nep-sbm New Economics Papers
on Small Business Management
Issue of 2020‒05‒11
sixteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Sources of Firm Life-Cycle Dynamics: Size vs. Age Effects By Lorenz Kueng; Mu-Jeung Yang; Bryan Hong
  2. Immigration Policy Levers for US Innovation and Startups By Sari Pekkala Kerr; William R. Kerr
  3. The growing digital divide in Europe and the United States By Rückert, Désirée; Veugelers, Reinhilde; Weiss, Christoph
  4. Smart Specialization Strategies at National, Regional, or Local Levels? Synergy and Policy-making in German Systems of Innovation By Henriette Ruhrmann; Michael Fritsch; Loet Leydesdorff
  5. The Impact of Emerging Market Competition on Innovation and Business Strategy By Lorenz Kueng; Nicholas Li; Mu-Jeung Yang
  6. The economic impact of public R&D: an international perspective By Soete, Luc; Verspagen, Bart; Ziesemer, Thomas
  7. Regional inequality in Europe: Evidence, theory and policy implications By Iammarino, Simona; Rodríguez-Pose, Andrés; Storper, Michael
  8. Digital technologies and firm performance: Evidence from Europe By Cathles, Alison; Nayyar, Gaurav; Rückert, Désirée
  9. Liquidity support to small and medium-sized enterprises by the banking system at the time of Coronavirus By Maurizio Irrera; Giuseppe Antonio Policaro
  10. Revisiting the sustainability-innovation nexus: Lessons learned from the US By Fafaliou, Irene; Giaka, Maria; Konstantios, Dimitrios; Polemis, Michael
  11. Growing through Spinoffs. Corporate Governance, Entry, and Innovation By Maurizio Iacopetta; Raoul Minetti; Pierluigi Murro
  12. The Impacts of Organizational Culture on Knowledge Transfer Between Japanese Managers and Vietnamese Employees in Japanese Enterprises By Satoshi Mizobata; Nguyen Thi Ngoc Anh; Pham Quoc Trung
  13. Family Firms, Banks and Firm Value: Evidence from Malaysia By Liew, Chee Yoong; Devi, S.Susela
  14. Perceptions of University Entrepreneurship Support among Bulgarian Science and Engineering Students By Desislava Yordanova
  15. Foreign acquisitions – A shortcut to higher productivity and expansion in smaller firms? By Eliasson, Kent; Hansson, Pär; Lindvert, Markus
  16. Corporate venture capital funds as a tool for innovative development of Russian corporations By Куракова Наталья (Kurakova, Natalia); Зинов Владимир (Zinov, Vladimir); Цветкова, Лилия (Tsvetkova, Liliya); Ерёмченко, Ольга (Eremchenko, Olga); Kurakov, Fedor (Кураков, Федор)

  1. By: Lorenz Kueng (University of Lugano - Faculty of Economics; Swiss Finance Institute; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Northwestern University - Kellogg School of Management); Mu-Jeung Yang (University of Washington - Department of Economics); Bryan Hong (New York University (NYU) - Leonard N. Stern School of Business)
    Abstract: What determines the life-cycle of businesses? Exploiting unique firm-level panel data on internal organization and innovation we establish three key sets of stylized facts to inform recent theories of firm life-cycles. First, life-cycle effects are driven by startups, not by new establishments of existing firms. Second, organizational restructuring and innovation are both strongly correlated with firm growth but not with firm age, in contrast to passive learning theories of firm dynamics. Third, there are important sectoral differences in innovation activities which are monotonically increasing in firm size for manufacturing firms but hump-shaped for firms in service industries.
    Keywords: firm life-cycle, organizational capital, innovation
    Date: 2020–04
  2. By: Sari Pekkala Kerr; William R. Kerr
    Abstract: Immigrants account for about a quarter of US invention and entrepreneurship despite a policy environment that is not well suited for these purposes. This chapter reviews the US immigration policy environment that governs how skilled migrants move to America for employment-based purposes. We discuss points of strain in the current system and potential policy reforms that would likely increase the rate of innovation and the number of startups due to immigrants in the country. Key areas include adjustments to the allocation of permanent residency visas, adjustments to the H-1B visa program, and the creation of an immigrant startup visa.
