nep-sbm New Economics Papers
on Small Business Management
Issue of 2019‒10‒28
ten papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Defining Opportunity versus Necessity Entrepreneurship: Two Components of Business Creation By Robert W. Fairlie; Frank M. Fossen
  2. Catching up or Lagging Behind? The Long-Term Business and Innovation Potential of Subsidized Start-Ups out of Unemployment By Caliendo, Marco; Künn, Steffen; Weissenberger, Martin
  4. The complexity to evaluate small firm performance By Mickaël Cita
  5. R&D, innovation spillover and business cycles By Uluc Aysun; Zeynep Yom
  6. Board of directors and export-spillovers: What is the impact on extensive margins of trade? By Lööf, Hans; Viklund-Ros, Ingrid
  8. FACTORS INFLUENCING EMPLOYEE ENGAGEMENT IN THAI SMEs By Sirisuhk Rakthin; Nattawat Pisitsupakarn; Karuna Aksaravut
  9. How Do Short-term Financial Constraints Affect SMEs’ Long-Term Investment: Evidence from the Working Capital Channel By Théo Nicolas
  10. International Diversification Impact on Firm Performance: A Study of the East African Community (EAC) Firms By Aniceth Kato Mpanju

  1. By: Robert W. Fairlie; Frank M. Fossen
    Abstract: A proposed explanation for why business creation is often found to increase in recessions is that there are two components to entrepreneurship – “opportunity” and “necessity” – the latter of which is mostly counter-cyclical. Although there is some agreement on the conceptual distinction between these two factors driving entrepreneurship, there is little consensus in the literature on empirical definitions. The goal of this paper is to propose an operational definition of opportunity versus necessity entrepreneurship based on the entrepreneur’s prior work status (i.e. based on previous unemployment) that is straightforward, based on objective information, and empirically feasible using many large, nationally representative datasets. We then explore the validity of the definitions with theory and empirical evidence. Using datasets from the United States and Germany we find that 80-90 percent of entrepreneurs are opportunity entrepreneurs. Applying our proposed definitions, we document that opportunity entrepreneurship is generally pro-cyclical and necessity entrepreneurship is strongly counter-cyclical both at the national levels and across local economic conditions. We also find that opportunity vs. necessity entrepreneurship is associated with the creation of more growth-oriented businesses. The operational definitions of opportunity and necessity entrepreneurship proposed here may be useful for distinguishing between the two types of entrepreneurship in future research.
    JEL: J23 J64 L26
    Date: 2019–10
  2. By: Caliendo, Marco (University of Potsdam); Künn, Steffen (Maastricht University); Weissenberger, Martin (University of Potsdam)
    Abstract: From an active labor market policy perspective, start-up subsidies for unemployed individuals are very effective in improving long-term labor market outcomes for participants. From a business perspective, however, the assessment of these public programs is less clear since they might attract individuals with low entrepreneurial abilities and produce businesses with low survival rates and little contribution to job creation, economic growth, and innovation. In this paper, we use a rich data set to compare participants of a German start-up subsidy program for unemployed individuals to a group of regular founders who started from non-unemployment and did not receive the subsidy. The data allows us to analyze their business performance up until 40 months after business formation. We find that formerly subsidized founders lag behind not only in survival and job creation, but especially also in innovation activities. The gaps in these business outcomes are relatively constant or even widening over time. Hence, we do not see any indication of catching up in the longer run. While the gap in survival can be entirely explained by initial differences in observable start-up characteristics, the gap in business development remains and seems to be the result of restricted access to capital as well as differential business strategies and dynamics. Considering these conflicting results for the assessment of the subsidy program from an ALMP and business perspective, policy makers need to carefully weigh the costs and benefits of such a strategy to find the right policy mix.
    Keywords: entrepreneurship, start-up subsidies, business growth, innovation, job creation
    JEL: L26 M13 J68
    Date: 2019–10
  3. By: Aniceth Kato Mpanju (Tanzania Institute of Accountancy)
    Abstract: The major purpose of this paper is to analyze the impact of microfinance services on SME?s performance in Dar-es-Salaam region, Tanzania. Using a sample of 350 SMEs, the study adopted a descriptive-correlation research design an econometric analysis using statistical package for social sciences (SPSS) version 24. The results show that microfinance services in the form of financial intermediation and enterprise development had to a large extent adequate to small and medium-sized entrepreneurs. Then from above analysis we may conclude that there existed a strong relationship between the extent of microfinance services and the performance of SMEs and that microfinance services influenced the performance of the SMEs in the Dar-es-Salaam region.
