nep-sbm New Economics Papers
on Small Business Management
Issue of 2019‒11‒11
nineteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. SMES’ STRATEGIES TO FACE THE ONSET OF THE GREAT RECESSION By Juan A. Máñez Castillejo; María E. Rochina-Barrachina; Juan A. Sanchis Llopis
  2. Evaluating SMEs Readiness to Transform to IoT-Based Business Models By Vitkauskaitė, Elena; Varaniūtė, Viktorija; Bouwman, Harry
  3. What Makes an Employer? By Marco Caliendo; Frank M. Fossen; Alexander S. Kritikos
  4. Synergizing Ventures By Akcigit, Ufuk; Dinlersoz, Emin M.; Greenwood, Jeremy; Penciakova, Veronika
  5. Analysis of Science, Technology, and Innovation in Emerging Economies By Alexander Cotte Poveda; Clara Inés Pardo; Patricia Fletscher Moreno
  6. Disruptive Innovation by Heterogeneous Incumbents and Economic Growth: When do incumbents switch to new technology? By Ohki, Kazuyoshi
  7. Text mining the entrepreneurship policy agenda in the EU: From naïveté into reality By Arenal, Alberto; Feijoo, Claudio; Moreno, Ana; Ramos, Sergio; Armuña, Cristina
  8. Pay, Employment, and Dynamics of Young Firms By Babina, Tania; Ma, Wenting; Moser, Christian; Ouimet, Paige P.; Zarutskie, Rebecca
  9. An Anatomy of Productivity in Turkey in the AKP Era through a Political Economy Lens By Dincer, Nergiz; Tekin-Koru, Ayca
  10. The survival of start-ups in time of crisis. A machine learning approach to measure innovation By Marco Guerzoni; Consuelo R. Nava; Massimiliano Nuccio
  11. Human Capital, Parent Size and the Destination Industry of Spinouts By Mariko Sakakibara; Natarajan Balasubramanian
  12. Does Easing Financing Matter for Firm Performance? By Bose, Udichibarna; Mallick, Sushanta; Tsoukas, Serafeim
  13. Applying a New Methodology to Measure Investment in R&D and Science and Technology Activities: The Case of Colombia By Alexander Cotte Poveda; Clara Inés Pardo; Jorge Andrade Parra
  14. Why Consumers Commit Voluntarily to Collaborative Innovation with Firms by Using Social Media?: Case of Japanese consumers By Idota, Hiroki; Nakaya, Joji; Tsuji, Masatsugu
  15. Linkages and spillover effects of South African foreign direct investment in Botswana and Kenya By Felix A. Nandonde; Richard Adu-Gyamfi; Tinaye S. Mmusi; Herbert Wamalwa; Simplice A. Asongu; Johannes P. Opperman; Jeremiah R. Makindara
  16. Do Multinationals Transplant Their Business Model? By Dalia Marin; Linda Rousova; Thierry Verdier
  17. New empirics about innovation and inequality in Europe By Antonio Biurrun-Santamaria
  18. Migrant Inventors and the Technological Advantage of Nations By Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport
  19. Favoriser l’innovation dans le secteur public québécois By Luc Bernier

  1. By: Juan A. Máñez Castillejo (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); María E. Rochina-Barrachina (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Juan A. Sanchis Llopis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: This work analyses how SMEs (as compared to large firms) endured the onset of the recent Great Recession through the engagement in internationalization and innovation strategies. We focus on the SMEs strategies of exporting and undertaking R&D and the impact of these activities on firms’ markups (i.e., a measure of performance). This study will allow determining whether performing these strategic activities allowed SMEs to get advantages to sustain markups, not only in an expansive period but also during the hit of the hardest period of the recent financial and economic crisis. The data we use is the Spanish survey on firms’ strategies (ESEE), 1993-2009. We obtain two main results: first, for SMEs the strategies of only exporting or performing both activities explain higher markups; and, second, there is confirmation that R&D played an increasing role in protecting firms against a decrease in markups in the onset of the crisis.