    JEL: F22 F23 J15 J44 J61 L26 M13 O31 O32 O33
    Date: 2020–04
  3. By: Rückert, Désirée; Veugelers, Reinhilde; Weiss, Christoph
    Abstract: Using a new survey on digitalisation activities of firms in the EU and the US, we identify digitalisation profiles based on the current use of digital technologies and future investment plans in digitalisation. Our analysis confirms the trend toward digital polarisation and a growing digital divide in the corporate landscape with, on one side, many firms that are not digitally active, and on the other side, a substantial number of digitally active firms forging ahead. Old small firms, with less than 50 employees and more than 10 years old, are significantly more likely to be persistently digitally non-active. We show that these persistently non-digital firms are less likely to be innovative, increase employment or command higher mark-ups. These trends are likely to exacerbate the digital divide across firms in the EU and the US.
    Keywords: digital technology,investment,firm performance
    JEL: D22 E22 L25
    Date: 2020
  4. By: Henriette Ruhrmann (Technical University of Berlin); Michael Fritsch (Friedrich Schiller University Jena, Faculty of Economics); Loet Leydesdorff (Amsterdam School of Communication Research (ASCoR), University of Amsterdam)
    Abstract: Employing a quantitative, data-driven tool - the Triple Helix Indicator - to microdata of firms in Germany, we develop an evidence base for innovation-policy strategies. We aim to answer the question which level of government (local, regional, national) might be most effective for strategic innovation policy-making based on smart specialization in Germany. The empirical results show that the country is decentralized to the extent that it cannot be considered a "national" innovation system. More than two-thirds of innovation-system synergy is generated at the lower levels of districts (NUTS3) and Governmental Regions (NUTS2). In high-tech and medium-tech manufacturing, former East and West Germany, as well as North and South Germany, can be considered separate sub-national innovation systems. These findings strengthen the case for region- and context-specific innovation policies. The results illustrate the value of the Triple Helix Indicator for systematic regional mapping and serve as evidence for policy-makers to expand RIS3 policy strategies to the regional and local level in Germany.
    Keywords: Innovation systems, Triple Helix, Germany, Redundancy, Synergy
    JEL: O30 R11 O38 O52
    Date: 2020–04–22
  5. By: Lorenz Kueng (University of Lugano - Faculty of Economics; Swiss Finance Institute; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Northwestern University - Kellogg School of Management); Nicholas Li (University of Toronto - Department of Economics); Mu-Jeung Yang (University of Washington - Department of Economics)
    Abstract: How do firms in high-income countries adjust to emerging market competition? We estimate how a representative panel of Canadian firms adjusts innovation activities, business strategies, and exit in response to large increases in Chinese imports. Whether firms invest in process or product innovation matters: on average, the number of process innovations declines more strongly than the number of product innovations. In addition, firms that initially pursue process innovation strategies and survive have higher profits ex-post, but are ex-ante more likely to exit. In contrast, firms that initially pursue product innovation strategies have higher profits if they survive, without significant impact on exit. Both empirical patterns are consistent with our theory, which suggests that innovation strategies do not ensure insulation against competitive shocks, but instead increase risk.
    Keywords: International Competition, Innovation, Management Practices, Firm Performance
    JEL: F14 L2 O3
    Date: 2020–04
  6. By: Soete, Luc (UNU-MERIT, Maastricht University); Verspagen, Bart (UNU-MERIT, Maastricht University); Ziesemer, Thomas (UNU-MERIT, Maastricht University)
    Abstract: Despite the fact that Research and Development (R&D) activities are carried out in most countries in public research institutes such as universities and public research organisations, there have been few studies that attempted to estimate the economic impact of such public investment in R&D. In this paper we analyse the relations between total factor productivity (TFP) and R&D as well as GDP for a set of 17 OECD countries using a vector-error-correction model (VECM). We find that for the period 1975-2014, investment in public R&D has had a clearly positive effect on TFP growth in the majority of countries analysed. In simulations allowing for a permanent positive shock on public R&D, we observe a strong dynamic complementarity between the public and private (domestic) stocks of R&D for a number of countries. In countries where this complementarity is strong, the TFP effect of extra public R&D investments is also strong. We also show that the share of foreign funding of R&D performed in the business sector combined with a high business R&D intensity, tends to be low in countries with high complementarity between private and public R&D. On the other hand, the share of basic R&D in business R&D combined with a higher public R&D intensity, tends to be higher in countries with strong complementarity.
    Keywords: R&D policy, public R&D investment, economic effects of R&D, vector-error-correction model
    JEL: O38 O30 H40
    Date: 2020–04–14
  7. By: Iammarino, Simona; Rodríguez-Pose, Andrés; Storper, Michael
    Abstract: Regional economic divergence has become a threat to economic progress, social cohesion and political stability in Europe. Market processes and policies that are supposed to spread prosperity and opportunity are no longer sufficiently effective. The evidence points to the existence of several different modes of regional economic performance in Europe, responding to different development challenges and opportunities. Both mainstream and heterodox theories have gaps in their ability to explain the existence of these different regional trajectories and the weakness of the convergence processes among them. Therefore, a different approach is required, one that strengthens Europe’s strongest regions but develops new approaches to promote opportunity in industrial declining and less-developed regions. There is ample new theory and evidence to support such an approach, which we have labelled ‘place-sensitive distributed development policy’.
