Theo Arentze
  19. Firm Growth through New Establishments By Dan Cao; Erick Sager; Henry Hyatt; Toshihiko Mukoyama

  1. By: Felix Gauger; Jan-Oliver Strych; Andreas Pfnür
    Abstract: Flexible office space is a game-changer in the real estate industry, forecasting a rapid growth over the next years up to 30.000 flexible offices in 2020 (Gcuc, 2017). Specifically, emerging coworking spaces build a growing field for individuals, entrepreneurs, start-ups, and corporations. The agglomeration of coworking spaces resembles entrepreneurship in incubation centers, but the community aspect among involved firms is strong and invaluable (Bouncken et al. 2018). One of the main reasons to work in coworking spaces is the collaboration and sharing of knowledge, resources, and ideas (Spinuzzi, 2012). This can breed new venture concepts, support the growth in an early start-up stage, and accelerate successful business models. However, entrepreneurs require capital, which is a challenge to obtain. Venture Capital (VC) is considered as a fundamental source of finance for entrepreneurial firms (Colombo et al. 2018). So far, there has been no research on the relationship between venture capital investments in firms using coworking spaces. Previous literature lacks the understanding of how coworking spaces support entrepreneurial activities and how this affects the raise of external equity. Our study aims at understanding the connection between coworking spaces with venture capital investments and spatial founding activities.Our research focuses on addressing the question of whether there is a substitutional or complementary relation between firms’ funding by venture capitalists and their use of coworking spaces?We examine the relationship between the existence of coworking spaces with VC investments and founding activities in the European Union to illuminate the macroeconomic impact of this recently emerged form of business model, transforming the real estate office market. First, we employed a webcrawler identifying coworking spaces throughout the big cities in Europe to generate data for the study. We then determined the size and founding date of each space and aggregated the data per city in order to conduct a panel over 9 years. Furthermore, we compiled VC data via the platform crunchbase. Using the crunchbase API we were able to obtain and compile global investments and funding information. Applying econometric methods, we identified the relation of VC and coworking spaces at a global and country-specific level using a regression analysis and addressing the endogeneity problem. The novelty of our research provides a new spatial component to the venture capital and innovation literature by showing how the physical organization of work affects entrepreneurial activities.The results are threefold. First, VC investors get guidance on where to supply venture capital, as venture capitalists tend to invest within a spatial proximity to the venue. Second, coworking operators can benefit from this analysis in order to attract venture capital and provide an ideal entrepreneurial environment. Third, from an urban perspective, the results influence cities and policy-makers. We show the impact of flexible office space and accelerators for entrepreneurial activities and the determining factors for capital inflow into a city, which is an important variable for economic growth.
    Keywords: Coworking spaces; flexible office space; venture capital; wework; work environments
    JEL: R3
    Date: 2019–01–01
  2. By: Enghin Atalay (University of Wisconsin, Madison); sarada sarada (UNIV OF WISCONSIN-MADISON)
    Abstract: Using the text of vacancy postings from 1940 to 2000, we examine the characteristics of firms which hire for newly emerging and soon-to-be disappearing work practices. To do so, we classify job titles as emerging or disappearing according to the years in which they appear. We verify that emerging work involves higher skill levels and is closer to the technological frontier --- qualities inherent to innovation. We find that, among the set of publicly listed firms, those which post ads for emerging work tend to be younger, more R&D intensive, and have higher future sales growth. Among privately held firms, those which post ads for emerging work are more likely to go public in the future. We then explore heterogeneity in the job vintage-firm performance relationship according to jobs that are in product-related technical fields versus in business related non-technical fields. New technological work correlates with R&D intensity and future sales growth, while survival and publicly traded status is more closely related to having newer vintages of business-related non-technological jobs. Our measures of firm innovativeness can be constructed for all employers, and are not limited to publicly traded firms or to industries in which R&D spending and patenting are prevalent.