    Keywords: SMEs, Exports, R&D, markups, the Great Recession
    JEL: D24 F14 O32 E32
    Date: 2019–10
  2. By: Vitkauskaitė, Elena; Varaniūtė, Viktorija; Bouwman, Harry
    Abstract: The connection of devices, as enabled by the Internet of Things (IoT), has a significant impact on business activities, processes, and performance. IoT is, therefore, gaining attention from practitioners and academia. The deployment of technological innovations is inseparable from changes in business activities, and therefore also affects business models (BMs) of both large corporations as well as small and medium-sized enterprises (SMEs). Both face challenges on transformations to their business models due to the use of IoT solutions, although these changes might be different for both. Extant literature on IoT-based business models mainly focuses on transformations in large companies. Since SMEs play an important role in the market's value creation, it is particularly important to understand SMEs business model transformations, caused by IoT. Research on this topic is limited and faces many theoretical and methodological challenges. Therefore, this paper proposes a mixed method approach to study SMEs readiness to transform business models as a result of implementing IoT solutions. Based on a systematic literature review, and a pilot study (by using a case of one SME in Lithuania), we developed a mixed method research design in which input-output relation between case studies for theory formulation as well as theory testing are proposed.
    Keywords: Internet of Things,Business Model,IoT,SME,mixed-method research
    Date: 2019
  3. By: Marco Caliendo; Frank M. Fossen; Alexander S. Kritikos
    Abstract: As the policy debate on entrepreneurship increasingly centers on firm growth in terms of job creation, it is important to better understand which variables influence the first hiring decision and which ones influence the subsequent survival as an employer. Using the German Socioeconomic Panel (SOEP), we analyze what role individual characteristics of entrepreneurs play in sustainable job creation. While human and social capital variables positively influence the hiring decision and the survival as an employer in the same direction, we show that none of the personality traits affect the two outcomes in the same way. Some traits are only relevant for survival as an employer but do not influence the hiring decision, other traits even unfold a revolving door effect, in the sense that employers tend to fail due to the same characteristics that positively influenced their hiring decision.
    Keywords: Employer, entrepreneurship, business venturing, recruitment, firm growth, employment growth, personality
    JEL: J22 J23 L26
    Date: 2019
  4. By: Akcigit, Ufuk (University of Chicago); Dinlersoz, Emin M. (U.S. Census Bureau); Greenwood, Jeremy (University of Pennsylvania); Penciakova, Veronika (Federal Reserve Bank of Atlanta)
    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.
    Keywords: venture capital; assortative matching; endogenous growth; IPO; management; mergers and acquisitions; research and development; startups; synergies; taxation; patents
    JEL: E13 E22 G24 L26 O16 O31 O40
    Date: 2019–09–01
  5. By: Alexander Cotte Poveda; Clara Inés Pardo; Patricia Fletscher Moreno
    Abstract: This research outlines a number of different perspectives on the relationship between science, technology, and innovation in emerging economies. In it, the authors explore the aforementioned relationship as a pillar of economic development, driving growth in emerging economies. Employing a collaborative and interdisciplinary approach, the authors work to determine the main related factors and outcomes of the relationship between science, technology, and innovation, ultimately seeking to guide public policies to enhance the welfare of the population of an emerging economy.
    JEL: O3 O31 O34 O38
    Date: 2019–06–18
  6. By: Ohki, Kazuyoshi
    Abstract: In this paper, we construct a tractable endogenous growth model to examine heterogeneous incumbents' current technology-switching behavior. Then, we examine the effects of policies such as a subsidy for innovation by incumbents, a subsidy for innovation by entrants, and the extension of patent length. Our setting suggests interesting and counterintuitive results. High quality incumbents tend to be less likely to conduct innovation, which is inconsistent with Schumpeter's hypothesis. A subsidy for innovation by entrants decreases the average quality of differentiated goods. Moreover, it may decrease the growth rate of the economy if the positive spillover of innovation from average quality production is adequately large. Aggregate innovation can be small even when the population size is large if the barriers to entry are extremely high.