    Keywords: Regions; inequality; economic divergence; place-sensitive development; European Union
    JEL: R11 R12 R58
    Date: 2019–03–01
  8. By: Cathles, Alison; Nayyar, Gaurav; Rückert, Désirée
    Abstract: As the productivity of the European economy shows signs of slowing down, many hopes are pinned on digital technologies to reverse this trend. This study uses data from the EIBIS 2019 survey to examine whether the adoption of different digital technologies (such as advanced robotics, 3D printing, or Internet of Things) by firms in the EU have different impacts on productivity. It also examines whether these different technologies have different implications for employment growth, and whether there are complementarities between technologies when it comes to firm performance.
    Date: 2020
  9. By: Maurizio Irrera (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Giuseppe Antonio Policaro (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    Abstract: The paper analyzes the main provisions of D.L. no. 18 of 17 March 2020 regarding financial support to SMEs by the banking system.
    Keywords: liquidity support; SME; banking system
    JEL: K29
    Date: 2020–04
  10. By: Fafaliou, Irene; Giaka, Maria; Konstantios, Dimitrios; Polemis, Michael
    Abstract: The relationship between innovation and corporate sustainability constitutes a long-lasting debate among policymakers and researchers. Despite the significant contributions to this field, extant literature does not provide clear answers. This can be attributed to the fact that prior studies do not incorporate the various aspects of innovation to measure their impact on sustainability performance. This study aims to cover this gap in the emerging literature by using a unique micro-level panel dataset consisting of a large number of firms scattered across the US states over the period 2007-2016. Our findings reveal that the basic mechanism for achieving corporate sustainability is through the innovation channel. We also argue that the quantity and value of innovation enhance the sustainability level, whereas these effects are strengthened in times of recession (global financial crisis). The empirical results survive robustness checks under alternative innovation measures and different econometric techniques dealing with endogeneity and reverse causality. Lastly, policy implications relating to the nature of corporate sustainability performance are also provided.
    Keywords: Innovation; Sustainability; Patents; Trademarks; Corporate Sustainability Performance
    JEL: L20 O31 O34
    Date: 2020–04
  11. By: Maurizio Iacopetta (SKEMA Business School and OFCE Sciences Po); Raoul Minetti (Michigan State University); Pierluigi Murro (LUISS University)
    Abstract: New firms are often based on ideas that the founders developed while working for incumbent firms. We study the macroeconomic effects of spinoffs through a growth model of product variety expansion, driven by firm entry, and product innovation. Spinoffs stem from conflicts of interest between incumbent firms' shareholders and employees. The analysis suggests that incumbents invest more in product innovation when knowledge protection is stronger. An inverted-U shape relationship emerges, however, between the intensity of spinoff activities and the strength of the rule of law. A calibration experiment indicates that, with a good rule of law, loosening knowledge protection by 5\% reduces product innovation by one fifth in the short run and one seventh in the long run, but boosts the spinoff rate by one tenth and one sixth in the short and long run, respectively. Nevertheless, per capita income growth drops and welfare deteriorates. The trade-offs are broadly consistent with evidence from Italian firm.
    Keywords: Corporate governance, Endogenous growth, Spinoffs
    JEL: E44 O40 G30
    Date: 2020–04
  12. By: Satoshi Mizobata (titute of Economic Research, Kyoto University); Nguyen Thi Ngoc Anh (National Economics University); Pham Quoc Trung (Ho Chi Minh City University of Technology)
    Abstract: Knowledge transfer effectiveness is considered one of the most important factors for ensuring the success of any enterprise, especially for multinational enterprises which have foreign employees. However, in the case of Japan, the effectiveness of knowledge transfer between Japanese managers and foreign employees is not high. This limited effectiveness is understood as linked to the cultural distance between Japanese managers and foreign employees. The main goal of this study is to explore the impact of organizational culture on knowledge transfer in Japanese enterprises. This research project examines a range of organizational cultural factors, including cultural background, communication ability, perceived cultural distance, learning style, and cultural openness. Quantitative survey research was conducted with 365 respondents, who are Vietnamese labourers working in Japan. Analysis showed that two factors had a positive impact on the effectiveness of knowledge transfer: cultural openness; and managers’ communication ability. The study draws on these results to make recommend improvements in the knowledge transfer process between Japanese managers and Vietnamese employees.