    Date: 2019
  3. By: Andreas Pfnür; Julian Seger; Rianne Appel-Meulenbroek
    Abstract: The worldwide research on corporate real estate management (CREM) over the past decades leaves no doubt that this area has a decisive influence on the success of a company. However, there are still great uncertainties about the impact of CREM decisions on the firm success and the underlying causal relationships. Depending on the perspective from which CREM decisions are made, the goals and the targeted contributions to success can vary greatly. In research work, CREM has been for example examined from the perspectives of the labour productivity at the workplace, the influence on competitiveness in sales and factor markets, the financial contribution in context of corporate finance or the efficient provision of real estate resources from the viewpoint of construction and the real estate industry. In their influence on the success of a company, CREM decisions can result in competing, complementary or independent effects. Empirical studies show that the high complexity of the target system is one of the most important challenges for CREM. So far, there is no holistic concept that explains the different success contributions of CREM in their mechanisms and classifies them holistically. The purpose of this article is to develop a holistic model to explain the relationship between CREM decisions and business success and to test it empirically.In a first step, a literature-based multidimensional framework for corporate real estate's contribution to corporate success is derived. In a second step, the framework has been validated empirically on the basis of a dataset collected from computer assisted telephone interviews (CATI) among the CREM managers of the 200 largest German companies. The answers of the decision makers are positioned in a solution space using multidimensional scaling. This is followed by an comparison whether the empirically generated structure represents the dimensions and mechanisms of the framework. Finally, hierarchical-agglomerative cluster analyses are performed to validate the results.The results show that the influence of CREM on corporate success can be divided into three mechanisms: operating performance, real estate performance and financial performance. On the other hand, CREM success can be differentiated according to its maturity. If both considerations are combined, the result is a two-dimensional framework that contains all the effects of CREM on the firm success. The mechanisms of the framework can be empirically confirmed in their essential elements. The article provides an overview of the very broad, interdisciplinary literature on the connection between corporate real estate management and corporate success. The mechanisms are systematised in a holistic concept. The deeper understanding of the different CREM effects on corporate success is the basis for the effective development of CREM concepts in theory and practice.
    Keywords: Cluster Analysis; Corporate real estate management; CREM performance; multidimensional scaling
    JEL: R3
    Date: 2019–01–01
  4. By: Douglas Hanley (University of Pittsburgh); Chengying Luo (University of Pittsburgh); Mingqin Wu (South China Normal University)
    Abstract: The spatial arrangement of firms is known to be a critical factor influencing a variety of firm level outcomes. Numerous existing studies have investigated the importance of firm density and localization at various spatial scales, as well as agglomeration by industry. In this paper, we bring relatively new data and techniques to bear on the issue. Regarding the data, we use a comprehensive census of firms conducted by the National Bureau of Statistics of China (NBS). This covers firms in all industries and localities, and we have waves from both 2004 and 2008 available. Past studies have largely relied on manufacturing firms. This additional data allows us to look more closely at clustering within services, as well as potential spillovers between services and manufacturing. Further, by looking at the case of China, we get a snapshot of a country (especially in the early 2000s) in a period of rapid transition, but one that has already industrialized to a considerable degree. Additionally, this is an environment shaped by far more aggressive industrial policies than those seen in much of Western Europe and North America. In terms of techniques, we take a machine learning approach to understanding firm clustering and agglomeration. Specifically, we use images generated by density maps of firm location data (from the NBS data) as well as linked satellite imagery from the Landsat 7 spacecraft. This allows us to frame the issue as one of prediction. By predicting firm outcomes such as profitability, productivity, and growth using these images, we can understand their relationship to firm clustering. By turning this into a prediction problem using images as inputs, we can tap into the rich and rapidly evolving literature in computer science and machine learning on deep convolutional neural networks (CNNs). Additionally, we can utilize software and hardware tools developed for these purposes.
    Date: 2019
  5. By: Sungki Hong (Federal Reserve Bank of St Louis)
    Abstract: This paper studies the importance of firm-level price-markup dynamics for business cycle fluctuations. The first part of the paper uses state-of-the-art IO techniques to measure the behavior of markups over the business cycle at the firm level. I find that markups are countercyclical with an average elasticity of -0.9 with respect to real GDP, in line with the earlier industry-level evidence. Importantly, I find substantial heterogeneity in markup cyclicality across firms, with small firms having significantly more countercyclical markups than large firms. In the second part of the paper, I develop a general equilibrium model that matches these empirical findings and explore its implications for business cycle dynamics. In particular, I embed customer capital (due to deep habits as in Ravn, Schmitt-Grohe, and Uribe, 2006) into a standard Hopenhayn (1992) model of firm dynamics with entry and exit. A key feature of the model is that a firm's decision about markups becomes dynamic -- firms accumulate customer capital in the periods of fast growth by charging low markups, and choose to exploit it by charging high markups in the downturns. In particular, during recessions, the endogenous higher exit probability for smaller firms implies that they place lower weight on future profits, leading them to charge higher markups. This mechanism serves to endogenously increase the dispersion of firm sales and employment in recessions, a property that is consistent with the data. I further show that the resulting input misallocation amplifies both the volatility and persistence of the exogenous productivity shocks driving the business cycle.
