nep-sbm New Economics Papers
on Small Business Management
Issue of 2021‒01‒04
twenty papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Black and White: Access to Capital among Minority-Owned Startups By Robert W. Fairlie; Alicia Robb; David T. Robinson
  2. From Discovery to Commercialization: Accretive Intellectual Property Strategies among Small, Knowledge-Based Firms By Hayter, Christopher; Link, Albert
  3. The short- and long-run employment impact of COVID-19 through the effects of real and financial shocks on new firms. By Christoph Albert; Andrea Caggese; Beatriz González
  4. Profiting from big data analytics: The moderating roles of industry concentration and firm size By Elisabetta Raguseo; Claudio Vitari; Federico Pigni
  5. Carbon Footprints of European Manufacturing Jobs: Stylized Facts and Implications for Climate Policy By U.J. Wagner; D. Kassem; A. Gerster; J. Jaraite-Kazukauske; M. Klemetsen; M. Laukkanen; J. Leisner; R. Martin; J.R. Munch; M. Muûls; A.T. Nielsen; L. de Preux; K.E. Rosendahl; S. Schusser
  7. Government financing of R&D: A mechanism design approach By Saul Lach; Zvika Neeman; Mark Schankerman
  8. Firm Patenting and Types of innovation in Least Developed Countries. An Empirical Investigation on Patenting Determinants By Mounir Amdaoud; Christian Le Bas
  9. A Comparison of Firm Age in the Survey of Business Owners and the Longitudinal Business Database By William D. Lastrapes; Ian M. Schmutte; Thor Watson
  10. Informality and firm performance in Myanmar By Hanna Berkel; Finn Tarp
  11. Federal Policies in Response to Declining Entrepreneurship By Congressional Budget Office
  12. Increasing the Cost of Informal Workers: Evidence from Mexico By Brenda Samaniego de la Parra; León Fernández Bujanda
  13. Organizational Drivers of Innovation: The Role of Workforce Agility By F. Landini; C. Franco
  14. Business Angels and Firm Performance: First Evidence from Population Data By W. Andersson, Fredrik; Lodefalk, Magnus
  15. Why life insurers are key to economic dynamism in Germany By Gropp, Reint; McShane, William
  16. Standard-Essential Patents and Incentives for Innovation By Wipusanawan, Chayanin
  17. The Impact of Innovation on the Performance of Manufacturing Enterprises in Vietnam By , AISDL
  18. Ressources naturelles, innovation et développement économique : vers une nouvelle approche By Mounir Amdaoud
  19. Lower Bank Capital Requirements as a Policy Tool to Support Credit to SMEs: Evidence From a Policy Experiment? By Dietsch Michel; Fraisse Henri; Lé Mathias; Lecarpentier Sandrine
  20. Academic engagement with industry: the role of research quality and experience By Scandura, Alessandra; Iammarino, Simona

  1. By: Robert W. Fairlie; Alicia Robb; David T. Robinson
    Abstract: We use confidential and restricted-access data from the Kauffman Firm Survey and matched administrative data on credit scores to explore racial disparities in access to capital for new business ventures. The novel results on racial inequality in startup financing indicate that black-owned startups start smaller and stay smaller over the entire first eight years of their existence. Black startups face more difficulty in raising external capital, especially external debt. We find that disparities in credit-worthiness constrain black entreprenuers, but perceptions of treatment by banks also hold them back. Black entrepreneurs apply for loans less often than white entrepreneurs largely because they expect to be denied credit, even when they have a good credit history and in settings where strong local banks favor new business development.
    JEL: J15 J71 L26
    Date: 2020–11
  2. By: Hayter, Christopher (Arizona State University); Link, Albert (University of North Carolina at Greensboro, Department of Economics)
    Abstract: This paper explores the use of publications and patents and their covariates among small, knowledge-based firms pursuing technology commercialization. It does so through an empirical examination of 1180 small firms’ R&D projects, all of which were funded through Phase II U.S. Small Business Innovation Research (SBIR) awards. As such, the paper responds to recent calls to investigate not only how small, knowledge-based firms utilize specific IP strategies, but also how accretive logic specifically differs from competitive publishing and patenting logic.
