nep-sbm New Economics Papers
on Small Business Management
Issue of 2020‒12‒07
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. An insight into the innovative start-up landscape of Trentino: Is it time for the “Start-up Valley” to scale up? By OECD
  2. Credit constraints, labor productivity and the role of regional institutions: evidence for manufacturing firms in Europe By Rodríguez-Pose, Andrés; Ganau, Roberto; Maslauskaite, Kristina; Brezzi, Monica
  3. An insight into the innovative start-up landscape of Friuli-Venezia Giulia: A tale of two sub-regions? By OECD
  4. A Mixed-Method Landscape Analysis of SME-focused B2B Platforms in Germany By Tina Krell; Fabian Braesemann; Fabian Stephany; Nicolas Friederici; Philip Meier
  5. The Productivity Cost of Power Outages for Manufacturing Small and Medium Enterprises in Senegal By Lassana Cissokho
  6. Top management team international diversity and the performance of international R&D By Rene Belderbos; Boris Lokshin; Christophe Boone; Jojo Jacob
  7. Foreign Shocks as Granular Fluctuations By Julian di Giovanni; Andrei A. Levchenko; Isabelle Mejean
  8. Distant but close in sight. Firm-level evidence on French-German productivity gaps in manufacturing By Thomas Grebel; Mauro Napoletano; Lionel Nesta
  9. R&D and Innovation: Evidence from Patent Data By Yusuke Oh; Koji Takahashi
  10. Finance, gender, and entrepreneurship: India’s informal sector firms By Gang, Ira N.; Natarajan, Rajesh Raj; Sen, Kunal
  11. Fertile Soil for Intrapreneurship: Impartial Institutions and Human Capital By Ljunge, Martin; Stenkula, Mikael
  12. Relationship lending and the use of trade credit: the role of relational capital and private information By Pierluigi Murro; Valentina Peruzzi
  13. Institutional change and the development of lagging regions in Europe By Rodríguez-Pose, Andrés; Ketterer, Tobias

  1. By: OECD
    Abstract: This paper offers an in-depth analysis of the characteristics of innovative start-up firms in Trentino, a high-income mountainous area in the North East of Italy. This work is part of a series of thematic papers on regional start-up landscapes in Italy, produced by the OECD Trento Centre for Local Development. Following the 2018 OECD Evaluation of the Italian Start-up Act, which embraced a national perspective, it represents a first attempt to analyse the impact of this policy at the local level. Among Italian regions, Trentino boasts the highest density of registered innovative start-ups over all young firms established locally. However, innovative start-ups spread unevenly throughout this territory, concentrating in urban areas. Female and young founders are less prevalent than in Italy at large. Firm dynamism, in particular high-growth and exit trends, the uptake of emerging technologies among local start-ups as well as their propensity to use national incentives are other key areas of this work, which concludes with a set of evidence-based recommendations for policy makers.
    Keywords: artificial intelligence, entrepreneurship, firm dynamism, innovation, local development, policy adoption, start-up
    JEL: D22 L26 M13 O38 R12
    Date: 2020–11–17
  2. By: Rodríguez-Pose, Andrés; Ganau, Roberto; Maslauskaite, Kristina; Brezzi, Monica
    Abstract: This paper examines the relationship between credit constraints - proxied by the investment-to-cash flow sensitivity – and firm-level economic performance - defined in terms of labor productivity – during the period 2009-2016, using a sample of 22,380 manufacturing firms from 11 European countries. It also assesses how regional institutional quality affects productivity at the level of the firm both directly and indirectly. The empirical results highlight that credit rationing is rife and represents a serious barrier for improvements in firm-level productivity and that this effect is far greater for micro and small than for larger firms. Moreover, high-quality regional institutions foster productivity and help mitigate the negative credit constraints-labor productivity relationship that limits the economic performance of European firms. Dealing with the European productivity conundrum thus requires greater attention to existing credit constraints for micro and small firms, although in many areas of Europe access to credit will become more effective if institutional quality is improved.
    Keywords: credit constraints; labor productivity; manufacturing firms; regional institutions; cross-country analysis; Europe
    JEL: C23 D24 G32 H41 R12
    Date: 2020–11
  3. By: OECD
    Abstract: This paper offers an in-depth analysis of the characteristics of innovative start-up firms in Friuli-Venezia Giulia, an autonomous region situated at the extreme North East of the Italian territory, bordering with Austria and Slovenia. This work is part of a series of thematic papers on sub-national start-up landscapes in Italy, produced by the OECD Trento Centre for Local Development. Following the 2018 OECD Evaluation of the Italian Start-up Act, which embraced a national perspective, it represents a first attempt to analyse the impact of this policy at the local level. Friuli-Venezia Giulia hosts a polycentric, mainly urban start-up landscape, with a low prevalence of female and young founders. Its historical sub-regions of Friuli and Venezia Giulia present remarkable differences under several perspectives, including the industrial composition of their start-ups, the spread of emerging technologies among them and their propensity to use national incentives. Firm dynamism, notably high-growth and exit trends, constitutes another major focus of this work, which concludes with a set of evidence-based recommendations for policy-makers.