    Date: 2019
  6. By: Tiago Cavalcanti (University of Cambridge); Bruno Martins (Central Bank of Brazil); Cezar Santos (Fundacao Getulio Vargas); Joseph Kaboski (University of Notre Dame)
    Abstract: We study how dispersion in financing cost and financial contract enforcement affect entrepreneurship, firm dynamics and productivity. We use employee-employer administrative linked data combined with data on financial transactions of all formal firms in Brazil to show how interest rate spreads vary with firm size, age, among other characteristics. We present a general equilibrium model with endogenous occupational choice based on a modified version of Buera, Kaboski, and Shin (2011), which are consistent with those facts of the the credit market. We then provide evidence on the allocative effects of financial reforms. Eliminating dispersion in financing cost leads to more credit and higher output due to cheaper credit for productive agents with low assets. In addition, abstracting from heterogeneity in interest rate spreads understates the impacts of financial reforms that improve the enforcement of credit contracts.
    Date: 2019
  7. By: Qin, Fei; Wright, M.; Gao, J.
    Abstract: We add to neglected research on how venture resources and founder experience outside the home country interplay in facilitating venture creation speed. In particular, we investigate how returnee entrepreneurs influence the role of venture resources in the speed of entrepreneurial entry. Using a novel sample of 388 new ventures covering a range of technologies in China, we find that returnees from abroad are slower in new venture entry in the home country, compared with homegrown entrepreneurs. At the same time, ventures with innovative technology and backed by foreign capital are slower to set up due to higher levels of liability of newness and liability of foreignness. However, when these firms have a returnee founder who can leverage their experience with foreign resources and technological knowhow, such negative effects on entry speed are significantly mitigated. We discuss implications for further research and practice.
    JEL: J50 L81
    Date: 2017–11–01
  8. By: Arenal, Alberto; Feijoo, Claudio; Moreno, Ana; Armuña, Cristina; Ramos, Sergio
    Abstract: Text mining is being increasingly used for the automatic analysis of different corpus of documents, either standalone or complementarily to other bibliometric techniques. The case of academic research into entrepreneurship policy is particularly interesting due to the increasing relevance of the topic and since the knowledge about the evolution of themes in this field is still rather limited. Consequently, this paper analyses the key topics, trends and shifts that have shaped the entrepreneurship policy research agenda to date using text mining techniques, cluster analysis and complementary bibliographic data to examine the evolution of a corpus of 1,048 academic papers focused on entrepreneurial-related policies and published during the period 1990-2016 in ten of the most relevant entrepreneurship journals. The results of the analysis show that inclusion, employment and regulation-related papers have largely dominated the research in the field, evolving from an initial classical approach about the relationship between entrepreneurship and employment to a wider and multidisciplinary perspective, including the relevance of management, geographies, and narrower topics such as agglomeration economics or internationalization instead of previous generic sectorial approaches. Overall, the text mining analysis reveals how entrepreneurship policy research has gained increasing attention and has become both more open, with a growing cooperation among researchers from different affiliations; and more sophisticated, with concepts and themes that moved forward the research agenda closer to the priorites of policies implementation
    Keywords: Text mining; Cluster analysis; Entrepreneurship policy; Entrepreneurship Research
    JEL: L26
    Date: 2019–06–05
  9. By: Roberto Gabriele; Andrea Mazzitelli; Giuseppe Espa; Maria Michela Dickson
    Abstract: The paper presents an empirical analysis of the effect of formal network agreements on growth of firm in Italy in the years 2011-2013. The theoretical background is given by evolutionary theories that assign a key role in determining the ability of firms to capture business opportunities to internal capabilities and to external knowledge and capabilities. We suggest that firms establishing formal relationships with other firms can extend the “set of things that they are able to do†–the set of capabilities– so that they are able to capture opportunities and grow. The study is based on a novel database of Italian firms that matches networked firms in year 2012 with firms that did not sign a formal network agreement but possess similar structural characteristics. In order to deal with possible self-selection phenomenon, we use difference-in-differences regression models to assess the effect on growth of belonging to a formal network agreement. Moreover, to study the effect of characteristics of network we employ two stage Hackman regression models. Results show that networked firms have a higher growth rate and that the size of the network plays a role. Results are in line with the evolutionary interpretation and suggest that formal network agreement can function as long-range antennas for firms that are more constrained from the geographical point of view. These agreements allow to acquire capabilities and knowledge of the market that allow firms to expand their economic activity.