    Keywords: Patents; Publications; Intellectual property; R&D; Strategy;
    JEL: L21 L26 O32 O34
    Date: 2020–12–14
  3. By: Christoph Albert (CEMFI); Andrea Caggese (UPF, CREI and Barcelona GSE); Beatriz González (Banco de España)
    Abstract: We use the latest available empirical evidence on the impact of the COVID-19 shock on the EU economy to predict its effect on firm entry, and in particular on high-growth startups, and on the related short- and long-run impact on employment growth. We find that the COVID-19 shock is expected to reduce firm entry and that its overall impact is very sensitive to financial conditions. A relatively small increase in financial frictions is likely to strongly reduce the entry of high-growth startups, with fewer jobs created in the short run but, more importantly, also slower employment growth in the long run. We then develop a model with heterogeneous startup types and simulate the effects of the COVID-19 shock on the entry and growth of a cohort of new firms to evaluate alternative policies. We find that a loan subsidy that reduces the excess cost of credit for new startups is the most efficient policy in promoting the entry of high-growth startups. The comparison of this subsidy with a wage subsidy that supports current employment shows that, for the same overall costs, the number of jobs created by the loan subsidy in the long term is significantly larger than that created by the wage subsidy in the short term. Our findings imply that, while policies aiming to stimulate current employment are important, in order to ensure also a faster recovery in the future they should be accompanied by measures directed at reducing the cost of credit for new businesses.
    Keywords: recessions, financial crisis, entrepreneurship, firm dynamics, coronavirus, COVID-19
    JEL: E20 E32 D22 J23 M13
    Date: 2020–12
  4. By: Elisabetta Raguseo (Polito - Politecnico di Torino [Torino]); Claudio Vitari (AMU - Aix Marseille Université); Federico Pigni (GEM - Grenoble Ecole de Management)
    Abstract: Big data has gained momentum as an Information Technology that is capable of supporting organizational efforts to generate new and better business value. We here contribute to the emerging literature on big data analytic (BDA) solutions by investigating the moderating roles of firm size and industry concentration in the relationship between BDA solutions and firm profitability. Using a unique panel data set that covers 13 years, from 2004 to 2016, which contains information about 176 firms, we provide robust econometric empirical evidence of the negative moderating effects of industry concentration and the positive moderating effects of firm size on the relationship between the use of BDA solutions and firm profitability. Our findings provide strong empirical evidence on the business value of BDA as well as the essential role played by contextual conditions that managers should consider.
    Keywords: IT business value,big data analytics,firm profitability,econometric analysis,industry concentration,firm size
    Date: 2020–11
  5. By: U.J. Wagner; D. Kassem; A. Gerster; J. Jaraite-Kazukauske; M. Klemetsen; M. Laukkanen; J. Leisner; R. Martin; J.R. Munch; M. Muûls; A.T. Nielsen; L. de Preux; K.E. Rosendahl; S. Schusser
    Abstract: This paper presents first results from a new European-wide research network for evidence-based climate policy. Using administrative data on industrial firms in Denmark, Finland, France, Germany, Lithuania, Norway, and Sweden, we construct harmonized measures of carbon dioxide emissions per job. We characterize the distribution of this measure and explore how it varies across countries, two-digit industries, and over time. We relate those changes to participation in the EU Emissions Trading System - Europe's flagship climate policy instrument since 2005.
