nep-sbm New Economics Papers
on Small Business Management
Issue of 2020‒01‒20
fifteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The spatial dimension of productivity: Connecting the dots across industries, firms and places By Alexandra Tsvetkova; Rudiger Ahrend; Joaquim Oliveira Martins; Alexander C. Lembcke; Polina Knutsson; Dylan Jong; Nikolaos Terzidis
  2. Does Remote Work Improve or Impair Firm Labour Productivity? Longitudinal Evidence from Portugal By Natália P. Monteiro; Odd Rune Straume; Marieta Valente
  3. Networks, Start-up Capital and Women’s Entrepreneurial Performance in Africa: Evidence from Eswatini By Brixiová, Zuzana; Kangoye, Thierry
  4. What makes a productive Russian firm? A comparative analysis using firm-level data By Lenka Wildnerova; Hansjörg Blöchliger
  5. What is the Impact of Increased Business Competition? By Sonia Feliz; Chiara Maggi
  6. Competitive strategies, heterogeneous demand sources and firms' growth trajectories By Serenella Caravella; Francesco Crespi; Dario Guarascio; Matteo Tubiana
  7. Environmental Innovation in European Transition Countries By Raul Caruso; Antonella Biscione; Annunziata de Felice
  8. Innovation Indicators: for a critical reflection on their use in Low- and Middle-Income Countries (LMICs) By Michiko Iizuka; Hugo Hollanders
  9. The Elusive Quest for the Holy Grail of an Impact of EU Funds on Regional Growth By Jan Fidrmuc; Martin Hulényi; Olga Zajkowska
  10. Optimal Capital Taxation in an Economy with Innovation-Driven Growth By Ping-ho Chen; Angus C. Chu; Hsun Chu; Ching-chong Lai
  11. India’s entrepreneurship policy: Future tasks and vision By Koshy, Perumal
  12. Contract Work at Older Ages By Katharine G. Abraham; Brad Hershbein; Susan Houseman
  13. Corporate Tax Cuts and Economic Growth By Suzuki, Keishun
  14. Innovate to Lead or Innovate to Prevail: When do Monopolistic Rents Induce Growth? By Roberto Piazza; Yu Zheng
  15. Entrepreneurial orientation dan pengalaman kerja By Ariani, Mintarti; Putri, Arlika Anindya

  1. By: Alexandra Tsvetkova; Rudiger Ahrend; Joaquim Oliveira Martins; Alexander C. Lembcke; Polina Knutsson; Dylan Jong; Nikolaos Terzidis
    Abstract: This working paper offers a synthesis of the current knowledge on the determinants of productivity. It carefully reviews both “spatial” (e.g. agglomerations, infrastructure, geography) and “aspatial” (e.g. human capital, labour regulations, industry-level innovation and dynamism) productivity drivers and demonstrates how the underlying spatial dynamics behind the latter group makes all productivity determinants “spatial” in nature. The paper demonstrates that productivity is inherently a spatial phenomenon and its understanding without a local/regional dimension is incomplete.
    Keywords: cities, firms, industries, local development, places, productivity growth, regions, spatial productivity
    JEL: R11 R12 R58
    Date: 2020–01–13
  2. By: Natália P. Monteiro; Odd Rune Straume; Marieta Valente
    Abstract: Whether or not the use of remote work increases firm labour productivity is theoretically ambiguous. We use a rich and representative sample of Portuguese firms, and within-firm variation in the policy on remote work, over the period 2011-2016, to empirically assess the causal productivity effect of remote work. Our findings from estimations of models with firm-fixed effects suggest that the average productivity effect of allowing remote work is significantly negative, though relatively small in magnitude. However, we also find a substantial degree of heterogeneity across different categories of firms. In particular, we find evidence of opposite effects of remote work for firms that do not undertake R&D activities and for firms that do, where remote work has a significantly negative (positive) effect on labour productivity for the former (latter) type of firms. Negative effects of remote work are also more likely for small firms that do not export and employ a workforce with a below-average skill level.