    Keywords: Collaboration agreements, Difference in differences, firm growth
    JEL: D22 L25 M21 L52
    Date: 2019
  10. By: Ziesemer, Thomas (UNU-MERIT)
    Abstract: We analyse the dynamic interaction of Japan's total factor productivity (TFP), GDP, domestic and foreign private and public R&D as well as mission-oriented R&D, GBAORD, in a cointegrated VAR for Japan with data from 1988-2014. Analysis of effects of permanent shocks shows that (i) public R&D, unlike GBAORD, encourages private R&D and TFP, and has high internal rates of return. (ii) Japan's public and private R&D have a statistically significant positive effect on foreign private and public R&D stocks and vice versa. (iii) After transitory GDP shocks, public and private R&D are counter-cyclical and GBAORD is pro-cyclical in Japan.
    Keywords: R&D, productivity, growth, spillovers, vector-auto-regression (VAR)
    JEL: F43 O19 O47 O53
    Date: 2019–09–11
  11. By: Reka Juhasz (Columbia University); Mara Squicciarini (Bocconi University); Nico Voigtländer
    Abstract: The transition from millennia of stagnating per-capita incomes to sustained economic growth constitutes the most important structural break in economic history. A key feature of the Industrial Revolution was the unprecedented growth in manufacturing productivity. So far, productivity growth during this period has been studied mostly at the country level, or – in some cases – at the aggregate sectoral level. However, theoretical and empirical research over the past decade has pointed to the importance of firm dynamics for understanding aggregate productivity. The dearth of firm-level data has thus far made it impossible to study this channel in the context of the Industrial Revolution. This paper uses a novel dataset of French firms across various industries to study the evolution of firm productivity before and during the onset of industrialization. First, we document a set of novel stylized facts about firms in innovative and traditional sectors during the Industrial Revolution in France. Second, we exploit regional variation to estimate the extent to which different firm dynamics account for different levels of industrialization across France in 1850. Third, we estimate the extent to which productivity gains were driven by firm entry relative to the intensive margin.
    Date: 2019
  12. By: Santiago Caicedo (University of Chicago); Arthur Seibold (University of Mannheim); Miguel Espinosa (Universitat Pompeu Fabra)
    Abstract: We study the effect of apprenticeship programs on firms and welfare, using novel administrative data on the universe Colombian manufacturing firms with at least 10 workers, and a unique reform to apprenticeship regulation. The reform simultaneously establishes apprentice quotas that vary discontinuously in firm size and lowers apprentices' wages. We begin by documenting that the policy is successful in increasing the number of trained apprentices more than threefold. However, the reform also induces significant firm size distortions driven by heterogeneous firm responses. In sectors with high skill requirements, firms avoided hiring apprentices decreasing their size and bunching just below the regulation thresholds. In contrast, firms in low-skilled sectors, increase their size and bunch just above the regulation thresholds in order to be able to hire more apprentices. As a consequence, the regulation results in most apprentices being trained in low-skilled sectors. We develop a simple theoretical model featuring heterogeneous training costs across sectors in order to rationalize and quantify these empirical findings. The key insight of the model is firms that train apprentices incur in an opportunity cost of spending time teaching and not producing. As training in high-skill sectors takes longer than in low-skill sectors, firms in high skilled sectors will avoid apprentices while firms in low-skill sectors try to get as many as possible. Finally, we use the model to analyze the welfare consequences of the regulation and study counterfactual policies.
    Date: 2019
  13. By: Iqbal, Muhammad; Alam Kazmi, Syed Hasnain; Manzoor, Dr. Amir; Rehman Soomrani, Dr. Abdul; Butt, Shujaat Hussain; Shaikh, Khurram Adeel
    Abstract: In today's world the data is considered as an extremely valued asset and its volume is increasing exponentially every day. This voluminous data is also known as Big Data. The Big Data can be described by 3Vs: the extreme Volume of data, the wide Variety of data types, and the Velocity required processing the data. Business companies across the globe, from multinationals to small and medium enterprises (SMEs), are discovering avenues to use this data for their business growth. In order to bring significant change in businesses growth the use of Big Data is foremost important. Nowadays, mostly business organization, small or big, wishes valuable and accurate information in decision-making process. Big data can help SMEs to anticipate their target audience and customer preferences and needs. Simply, there is a dire necessity for SMEs to seriously consider big data adoption. This study focusses on SMEs due to the fact that SMEs are backbone of any economy and have ability and flexibility for quicker adaptation to changes towards productivity. The big data holds different contentious issues such as; suitable computing infrastructure for storage, processing and producing functional information from it, and security and privacy issues. The objective of this study is to survey the main potentials & threats to Big Data and propose the best practices of Big Data usage in SMEs to improve their business process.