    Keywords: Economic Growth, R&D, Firm-Heterogeneity, Innovation by Incumbents, IPR Policy
    JEL: O31 O32 O33 O34 O41
    Date: 2019–10–31
  7. By: Arenal, Alberto; Feijoo, Claudio; Moreno, Ana; Ramos, Sergio; Armuña, Cristina
    Abstract: This paper analyses the learning curve in the emergence and development of an entrepreneurship policy in the European Union (EU) during the period 1990-2016 by identifying the key topics in the policy agenda-setting and their evolution over time within a corpus of 576 selected policy-making documents. To this end, the paper uses a combination of text mining techniques, cluster analysis and qualitative assessment, illustrating the possibilities of these tools to learn about the evolution of the policy cycle in a particular domain. The results from the analysis display three main stages, each of them with two sub stages. During the initial period, labelled (a) latent EU entrepreneurship policy, there were hardly any specific entrepreneurship policy initiatives and only some general enterprisefostering policies at the EU level which included, tangentially, SMEs and entrepreneurs, and lasted up to late 1990s. In the (b) emergent EU entrepreneurship policy stage, the initial steps of an entrepreneurship policy with a main focus on diagnosis of the entrepreneurial ecosystem and some measures of support - mainly to SMEs - can be traced from the late 1990s to the early 2010s. The third and last period to date is a (c) new normal for EU entrepreneurship policy, which is a more targeted stage aimed at promoting not only quantity but quality of business ventures; and is ongoing since the early 2010s. Overall, this paper provides a complete overview of the EU entrepreneurship policy evolution and concludes with a granular proposal for its evolution, identifying main themes and foundational concepts, establishing patterns, and finding temporal and contextual relations within the EU policy cycle.
    Keywords: Entrepreneurship policy,Policy cycle,Policy analysis,Cluster analysis,Text mining,EU policy
    JEL: L26
    Date: 2019
  8. By: Babina, Tania (Columbia University); Ma, Wenting (University of Massachusetts Amherst); Moser, Christian (Federal Reserve Bank of Minneapolis); Ouimet, Paige P. (University of North Carolina at Chapel Hill); Zarutskie, Rebecca (Board of Governors of the Federal Reserve System)
    Abstract: Why do young firms pay less? Using confidential microdata from the US Census Bureau, we find lower earnings among workers at young firms. However, we argue that such measurement is likely subject to worker and firm selection. Exploiting the two-sided panel nature of the data to control for relevant dimensions of worker and firm heterogeneity, we uncover a positive and significant young-firm pay premium. Furthermore, we show that worker selection at firm birth is related to future firm dynamics, including survival and growth. We tie our empirical findings to a simple model of pay, employment, and dynamics of young firms.
    Keywords: Young-firm pay premium; Selection; Worker and firm heterogeneity; Firm dynamics; Startups
    JEL: D22 E24 J30 J31 M13
    Date: 2019–08–05
  9. By: Dincer, Nergiz; Tekin-Koru, Ayca
    Abstract: The main aim of the current paper is to investigate the productivity dynamics of Turkish economy between 2003-2015, during the Adalet ve Kalkınma Partisi (AKP) era, to contribute to the ongoing discussions of long-term economic growth of the country, using a unique data set and firm-level granular productivity analysis. Furthermore, the political economy of the deindustrialization of Turkey is scrutinized as a complement to the productivity analysis. Among a plethora of results, the following three are the most important ones in terms of their policy implications: (i) The aggregate productivity figures underestimate the productivity improvements in the manufacturing sector and overestimate the productivity losses in the services sector. (ii) The productivity growth of manufacturing sector in Turkey has been positive yet evolving towards medium-low tech manufacturing which displays the lowest productivity growth among all manufacturing sectors. (iii) While the surviving firms in the Turkish manufacturing sector have increased their own productivity in the AKP era, in the services sector surviving firms had a negative contribution to aggregate productivity growth.
    Keywords: Productivity, services, manufacturing, deindustrialization, AKP
    JEL: D24 O47 P16
    Date: 2019–10–22
  10. By: Marco Guerzoni; Consuelo R. Nava; Massimiliano Nuccio
    Abstract: This paper shows how data science can contribute to improving empirical research in economics by leveraging on large datasets and extracting information otherwise unsuitable for a traditional econometric approach. As a test-bed for our framework, machine learning algorithms allow us to create a new holistic measure of innovation built on a 2012 Italian Law aimed at boosting new high-tech firms. We adopt this measure to analyse the impact of innovativeness on a large population of Italian firms which entered the market at the beginning of the 2008 global crisis. The methodological contribution is organised in different steps. First, we train seven supervised learning algorithms to recognise innovative firms on 2013 firmographics data and select a combination of those with best predicting power. Second, we apply the former on the 2008 dataset and predict which firms would have been labelled as innovative according to the definition of the law. Finally, we adopt this new indicator as regressor in a survival model to explain firms' ability to remain in the market after 2008. Results suggest that the group of innovative firms are more likely to survive than the rest of the sample, but the survival premium is likely to depend on location.