    Keywords: remote work, firm labour productivity, panel data
    JEL: D24 L23 M54
    Date: 2019
  3. By: Brixiová, Zuzana; Kangoye, Thierry
    Abstract: This paper analyzes the role of networks in the access of female entrepreneurs to start-up capital and firm performance in Eswatini, a country with one of the highest female unemployment rates in Africa. The paper first shows that higher initial capital is associated with better sales performance for both men and women entrepreneurs. Women entrepreneurs start their firms with smaller start-up capital than men and are more likely to fund it from their own sources, which reduces the size of their firm and sales level. However, women with higher education start their firms with more capital than their less educated counterparts. Moreover, women who receive support from professional networks have higher initial capital, while those trained in financial literacy more often access external funding sources, including through their networks.
    Keywords: networks,start-up capital,women’s entrepreneurship,multivariate analysis,Africa
    JEL: L53 O12
    Date: 2019
  4. By: Lenka Wildnerova; Hansjörg Blöchliger
    Abstract: Productivity in Russia has fallen steadily over the past 15 years. This paper explores micro-level data to understand the contribution of individual firms to aggregate productivity. Overall, firm-level data corroborate the decline in aggregate productivity and a widening productivity gap against several European countries. They also show that the gap between “the best” and “the rest” has widened in Russia, similar to other countries. Russian markets are quite concentrated, i.e. dominated by few large firms. Larger firms tend to be more productive, but firms at the productivity frontier have become smaller and younger over time, suggesting that more support for young and innovative firms could help raise productivity. Foreign ownership is associated with higher productivity, and there is evidence that foreign firms generate positive productivity spillovers for domestic firms. Service firms belong to the most productive, yet the service sector remains underdeveloped. Mining is also very productive but less than in other countries. Differences in productivity across regions are large, even controlling for many other determinants, suggesting a lack of capital and labour mobility and knowledge transfer across regional borders.
    Keywords: entry and exit of firms, firm-level productivity, foreign ownership, industrial organisation, privatisation, productivity gap, regional productivity differences, Russian economy
    JEL: D24 L16 O43
    Date: 2019–12–23
  5. By: Sonia Feliz; Chiara Maggi
    Abstract: This paper studies the macroeconomic effect and underlying firm-level transmission channels of a reduction in business entry costs. We provide novel evidence on the response of firms' entry, exit, and employment decisions. To do so, we use as a natural experiment a reform in Portugal that reduced entry time and costs. Using the staggered implementation of the policy across the Portuguese municipalities, we find that the reform increased local entry and employment by, respectively, 25% and 4.8% per year in its first four years of implementation. Moreover, around 60% of the increase in employment came from incumbent firms expanding their size, with most of the rise occurring among the most productive firms. Standard models of firm dynamics, which assume a constant elasticity of substitution, are inconsistent with the expansionary and heterogeneous response across incumbent firms. We show that in a model with heterogeneous firms and variable markups the most productive firms face a lower demand elasticity and expand their employment in response to increased entry.
    Date: 2019–12–13
  6. By: Serenella Caravella; Francesco Crespi; Dario Guarascio; Matteo Tubiana
    Abstract: The present paper explores the demand-pull effect of distinct demand sources (i.e. households and retailers, other firms and public sector) on Italian companies' growth patterns. Data relies on the PEC (Indagine sulle Professioni e le Competenze) survey carried out by the Institute for Public Policy Analysis (INAPP), which provides a rich set of information on a representative sample of Italian companies (~32.000) observed during the years 2012, 2014 and 2017. In particular, we investigate if and to what extent firm-level growth profiles are linked to the prevalent source of the demand flows that such firms face. The analysis contextually accounts for the role played by technological and knowledge-related heterogeneities in shaping the growth pattern-demand type relationship. The empirical analysis shows that the demand-pull effect on firms' growth is heterogeneous across different types of demand sources and that the ability to seize the growth-related chances provided by distinct demand conditions is contingent on firms' specific knowledge profiles.
    Keywords: firms; growth; demand-pull; innovation.
