nep-sbm New Economics Papers
on Small Business Management
Issue of 2020‒09‒21
fifteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. In Times of Trouble: Innovative Drivers of External Competitiveness for Small Businesses during the Great Recession By Brancati, Emanuele; Brancati, Raffaele; Guarascio, Dario; Zanfei, Antonello
  2. Public research and the quality of inventions: the role and impact of entrepreneurial universities and regional network embeddedness By Holger Graf; Matthias Menter
  3. Strapped for Cash? Funding for UK high growth SMEs since the global financial crisis By Brown, Ross; Lee, Neil
  4. Start-up factories, transnational entrepreneurs and entrepreneurial ecosystems: unpacking the lure of start-up accelerator programmes By Brown, Ross; Mawson, Suzanne; Lee, Neil
  5. Manufacturing Exports Determinants across Mexican States, 2007-2015 By Cabral Torres René; Alvarado Jorge
  6. Heterogeneous Shocks in the Covid-19 Pandemic: Panel Evidence from Italian Firms By Brancati, Emanuele; Brancati, Raffaele
  7. Is innovation in ICT valuable for the efficiency of Italian museums? By Calogero Guccio; Marco Ferdinando Martorana; Isidoro Mazza; Giacomo Pignataro; Ilde Rizzo
  8. Investor Tax Credits and Entrepreneurship: Evidence from U.S. States By Matthew R. Denes; Sabrina T. Howell; Filippo Mezzanotti; Xinxin Wang; Ting Xu
  9. Antitrust policies and profitability in non-tradable sectors By Besley, Timothy; Fontana, Nicola; Limodio, Nicola
  10. Moonshots, Investment Booms, and Selection Bias in the Transmission of Cultural Traits By David Hirshleifer; Joshua Plotkin
  11. Heterogeneous Environmental Regulations, R&D Innovation and Manufacturing Enterprises' Export Technological Sophistication By Hu, Yuanhong
  12. The role of innovation in industrial dynamics and productivity growth: a survey of the literature By Ugur, Mehment; Vivarelli, Marco
  13. The future of University-Business Cooperation: research and practice priorities By Balzhan Orazbayeva; Carolin Plewa; Todd Davey; Victoria Galán-Muros
  14. Supporting Firm Innovation and R&D: What is the Optimal Policy Mix? By İrem Güçeri; Marko Köthenbürger; Martin Simmler
  15. Internationalization Strategies of Multi-Product Firms: The Role of Technology By Daniel Baumgarten; Michael Irlacher; Karin Mayr-Dorn

  1. By: Brancati, Emanuele; Brancati, Raffaele; Guarascio, Dario; Zanfei, Antonello
    Abstract: This paper analyzes the main drivers of external competitiveness in times of crisis for small and medium enterprises (SMEs). We focus on the Italian experience in the midst of the financial and sovereign-debt crisis, and present robust evidence based on a comprehensive survey of Italian companies in the manufacturing and production service sectors (the MET dataset). Overall, our results confirm the high degree of heterogeneity of the Italian system and the differences between internationalized and domestic companies in terms of performance as well as structural and behavioral dimensions. In particular, data highlight not only the strict correlation between internationalization and innovative activities but also a positive change of attitude of Italian firms towards these strategies. Our analysis shows that, whilst structural factors play a key role for external competitiveness, other critical firm-level aspects trigger superior performances, especially strategic profiles, technological capabilities, and proactive behaviors such as innovativeness and R&D investment. Importantly, we document disproportionate effects of innovation for smaller and less productive companies. This points at dynamic strategies as a potential tool to fill the gap between larger/more productive companies and the set of less structured firms, a segment representing an ideal target for policy measures.
    Keywords: SME,external competitiveness,Great Recession
    JEL: M20 L23 L25
    Date: 2020
  2. By: Holger Graf (Friedrich Schiller University Jena, Faculty of Economics and Business Administration); Matthias Menter (Friedrich Schiller University Jena, Faculty of Economics and Business Administration)
    Abstract: The positive effect of public research on industrial innovations is beyond controversy: public research institutions produce knowledge that is subsequently transferred into product and process innovations by private businesses. Besides this rather passive role in commercializing inventions, public research institutions may also proactively exploit new knowledge through public sector entrepreneurship activities. Especially entrepreneurial universities are perceived as a conduit of knowledge spillovers, as they serve as central actors of innovation networks and stimulate network activities. Whereas the linkages between network embeddedness and innovation activities have been largely explored, the impact on patent quality in terms of radicalness, originality and generality remains rather unclear. Considering Germany’s diverse public research infrastructure (universities, polytechnics, and non-university research institutes), our findings reveal that the type of institution and the corresponding scientific orientation (basic vs. applied research) matter for the quality of inventions. Centrality of respective institutions within innovation networks thereby reinforces the radicalness of inventions. However, we do not find support for the general assumption that an entrepreneurial orientation of public sector entities augments the quality of inventions. We conclude the paper with policy recommendations as well as with future avenues of research.