    Keywords: carbon dioxide emissions, manufacturing, climate policy, employment
    JEL: Q54 H23
    Date: 2020–12
  6. By: Jaan Masso; Priit Vahter
    Abstract: Although much research has investigated how innovation affects wages and wage inequality in general, less is still known on how innovation in firms affects the gender wage gap. We show, using matched employer-employee data from Estonia, that technological (product and process) and non-technological (organizational and marketing) innovation, as well as the firm’s own R&D and innovation-related collaboration with external partners are, on average, associated with a larger gender wage gap in the firm. The positive effect of innovation on wages is about 3–5 percentage points smaller for women compared to men. The relationship between innovation and gender wage gap is stronger in the case of managers and plant and machine operators; therefore, both at the higher and lower end of the wage distribution, potentially indicating the importance of routine-biased technological change. We further show based on propensity score matching that men gain more from taking up a job at an innovative firm than women. The effect of innovation on men’s wages and on the gender wage gap is significantly larger among newly hired employees compared to incumbent employees. Among the newly hired employees at innovative firms, taking up a job at a more ‘open’ innovator appears to be associated with especially strong gains for newly hired women. However, even in this case the gains fall short of the gains for men.
    Keywords: innovation, gender wage gap, wage inequality
    Date: 2020
  7. By: Saul Lach; Zvika Neeman; Mark Schankerman
    Abstract: We study how to design an optimal government loan program for risky R&D projects with positive externalities. With adverse selection, the optimal government contract involves a high interest rate but nearly zero co-financing by the entrepreneur. This contrasts sharply with observed loan schemes. With adverse selection and moral hazard (two effort levels), the optimal policy consists of a menu of at most two contracts, one with high interest and zero self-financing, and a second with a lower interest plus co-financing. Calibrated simulations assess welfare gains from the optimal policy, observed loan programs, and a direct subsidy to private venture capital firms. The gains vary with the size of the externalities, cost of public funds, and effectiveness of the private VC industry.
    Keywords: mechanism design, innovation, R&D, entrepreneurship, additionality, government finance, venture capital
    JEL: D61 D82 O32 O38
    Date: 2020–06
  8. By: Mounir Amdaoud (CEPN - Centre d'Economie de l'Université Paris Nord - CNRS - Centre National de la Recherche Scientifique - Université Sorbonne Paris Nord - USPC - Université Sorbonne Paris Cité - LABEX ICCA - UP13 - Université Paris 13 - Université Sorbonne Nouvelle - Paris 3 - CNRS - Centre National de la Recherche Scientifique - UP - Université de Paris - Université Sorbonne Paris Nord); Christian Le Bas
    Abstract: This paper aims to account for the determinants of firm patenting behaviour in developing countries. The literature has accumulated numerous evidence and trends as far as developed countries' firm patenting is concerned. However, only a small amount of information concerning least developed countries' firm patenting is available. With the present study we wish to fill this gap creatively. The core assumption of this paper is that the occurrence of firm patenting is positively related with innovation strategies. As a result we place the emphasis on the diverse ways to innovate and account for the effects on a firm's probability to patent. Our findings indicate that despite the weaknesses of their patenting system in least developed countries (LDCs) there is no huge gap between the determinants of patenting behaviour from firms in these countries, and those the literature considers to be important for developed countries firms.
    Keywords: Patent,appropriation,innovation,developing economies. JEL Codes : O31,O32,O33,O34
    Date: 2020–12–12
  9. By: William D. Lastrapes; Ian M. Schmutte; Thor Watson
    Abstract: In this note, we use restricted-access data from the 1992 Characteristics of Business Owners (CBO) and the 2002 and 2007 Surveys of Business Owners (SBO) that are linked to the Longitudinal Business Database (LBD) and compare how firm age is reported across sources. Our analysis shows considerable agreement between administrative and survey measures. However, we also find meaningful discrepancies. The SBO measures generally suggest an earlier date of founding than is revealed in the LBD. For researchers, caution should be taken when using these sources in studies that rely on a particular interpretation of the firm age measure.
    Date: 2020–12
  10. By: Hanna Berkel; Finn Tarp
    Abstract: Using a novel panel survey of enterprises in Myanmar, we compare the performance of manufacturing firms by three different informality definitions. The first is binary, based on whether firms pay taxes. The second captures five categories of registration with the authorities, and the third definition relates to three groupings of the informality status of a firm's workers. Depending on the informality concept used, formalization has positive, insignificant, and negative performance outcomes.
