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on Small Business Management |
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Issue of 2020‒10‒05
eleven papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | Michael Ewens; Nadya Malenko |
| Abstract: | Venture capital (VC) backed firms face neither the governance requirements nor a major separation of ownership and control of their public peers. These differences suggest that independent directors could play a unique role on private firm boards. This paper explores the dynamics of VC-backed startup boards using new data on board member entry, exit, and individual director characteristics. We document several new facts about board size, the allocation of control, and composition dynamics. At formation, a typical board has four members and is entrepreneur-controlled. Independent directors are found on the median board after the second financing event, when control over the board becomes shared, with independent directors holding the tie-breaking vote. These patterns are consistent with independent directors playing both a mediating and advising role over the startup lifecycle, and thus representing another potential source of value-add to entrepreneurial firm performance. |
| JEL: | G24 G34 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27769&r=all |
| By: | Ryan Decker; Meagan McCollum; Gregory B. Upton, Jr. |
| Abstract: | The shale oil and gas boom in the U.S. provides a unique opportunity to study economic growth in a "boom town" environment, to derive insights about economic expansions more generally, and to obtain clean identification of the causal effects of economic growth on specific margins of business adjustment. The creation of new business establishments--separate from the expansion of existing establishments--accounts for a disproportionate share of the multi-industry employment growth sparked by the shale boom, an intuitive but not inevitable empirical result that is broadly consistent with canonical models of firm dynamics. New firms, in particular, contribute nearly half of the cumulative economic growth resulting from the shale boom. |
| Keywords: | Business dynamics; Entrepreneurship; Natural resource booms; Economic growth |
| JEL: | E24 L26 M13 Q33 Q35 R23 |
| Date: | 2020–09–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2020-81&r=all |
| By: | Ufuk Akcigit; Sina T. Ates; Josh Lerner; Richard R. Townsend; Yulia Zhestkova |
| Abstract: | The treatment of foreign investors has been a contentious topic in U.S. entrepreneurship policy in recent years. This paper examines foreign corporate investments in Silicon Valley from a theoretical and empirical perspective. We model a setting where such funding may allow U.S. entrepreneurs to pursue technologies that they could not otherwise, but may also lead to spillovers to the overseas firm providing the financing and the nation where it is based. We show that despite the benefits from such inbound investments for U.S. firms, it may be optimal for the U.S. government to raise their costs to deter investments. Using as comprehensive as possible a sample of investments by non-U.S. corporate investors in U.S. start-ups between 1976 and 2015, we find evidence consistent with the presence of knowledge spill-overs to foreign investors. |
| JEL: | G24 O33 O34 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27828&r=all |
| By: | Falco J. Bargagli-Stoffi; Jan Niederreiter; Massimo Riccaboni |
| Abstract: | Thanks to the increasing availability of granular, yet high-dimensional, firm level data, machine learning (ML) algorithms have been successfully applied to address multiple research questions related to firm dynamics. Especially supervised learning (SL), the branch of ML dealing with the prediction of labelled outcomes, has been used to better predict firms' performance. In this contribution, we will illustrate a series of SL approaches to be used for prediction tasks, relevant at different stages of the company life cycle. The stages we will focus on are (i) startup and innovation, (ii) growth and performance of companies, and (iii) firms exit from the market. First, we review SL implementations to predict successful startups and R&D projects. Next, we describe how SL tools can be used to analyze company growth and performance. Finally, we review SL applications to better forecast financial distress and company failure. In the concluding Section, we extend the discussion of SL methods in the light of targeted policies, result interpretability, and causality. |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2009.06413&r=all |
| By: | Bertheau, Antoine (University of Copenhagen); Bunzel, Henning (Aarhus University); Vejlin, Rune Majlund (Aarhus University) |
| Abstract: | We present new evidence on how employment growth varies across firm types (size, productivity, and wage) and over the business cycle using Danish data covering almost 30 years. We decompose net employment growth into two recruitment margins: net hirings from/to employment (poaching) and net hirings from nonemployment. High-productivity firms are the most growing firms due to poaching. High wage firms poach almost as many workers, but shed an almost equal amount to non-employment. Large firms do not poach workers from smaller firms. In terms of employment cyclicality, we find that low-productive and low-wage firms shed proportionally more jobs in recessions. We relate our findings to recent models of employment fluctuations that jointly analyze worker and firm dynamics. |
| Keywords: | worker flows, firm heterogeneity, matched employer-employee data, business cycle, equilibrium search models |
| JEL: | E24 E32 J63 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13681&r=all |
| By: | Georgij Alekseev; Safaa Amer; Manasa Gopal; Theresa Kuchler; JW Schneider; Johannes Stroebel; Nils C. Wernerfelt |