    Date: 2020–01–09
  7. By: Raul Caruso (European Center of Peace Science, Integration and Cooperation CESPIC; Catholic University 'Our Lady of Good Counsel'); Antonella Biscione (European Center of Peace Science, Integration and Cooperation CESPIC; Catholic University 'Our Lady of Good Counsel'); Annunziata de Felice (Department of Law, University of Bari Aldo Moro)
    Abstract: This paper explores the demand-pull, technology-push and regulation factors influencing the environmental innovation strategies. We focus on a subset of manufacturing firms of a group of European Transition Countries. The data available to investigate the driving factors that lead to eco-innovate are taken from the Community Innovation Survey data (CIS 2014). The data is a cross-section covering the three-year period between 2012 and 2014. We employ a multivariate probit model to observe the effect of several drivers on eco-innovation, captured by means of different measures. Empirical findings highlight that: (i) some drivers are common to some types of eco-innovation; (ii) regulation does have a positive impact on all drivers. The latter provides a clear-cut implication for policy-making. Broadly speaking, in transition economies public policies and invectives appear to trigger environmental innovation much more than demand-pull factors.
    Keywords: environmental innovation, European Transition countries, demand-pull, technology-push, regulation
    JEL: Q55 Q58 L6
    Date: 2020–01
  8. By: Michiko Iizuka (National Graduate Institute for Policy Studies, Tokyo, Japan); Hugo Hollanders (UNU†MERIT(The United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology))
    Abstract: It has been widely recognized that innovation is an important driver of economic growth. Many Low- and Middle-Income Countries (LMICs) have adopted innovation indicators to monitor innovation performance and to evaluate the impact of innovation policies. This paper argues that innovation indicators should be customized to the different socio-economic structures of LMICs. For this, the definition of innovation needs to be relevant to the multitude of innovation actors and processes in LMICs. LMICs also need to build competences not only in the construction of innovation indicators within their statistical systems, but also in the use of these indicators by among others policy makers. Especially as the fourth edition of the Oslo Manual (OM 2018) has broadened the scope of “innovation†, opening up policy space for LMICs to accommodate the diversity in their national systems of innovation and to develop accompanying innovation indicators.
  9. By: Jan Fidrmuc; Martin Hulényi; Olga Zajkowska
    Abstract: We analyze the impact of EU structural and cohesion funds on economic growth of European regions, using 2SLS to tackle the potential problem of endogeneity, and estimating a spatial model to account for inter-regional spillovers. We use the presence of environmentally protected areas (under the European Union’s Natura 2000 program) as instruments for the receipts of funds from the EU Cohesion Policy. We find that the European funds have a significant and positive effect on regional economic growth in the EU. The inter-regional spillovers in the effect of Cohesion Policy on regional growth are found to be important: most of the effect takes place outside of the recipient region rather than inside. However, there is considerable heterogeneity in the effect of Cohesion Policy across individual EU member states: the effect is stronger in the new member states, and weak or negative in the countries hit by the recent austerity measures. Finally, our results confirm the positive impact of institutional quality: improvements in economic development across the EU do not necessarily require only redistribution: institutional reform can also help boost growth performance.
    Keywords: regional aid, growth, environmental conservation, 2SLS, spatial model
    JEL: C21 C36 F36 E62 O11 P48
    Date: 2019
  10. By: Ping-ho Chen; Angus C. Chu; Hsun Chu; Ching-chong Lai
    Abstract: This paper investigates optimal capital taxation in an innovation-driven growth model. We examine how the optimal capital tax rate varies with externalities associated with R&D and innovation. Our results show that the optimal capital tax rate is higher when (i) the "stepping on toes effect" is smaller, (ii) the "standing on shoulders effect" is stronger, or (iii) the extent of creative destruction is greater. Moreover, the optimal capital tax rate and the monopolistic markup exhibit an inverted-U relationship. By calibrating our model to the US economy, we find that the optimal capital tax rate is positive, at a rate of around 11.9 percent. We also find that a positive optimal capital tax rate is more likely to be the case when there is underinvestment in R&D.
