nep-sbm New Economics Papers
on Small Business Management
Issue of 2021‒09‒20
sixteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The Role Of CEO Characteristics In Firm Innovative Performance: A Comparative Analysis Of EU Countries And Russia By Fernanda Ricotta; Victoria Golikova; Boris Kuznetsov
  2. The Prerequisites for Increasing the R&D Activity of Companies in Finland By Ali-Yrkkö, Jyrki; Halme, Kimmo; Deschryvere, Matthias; Lehenkari, Janne; Piirainen, Kalle; Suominen, Arho
  3. Entrepreneurial Migration By Bryan, Kevin; Guzman, Jorge
  4. Project Aid and Firm Performance By Marchesi, Silvia; Masi, Tania; Paul, Saumik
  5. The Color of Money: Federal vs. Industry Funding of University Research By Tania Babina; Alex Xi He; Sabrina T. Howell; Elisabeth Ruth Perlman; Joseph Staudt
  6. The impact of the six European Key Enabling Technologies (KETs) on regional knowledge creation By Colin Wessendorf; Alexander Kopka; Dirk Fornahl
  7. Linking real estate data with entrepreneurial ecosystems: Coworking spaces, funding and founding activity of start-ups By Gauger, Felix; Strych, Jan-Oliver; Pfnür, Andreas
  8. Merging Competencies, Valuing Diversity: The Multicultural Enterprise as an Emerging Model By Arrighetti, Alessandro; Lasagni, Andrea; Gnarini, Daniela; Semenza, Renata
  9. Productivity Dispersion, Entry, and Growth in U.S. Manufacturing Industries By Cindy Cunningham; Lucia Foster; Cheryl Grim; John Haltiwanger; Sabrina Wulff Pabilonia; Jay Stewart; Zoltan Wolf
  10. Public Service Innovation Network for Social Innovation: A European overview By Céline Merlin-Brogniart; Lars Fuglsang; Ada Scupola; Anne Hansen; Rolf Rønning; Siv Magnussen; Alberto Peralta; Miklós Rosta; Márton Katona; Éva Révész
  11. William J. Baumol: Innovative Contributor to Entrepreneurship Economics By Henrekson, Magnus; Stenkula, Mikael
  12. The critical role of the State in the emergence and scaling-up process of social innovation networks By Céline Merlin-Brogniart; Christine Liefooghe; Miklós Rosta; Márton Katona
  13. Employer Association in Italy. Trends and Economic Outcomes By Bernardo Fanfani; Claudio Lucifora; Daria Vigani
  14. Impact of the COVID-19 crisis on Spanish firms’ financial vulnerability By Roberto Blanco; Sergio Mayordomo; Álvaro Menéndez; Maristela Mulino
  15. Intellectual Capital, and Knowledge Processes for Organizational Innovativeness across Industries: The Case of Poland – the full version of a study published in JIC By Wioleta Kucharska
  16. Small and medium business amid coronacrisis By Barinova Vera; Zemtsov Tsepan; Tsareva Yulia

  1. By: Fernanda Ricotta (University of Calabria); Victoria Golikova (National Research University Higher School of Economics); Boris Kuznetsov (National Research University Higher School of Economics)
    Abstract: In this paper, we investigate whether CEO characteristics (owner-manager status, age and gender) influence firm innovative performance and test empirically if the effect differs for market and transition economies. We use cross-sectional data of manufacturing firms in six EU countries and in Russia. To address heterogeneity, we explore innovation performance by size among SMEs and large businesses and by Pavitt sector. In both institutional settings, the presence of a family CEO either has no effect or improves innovative performance. On the contrary, the role of CEO gender is different in Russia and in the EU. In the EU, female CEOs are associated with less innovation, especially in SMEs and in the traditional sector. In Russia, CEO gender is not associated with differences in innovative performance and when it is (for the traditional sector), it favors female-run firms. For CEO age, considering product innovations, the oldest group of CEOs are less active in European firms while mature CEOs are more innovative in Russia.
    Keywords: CEO age, gender, manager-owner status, innovation, manufacturing firms
    JEL: D21 L60 P50
    Date: 2021
  2. By: Ali-Yrkkö, Jyrki; Halme, Kimmo; Deschryvere, Matthias; Lehenkari, Janne; Piirainen, Kalle; Suominen, Arho
    Abstract: Abstract This study focuses on factors affecting companies’ research and development (R&D), Finland as a location for R&D activities, and R&D intensity (R&D/GDP). According to our results, R&D investments are increasing in Finland but the R&D intensity will not reach 4 % target by 2030. Our results showed that Sweden, Estonia (and to some extent other Baltic countries), and Germany are Finland’s main competitors regarding the location of R&D investments. The key factors affecting R&D location are the availability of R&D personnel, and the geographical proximity to the companies’ other units and customers. We recommend comprehensive and long-term innovation policy which considers policy actions – not only affecting the increase of R&D and its impacts – but also the increase of capabilities. It should be noted, however, that rather than the ultimate target, R&D is a means to reach other goals.
