nep-sbm New Economics Papers
on Small Business Management
Issue of 2020‒10‒12
eighteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Financial Distress and the Role of Management in Micro and Small-Sized Firms By Alexandre, Fernando; Cruz, Sara; Portela, Miguel
  2. Latent Technology as an Outcome of R&D By Cunningham, James; Link, Albert
  3. Entrepreneurial discrete choice: Modelling decisions between self-employment, employer and worker status. Working paper 15. By Bennett, Robert; Montebruno, Piero; Smith, Harry; van Lieshout, Carry
  4. Export Performance, Innovation, and Productivity in Indian Manufacturing Firms By Santosh Kumar Sahu; Sunder Ramaswamy; Abishek Choutagunta
  5. Financial Capital and Immigrant Self-Employment: Evidence from a Swedish Reform By Aldén, Lina; Hammarstedt, Mats; Miao, Chizheng
  6. The COVID-19 Shock and Equity Shortfall: Firm-level Evidence from Italy By Elena Carletti; Tommaso Oliviero; Marco Pagano; Loriana Pelizzon
  7. Fostering Innovation Activities with the Support of a Development Bank: Evidence from Brazil By Marco Carreras
  8. Do Capabilities Reside in Firms or in Regions? Analysis of Related Diversification in Chinese Knowledge Production By Yiou Zhang; David L. Rigby;
  9. Clean Energy Innovation and the Influence of Venture Capitalists' Social Capital By Till Fust
  10. Effects of interest rate caps on microcredit: evidence from a natural experiment in Bolivia By María José Roa; Alejandra Villegas; Ignacio Garrón
  11. Les mutations de l’accompagnement entrepreneurial By Karim Messeghem; Sylvie Sammut; Leila Temri; Etienne St-Jean
  12. The Effect of Outward Foreign Direct Investments on Home Employment: Evidence using Swiss Firm-Level Data By Preetha Kalambaden, Daniel Steffen
  13. Productivity effects of an exogenous improvement in transport infrastructure: accessibility and the Great Belt Bridge By Bruno de Borger; Ismir Mulalic; Jan Rouwendal
  14. Reconstructing business proprietor responses for censuses 1851-81: a tailored logit cut-off method. Working paper 9.2. By Bennett, Robert; Montebruno, Piero; Smith, Harry; van Lieshout, Carry
  15. Results of Survey on Standardization Activities for 2018 (State of Implementation, Advanced Technologies, and Organizational Design) By TAMURA Suguru
  16. The Emergence of Knowledge Production in New Places By Christopher R. Esposito; ;
  17. The Rise (and Fall) of Tech Clusters By Sergey Kichko; Wen-Jung Liang; Chao-Cheng Mai; Jacques-Francois Thisse; Ping Wang
  18. Technology evolution in the global automotive industry: a patent-based analysis By Alessandra Perri; Daniela Silvestri; Francesco Zirpoli

  1. By: Alexandre, Fernando (University of Minho); Cruz, Sara (University of Minho); Portela, Miguel (University of Minho)
    Abstract: In this paper, we focus on managerial characteristics of micro and small-sized firms. Using linked employer-employee data on the Portuguese economy for the 2010-2018 period, we estimate the impact of management teams' human capital on the probability of firms becoming financially distressed and on their subsequent recovery. Our estimates show that the relevance of management teams' formal education on the probability of firms becoming financially distressed depends on firms' size and the type of education. We show that management teams' formal education and tenure reduces the probability of micro and small-sized firms becoming financially distressed and increases the probability of their subsequent recovery. The estimates also suggest that those impacts are stronger for micro and small-sized firms. Additionally, our results show that functional experience previously acquired in other firms, namely in foreign-owned and in exporting firms and in the area of finance, may reduce the probability of micro firms becoming financially distressed. On the other hand, previous functional experience in other firms seems to have a strong and highly significant impact on increasing the odds of recovery of financially distressed firms. We conclude that policies that induce an improvement in the managerial human capital of micro and small-sized firms have significant scope to improve their financial condition, reducing the likelihood of firms entering a state of financial distress.
