nep-sbm New Economics Papers
on Small Business Management
Issue of 2021‒08‒09
ten papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Mission-Oriented Policies and the “Entrepreneurial State” at Work: An Agent-Based Exploration By Giovanni Dosi; Francesco Lamperti; Mariana Mazzucato; Mauro Napoletano; Andrea Roventini
  2. Deflation and Declining Business Dynamism in a Cash-in-Advance Economy By FURUKAWA Yuichi; NIWA Sumiko
  3. Extending A Regional Innovation Network: A Technology Intelligence Approach By Johannes van der Pol; Jean-Paul Rameshkoumar; Sarah Teulière; Thierry Bazerque
  4. TV and Entrepreneurship By Viktor Slavtchev; Michael Wyrwich
  5. The Impact of Foreign Direct Investment on Innovation: Evidence from Patent Filings and Citations in China By Chen, Yongmin; Jiang, Haiwei; Liang, Yousha; Pan, Shiyuan
  6. Do capacity constraints trigger high growth for enterprises? By Coad, Alexander; Domnick, Clemens; Flachenecker, Florian; Harasztosi, Peter; Janiri, Mario Lorenzo; Pál, Rozália; Teruel Carrizosa, Mercedes
  7. Unraveling industry, firm and host-region effects on export behaviors of international new ventures and established exporters By Ine Paeleman; Shaker A. Zahra; Jonas W. B. Lang
  8. Policy Influence in the Knowledge Space: a Regional Application By Stefano Basilico; Uwe Cantner; Holger Graf
  9. Location, Location, Location: Do Universities Matter for Foreign R&D? By Loles Añón Higón; Alfonso Díez-Minguela
  10. Sources of Convergence and Divergence in University Research Quality: Evidence from the Performance-Based Research Funding System in New Zealand By Buckle, Robert A; Creedy, John; Gemmell, Norman

  1. By: Giovanni Dosi (Laboratory of Economics and Management); Francesco Lamperti (Université Panthéon-Sorbonne - Paris 1 (UP1)); Mariana Mazzucato; Mauro Napoletano (Observatoire français des conjonctures économiques); Andrea Roventini
    Abstract: We study the impact of alternative innovation policies on the short- and long-run performance of the economy, as well as on public finances, extending the Schumpeter meeting Keynes agent-based model (Dosi et al., 2010). In particular, we consider market-based innovation policies such as R&D subsidies to firms, tax discount on investment, and direct policies akin to the “Entrepreneurial State” (Mazzucato, 2013), involving the creation of public research oriented firms diffusing technologies along specific trajectories, and funding a Public Research Lab conducting basic research to achieve radical innovations that enlarge the technological opportunities of the economy. Simu- lation results show that all policies improve productivity and GDP growth, but the best outcomes are achieved by active discretionary State policies, which are also able to crowd-in private investment and have positive hysteresis effects on growth dynamics. For the same size of public resources allocated to market-based interventions, “Mission” innovation policies deliver significantly better aggregate performance if the government is patient enough and willing to bear the intrinsic risks related to innovative activities.
    Keywords: Innovation policy, mission-oriented R&D, entrepreneurial state, agent-based modelling
    JEL: O33 O38 O31 O40 C63
    Date: 2021
  2. By: FURUKAWA Yuichi; NIWA Sumiko
    Abstract: This study considers the relationship between deflation and declining business dynamism. We do this by incorporating the empirical evidence that inflationary factors essentially affect all stages of an R&D firm's life cycle―entry, exit, and survival―into an R&D-based growth model. Our model has a new feature; namely, the entry, exit, and survival of R&D firms are all endogenous and subject to a cash-in-advance constraint. The core finding is that deflation can significantly affect the nature of business dynamism. Specifically, a decrease in the inflation rate potentially encourages or discourages innovation and survival investments; however, it necessarily discourages both if the entry cost is sufficiently high. In this case, deflation stifles business dynamism, leading to lower entry and exit rates and a maturity bias in the firm age distribution. Calibrating the model to the U.S. economy, we show that deflation causes declining business dynamism under realistic values of entry, exit, and growth rates. Then, we show that deflation also causes welfare loss if the natural rate of firm exit is higher.