    Keywords: R&D, Research, Development, Target, Location, Factors, Private, Company, Firm, Competition
    JEL: D22 D25 E22 F23 H25 O3 O32 O38
    Date: 2021–09–09
  3. By: Bryan, Kevin; Guzman, Jorge
    Abstract: We use cross-state business registrations to track the geographic movement of startups with high growth potential. In their first five years, 6.6% percent of these startups move across state borders. Though startup births are concentrated geographically, hubs like Silicon Valley and Boston on net lose startups to entrepreneurial migration. A revealed preference approach nonparametrically identifies the average utility of cities to migrant founders. University towns and startup hubs have low relative utility. This pattern is due neither to vertical sorting nor industrial specialization. The higher-quality startups move to lower-tax, business-friendly cities, while less growth-oriented startups move to low-tax, high-amenity cities.
    Date: 2021–09–08
  4. By: Marchesi, Silvia (University of Milan Bicocca); Masi, Tania (University of Chieti Pescara); Paul, Saumik (Newcastle University)
    Abstract: This paper evaluates the effect of development project aid from the World Bank and China on firms' sales growth, using a large dataset of 110864 firms spanning 121 countries between 2001 and 2016. We find that, contrary to the World Bank, Chinese ODA projects increase, on average, firm sales and, compared to sector-specific, Chinese region-specific aid positively affect firm performance. Finally, we show that the positive effect of Chinese aid is stronger for firms lacking transport infrastructure (and with better electricity provision), suggesting that aid may improve firm performance by releasing their infrastructure constraints.
    Keywords: aid effectiveness, world bank projects, chinese projects, geo-coding, firm growth
    JEL: F35 O19 D22
    Date: 2021–08
  5. By: Tania Babina; Alex Xi He; Sabrina T. Howell; Elisabeth Ruth Perlman; Joseph Staudt
    Abstract: U.S. universities, which are important producers of new knowledge, have experienced a shift in research funding away from federal and towards private industry sources. This paper compares the effects of federal and private university research funding, using data from 22 universities that include individual-level payments for everyone employed on all grants for each university year and that are linked to patent and Census data, including IRS W-2 records. We instrument for an individual’s source of funding with government-wide R&D expenditure shocks within a narrow field of study. We find that a higher share of federal funding causes fewer but more general patents, more high-tech entrepreneurship, a higher likelihood of remaining employed in academia, and a lower likelihood of joining an incumbent firm. Increasing the private share of funding has opposite effects for most outcomes. It appears that private funding leads to greater appropriation of intellectual property by incumbent firms.
    Keywords: R&D, Science, Universities, Innovation, Entrepreneurship
    JEL: O3 G18 G38 I2
    Date: 2021–09
  6. By: Colin Wessendorf; Alexander Kopka; Dirk Fornahl
    Abstract: The European Commission summarized six young General Purpose Technologies (GPTs) under the label of European Key Enabling Technologies (KETs) in 2009. GPTs are broad, pervasive and widely diffused technologies that enable knowledge creation and economic growth. This study analyzes to what extent the KETs’ structural relevance within their regional knowledge bases leads to regional knowledge creation. Additionally, we analyze whether the structural relevance and the regional knowledge presence in KETs interact with regards to regional knowledge creation. The ‘structure’ of a regional knowledge base describes the relation of all knowledge being present within a given region, while ‘structural relevance’ describes a technology’s impact on the structure. Our analysis focuses on the time period from 1986-2015 and includes Germany’s 141 Labor Market Regions (LMRs) as regional spatial units. Our database consists of patent data from which we map the structure of the regional knowledge bases, by constructing technological spaces based on technology co-occurrences on patents. The structural relevance is operationalized with the help of Social Network Analysis (SNA), by measuring the changes that the removal of KETs causes in the structure of technological spaces. Our findings indicate that KETs enable knowledge creation in different ways. They show that the effects of KETs on regional knowledge creation activities are KET-specific. Furthermore, it proves essential to distinguish between ‘knowledge presence’ and ‘structural knowledge relevance’ when addressing the innovation-spawning function of KETs. Thus, for both further research and for policy-making, it is a fundamental requirement to address KET-driven knowledge creation in particular KET-specific ways.