    Keywords: financial distress, human capital, firm performance
    JEL: G32 J24 L25
    Date: 2020–09
  2. By: Cunningham, James (Northumbira University); Link, Albert (University of North Carolina at Greensboro, Department of Economics)
    Abstract: This paper focuses on a situation in which a firm decides to sell its non-commercialized technology to another firm rather than commercialize it (a latent entrepreneurial firm), and the other firm then adopts the appearance of an emergent entrepreneur. Using U.S. project data from firms funded through the U.S. Small Business Innovation Research (SBIR) program, we find using a qualitative choice model that firms that do not commercialize their newly developed SBIR-funded technology have a greater probability of selling their technology to another firm than do firms that do commercialize. We also identify other covariates with the probability that such a firm will sell their technology.
    Keywords: Latent entrepreneurship; Emergent entrepreneurship; SBIR; Commercialization;
    JEL: O32 O33 O38
    Date: 2020–09–29
  3. By: Bennett, Robert; Montebruno, Piero; Smith, Harry; van Lieshout, Carry
    Abstract: This paper estimates an entrepreneurial choice model between different forms of business organisation, focusing on the choice to operate as a sole proprietor operating on own account, or as an employer, rather than as a waged employee. ‘Own account’ was the phrasing used through the censuses of the period we cover: it describes an entrepreneur who operates as self-employed on their own with no employees. A discrete choice decision model is used to estimate probabilities of different choices using the large scale data for England and Wales contained in the ‘British Business Census of Entrepreneurs 1851-1911’ to be deposited at UKDA. This paper uses the data for the later censuses, 1891-1911. This database is one of the outputs of ESRC project ES/M010953 Drivers of Entrepreneurship and Small Businesses’.
    Keywords: Entrepreneurship; Employers; Self-employment; Small businesses; Census
    JEL: D13 D22 L25 L26
    Date: 2019–02
  4. By: Santosh Kumar Sahu (Assistant Professor, Madras School of Economics); Sunder Ramaswamy (Visiting Distinguished Professor of Economics, Madras School of Economics); Abishek Choutagunta (Institute of Law and Economics, Universität Hamburg)
    Abstract: This study re-examines the relationship between export performance and productivity in manufacturing firms in India for the period 2003-2015, using firm level information. Departing from the earlier studies on India economy, we argue that product innovations boost export performance of the economy. The hypothesis being that, in the post-economic-reforms era competitive export market scenario, productivity alone, without product innovation and participation in R and D cannot drive export performance. We observe that the argument of highly productive firms entering the export market without eallocating resources towards innovation and R and D seems to be invalid in our sample. Nevertheless, we find in our sample, that productivity as a selection criterion coupled with advertising and marketing strategies explains participation in R and D in boosting exports.
    Keywords: Export Performance, Innovation, Productivity, Manufacturing firms, India
    JEL: D20 D24 L16 L6 L60
  5. By: Aldén, Lina (Department of Economics and Statistics); Hammarstedt, Mats (Linnæus University and); Miao, Chizheng (Department of Economics and Statistics)
    Abstract: We study the role of capital requirement in immigrants’ self-employment decision with the help of a reform implemented in Sweden in 2010 which reduced capital requirements for limited liability companies. For both men and women, the reform increased both the probability of starting a limited liability firm and the probability of changing corporate form for those self-employed prior to the reform. We found that the reform affected immigrants and natives differently. Natives primarily responded to the reform by changing corporate form whereas immigrant men, especially those originating from the Middle East, responded to the reform by starting limited liability firms. Small differences emerge when we compare native women with immigrant women. Finally, it is the wage employed who start a limited liability business in the post-reform period, underlining the fact that access to financial capital is an obstacle for wage-employed individuals who opt for self-employment. This is true for both immigrants and natives. In contrast, more marginalised groups (i.e. unemployed immigrants), do not respond to the reform by starting limited liability firms.