| Abstract: | We analyze a large-scale survey of owners, managers, and employees of small businesses in the United States to understand the effects of the early stages of the COVID-19 pandemic on those businesses. The survey was fielded in late April 2020 among Facebook business page administrators, frequent sellers on Facebook's e-commerce platform Marketplace, and the general Facebook user population. We observe more than 66,000 responses covering most sectors of the economy, including many businesses that had stopped operating due to the pandemic. The survey asks 136 questions covering topics such as changes in business operations and employment, changes in financing patterns, and the interaction of household and business responsibilities. We characterize the adjustments implemented to survive the pandemic and explore the key challenges to continue operating or to re-open. We show how these patterns differ across industry, firm size, owner gender, and other firm characteristics. |
| JEL: | G0 M1 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27833&r=all |
| By: | Naudé, Wim (RWTH Aachen University); Liebregts, Werner (Tilburg University) |
| Abstract: | In the past few decades, technological progress has led to the digitization and digitalization of economies into what one could now call digital economies. The COVID-19 pandemic will accelerate the development of the digital economy. In a digital economy, digital entrepreneurs pursue opportunities to produce and trade in digital artifacts on digital artifact stores or platforms, and/or to create these digital artifact stores or platforms themselves. There is a well-recognized need for more research on digital entrepreneurship. As such, this paper provides an overview of the central research questions currently being pursued in this field. These include questions such as: What is digital entrepreneurship? What is different in the digital economy from an entrepreneurial perspective? What is the impact of digitalization - and big data - on business models and entrepreneurship? How can digital entrepreneurship be supported and regulated? The paper identifies areas of neglect, and makes proposals for future research. |
| Keywords: | gig economy, digital platforms, network effects, digital artifacts, digital entrepreneurship, digital entrepreneurial ecosystems |
| JEL: | L26 D21 M13 O33 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13667&r=all |
| By: | Aissata Boubacar Moumouni (Aix-Marseille Univ., CNRS, AMSE, Marseille, France) |
| Abstract: | This paper investigates the determinants of firms investment financing constraints. Using an endogenous switching regression model on French Provence-Alpes Côte d'Azur region firms data collected between 2005-2014, we provide a novel evidence of the role of inter-enterprises payment deadlines which are days receivable outstanding and days payable outstanding, as factors determining rms investment nancing constraints. We also show that there is a non-negligible number of firms switching each year either from constrained regime to unconstrained regime or unconstrained regime to constrained one. By developing a model, we highlight the factors determining firms regime change. |
| Keywords: | firms investment, inter-enterprises payment deadlines, endogenous switching regression model |
| JEL: | G30 G32 C30 C33 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1938&r=all |
| By: | John M. Barrios (Washington University); Yael V. Hochberg (Rice University and NBER); Hanyi Yi (Rice University) |
| Abstract: | The introduction of the gig economy creates opportunities for would-be entrepreneurs to supplement their income indownside states of the world, and provides insurance in the form of an income fallback in the event of failure. We present a conceptual framework supporting the notion that the gig economy may serve as an income supplement and as insurance against entrepreneurial-related income volatility, and utilize the arrival of the on-demand, platform-enabled gig economy in the form of the staggered rollout of ride hailing in U.S. cities to examine the effect of the arrival of the gig economy on entrepreneurial entry. The introduction of gig opportunities is associated with an increase of ~5% in the number of new business registrations in the local area, and correspondingly-sized increase in small business lending to newly registered businesses. Internet searches for entrepreneurship-related keywords increase ~7%, lending further credence to the predictions of our conceptual framework. Both the income supplement and insurance channels are empirically supported: the increase in entry is larger in regions with lower average income and higher credit constraints, as well as in locations with higher ex ante economic uncertainty regarding future wage levels and wage growth. |
| JEL: | L26 G39 O3 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2020-21&r=all |
| By: | Adian,Ikmal; Doumbia,Djeneba; Gregory,Neil; Ragoussis,Alexandros; Reddy,Aarti; Timmis,Jonathan David |
| Abstract: | This study highlights how COVID-19 has affected small and medium enterprises, drawing on newly released World Bank Enterprise Surveys in 13 countries. The study shows that firms of all sizes are severely affected in multiple dimensions; however, firm size matters for the intensity of the different channels of transmission and firms'responses. Small and medium enterprise sales shrink by more and their cash drains faster than large firms in the same sector and country. Among them, faster growing firms experience the demand shock somewhat less severely, but they are more exposed to international trade disruption, supply, and finance shocks. Yet, a range of firm responses to the downturn seem to be out of reach. Fewer small and medium-size enterprises, for example, start remote work, leaving their workers exposed to health risks. To make it through the pandemic, the majority of smaller firms do not turn to banks for loans; they need grants. Although development finance is not enough to fill the financing gap, development finance institutions are relevant -- in investment mobilization, demonstration, and know-how -- as economies move toward recovery and rebuilding. Delivering these requires rapid efforts to build partnerships and gather information in places where development finance has been limited in the past. |
| Date: | 2020–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9414&r=all |
| By: | Mehmet Ugur (Institute of Political Economy, Governance, Finance and Accountability, University of Greenwich, United Kingdom); Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany) |
| 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: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie5:dipe0011&r=all |