    Keywords: General purpose technologies, GPT, key enabling technologies, KET, regional innovation, regional knowledge base, knowledge space, technological space, technological integration, German regions
    JEL: O31 O33 R11 R58
    Date: 2021–09
  7. By: Gauger, Felix; Strych, Jan-Oliver; Pfnür, Andreas
    Abstract: This data article describes a panel dataset that combines flexible office space market data with entrepreneurial data, such as founding and funding of ventures in 47 European cities. One adaption of new ways of working are coworking spaces. They are shared working environments that offer office space and intangible resources, such as knowledge sharing, collaboration and networking. Access to flexible office space for self-employed, start-ups, and corporates is a key resource for businesses. Covid-19 has shown that space provision is becoming more flexible and ventures increasingly use scalable space instead of long-term lease agreements for office space or than owning it. Deskmag counts 18,700 coworking spaces worldwide in the year of 2018 with 1.65 million coworkers and high future growth expectations after COVID-19 [1]. Data were collected through two sources. Data about coworking spaces were collected through a web scraper crawling for coworking spaces within a city as of December 31, 2018. Those data were manually enriched by real estate and economic variables, such as the office high prime rent and office market size. Data about the funding and founding of ventures were obtained through using the database Crunchbase, including all start-ups in a city with their type of funding (including: seed, venture capital, private equity, debt convertibles and others) and their financing rounds. The Crunchbase database lists mostly young firms, commonly called start-ups and small medium enterprises (SME), and their financing with external funding. It includes firms that have needed or might need funding in the near future, or have already got funding. Hence, it is possible to relate spatial clusters with entrepreneurial activity and analyze for example the influence of (flexible) office markets on founding activity. This dataset enables researchers and practitioners to further explore important questions regarding the nexus between the real estate industry, entrepreneurship behavior, start-ups and regional clusters. Due to the scarcity of publicly available quality flexible office space market data, the dataset detailed in this article may play a relevant role to be ready to be used by researchers and practitioners. Funding data can be used for regional analysis, growth development, or any other economic issues.
    Date: 2021
  8. By: Arrighetti, Alessandro; Lasagni, Andrea; Gnarini, Daniela; Semenza, Renata
    Abstract: Multicultural enterprises can be considered as a subset of the complex phenomenon of migrant entrepreneurship Starting from a theoretical overview of the phenomenon, the study analyzes multicultural enterprise experiences. Various topics, ranging from perceived advantages to obstacles encountered in everyday business, are discussed. In its conclusion, the study presents recommendations on how to adjust support actions to the specific needs of multicultural enterprises.
    Keywords: Multicultural Firm,Migrant Firm
    JEL: L20
    Date: 2020
  9. By: Cindy Cunningham; Lucia Foster; Cheryl Grim; John Haltiwanger; Sabrina Wulff Pabilonia; Jay Stewart; Zoltan Wolf
    Abstract: Within-industry productivity dispersion is pervasive and exhibits substantial variation across countries, industries, and time. We build on prior research that explores the hypothesis that periods of innovation are initially associated with a surge in business start-ups, followed by increased experimentation that leads to rising dispersion potentially with declining aggregate productivity growth, and then a shakeout process that results in higher productivity growth and declining productivity dispersion. Using novel detailed industry-level data on total factor productivity and labor productivity dispersion from the Dispersion Statistics on Productivity along with novel measures of entry rates from the Business Dynamics Statistics and productivity growth data from the Bureau of Labor Statistics for U.S. manufacturing industries, we find support for this hypothesis, especially for the high-tech industries.
    Keywords: dispersion; entry; innovation; productivity; manufacturing; high-tech industries
    JEL: O3 O4
    Date: 2021–08
  10. By: Céline Merlin-Brogniart (CLERSÉ - Centre Lillois d’Études et de Recherches Sociologiques et Économiques - UMR 8019 - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Lars Fuglsang (Roskilde University); Ada Scupola (Roskilde University); Anne Hansen (Roskilde University); Rolf Rønning (The Inland Norway University of Applied Sciences); Siv Magnussen (The Inland Norway University of Applied Sciences); Alberto Peralta (UAH - Universidad de Alcalá - University of Alcalá); Miklós Rosta (Corvinus University of Budapest); Márton Katona (Corvinus University of Budapest); Éva Révész (Corvinus University of Budapest)
    Abstract: In the context of the modernization of public management in Europe, the attention paid to social entrepreneurs for innovation is increasingly important. This paper reveals that these actors significantly contribute to the development of collaborative governance aimed at improving social innovation related to public service through their role as initiator, boundary spanner or network leader. However, the public sector actors involved in the governance also have a significant role to play in enabling these innovations to emerge. This paper analyzes the forms and processes of innovation taken by this multi-actors collaborative governance. It is based on the study of 25 case studies associated with five countries of the European Union.