    Keywords: Optimal capital taxation, R&D externalities, innovation
    JEL: E62 H21 O31
    Date: 2019–09
  11. By: Koshy, Perumal
    Abstract: Entrepreneurs and free enterprises are crucial for economic independence. Mahatma Gandhi gave priority to revitalizing entrepreneurship from the grassroots so that there would be a strong community of entrepreneurs to rebuild India. However, after independence, Indian economy emerged as a mixed economic system, with a plethora of regulations, inspectors, rules primarily targeting the businesses and entrepreneurs. Even the reforms heralded in 1991 could not completely demolish regulatory overburden that strangles entrepreneurs. Indian entrepreneurship policy framework and startup ecosystem has evolved over the years as one with potential to facilitate new venture creation at ease. The current ecosystem and reformed regulatory framework is much more entrepreneur and small business friendly. However, much needs to happen at the ground level. This article looks at how entrepreneurial ecosystem evolved and emerged in India. How was it envisioned and how it shaped up during the decades under various Indian governments? And it concludes with a note on future task and scope.
    Keywords: Entrepreneurship; Policy; India; Startup; Ecosystem; Businesses; Reforms; Business incubators; Finance for Entrepreneurs
    JEL: L5 L51 L53 M13
    Date: 2019–12–06
  12. By: Katharine G. Abraham; Brad Hershbein; Susan Houseman
    Abstract: The share of workers who are self-employed rises markedly with age. Given policy concerns about inadequate retirement savings, especially among those with lower education, and the resulting interest in encouraging employment at older ages, it is important to understand the role that self-employment arrangements play in facilitating work among seniors. New data from a survey module fielded on a Gallup telephone survey distinguish independent contractor work from other self-employment and provide information on informal and online platform work. The Gallup data show that, especially after accounting for individuals who are miscoded as employees, self-employment is even more prevalent at older ages than suggested by existing data. Work as an independent contractor is the most common type of self-employment. Roughly one-quarter of independent contractors age 50 and older work for a former employer. At older ages, self-employment generally—and work as an independent contractor specifically—is more common among the highly educated, accounting for much of the difference in employment rates across education groups. We provide suggestive evidence that differences in opportunities for independent contractor work play an important role in the lower employment rates of less-educated older adults.
    JEL: J26 J41 J46
    Date: 2020–01
  13. By: Suzuki, Keishun
    Abstract: Empirical evidence on the effect of corporate income tax on economic growth is mixed. This paper explores the ambiguous mechanism of corporate income tax by using a Schumpeterian growth model with heterogeneous innovators and endogenous market structure. Our main findings are as follows: (i) Corporate tax cuts do not necessarily enhance innovation. (ii) Corporate tax cuts are likely to have a positive growth effect when the research and development (R&D) productivity across firms is heterogeneous. (iii) R&D tax deduction increases the growth rate. (iv) Based on our calibration, the corporate tax cut in 2018 had a negative effect on economic growth and welfare in the U.S. economy.
    Keywords: Corporate income tax, R&D tax deduction, Innovation, Heterogeneity, Endogenous entry, Market competition
    JEL: H21 H25 O31
    Date: 2019–12
  14. By: Roberto Piazza; Yu Zheng
    Abstract: This paper extends the Schumpeterian model of creative destruction by allowing followers’ cost of innovation to increase in their technological distance from the leader. This assumption is motivated by the observation the more technologically ad- vanced the leader is, the harder it is for a follower to leapfrog without incurring extra cost for using leader’s patented knowledge. Under this R&D cost structure, leaders innovate to increase their technological advantage so that followers will eventually stop innovating, allowing leadership to prevail. A new steady state then emerges featuring both leaders and followers innovating in few industries with low aggregate growth.
    Date: 2019–12–27
  15. By: Ariani, Mintarti; Putri, Arlika Anindya
    Abstract: Pengalaman kerja memungkinkan manajer untuk mengembangkan orientasi kewirausahaan, termasuk kemampuan untuk mengambil keputusan, kemampuan untuk berinovasi, dan kemampuan untuk bersikap proaktif. Hal tersebut akan berdampak pada kinerja perusahaan.
    Date: 2018–12–12

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