    Keywords: Self-employment; Financial capital; Limited liability; Immigrants
    JEL: J15 J68 L26 L51
    Date: 2020–09–29
  6. By: Elena Carletti; Tommaso Oliviero; Marco Pagano; Loriana Pelizzon
    Abstract: We forecast the drop in profits and the equity shortfall triggered by the COVID-19 lockdown, using a representative sample of 80,972 Italian firms. A 3-month lockdown entails an aggregate yearly drop in profits of about 10% of GDP and results in financial distress for 17% of the sample firms, employing 8.8% of the sample employees. Distress is more frequent for small and medium-sized enterprises, for firms with high pre-COVID-19 leverage, and those belonging to the Manufacturing and Wholesale Trading sectors. Listed companies are less likely to enter distress, while there is no clear correlation between distress rates and family firm ownership.
    Keywords: COVID-19, pandemics, losses, distress, equity, recapitalization.
    JEL: G01 G32 G33
    Date: 2020–10
  7. By: Marco Carreras (Institute of Development Studies)
    Abstract: I evaluate the impact of the Banco Nacional de Desenvolvimento Econômico e Social, (BNDES) disbursements on companies’ R&D intensity of companies operating in the Brazilian manufacturing sector for the period of 2003-2011. Using Instrumental Variable (IV) technique, I find a crowding-in impact of receiving funding from BNDES on business-funded innovation intensity, resulting in an increased commitment in innovation activities for funded Brazilian manufacturing companies. The findings of this analysis provide new evidence regarding the industrial sector activity of the Brazilian development bank, adding on the debate about additionality/substitutability of public financial resources.
    Keywords: BNDES, development bank, crowding-in/out, R&D intensity2
    Date: 2020–09
  8. By: Yiou Zhang; David L. Rigby;
    Abstract: Do capabilities reside in firms, in regions, or in both? Most models of related diversification, building on the early work of Hidalgo et al. (2007), examine how the structure of economic activity within a region conditions the trajectory of diversification. Inter-regional flows are sometimes added to these models. The logic here is that capabilities are largely built-up within regions and sometimes shared between them. We challenge that logic, exploring whether capabilities are more likely to be built within the firm and to flow across spatial boundaries than they are to be built within the region flowing across firm boundaries. Analysis focuses on Chinese patent data spanning 286 cities over the period 1991 to 2015. We develop standard models of related diversification before examining how the branches of multi-locational firms diversify their knowledge portfolios. Evidence shows that the knowledge structure of firms is more important than the knowledge structure of regions in shaping branch diversification. We show that the influence of the firm and the region on diversification vary significantly between headquarters (HQ) branches and non-HQ branches of firms, and between the non-HQ branches of firms that are located in core and peripheral cities of China.
    Keywords: Related diversification; Patents; Capabilities; China
    Date: 2020–09
  9. By: Till Fust
    Abstract: This study contributes to the understanding of the enabling role that venture capitalists can play in bringing new innovative technologies to market, with a focus on clean energy technologies. Applying the structural model introduced by Sorensen (2007) that allows to control for a potential sorting bias, I estimate the influence of venture capital investor's social capital on startups' funding and exit performance, with social capital de ned as the investors' eigencentrality and constraint within the network of investors. Looking at startups' first venture capital funding rounds in California between 2001 and 2019, this study finds a positive and significant influence of the lead investor's eigencentrality on the funding amount raised and the exit probability of the firm. Furthermore, a less constrained lead investor also increases the chance of the startup's eventual exit. But no differentiated effect for cleantech startups compared to other industries is found.
    Keywords: Venture Capitalists;CleanEnergy; Clean Technologies; Startups; Capital Funding; Cleantech startup
    JEL: O14 O33 Q41 Q42
    Date: 2020–09–29
  10. By: María José Roa (Investigadora del Instituto de Investigaciones Económicas y Sociales Francisco de Vitoria); Alejandra Villegas (Investigadora de Universidad Iberoamericana Ciudad de México); Ignacio Garrón (Consultor indpendiente)
    Abstract: This paper evaluates the imposition of caps on microcredit lending rates through directed credit policies for productive sectors. This financial inclusion intervention provides a unique quasi-experiment, allowing to estimate its causal effect following a difference-in-differences analysis. Our results suggest that the imposition of interest rate ceilings negatively affected the portfolio balance of new microcredits and loans to SMEs granted by MFIs. Particularly, we find robust results indicating that the balance of the microcredit and SME loans portfolio granted by MFIs, relative to the company portfolio granted by banks, decreased by 26.1% for an average MFI for the period 2011-2018.