    Date: 2021–07
  3. By: Johannes van der Pol (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Jean-Paul Rameshkoumar; Sarah Teulière; Thierry Bazerque
    Abstract: In France, Regions do not make their own innovation policies, this is the role of the State. A Region implements national policies and uses grants and subsidies to create and dynamize innovation ecosystems important for its economic development. The Region's role is therefore largely influential. In order to influence one needs to how and when to exert this influence. A precise understanding of an innovation ecosystem is therefore of vital importance. On the occasion of the venue of a Nobel laureate to the French region of Nouvelle-Aquitaine the regional counsel aimed to connect her with the regional innovation ecosystem around her research. The purpose of this paper is to show methods and techniques using patents, scientific publications and non-patent literature citations that can help with the identification of an innovation ecosystem and how to integrate a researcher into this ecosystem .
    Keywords: NPL,Technology Intelligence,Patents,innovation networks
    Date: 2021–07–16
  4. By: Viktor Slavtchev (Halle Institute for Economic Research (IWH)); Michael Wyrwich (University of Groningen, Faculty of Economics and Business)
    Abstract: This paper analyzes empirically whether individuals’ decisions to start an own business can be influenced via television (TV). To identify its effect, we utilize exogenous regional variation in the availability of TV that conveyed images conducive to entrepreneurship and the notion that self-reliance, self-determination and proactive behavior are desirable from individual and social point of view. We use both regional-level as well as geo-referenced individual level data and show that the entrepreneurship incidence is higher among the residents of regions that had TV signal than in regions without TV, indicating a first-order effect on the directly exposed individuals. We find that the effect would fade out if only directly treated individuals are more likely to become entrepreneurs and the last exposed cohort becomes ‘too old’. However, we also find that non-directly exposed successive cohorts and descendants of directly exposed individuals also wish to become entrepreneurs more often. We provide evidence that is consistent with second-order effects due to the intergenerational transmission of entrepreneurial mindset and suggests a formation of a self-sustaining entrepreneurial culture, which can cause long lasting differences between treated and non-treated population groups or regions.
    Keywords: Entrepreneurship, TV, Culture, Occupational choice
    JEL: L26 J24 M13 P20 P30 O30 D02 D03 Z10
    Date: 2021–07–25
  5. By: Chen, Yongmin; Jiang, Haiwei; Liang, Yousha; Pan, Shiyuan
    Abstract: This paper studies how foreign direct investment (FDI) affects innovation in the host country, using matched firm-level patent data of Chinese firms. The data contain multidimensional information about patent counts and citations which, together with an identification strategy based on Lu et al. (2017), allows us to measure innovation comprehensively and to uncover the causal relationship. Our empirical analysis shows that FDI has positive intra-industry effects on the quantity and quality of innovation by Chinese firms. We show that these positive effects are driven by increases in competition, rather than by knowledge spillover from FDI which is measured by patent citations between domestic firms and foreign invested enterprises (FIEs). We further investigate the inter-industry effects of FDI and find that FDI has positive vertical effects on innovation in upstream sectors.
    Keywords: FDI; Innovation; Patent; Competition; Spillover
    JEL: F2 L5 O3
    Date: 2021–07–26
  6. By: Coad, Alexander; Domnick, Clemens; Flachenecker, Florian; Harasztosi, Peter; Janiri, Mario Lorenzo; Pál, Rozália; Teruel Carrizosa, Mercedes
    Abstract: High-Growth Enterprises (HGEs) have a large economic impact, but are notoriously hard to predict. Previous research has linked high-growth episodes to the configuration of lumpy indivisible resources inside firms, such that high capacity utilisation levels might stimulate future growth. We theorize that firms reaching critically high capacity utilisation levels reach a 'trigger point' involving either broad-based investment in further growth, or shrinking back to previous levels. We analyse EIBIS survey data (matched to ORBIS) which features a question on time-varying capacity utilisation. Overcapacity is a transitory state. Firms enter into overcapacity after a period of rapid growth of sales and profits, and the years surrounding overcapacity have higher employment growth rates. Firms operating at overcapacity make incremental investments (e.g. capacity expansion, process improvements, and modern machinery) rather than investing in R&D and new product development. We find support for the 'fork in the road' hypothesis: for some firms, overcapacity is associated with launching into massive investments and subsequent sales growth, while for other firms, overcapacity is negatively related to both investments and sales growth.