    Keywords: patent quality, radical innovation, entrepreneurial university, network embeddedness, centrality
    JEL: O31 O32 O34
    Date: 2020–07–19
  3. By: Brown, Ross; Lee, Neil
    Abstract: While high growth firms (HGFs) are crucial drivers of economic growth, to date there has been a dearth of research examining their funding requirements. Drawing on a survey of over 8,000 UK Small and Medium Sized Enterprises (SMEs), this paper investigates the capital structure and access to credit in high growth SMEs in the period following the global financial crisis. The findings challenge conventional wisdom about high growth SMEs in certain respects. They find it no harder than non-high growth SMEs to access external finance. The vast majority of high growth SMEs rely strongly on debt-based finance for their funding, not equity finance. High growth SMEs are much less likely to seek finance for working capital purposes but are no more likely to seek finance to invest in R&D than less rapidly growing SMEs. The findings suggest little justification for government intervention aimed at increasing credit availability for HGFs as currently espoused by the UK government.
    Keywords: Entrepreneurship; SMEs; Gazelles; Innovation; Access to finance; Policy
    JEL: O31 G21 G32
    Date: 2019–06–01
  4. By: Brown, Ross; Mawson, Suzanne; Lee, Neil
    Abstract: This paper examines the role of accelerator programmes in promoting transnational entrepreneurship. Designed to assist the growth of start-ups by providing seed finance and structured entrepreneurship support, these programmes are now a prominent feature in many entrepreneurial ecosystems around the world. Drawing on in-depth qualitative evidence focused on one particular programme, the paper shows accelerators play an important intermediary or ‘brokerage mechanism’ providing start-ups with enhanced relational connections and networks. Transnational entrepreneurs attracted to these programmes are highly focused on exploiting these networks whilst maintaining multiple levels of embeddedness in various contexts to maximize the opportunities afforded by accelerators. While many governments are attempting to replicate accelerators programmes within the public sector, the paper concludes that such attempts may prove problematic within weaker entrepreneurial ecosystems.
    Keywords: Transnational Entrepreneurs; Public Policy; Accelerators; Entrepreneurial Ecosystems; Networks
    JEL: R14 J01 F3 G3
    Date: 2019–05–04
  5. By: Cabral Torres René; Alvarado Jorge
    Abstract: This article examines manufacturing export determinants across Mexican states and regions from 2007 to 2015, paying particular attention to the role of FDI. The analysis considers internal and external determinants of manufacturing exports under static and dynamic panel data methods, obtaining three main results. First, the ratio of manufacturing to total GDP is the most consistent determinant explaining exports performance, regardless of the econometric specification employed. Second, static panel data estimations under GMM techniques suggest different sensitivity to FDI across regions, with the Mexico-U.S. border region observing the strongest short-term effect of FDI on manufacturing exports. Finally, using dynamic panel data methods, we observe a significant persistence and similar long-term effects of FDI across most of the regions on the exporting manufacturing sector.
    Keywords: Exports;Foreign Direct Investment;Panel Data;Mexico
    JEL: F16 F36
    Date: 2019–08
  6. By: Brancati, Emanuele; Brancati, Raffaele
    Abstract: This paper contributes to the policy discussion on Covid-19 by presenting real-time evidence on the magnitude of the shock for Italian firms. We take advantage of unique panel data on 7,800 companies between January 2020 {right before the pandemic{ and March of the same year {in the midst of lockdown policies. We then exploit the revision in expectation within this short time window to capture the impact of firms' idiosyncratic shock. Our analysis shows disproportionate effects for internationalized companies and provide some evidence on supply chain contagion. We also document stronger shocks for truly innovative companies and effects on long-run growth operating through the disruption of preexisting R&D plans.