    Keywords: firms, Informality, Myanmar, Business, business registration, Manufacturing
    Date: 2020
  11. By: Congressional Budget Office
    Abstract: Entrepreneurship has declined significantly in the United States over the past four decades. That decline has implications for economic growth because new firms provide innovative products and services, improve the productivity of the workforce, and ensure competition in the marketplace. The decline in entrepreneurship has been associated with a decrease in annual productivity growth, in CBO’s assessment, and is frequently attributed to three types of factors. The effects of financial and demographic factors are supported by strong evidence.
    JEL: D24 M21 O00
    Date: 2020–12–29
  12. By: Brenda Samaniego de la Parra; León Fernández Bujanda
    Abstract: This paper estimates the effects of increasing the cost of informal jobs on formal firms' and workers' outcomes. We create novel datasets combining administrative records and household surveys data, and exploit exogenous variation in this cost generated by over 480,000 random work-site inspections in Mexico. Increasing the cost of informal jobs at formal firms leads to lower employment growth, lower formal job creation, and higher formal and informal job destruction. For informal workers, inspections increase the probability of being formalized at the inspected firm, but also increase the probability of dissolving the informal match. Transitioning to a formal job due to an inspection increases the probability of being poached to a new, formal job.
    JEL: D22 E26 J46
    Date: 2020–12
  13. By: F. Landini; C. Franco
    Abstract: The interplay between organization practices and innovation is highly relevant in modern business. This paper analyzes whether a specific organizational dimension, namely workforce agility, affects innovative performance. We rationalize this effect within an organizational economics perspective that stresses the role of behavioral motives and skill variety in the innovation process. In particular, we distinguish the contribution of two components: time agility and task agility. Using a sample of nearly 20000 private-sector workplaces in 32 countries, we report conditional correlations between workforce agility and innovation that are consistent with our framework. Establishments with higher workforce agility are more likely to innovate. This relationship holds also when we consider different types of innovation and we distinguish between time and task agility. The analysis of managers’ perceptions about internal working climate and information exchange activities suggest that this effect is likely be driven by the fact that workforce agility improves work motivation and knowledge transmission at the workplace level, favouring innovation. Managerial and policy implications are discussed.
    Keywords: workforce agility, task agility, time agility, innovation
    Date: 2020
  14. By: W. Andersson, Fredrik (Statistics Sweden); Lodefalk, Magnus (Örebro University School of Business)
    Abstract: Business angels dominate early-stage investment in firms, but research on their investment effects is scarce and is limited by sample selection. Therefore, we propose an algorithm for identifying business angel investments from total population data. We apply the algorithm to study business angels’ effects on firm performance, using detailed and longitudinal total population data for individuals and firms in Sweden. Employing these data and a quasi-experimental estimator, we find that business angels invest in firms that already perform above par. There is also a positive effect on subsequent growth compared with control firms. Firms with business angel investments perform better in terms of sales growth, employment growth and the likelihood of becoming a high-growth firm. However, contrary to previous research, we cannot find any impact on firm survival. Overall, our results underline the need to address sample selection issues both in identifying business angels and in evaluating their effects on firm performance.
    Keywords: business angels; firm performance; sample selection; population data
    JEL: C23 G24 G32 L25
    Date: 2020–12–22
  15. By: Gropp, Reint; McShane, William
    Abstract: Young entrepreneurial firms are of critical importance for innovation. But to bring their new ideas to the market, these startups depend on investors who understand and are willing to accept the risk associated with a new firm. Perhaps the key reason as to why the US has succeeded in producing nearly all the most successful new firms of the 21st century is the economy's ability to supply vast sums of capital to promising startups. The volume of venture capital (VC) invested in the US is more than 60 times that of Germany (OECD, 2017). In this policy note, we argue that differences in the regulatory and structural context of institutional investors, in particular life insurance companies, is a central driver of the relative lack of VC - and thereby successful startups - in Germany.