    Keywords: Interest rate ceilings, financial inclusion, credit access, microcredit loans, small and medium enterprises loans .
    JEL: G18 G28 G38
    Date: 2020–09
  11. By: Karim Messeghem (MRM - Montpellier Research in Management - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - UM1 - Université Montpellier 1 - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier); Sylvie Sammut (MRM - Montpellier Research in Management - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - UM1 - Université Montpellier 1 - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier); Leila Temri (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement, Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Etienne St-Jean (UQTR - Université du Québec à Trois-Rivières)
    Abstract: L'accompagnement entrepreneurial connaît depuis une dizaine d'années des transformations majeures. Portée par une forte dynamique entrepreneuriale et la diffusion d'une culture start-up, l'industrie de l'accompagnement entrepreneurial subit de profondes mutations (Bakkali et al., 2013 ; Calmé et al., 2016 ; Commission nationale d'évaluation des politiques d'innovation, 2016). De nouveaux dispositifs (accélérateurs, espaces de coworking, pré-incubateurs étudiants, incubateurs sociaux, etc.) fleurissent ici ou là. De nouveaux entrants issus de la sphère privée et souvent empreints d'une culture nord-américaine (Station F, The Family, Founder Institute, etc.) dynamisent le secteur et le contraignent à une remise en question. En parallèle, des modèles d'entrepreneuriat novateurs tels que l'entrepreneuriat hybride ou la gig economy se développent.
    Keywords: Entrepreneuriat,mutation,innovation,accompagnement entrepreneurial
    Date: 2020
  12. By: Preetha Kalambaden, Daniel Steffen
    Abstract: This paper investigates the effect of outward foreign direct investments (FDI) on home employment in an understudied context - a small economy with a large relative outward FDI stock. Using Swiss firm-level data we construct a novel instrumental variable to identify a direct negative displacement effect and an indirect positive output effect. We find that FDI to high-income countries have a positive effect on domestic jobs, while FDI to lower middle-income countries are associated with a loss of domestic jobs. Further, FDI to low-income countries tend to have a positive effect on home employment. Overall, the effect of outward FDI on home employment is small and tends to create more domestic jobs than it relocates.
    Keywords: Foreign direct investments, home employment, multinational firms, globalization
    JEL: F14 F16 F23 F66
    Date: 2020–08
  13. By: Bruno de Borger (University of Antwerp); Ismir Mulalic (Technical University of Denmark); Jan Rouwendal (Vrije Universiteit Amsterdam)
    Abstract: Most studies of the effects of transport infrastructure on the performance of individual firms have focused on marginal expansions of the rail or highway network over time. In this paper, we study the short-run effects of a large discrete shock in the quality of transport infrastructure, viz. the opening of the Great Belt bridge connecting the Copenhagen area with a neighboring island and the mainland of Denmark. We analyse the effect of the opening of the bridge on the productivity of firms throughout the country using a two-step approach: we estimate firm- and year-specific productivity for a large panel of individual firms, using the approaches developed by Levinsohn and Petrin (2003) and De Loecker (2011). Then, controlling for firm-fixed effects, we relate productivity to a calculated measure of accessibility that captures the effect of the opening of the bridge. We find large productivity effects for firms located in the regions near the bridge, especially for relatively small firms in the construction and retail industry. Estimation results further suggest statistically significant but small positive wage effects throughout the country, even in regions far from the bridge. Finally, there is some evidence that the bridge has stimulated new activities in the Copenhagen region at the expense of firms disappearing on the neighboring island Funen.
    Keywords: production functions, productivity, accessibility, agglomeration, transport infrastructure
    JEL: R12 H54 O18
    Date: 2019–09–13
  14. By: Bennett, Robert; Montebruno, Piero; Smith, Harry; van Lieshout, Carry
    Abstract: This paper extends the reconstruction method developed in WP 9 to identify entrepreneurs 1851-81. Its aim is to identify the individual employers and own-account business people for 1851-1881, where employment status was not explicitly identified in the population censuses. This paper develops a method of variable logit cut-offs tailored to each occupation code. This allows the original census responses can be supplemented to give approximately all employers and own account. The aim is to provide a further resource for subsequent researchers, which is available in the database deposited at UK Data Archive (UKDA) as the British Census of Entrepreneurs 1851-1911 (BBCE), derived from the ESRC-supported project ES/M010953 Drivers of Entrepreneurship and Small Businesses.