    Keywords: Covid-19,Firms,Expectations,Internationalization,Innovation,Global Value Chains
    JEL: D84 F00 O3
    Date: 2020
  7. By: Calogero Guccio (Università di Catania); Marco Ferdinando Martorana (Università di Catania); Isidoro Mazza (Università di Catania); Giacomo Pignataro (Università di Catania e Politecnico di Milano); Ilde Rizzo (Università di Catania)
    Abstract: This paper investigates the influence of information and communication technologies (ICT) on the efficiency in attracting visitors of Italian museums. Notwithstanding the extensive literature on museum performance measurement, the analysis of the role of technological innovation is relatively neglected. As a first attempt to fill this lacuna, this study presents a two-stage analysis of a novel sample of Italian state-owned museums built by merging information drawn from different sources. In the first stage, we use Data Envelopment Analysis (DEA) and bootstrapping technique to measure the efficiency of museums. In the second stage, we use a bootstrap truncated regression approach to test the extent to which different forms of ICT affect museum efficiency. We distinguish the ICT investments into in situ and online services, since the former improve the visitors’ experience on site, while the latter can prepare for the visit or, even, be a substitute of the visit. The results reveal that the use of ICT is generally associated with better performances but in situ services shows to play a major role.
    Keywords: museums; ICT, technological innovation, efficiency, Data Envelopment Analysis, bootstrap truncated regression
    JEL: C14 C61 I21 Z1
    Date: 2020–09
  8. By: Matthew R. Denes; Sabrina T. Howell; Filippo Mezzanotti; Xinxin Wang; Ting Xu
    Abstract: Angel investor tax credits are used globally to spur high-growth entrepreneurship. Exploiting the staggered implementation of these tax credits in 31 U.S. states, we find that while they increase angel investment, they have no significant effect on entrepreneurial activity. Tax credits induce entry by inexperienced, local investors and are often used by insiders. A survey of 1,411 angel investors suggests that a “home run” investing approach alongside coordination and information frictions explain low take-up among experienced investors. The results contrast with evidence that direct subsidies to firms have large positive effects, raising concerns about using investor subsidies to promote entrepreneurship.
    JEL: G0 G14 G28 H0 H25 O3
    Date: 2020–08
  9. By: Besley, Timothy; Fontana, Nicola; Limodio, Nicola
    Abstract: Firms in tradable sectors are more likely to be subject to external competition to limit market power while non-tradable firms are more dependent on domestic policies and institutions. This paper combines an antitrust index available for multiple countries with firm-level data from Orbis covering more than 10 million firms from 90 countries, covering 20 sectors over 10 years and finds that profit margins of firms operating in non-tradable sectors are significantly lower in countries with stronger antitrust policies compared to firms operating in tradable sectors. The results are robust to a wide variety of empirical specifications.
    Keywords: competition; antitrust; institutions; forthcoming
    JEL: F3 G3 J1
    Date: 2020–09–04
  10. By: David Hirshleifer; Joshua Plotkin
    Abstract: Biased information about the payoffs received by others can drive innovation, risk-taking, and investment booms. We study this cultural phenomenon using a model based on two premises. The first premise is a tendency for large successes, and the actions that lead to them, to be more salient to onlookers than small successes or failures. The second premise is selection neglect – the failure of observers to adjust for biased observation. In our model, each firm in sequence chooses to adopt or to reject a project that has two possible payoffs, one positive and one negative. The probability of success is higher in the high state of the world than in the low state. Each firm observes the payoffs received by past adopters before making its decision, but there is a chance that an adopter's outcome will be censored, especially if the payoff was negative. Failure to account for biased censoring causes firms to become overly optimistic, leading to irrational booms in adoption. Booms may eventually collapse, or they may last forever. We describe these effects as a form of cultural evolution with adoption or rejection viewed as traits transmitted between firms. Evolution here is driven not only by differential copying of successful traits, but also by cognitive reasoning about which traits are more likely to succeed – quantified using the Price Equation to decompose the effects of mutation pressure and evolutionary selection. This account provides a new explanation for investment booms, merger and IPO waves, and waves of technological innovation.