    Date: 2020
  16. By: Wipusanawan, Chayanin (Tilburg University, TILEC)
    Keywords: standardisation; standard-essential patents; FRAND; innovation incentives
    Date: 2020
  17. By: , AISDL
    Abstract: This paper examines the impact of innovation on the performance of manufacturing enterprises in Vietnam. Innovation is measured by product innovation (3 observed variables), technology innovation (8 observed variables), and organization innovation (6 observed variables) while firm performance is measured by revenue and profit. The OLS regression model was used with data collected from 806 enterprises in four industrial sectors. The results show that innovation has a positive effect on firm performance. From the results, some implications are proposed to improve the performance of manufacturing enterprises in Vietnam.
    Date: 2020–10–19
  18. By: Mounir Amdaoud (CEPN - Centre d'Economie de l'Université Paris Nord - CNRS - Centre National de la Recherche Scientifique - Université Sorbonne Paris Nord - USPC - Université Sorbonne Paris Cité - LABEX ICCA - UP13 - Université Paris 13 - Université Sorbonne Nouvelle - Paris 3 - CNRS - Centre National de la Recherche Scientifique - UP - Université de Paris - Université Sorbonne Paris Nord)
    Abstract: Les ressources naturelles ont été souvent analysées dans la littérature économique comme étant non compatibles avec le développement économique (Auty, 2001 ; Gylfason, 2001 ; Sacks & Warner, 1995). L'objet de ce papier est de revenir sur l'analyse du lien qui caractérise les ressources naturelles et le développement économique. Pour ce faire, nous mobilisons une nouvelle approche basée sur les théories évolutionnistes et institutionnelle qui porte la focale sur l'importance de la dynamique d'apprentissage et de création de nouvelles connaissances notamment dans les économies riches en ressources naturelles. Les résultats obtenus dans notre étude sur près de 100 pays montrent que certaines des économies les plus avancés et les plus riches au monde sont des économies basées sur les ressources naturelles. Par conséquent, la malédiction serait davantage dans l'apprentissage et la construction de compétences que dans les ressources.
    Keywords: Ressources naturelles,rente,croissance économique,institutions,innovation,apprentissage,compétences O13,O31,O43
    Date: 2020–12–12
  19. By: Dietsch Michel; Fraisse Henri; Lé Mathias; Lecarpentier Sandrine
    Abstract: Starting in 2014 with the implementation of the European Commission Capital Requirement Directive, banks operating in the Euro area were benefiting from a 25% reduction (the Supporting Factor or "SF" hereafter) in their own funds requirements against Small and Medium-sized enterprises ("SMEs" hereafter) loans. We investigate empirically whether this reduction has supported SME financing and to which extent it is consistent with SME credit risk. Economic capital computations based on multifactor models do confirm that capital requirements should be lower for SMEs. Taking into account the uncertainty surrounding their estimates and adopting a conservative approach, we show that the SF is consistent with the difference in economic capital between SMEs and large corporates. As for the impact on credit distribution, our difference-in-differences specification enables us to find a positive and significant impact of the SF on the credit supply.
    Keywords: SME finance, Credit supply, Basel III, Credit risk modelling, Capital requirement.
    JEL: C13 G21 G33
    Date: 2020
  20. By: Scandura, Alessandra; Iammarino, Simona (University of Turin)
    Abstract: This work explores the role of university department characteristics on academic engagement with industry. In particular, we investigate the role played by research quality and previous experience across different scientific disciplines. We test our hypotheses on a dataset of publicly funded university-industry partnerships in the UK, combined with data from the UK Research Assessment Exercises 2001 and 2008. Our data reveal a negative link between academic quality and the level of engagement with industry for departments in the basic sciences, and a positive relationship for departments in the applied sciences. Our results further show that the role of research quality for academic engagement tightly depends on the level of department previous experience in university-industry partnerships, notably in the basic sciences, where experience acts as a moderating factor. The findings of this work are highly relevant for policy makers and university managers, and contribute to the innovation literature focused on the investigation of the determinants of valuable knowledge transfer practices in academia.
    Date: 2020–10

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