    Date: 2019–11
  11. By: Mariko Sakakibara; Natarajan Balasubramanian
    Abstract: We study how spinout founders’ human capital and parent size relate to founders’ propensity to stay in the same industry as their parents or to go outside the industry. Individuals with high human capital face a higher performance penalty if they form spinouts outside the parent industry, but they also face greater deterrence from large parents if they stay in that industry. Using matched employer employee data on spinout founders and their coworkers, we find that individuals with higher human capital are less likely to form spinouts in distant industries than in the parent’s industry. Further, we find that as parent size increases, such individuals are less likely to form spinouts in the parent’s industry and more likely to form spinouts in distant industries.
    Keywords: Entrepreneurship, spinout, human capital, competition, industry-specific knowledge
    Date: 2019–10
  12. By: Bose, Udichibarna; Mallick, Sushanta; Tsoukas, Serafeim
    Abstract: Financial reforms have been found to be highly important in promoting aggregate productivity. Yet, the linkage between access to finance, firm-level productivity, and exporting performance has been overlooked in the literature. We fill this gap using a rich dataset of 11,612 Indian firms over the period 1988-2014 to study the impact of a unique financial policy intervention on firm performance. We document a significant effect of capital-account liberalization through the lens of an export-oriented policy initiative on firms’ productivity and consequently on their exporting activity. Finally, the beneficial effect of the policy change is more pronounced for financially vulnerable firms, as measured by high debt dependence and low levels of liquidity.
    Keywords: Productivity; Exporting; Financing; FX market liberalization
    Date: 2019–11–08
  13. By: Alexander Cotte Poveda; Clara Inés Pardo; Jorge Andrade Parra
    Abstract: Research and development (R&D), especially in industry and technology, is a crucial component of innovation, productivity and effectiveness, as well as the generation of new competitive advantages that are reflected in the whole economy of a country. In this context and with the aim of improving the measurement of R&D, the Organization for Economic Cooperation and Development updated the Frascati Manual in 2015 to provide the main, globally applicable guidelines for national statistical offices and policy-makers to analyze trends and allow for international comparisons of science, technology and innovation. In developing countries, it is particularly important to determine different strategies to guarantee adequate R&D to inform the creation of policies and instruments to effectively promote knowledge and generate technological solutions to local problems. This chapter describes the development and application of the Frascati Manual (2015) in Colombia to measure investments in R&D and other scientific, technological and innovation activities in Colombia from the perspective of the requirements of the manual for government, higher education, business enterprises, the health sector and private non-profit institutions with an update for the entire 2000–2017 period. The results indicate that the new guidelines for quantifying investments in R&D guarantee greater reliability through the use of mixed methods involving administrative registers or surveys and control mechanisms with budget analysis. Moreover, it is important to analyze differences among sectors to adequately determine the specific factors related to scientific, technological and innovation activities with the aim of establishing the investments and expenditures in science, technology and innovation. During the period of study, Colombia maintained constant investment with a slight increase in the last year that was mainly due to found royalties. The resulting indicators of expenditure in R&D and other scientific, technological and innovation activities can be used to monitor and evaluate relevant policies that have been implemented, as well as to make international comparisons.
    JEL: O3 O31 O34 O38
    Date: 2019–06–20
  14. By: Idota, Hiroki; Nakaya, Joji; Tsuji, Masatsugu
    Abstract: It is necessary to grasp and utilize consumer's needs for firms to improve existing products and developing new products. Especially, collaboration with consumers for product innovation is indispensable. On the other hand, social media has been spreading all over the world. Network communities formed by social media are one of key factors of innovation achieved by collaborating with consumer innovators, which is referred to as consumer collaborative innovation. This paper studies how Japanese firms achieve consumer collaborative innovation based on authors' questionnaire survey data in Japan. In particular, the types of users and the strength of ties between firms and consumers and types of consumer innovators are focused on. In addition, consumers' motivation of collaboration such as the intrinsic and extrinsic motivations of lead users and collaborative innovators are elucidated. This paper finds the role of lead users and pecuniary rewards which are more important than other motivations. Based on results obtained, some measures to promote consumer collaborative innovation in Japan are proposed.