    JEL: D03 D21 D53 D83 D92 G02 G3 M2 O31 O35
    Date: 2020–08
  11. By: Hu, Yuanhong
    Abstract: Based on the combined data of China Patent Database, China Industrial Firm Database and China Customs Trade Database from 2004-2010, this paper investigates the impact of heterogeneous environment regulation on the export technological sophistication of manufacturing enterprises. The results show that: the impact of control-type environmental regulation on enterprises' export technological sophistication is U-shaped, and has negative effect on mixed trade enterprises, eastern enterprises and foreign-funded enterprises. The impact of incentive-type environmental regulation on the enterprises' export technological sophistication is inverted Ushaped, and has positive effect on processing trade enterprises, mixed trade enterprises, domestic and foreign-funded enterprises. The impact of participative-type environmental regulation on the enterprises' export technological sophistication has an inverted U-shaped characteristic and has a positive effect on all kinds of trade pattern and ownership of enterprises. The result of mechanism analysis shows that control and participative environmental regulation affect enterprises' export technological sophistication through fundamental innovation and practical innovation, while incentive environmental regulation also affects enterprises' export technological sophistication through design innovation. Considering environmental governance issues has clear policy implications for enhancing the R&D innovation of the whole industrial chain and improving the export competitiveness of China's manufacturing enterprises.
    Keywords: Environmental Regulation,R&D Innovation,Export Technological Sophistication,DVA,Manufacturing
    JEL: F14 O44 F18
    Date: 2020
  12. By: Ugur, Mehment; Vivarelli, Marco
    Abstract: We review the theoretical underpinnings and the empirical findings of the literature that investigates the effects of innovation on firm survival and firm productivity, which constitute the two main channels through which innovation drives growth. We aim to contribute to the ongoing debate along three paths. First, we discuss the extent to which the theoretical perspectives that inform the empirical models allow for heterogeneity in the effects of R&D/innovation on firm survival and productivity. Secondly, we draw attention to recent modeling and estimation effort that reveals novel sources of heterogeneity, non-linearity and volatility in the gains from R&D/innovation, particularly in terms of its effects on firm survival and productivity. Our third contribution is to link our findings with those from prior reviews to demonstrate how the state of the art is evolving and with what implications for future research.
    Keywords: Innovation,R&D,Survival,Productivity
    JEL: O30 O33
    Date: 2020
  13. By: Balzhan Orazbayeva (S2BMRC - Science-to-Business Marketing Research Centre - University of Münster); Carolin Plewa (University of Adelaide); Todd Davey (MMS - Département Management, Marketing et Stratégie - TEM - Télécom Ecole de Management - IMT - Institut Mines-Télécom [Paris] - IMT-BS - Institut Mines-Télécom Business School, LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - IMT-BS - Institut Mines-Télécom Business School, S2BMRC - Science-to-Business Marketing Research Centre - University of Münster); Victoria Galán-Muros (UIIN - University Industry Innovation Network, GIID - The Global Institute on Innovation Districts)
    Abstract: University-Business Cooperation (UBC) is an essential mechanism for advancing interests of business, universities and societies. To improve our understanding of the future of UBC research and practice, this study reports on a priority setting process comprising a two-stage research design. Qualitative research identifies a portfolio of six priority areas and 58 related topics. A quantitative step then evaluates the perceived future importance and current advancement of these topics. This approach contributes to shaping the future of UBC by identifying topics that require particular focus to maximise opportunities. The paper concludes with clear future directions for both UBC theory and practice.
    Keywords: Priorities,Future,University-Business Cooperation,Mixed-method Citation
    Date: 2019–10
  14. By: İrem Güçeri; Marko Köthenbürger; Martin Simmler
    Abstract: This policy report provides an overview of firm R&D support policies used by European countries, reviews the empirical evidence on the effectiveness of these policies, and discusses implications for policy. Existing literature suggests that firm R&D support policies stimulate private R&D within a country and that in most cases, the positive impact of government support is stronger on smaller firms. Recent evidence also indicates that some of the policy instruments, such as patent box policies, are tools that multinationals use to lower their total tax bill through profit shifting. Despite the data issues that limit the ability to quantify the impact of tax incentives on global R&D, these recent findings together suggest that R&D support policies indeed promote national R&D activities. But governments also use some of these tax instruments to compete for R&D and mobile tax bases, which makes them less cost-effective in stimulating aggregate private sector R&D.
    Date: 2020
  15. By: Daniel Baumgarten; Michael Irlacher; Karin Mayr-Dorn
    Abstract: High-performance firms typically have two features in common: i) they produce in more than one country and ii) they produce more than one product. In this paper, we analyze the internationalization strategies of multi-product firms at the product-level. We find that the most productive firms sell core varieties via foreign direct investment (FDI) and export products with intermediate productivity. Shocks to trade costs and technology affect the endogenous decision to export or produce abroad at the product-level and, in turn, the relative productivity between parents and affiliates.
    Keywords: multi-product firms, FDI, exports, flexible manufacturing
    JEL: F12 F23 L25 L11
    Date: 2020

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