    Keywords: artificial intelligence, entrepreneurship, firm growth, innovation, local development, multi-level governance, policy adoption, start-up
    JEL: D22 L26 M13 O38 R12
    Date: 2020–11–17
  4. By: Tina Krell; Fabian Braesemann; Fabian Stephany; Nicolas Friederici; Philip Meier
    Abstract: Digital platforms offer vast potential for increased value creation and innovation, especially through cross-organizational data sharing. It appears that SMEs in Germany are currently hesitant or unable to create their own platforms. To get a holistic overview of the structure of the German SME-focused platform landscape (that is platforms that are led by or targeting SMEs), we applied a mixed method approach of traditional desk research and a quantitative analysis. The study identified large geographical disparity along the borders of the new and old German federal states, and overall fewer platform ventures by SMEs, rather than large companies and startups. Platform ventures for SMEs are more likely set up as partnerships. We indicate that high capital intensity might be a reason for that.
    Date: 2020–11
  5. By: Lassana Cissokho (Faculté des Sciences Economiques et de Gestion,Université Cheikh Anta Diop, Senegal)
    Abstract: This paper investigates the productivity effects of power outages on manufacturing SMEs in Senegal, using a panel data on manufacturing firms. Productivity is estimated using stochastic frontier models, and power outages measured by their frequency or their duration. We controlled for firms owning a generator as well. The main results are drawn from random effects in a linear panel model. Nonetheless, the results remain consistent to the robustness checks using different models: a double-sided truncated data model and a generalized linear model, and different productivity measures: data envelopment analysis. We find that power outages have negative significant effects on the productivity of SMEs. For example, the manufacturing sector lost up to around 11.6% of the actual productivity due to power outages in 2011, and small firms appear to be affected more than medium ones, 5% against 4.3%. Further, firms with a generator were successful in countering the adverse effect of power outages on productivity. Besides, another outstanding result is the significant positive effect of access to credit on productivity. At last, it appears that productivity increases with firms’ size.
    Date: 2020
  6. By: Rene Belderbos; Boris Lokshin; Christophe Boone; Jojo Jacob
    Abstract: We investigate how international diversity in Top Management Teams (TMTs) contributes to the effectiveness of geographically dispersed R&D strategies in enhancing innovation performance. Both international work experience and nationality diversity may enhance the effectiveness of geographically dispersed R&D when there is alignment between the countries of work experience and nationality of TMT members, on the one hand, and firms’ R&D locations on the other. This influence is stronger for international work experience diversity than for nationality diversity, as the former provides more task-related knowledge to coordinate R&D activities and is less associated with the risk of social categorization. We find partial support for these notions in a panel analysis of the innovation performance of 165 leading MNCs based in Europe, Japan and the United States.
    Keywords: diversity, innovation, internationalization, MNCs, R&D, Top Management Teams (TMTs)
    Date: 2020–11–18
  7. By: Julian di Giovanni; Andrei A. Levchenko; Isabelle Mejean
    Abstract: This paper uses a dataset covering the universe of French firm-level sales, imports, and exports over the period 1993-2007 and a quantitative multi-country model to study the international transmission of business cycle shocks at both the micro and the macro levels. The largest firms are both important enough to generate aggregate fluctuations (Gabaix, 2011), and most likely to be internationally connected. This implies that foreign shocks are transmitted to the domestic economy primarily through the largest firms. We first document a novel stylized fact: larger French firms are significantly more sensitive to foreign GDP growth. We then implement a quantitative framework calibrated to the full extent of observed heterogeneity in firm size, exporting, and importing. We simulate the propagation of foreign shocks to the French economy and report one micro and one macro finding. At the micro level heterogeneity across firms predominates: 40 to 85% of the impact of foreign fluctuations on French GDP is accounted for by the "foreign granular residual" - the term capturing the fact that larger firms are more affected by the foreign shocks. At the macro level, firm heterogeneity dampens the impact of foreign shocks, with the GDP responses 10 to 20% larger in a representative firm model compared to the baseline model.
    Keywords: granularity, shock transmission, aggregate fluctuations, input linkages, international trade
    JEL: E32 F15 F23 F44 F62 L14
    Date: 2020–11
  8. By: Thomas Grebel; Mauro Napoletano; Lionel Nesta
    Abstract: We study the productivity level distributions of manufacturing firms in France and Germany, and how these distributions evolved across the Great Recession. We show the presence of a systematic productivity advantage of German firms over French ones in the decade 2003-2013, but the gap has narrowed down after the Great Recession. Convergence is explained by the better growth performance of French firms in the post-recession period, especially of those located in the top percentiles of the productivity distribution. We also highlight the role of sectoral growth, firm size and export intensity in explaining the above convergence. In contrast, the contribution of allocative efficiency was small.
    Keywords: International productivity gaps; productivity distributions; firm level comparisons.