    Keywords: Consumer collaborative innovation,social media,network community,lead user,motivation,monetary rewards
    Date: 2019
  15. By: Felix A. Nandonde (Morogoro, Tanzania); Richard Adu-Gyamfi (Geneva, Switzerland); Tinaye S. Mmusi (Gaborone, Botswana); Herbert Wamalwa (University of Nairobi, Kenya); Simplice A. Asongu (Yaoundé, Cameroon); Johannes P. Opperman (University of Stellenbosch, South Africa); Jeremiah R. Makindara (Morogoro, Tanzania)
    Abstract: In recent decades, the impact of South African foreign direct investment in Africa has been captured by research and policy. This paper investigates linkages and spillover effects of South African foreign direct investment in Botswana and Kenya. The study uses primary data to investigate qualitative implications. The findings reveal that South African firms operate in sectors including retail, food-processing, and information and communication technology. Linkages forged in these sectors include supply, employee, joint venture, service, and institutional nexuses. Supply and service linkages create observable spillovers which point to the fact that younger local firms tend to benefit from South African firms in terms of technology transfer and training opportunities. Host country policymakers are therefore encouraged to provide favourable incentives for foreign direct investment to promote entrepreneurship. Other policy implications are also discussed.
    Keywords: Foreign direct investment, linkages, spillover effects, South Africa, Botswana, Kenya
    JEL: E23 F21 F30 L96 L98 O55
    Date: 2019–01
  16. By: Dalia Marin; Linda Rousova; Thierry Verdier
    Abstract: What determines whether or not multinational firms transplant the mode of organisation to other countries? We embed the theory of knowledge hierarchies in an industry equilibrium model of monopolistic competition to examine how the economic environment may affect the decision of multinational firms about transplanting the mode of organization to other countries. We test the theory with original and matched parent and affiliate data on the level of decentralization of 660 Austrian and German multinational firms and 2200 of their affiliate firms in Eastern Europe. We find that three factors stand out in promoting the multinational firm’s decision to transplant the organisational form to the affiliate firm in the host country: a competitive host market, the human resource policy of the multinational firm, and when an innovative technology is transferred to the host country. These factors increase the respective probabilities of organizational transfer by 7, 21, and 24 percentage points.
    Keywords: organizational economics of multinational firms, trade and organisation, the theory of the firm, organizational transfer between countries
    JEL: D23 F12 F23 F61
    Date: 2019
  17. By: Antonio Biurrun-Santamaria (Instituto Complutense de Estudios Internacionales (ICEI), Universidad Complutense de Madrid.)
    Abstract: The increase of internal inequality is one of the consequences of the recent turbulence of the World economy and the crisis’ effects in advanced countries. At the same time, to face the new information age and the phenomena of digitalization and robotization, investment in research and development (R&D) is an indisputable action for economic and social progress. The combination of these two dynamics opens new debates about the still unresolved relationship between innovation and inequality. This paper contrasts the postulates of the existing body of theory and the existing empirical evidence to argue that the positive co-evolution of inequality reduction and technological progress in Europe is not a lineal process, but it requires to analyze its complexity and what sort of combination of factors would best explain it. The findings are based on regressions with panel data from a sample of 20 countries in the period 1995-2017, and they show the relevance of structural and institutional aspects within the European region. In particular, two clusters of countries seem to define a dissimilar behavior in the relationship between inequality and innovation and a virtuous circle defined by the contribution of social protection and innovation policies contributes to a favorable solution of the puzzle between innovation and inequality.
    Keywords: Innovation; Inequality; Institutions; Catching-up.
    Date: 2019
  18. By: Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport
    Abstract: We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants’ receiving countries. We find that countries are 25 to 50 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors "import" knowledge from their home countries which translate into higher patenting. We complement our results with micro-evidence showing that migrant inventors are more prevalent in the first bulk of patents of a country in a given technology, as compared to patents filed at later stages. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations.
    Keywords: Innovation;Migration;Patent;Technology;Knowledge
    JEL: O31 O33 F22
    Date: 2019–10
  19. By: Luc Bernier
    Date: 2019–10–29

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