    Keywords: organizational culture, knowledge transfer, cultural openness, communication ability, Japan.
    JEL: L14 M14 M16 M54 O32
    Date: 2020–04
  13. By: Liew, Chee Yoong; Devi, S.Susela
    Abstract: This paper examines the relationship between the number of domestic banks that the firm engages with and firm value and how this relationship is moderated by ownership concentration at low and very high level on a sample of Malaysian family and non-family firms. We find that there is a significant negative relationship between the number of domestic banks engaged by family firms, operating in industries where these firms do not have absolute monopoly, and firm value. However, there is no evidence that this significant negative firm value effect is stronger in family firms compared to non-family firms. Furthermore, the significant positive moderating effect of ownership concentration on this relationship within family firms in such industries is evident only at low level of ownership concentration. Interestingly, at very high level of ownership concentration, this significant positive moderating effect becomes negative. There is no evidence that these significant moderating effects are stronger in family firms compared to non-family firms. An implication of this research is that there is a need for the capital market regulators to introduce appropriate policies to deter family firms from having a close relationship with domestic banks as well as monitor the number of domestic banks engaged by such firms. There may be policy implications for consideration by the Central Bank of Malaysia as well.
    Keywords: corporate governance, banks, family firms, agency problems
    JEL: G30 G32 G39
    Date: 2020–02–22
  14. By: Desislava Yordanova (Sofia University “St. Kliment Ohridski”, Faculty of Economics and Business Administration)
    Abstract: The transformation of Bulgarian universities into entrepreneurial universities is a slow process. Bulgarian universities not only exhibit narrow understanding of the concept of innovative and entrepreneurial university, but also do not recognize entrepreneurship promotion as a strategic goal (OECD, 2014). The research objective of the present study is to explore the current efforts of Bulgarian universities to support student entrepreneurship by examining the perceptions of university entrepreneurship support among Bulgarian science and engineering students. Our empirical findings reveal that the studied Bulgarian universities provide little educational support, concept development support and business development support to their students. The paper provides practical implications of the findings and recommendations for future research.
    Keywords: university entrepreneurship support, student entrepreneurship, Bulgaria.
    JEL: M14 O3 L3
    Date: 2020–04
  15. By: Eliasson, Kent (Swedish Agency for Growth Policy Analysis); Hansson, Pär (Örebro University School of Business); Lindvert, Markus (Swedish Agency for Growth Policy Analysis)
    Abstract: The purpose of this paper is to analyze the effects of foreign acquisitions on the productivity of acquired Swedish firms. However, because an acquisition is an opportunity to restructure a business and because such changes, in turn, can result in increased productivity, the effects may be observed in other outcome variables. Therefore, we also study the effects after an acquisition on employment, share of skilled labor, and export and import intensities in Swedish firms taken over by foreign multinationals (MNEs). As we examine the effects on both acquired manufacturing and service firms, we also analyze the effects in small firms, e.g., those with one or more employees. To control for the possible endogeneity of foreign direct investment decisions, propensity score matching is combined with a difference-in-difference approach. The positive effects on productivity, the share of skilled labor, employment and the export and import intensities of foreign acquisitions are most pronounced among small service firms. We also find positive productivity effects of foreign acquisitions in large manufacturing firms. A contributing factor is the investment in human capital, i.e., increasing the share of skilled labor. Foreign acquisitions appear to involve expansion in the acquired firms, particularly with respect to employment increases in small firms. Thus, being acquired by a foreign MNE appears to be a conceivable alternative for small firms with strong future growth potential, especially when dealing with the growth barriers that such firms usually encounter.
    Keywords: foreign acquisition; restructuring; cherry-picking; labor productivity; skilled labor; export and import intensities
    JEL: D22 F21 F23 J24
    Date: 2020–04–24
  16. By: Куракова Наталья (Kurakova, Natalia) (The Russian Presidential Academy of National Economy and Public Administration); Зинов Владимир (Zinov, Vladimir) (The Russian Presidential Academy of National Economy and Public Administration); Цветкова, Лилия (Tsvetkova, Liliya) (The Russian Presidential Academy of National Economy and Public Administration); Ерёмченко, Ольга (Eremchenko, Olga) (The Russian Presidential Academy of National Economy and Public Administration); Kurakov, Fedor (Кураков, Федор) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The paper systematizes the strategies for creating and developing corporate venture capital funds, analyzes the activities of Russian venture capital funds of Softline, Rostelecom, Severstal and others, as well as their interaction with state development institutions to identify key factors for the performance of these funds.
    Date: 2020–03

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