    Keywords: Entrepreneurship; Employers; Self-employment; Small businesses; Census
    JEL: D13 D22 L25 L26
    Date: 2019–09
  15. By: TAMURA Suguru
    Abstract: This study discusses the results of a survey conducted in 2018 targeting standardization activities in organizations. The questions covered: (1) the state of the implementation of standardization, (2) interest in the standardization of advanced technologies, (3) knowledge sources for standardization activities, (4) types of standardization activities, (5) organizational designs of standardization activities, and (6) the control system for standardization activities. The participants of the survey were Japanese organizations including firms and research institutions. Advanced technology topics included (1) AI-related technology and (2) quantum computing technology. The standardization needs for specific technology areas including (1) method of performance evaluation, (2) data style, and (3) ethical aspects, among others, were surveyed.
    Date: 2020–09
  16. By: Christopher R. Esposito; ;
    Abstract: This article studies how new locations emerge as advantageous places for the creation of ideas. Analysis of a novel patent-based dataset that traces the flow of knowledge between inventions and across time reveals that inventors initiate knowledge production in new places through a three-stage process. In the first stage, about 50 years before knowledge production in a region reaches an appreciable volume, local inventors begin to experiment with a few promising ideas developed in other places. In the second stage, inventors use the promising ideas developed elsewhere to create a large number of highly impactful inventions locally. In the third stage, inventors source high-impact ideas from their local environs and produce an even larger number of inventions, albeit of lower quality. Overall knowledge production in regions peaks in this third stage, but novelty and the potential for future knowledge growth decline.
    Keywords: Regional development, innovation, knowledge transmission, agglomeration
    JEL: O33 R12
    Date: 2020–09
  17. By: Sergey Kichko; Wen-Jung Liang; Chao-Cheng Mai; Jacques-Francois Thisse; Ping Wang
    Abstract: Tech clusters play a growing role in knowledge-based economies by accommodating high-tech firms and providing an environment that fosters location-dependent knowledge spillovers and promote R&D investments by .rms. Yet, not much is known about the economic conditions under which such entities may form in equilibrium without government interventions. This paper develops a spatial equilibrium model with a competitive final sector and a monopolistically competitive intermediate sector, which allows us to determine necessary and sufficient conditions for a tech cluster to emerge as an equilibrium outcome. We show that strongly localized knowledge spillovers, skilled labor abundance, and low commuting costs are key drivers for a tech cluster to form. Not only is the productivity of the final sector higher when intermediate firms cluster, but a tech cluster hosts more intermediate firms and more R&D and production activities, and yields greater worker welfare, compared to what a dispersed pattern would generate. With continual improvements in infrastructure and communication technology that lowers coordination costs, tech clusters will eventually be fragmented.
    Keywords: high-tech city, knowledge spillovers, intermediate firm clustering, land use, commuting, R&D
    JEL: D51 L22 O33 R13
    Date: 2020
  18. By: Alessandra Perri (Department of Management, Università Ca' Foscari Venice); Daniela Silvestri (Department of Management, Università Ca' Foscari Venice); Francesco Zirpoli (Department of Management, Università Ca' Foscari Venice)
    Abstract: This study explores the evolution of the knowledge base of the automotive industry. Over the last decades, the industry has experienced major changes. New and originally unrelated fields have increasingly become relevant shaping over time the knowledge base of the industry. Using data on patent families granted in the period 1990-2014, we map the knowledge base of the automotive industry by reconstructing and analyzing the patenting portfolio of the top firms operating in this industry. The analysis documents exploration in new technical fields as well as persistence in industry-specific technical areas, pointing to the relevance of core competences that might be difficult to accumulate for industry outsiders.
    Keywords: knowledge base evolution, automotive industry, patent analysis
    JEL: L62 O34
    Date: 2020–09

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