    Keywords: Microfinance services, SMEs, Microfinance institutions, Financial literacy and enterprise development
    JEL: G29
    Date: 2019–10
  4. By: Mickaël Cita (CREDDI - Centre de Recherche en Economie et en Droit sur le Développement Insulaire - UA - Université des Antilles)
    Abstract: It's not easy to evaluate small firm performance. With this few words we try to understand more how function a small firm and try evaluate the performance. We try to make tool to do it.
    Abstract: La performance des micro-entreprises est souvent vu comme négligeable et pas toujours très reconnu, au travers de cet article nous allons essayer de mieux comprendre la performance que réalise celles-ci. Pour y parvenir il est important de faire une revue de la littérature sur la performance et en particulier la performance dans les microentreprises et les PME.
    Keywords: small firm,PME,Microentreprise,performance,RUP
    Date: 2019–10–11
  5. By: Uluc Aysun (Department of Economics, College of Business Administration, University of Central Florida); Zeynep Yom (Department of Economics, Villanova School of Business, Villanova University)
    Abstract: This paper shows that technology shocks have the largest impact on economies when industries adopt innovations of other industries at a high rate, if costs of adopting new technologies and adjusting R&D expenditures are low, and if innovators face a high degree of competition. It is not the level but the spillover of innovations across industries that is the key determinant of these findings. Under the conditions mentioned above, R&D becomes less procyclical and smoother along the business cycle yet R&D driven innovations have a larger impact on output since these innovations spillover at a higher rate. These inferences are drawn from a dynamic stochastic general equilibrium framework describing a real economy with endogenous growth. The latter feature allows us to infer the welfare implications of R&D processes.
    Keywords: Research and development; spillover effects; endogenous growth
    JEL: E30 E32 O30 O33
    Date: 2019–10
  6. By: Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Viklund-Ros, Ingrid (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Increased export experience on the board of non-exporting firms has a causal effect on their propensity to enter foreign markets in later periods. Using a universal set of Swedish employer-employee panel data for the period 2000-2014, this paper finds evidence on spillover from exporters to non-exporters through outside board directors. The identification strategy to account for endogenous selection of external board members relies on external instruments and applications of different instrumental variable approaches, capturing also unobserved heterogeneity. Our findings are robust to controlling for export background among managers and employees, as well as firm size, human capital, total factor productivity, productivity spillovers, firm location and industry classification.
    Keywords: Export spillovers; extensive margins of trade; outside directors; employer-employee data; endogeneity
    JEL: C26 F14 L20 M20 O33
    Date: 2019–10–16
  7. By: Rachel Bocquet (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Sandra Dubouloz (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Tarik Chakor (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: The effects of lean manufacturing on worker health remain poorly understood. Although recent studies show a moderating role of human resource management (HRM) practices on this relationship, they focus only on some specific HRM practices and do not grasp their effects on the different phases of the lean adoption process. By considering lean manufacturing as a managerial innovation, the objective of this paper is to explore the relationship between, lean, MRH practices and worker health according to the firm's lean maturity (i.e. intensity of usage and stage of adoption). The results, based on three case studies of French industrial firms, show that the effects of lean practices on worker health should be assessed in light of the combination of lean and HRM practices that differ along the lean process
    Abstract: Les effets du lean manufacturing sur la santé au travail restent peu étudiés. Si des travaux récents montrent le rôle modérateur des pratiques de management des ressources humaines (MRH) sur cette relation, ils se focalisent le plus souvent sur quelques pratiques spécifiques et n'appréhendent pas leurs effets aux différentes étapes du processus d'adoption. En considérant le lean comme une innovation managériale, l'objectif de cet article est d'explorer la relation entre les pratiques lean, MRH et la santé au travail en prenant en compte explicitement la maturité lean de l'entreprise (i.e. intensité d'usage des pratiques et stade d'adoption). Les résultats, basés sur trois études de cas d'entreprises industrielles françaises, montrent que les effets du lean sur la santé au travail sont à évaluer à la lumière de combinaisons de pratiques lean et MRH qui diffèrent selon la phase du processus d'adoption..