    Keywords: SME; Big Data; Efficieny; Analytics; Competitive Advantage
    JEL: C8 M1 M15
    Date: 2018–03–04
  14. By: Bruno de Borger (University of Antwerp); Ismir Mulalic (Technical University of Denmark); Jan Rouwendal (Vrije Universiteit Amsterdam)
    Abstract: Most studies of the effects of transport infrastructure on the performance of individual firms have focused on marginal expansions of the rail or highway network over time. In this paper, we study the short-run effects of a large discrete shock in the quality of transport infrastructure, viz. the opening of the Great Belt bridge connecting the Copenhagen area with a neighboring island and the mainland of Denmark. We analyse the effect of the opening of the bridge on the productivity of firms throughout the country using a two-step approach: we estimate firm- and year-specific productivity for a large panel of individual firms, using the approaches developed by Levinsohn and Petrin (2003) and De Loecker (2011). Then, controlling for firm-fixed effects, we relate productivity to a calculated measure of accessibility that captures the effect of the opening of the bridge. We find large productivity effects for firms located in the regions near the bridge, especially for relatively small firms in the construction and retail industry. Estimation results further suggest statistically significant but small positive wage effects throughout the country, even in regions far from the bridge. Finally, there is some evidence that the bridge has stimulated new activities in the Copenhagen region at the expense of firms disappearing on the neighboring island Funen.
    Keywords: production functions, productivity, accessibility, agglomeration, transport infrastructure
    JEL: R12 H54 O18
    Date: 2019–09–13
  15. By: Lohwasser, Todor S.
    Abstract: The purpose of this multi-level meta-analytic study is to examine the impact of the financial environment on general performance differences between family firms and non-family firms. The considerable cross-country variability of meta-analyses focusing on this relationship suggests noticeable differences between firm- and country-based characteristics. We trace this variance to differences in the respective development of the financial markets and banking systems. We show that family firms outperform non-family firms in market-based economies. We further show that family firms report worse performance measures in well-developed financial markets. If, however, strong investor protection buttresses these already welldeveloped financial markets, family firms also outperform non-family firms. Our study has implications for banks, family firm owners, investors, and policy-makers.
    JEL: G15 G32 O16
    Date: 2019
  16. By: Aubhik Khan (Ohio State University); Julia Thomas (Ohio State University); Tatsuro Senga (Queen Mary University of London)
    Abstract: We develop a model with endogenous entry and exit in an economy subject to non-stationary shocks to aggregate total factor productivity. Firms exhibit a life-cycle consistent with microeconomic data, and our model reproduces key moments of the empirical firm age and size distribution. In this setting, persistent shocks to trend growth can drive long term reductions in business formation. The economic consequences of a persistent decline in entry grow over time and, together with "wait-and-see" effects on aggregate capital investment, can compound and protract a productivity slowdown. We apply our model to understanding the last decade of U.S. economic activity, an episode marked by slow GDP growth and persistently low entry rates and business fixed investment in the aftermath of the Great Recession. Firms vary in the permanent and transitory components affecting their productivity and in their capital stocks, and their capital adjustments are subject to one period time-to-build, alongside convex and nonconvex costs. Thus, the economy's aggregate state includes a distribution of firms over productivity and capital, and changes in this distribution have a persistent influence on economic activity. Epstein-Zin preferences and a time-varying relative price of capital goods combine to accommodate countercyclical risk premia capable of driving large changes in firm values. Following a persistent shock to trend growth, equilibrium movements in firms' stochastic discount factors imply long-run reductions in the value of entry. The resulting declines in new business formation propagate the shock's effects on investment and GDP, slowing aggregate recovery.