    Date: 2020–11–26
  9. By: Yusuke Oh (Bank of Japan); Koji Takahashi (Bank of Japan)
    Abstract: We investigate innovation dynamics in Japanese listed firms by calculating an indicator for the accumulation of innovation based on patent citations, the gcitation stock. h The calculated citation stock has decreased since the mid-2000s, which implies that the pace of innovation accumulation at Japanese listed firms has slowed. Using the citation stock, we show that an increase in a firm fs citation stock contributes to its productivity growth and that the citation stock provides information on whether research and development (R&D) leads to innovation that cannot be captured by focusing on the amount of R&D investment alone. In addition, we find that while higher R&D investment is associated with new innovation, the efficiency of R&D investment in Japan has decreased in recent years. Such a decrease in the efficiency of R&D investment has been reported not only for Japanese firms but also for a wide range of fields around the world, so that firms and research institutions are attempting to maintain the pace of innovation by increasing the number of researchers and research spending. For Japan, where it is difficult to increase the number of researchers due to the declining population, it is important to improve the quality of research through various efforts such as increasing the diversity of researchers.
    Keywords: productivity; patent data; innovation; R&D
    JEL: O31 E23 D24
    Date: 2020–11–27
  10. By: Gang, Ira N.; Natarajan, Rajesh Raj; Sen, Kunal
    Abstract: How does informal economic activity respond to increased financial inclusion? Does it become more entrepreneurial? Does access to new financing options change the gender configuration of informal economic activity and, if so, in what ways and what directions? We take advantage of nationwide data collected in 2010/11 and 2015/16 by India's National Sample Survey Office on unorganized (informal) enterprises. This period was one of rapid expansion of banking availability aimed particularly at the unbanked, under-banked, and women. We find strong empirical evidence supporting the crucial role of financial access in promoting entrepreneurship among informal sector firms in India. Our results are robust to alternative specifications and alternative measures of financial constraints using an approach combining propensity score matching and difference-in-differences. However, we do not find conclusive evidence that increased financial inclusion leads to a higher likelihood of women becoming entrepreneurs than men in the informal sector.
    Keywords: entrepreneurship,financial constraints,gender,informal sector,difference-indifferences,India
    JEL: O12 G28 L26
    Date: 2020
  11. By: Ljunge, Martin (Research Institute of Industrial Economics (IFN)); Stenkula, Mikael (Research Institute of Industrial Economics (IFN))
    Abstract: Intrapreneurs, entrepreneurial employees, constitute an important force behind innovations in the economy. Yet, what factors that promote intrapreneurship at the country level are an underdeveloped research area. This paper provides a seminal contribution regarding the methodological approach and the broad set of potential explanatory factors studied. Based on machine-learning techniques (LASSO and EBA methods), we investigate the influence of over 60 factors capturing institutional, demographic, cultural, and developmental factors. We find that the quality of government measured as impartiality, i.e., that the political institutions treat the citizens in a non-discriminatory fashion and do not favor some groups or individuals, and the level of human capital, measured as the average years of schooling, are the most important factors predicting the level of intrapreneurship across countries. Instrumental variable results support a causal interpretation. The findings emphasize the importance of policy to establish well-functioning and impartial institutions as well as to promote higher education.
    Keywords: Intrapreneurship; Impartial institutions; Human capital; Machine-learning
    JEL: E02 I20 L26 O17 O30
    Date: 2020–11–11
  12. By: Pierluigi Murro (LUISS University); Valentina Peruzzi (LUISS University)
    Abstract: Using a unique sample of Italian manufacturing firms, we investigate the impact of relationship lending on firms' use of trade credit. We find that firms with close and long-lasting relationships with their main bank obtain higher amounts of trade credit. This result is robust to alternative definitions of trade credit and relationship lending, and to different estimation techniques. This positive link is especially strong for firms that use to provide soft information to their lenders and for companies with greater abilities to create valuable relationships with business parties.
    Keywords: Trade credit; relationship lending; soft information
    JEL: D22 G21 G32
    Date: 2020–11
  13. By: Rodríguez-Pose, Andrés; Ketterer, Tobias
    Abstract: This paper assesses whether both the levels and the degree of change in government quality influence regional economic performance in the European Union and, in particular, in its lagging regions. The results of the econometric analysis, covering 249 NUTS-2 regions for the period 1999–2013, suggest that (1) government quality matters for regional growth; (2) relative improvements in quality of government are a powerful driver of development; (3) one-size-fits-all policies for lagging regions are not the solution; (4) government quality improvements are essential for low-growth regions; and (5) in low-income regions basic endowment shortages are still the main barrier to development. In particular, low-growth regions in Southern Europe stand to benefit the most from improvements in government quality, while in low-income regions of Central and Eastern Europe, investments in the traditional drivers of growth remain the main factors behind successful economic trajectories.
    Keywords: economic growth; government quality; institutional change; regions; EU
    JEL: N0
    Date: 2019–05–22

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