    Keywords: Lean practices,Worker health,Human resource management practices,Bundles of practices,Adoption process.,combinaisons de pratiques,processus d'adoption,Pratiques lean,santé au travail,pratiques de management des ressources humaines
    Date: 2019
  8. By: Sirisuhk Rakthin (College of Management, Mahidol University); Nattawat Pisitsupakarn (College of Management, Mahidol University); Karuna Aksaravut (College of Management, Mahidol University)
    Abstract: Successful organization, in any size or type, must have engaged employees who have high potential, positive attitude, and devotion to do their job well. Employee engagement became more vital to small and medium-sized enterprises (SMEs) since they posses much fewer resources than large organizations. In Thailand, there are currently 2.9 million SMEs, which account for 99.6% of all business entities and employ 10.5 million people, or 77.8% of total Thai workforce. Although SMEs play a critical role in Thai Economy, most Thai SMEs still face many challenges ? limited competency and accessibility to sources of funds, IT competency, government business promotions services, and global markets. Limited resource accessibility for SMEs results in high employee turnover rate. Consequently, it is vital that Thai SMEs should adopt meaningful HR management tools to improve their long-term business sustainability. This research study aims to explore how employee?s 1) self-leadership, 2) interpersonal leadership, 3) process leadership, 4) adaptability, and 5) remuneration satisfaction could influence employee engagement in Thai SMEs. Also, the mediating effects of job satisfaction in these relationships are examined. Data have been collected via questionnaires from 497 employees in Thai SMES and hypotheses were tested using the partial least squares structural equation modeling (PLS-SEM). The results indicate that employee?s 1) self-leadership, 2) interpersonal leadership, 3) adaptability, and 4) satisfaction on existing remuneration have positive impacts on employee engagement. In addition, our results demonstrate that job satisfaction partially mediates relationships between 1) interpersonal leadership and 2) remuneration satisfaction and the SMEs? employee engagement. The research study demonstrates the value of employees? leadership, adaptability and satisfaction in increasing employee engagement, particularly in SMEs context. The research result can pave a path for better HR management in Thai SMEs, e.g., leadership training, compensation package design, and etc.
    Keywords: Leadership, Employee Engagement, Job Satisfaction, SMEs, Thailand
    JEL: J28 C30 M10
    Date: 2019–10
  9. By: Théo Nicolas
    Abstract: This paper investigates the real effects of short-term financial constraints in the light of the working capital channel: cash credit constraints may force SMEs to forgo investment opportunities in order to finance their working capital needs. Building on unique indicators of cash and investment credit constraints derived from survey data, I find that: (1) short-term credit constraints are as important as long-term ones in SMEs' investment decisions; (2) the detrimental effect of cash credit constraints on corporate investment is even stronger for firms with higher working capital needs; (3) the negative relationship between working capital and fixed investment is associated with short-term financial frictions; and (4) only liquid SMEs are able to offset short-term financial frictions by adjusting their accounts receivable and inventories.
    Keywords: : Investment, Bank credit, Financial constraints, Working capital, Survey data.
    JEL: D82 E32 E51 G01 G21
    Date: 2019
  10. By: Aniceth Kato Mpanju (Tanzania Institute of Accountancy)
    Abstract: The major purpose of this research was to analyse the impact of internationalisation strategy on industry performance among the East African Community (EAC) firms. We used a sample to 279 domestic firms and multinational companies (MNC?s) subsidiaries in the manufacturing sector, service sector and agriculture sector. The impact of internationalisation strategy on firm performance was investigated by logistic regression analysis using statistical package for social sciences (SPSS). The results confirm that performance is perceived to be stronger by firms with foreign connections as compared to domestic firms, and that the MNC?s subsidiaries experience better (sustainable development) performance of their functions as compared to local firms.
    Keywords: EAC firms, Firm performance, International diversification, Internationalisation theories, MNCs
    JEL: L25
    Date: 2019–10

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