    Keywords: High-Growth Enterprises (HGEs),firm growth,investment,capacity utilisation,trigger points
    JEL: L25
    Date: 2021
  7. By: Ine Paeleman (University of Antwerp, Antwerp, Belgium); Shaker A. Zahra (Carlson School of Management, University of Minnesota, Minneapolis, Minnesota, U.S.A.); Jonas W. B. Lang (Ghent University, Ghent, Belgium, 4 Business School, University of Exeter, UK)
    Abstract: While an extensive strategy literature seeks to explain differences in firm performance, little is known about how much firm, industry and host-regions matter in explaining heterogeneity in export behaviors. The international entrepreneurship literature has highlighted that firm-, industry- and hostregion-level factors shape export behaviors, yet more research is needed about their relative contribution. We decompose the variance of export behaviors of 4,982 Belgian SMEs during 2006‒2014. Results indicate that firm effects account for the largest part in the variation of export behaviors, followed by industry and host-region effects. However, host-region effects matter more for INVs whereas firm effects matter more for established exporters. There are no substantial differences in industry effects among either sample of firms. Our study contributes to the literatures on variance decomposition and international entrepreneurship.
    Keywords: : new ventures; host-region effects; firm effects; export; variance decomposition
    Date: 2021–07
  8. By: Stefano Basilico (Friedrich Schiller University Jena, Economics Department); Uwe Cantner (Friedrich Schiller University Jena, Economics Department, and University of Southern Denmark, Odense); Holger Graf (Friedrich Schiller University Jena, Economics Department)
    Abstract: Cluster policies aim at improving collaboration between co-located actors to address systemic failures. As yet, cluster policy evaluations are mainly concerned with effects on firm performance. Some recent studies move to the system level by assessing how the structure of actor-based knowledge networks is affected by such policies. We continue in that direction and analyze how technology-based regional knowledge spaces structurally respond to the introduction of a cluster policy. Taking the example of the German BioRegio contest, we examine how such knowledge spaces in winning and non-winning regions evolved before, during and after the policy. Using a difference-in-differences approach, we identify treatment effects of increased knowledge space embeddedness of biotechnology only in the post-treatment period. Our findings imply that cluster policies can have long-term structural effects typically not accounted for in policy evaluations.
    Keywords: BioRegio contest, network analysis, knowledge space, difference in differences, patents
    JEL: O31 O38 R11
    Date: 2021–08–02
  9. By: Loles Añón Higón (Department of Applied Economics II and ERI-CES, Faculty of Economics, Universitat de València, Avda. Tarongers, s/n, 46022 Valencia (Spain).); Alfonso Díez-Minguela (Department of Economic Analysis, Faculty of Economics, Universitat de València, Avda. Tarongers, s/n, 46022 Valencia (Spain).)
    Abstract: This paper explores the extent to which the regional Higher Education System (HES) influences the location of foreign R&D. To do so, we use a dataset with information on the location choices of new foreign R&D establishments within Spain from 2005 to 2013. Likewise, we use a multiple measure of the university three missions, distinguishing between research capacity training, scientific research and technology transfer. We find that the probability of a foreign R&D establishment being located in a region is positively affected by the strength of the region’s HES missions, and more specifically by the quality of its scientific research, while its research training capacity and knowledge transfer activities do not seem to play a significant role.
    Keywords: Foreign R&D, universities, location, research activities, development
    JEL: F21 F23 O32
    Date: 2021–07
  10. By: Buckle, Robert A; Creedy, John; Gemmell, Norman
    Abstract: The introduction of performance-based research funding systems (PBRFS) in many countries has generated new information on the impact of these systems. Recent research has considered whether such systems generate convergence or divergence of research quality across universities and disciplines. However, little attention has been given to the processes determining research quality changes. This paper utilises anonymised longitudinal researcher data over fifteen years of the New Zealand PBRFS to evaluate whether research quality changes are characterised by convergence or divergence, and the processes determining those dynamics. A unique feature of this research is the use of longitudinal data to decompose changes in researcher quality into contributions arising from the entry, exit and quality transformations of retained researchers, and their impacts on the convergence or divergence of research quality of universities and disciplines. The paper also identifies how researcher dynamics vary systematically between universities and disciplines, providing new insights into the effects of these systems.
    Keywords: Education policy, Performance-based research funding systems, Research quality, Convergence, Universities,
    Date: 2021

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