    Date: 2019
  17. By: Julian Seger; Andreas Pfnür
    Abstract: Since decades, the choice between ownership, leasing or renting in corporate real estate management has been discussed in numerous articles. The studies have mainly focused on demonstrating the negative effects of ownership on the capital market performance of non-property companies. A wide variety of influencing factors has been identified, which demonstrably determine the real estate ownership strategy as well as its valuation by the capital market. The reliance of the ownership decision on the real estate specificity instead, has been explained by its strategic importance, but in the course of a theoretical, resource based approach only. This one-dimensional view misses possible consequences for other company divisions though. A further complicating factor is that the strategic value of specific resources, which is a major motive in favor of ownership decisions, is strongly dependent on business environmental changes. In times of structural change and increasing uncertainty, this could cause investments in specific real estate to be withheld or even alternatives to ownership to be considered. This paper aims at filling this research gap by using German balance sheet and capital market data to prove the linkage between specificity and ownership intensity by taking environmental dynamics into account and to show potential effects on the capital market performance.The article begins with a literature-based derivation of the concept of specificity focusing on the theory of the firm on the one hand and its role in corporate finance on the other. The impact of ownership, leasing or rental solutions in the case of specific real estate can be operationalised by using a framework of Pfnuer/Seger (2018). In the following multivariate regression analysis, the influence of real estate specificity on the intensity of ownership is tested while also environmental dynamics are considered. The valuation of the capital market is examined using the Fama-French factor model.The article points out on a theoretical level that ownership of specific real estate is not only based on its strategic importance. Moreover, questions of corporate finance and changes in the business environment are also relevant. Empirical evidence confirms the positive correlation between specificity and ownership strategy. In addition, the analysis provides information on the influence of specificity and ownership strategy on capital market performance.The paper expands the scientific discourse by explicitly linking real estate specificity with the choice between ownership, leasing or rental solutions and corporate success. The article concludes that the irreversibility of specific real estates should be considered in the ownership decision in order to avoid inefficiencies. This especially accounts for firms which operate in a structurally changing business environment.
    Keywords: Corporate real estate management; Firm Performance; real estate ownership; specificity
    JEL: R3
    Date: 2019–01–01
  18. By: Wei Keat Benny Ng; Rianne Appel-Meulenbroek; Myriam Cloodt; Theo Arentze
    Abstract: Technology development is increasingly important for creating efficient and sustainable economies. One of the innovation policies are science parks, area developments where technology-based firms and knowledge-based institutions co-locate. Preferences of technology-based firms relate to the presence and quality of certain facilities, services, and location attributes, which are means for achieving organizational goals. As science parks are locations that generally offer a mix of such facilities and services, it can be configured in numerous ways. The gap between what science parks offer and what tenants need has been acknowledged as troublesome by science park managers and tenants as this gap can negatively influence the performance of science parks and their tenants. Therefore, this study focuses on the preferences of technology-based firms in relation to science park attributes and if different target groups can be distinguished from these preferences. To collect data about preferences, an online survey is distributed among technology-based firms both on and off science parks in the Netherlands. Using the technique of stated-choice experiments, decision-makers of technology-based firms (i.e. CEOs) are presented carefully designed hypothetical science-park locations and asked to indicate which location they would prefer if they would relocate. In the experimental design used, each hypothetical location consists of seven attributes each with three levels. The choice data allows for estimating the preference values for the different levels of each attribute, while taking into account the respondent’s current situation, using a discrete choice model as framework (a latent class model). This research provides insights on which science park attributes are desirable for technology-based firms and how much firms are willing-to-pay for particular attributes. Furthermore, differences in preferences between distinct target groups among technology-based firms are analyzed. For practice, the insights allow management of science parks to better adapt services and location characteristics to demands of the target groups of interest.
    Keywords: Corporate real estate management; science parks; Stated choice experiment; Technology firms
    JEL: R3
    Date: 2019–01–01
  19. By: Dan Cao (Georgetown University); Erick Sager (Federal Reserve Board); Henry Hyatt (US Census Bureau); Toshihiko Mukoyama (Georgetown University)
    Abstract: This paper analyzes firm growth along two margins: the extensive margin (adding more establishments) and intensive margin (adding more workers per establishment). We utilize administrative datasets to document the behavior of these two margins in relation to changes in the U.S. firm size distribution. Between 1990 and 2015, we find that the significant increase in average firm size was driven primarily by the expansion along the extensive margin, particularly in superstar firms. We develop a general equilibrium model of endogenous innovation that features both extensive and intensive margins of firm growth. We estimate the model to uncover the fundamental forces that caused the changes over this time period through the lens of our model. We find that, over time, the cost of innovations that lead to new establishments has declined for firms who are innovative in that dimension. Meanwhile, the duration that a firm can enjoy high growth through such innovation became shorter, and firm entry became more costly.
    Date: 2019

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