    Date: 2021–01–21
  11. By: Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Stenkula, Mikael (Research Institute of Industrial Economics (IFN))
    Abstract: William J. Baumol was one of the most prolific economists of his generation, analyzing a broad range of central economic issues addressing real problems of the world. In this essay, we present and critically evaluate Baumol’s research contributions in entrepreneurship economics and point to areas for future research. Baumol contributed an impressive number of important insights, increasing our understanding of entrepreneurship from both a macro and a micro perspective. He also devoted a large part of his writings to discussing public policy, linking his theoretical insights with policy issues in practice. His analyses are rooted in contemporary mainstream neoclassical economics, and one of his main objectives was to integrate the entrepreneur into this tradition. Today, Baumol is best known for his tripartite distinction between productive, unproductive, and destructive entrepreneurship and his associated idea that the institutional framework, “the rules of the game,” will determine how entrepreneurs allocate their time and effort across different—productive or unproductive—activities. An institutional environment that encourages productive entrepreneurship and spontaneous experimentation while disincentivizing unproductive activities becomes, through this insightful lens, the driving force of economic growth. As an economist, Baumol was knowledgeable and well acquainted with earlier scholars and their writings about entrepreneurship. Baumol’s writings were greatly inspired by Joseph Schumpeter’s views on entrepreneurship, and he made several attempts to formalize Schumpeter’s concept of the innovative entrepreneur. Baumol was in all senses an innovative contributor to entrepreneurship economics. His work has inspired the research community of entrepreneurship scholars, but like all great scientists, he also encountered criticism.
    Keywords: Entrepreneurship; Innovation; Institutions; Rent seeking
    JEL: B41 D02 J48 L26 L53 O31 Z10
    Date: 2021–09–10
  12. By: Céline Merlin-Brogniart (CLERSÉ - Centre Lillois d’Études et de Recherches Sociologiques et Économiques - UMR 8019 - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Christine Liefooghe (TVES - Territoires, Villes, Environnement & Société - ULR 4477 - ULCO - Université du Littoral Côte d'Opale - Université de Lille); Miklós Rosta (Corvinus University of Budapest); Márton Katona (Corvinus University of Budapest)
    Abstract: In the context of social innovation, collaborative governance and in particular innovation networks has gained importance. This paper focuses on the potential for scaling up according to the institutional arrangements and context of different countries. A grid for analyzing the degree of state control of citizens' and local initiatives is proposed in order to study the different forms and intensity of scaling up.
    Date: 2021–01–21
  13. By: Bernardo Fanfani; Claudio Lucifora (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Daria Vigani
    Abstract: This paper analyses the characteristics of employer association in Italy, using unique firm-level data with information on employers’ affiliation choices as well as their characteristics. We document that a persistent decline in affiliation rates to employers’ associations has occurred during the last two decades. We show that affiliated companies are positively selected, as they tend to be larger, older, more likely to be located in richer regions, to be export- and innovation-oriented, as well as more likely to provide training. Using longitudinal data and regression decomposition techniques, we show that more fragile and less innovative firms have been more affected by the persistent decline in affiliation rates. Using a firm fixed effect identification strategy, we also show that firms that become members of an employer association tend to experience a faster growth in employment, but there are no significant relationships with productivity dynamics. Finally, the paper analyses whether the level of representativeness of employers’ associations has any effect on bargaining outcomes concerning the level of minimum wages, which are settled by these organizations in national industry-wide collective contracts after a negotiation process with trade unions. Results from this analysis show that a higher representativeness of employers’ organizations has a weak positive relationship with the level of bargained wages.
    Keywords: industrial relations; employer association; collective bargaining; wage setting.
    JEL: J52 J31 J41
    Date: 2021–07
  14. By: Roberto Blanco (Banco de España); Sergio Mayordomo (Banco de España); Álvaro Menéndez (Banco de España); Maristela Mulino (Banco de España)
    Abstract: This paper analyses the impact of the COVID-19 crisis on the financial vulnerability of the Spanish corporate sector. The simulations conducted show that the crisis significantly increased firms’ liquidity needs in 2020, although the measures adopted by national and international authorities eased access to credit under favourable conditions, which substantially mitigated the short-term liquidity risks. However, the sharp fall in profitability levels, coupled with debt growth, appears to have resulted in a marked increase in the proportion of vulnerable firms (i.e. those with negative equity or high debt levels), which would be more pronounced among SMEs and the sectors hardest hit by the pandemic. The projections for the period 2021-2023 indicate a gradual decline in these percentages, in keeping with the expected recovery in activity. The results also suggest that, as a result of the crisis, the proportion of firms at risk of becoming non-viable on account of persistent losses through to 2023 would rise by between 2 pp and 3 pp, while the proportion of those that will remain viable but struggle to repay their debts out of their expected future earnings (overindebted firms) would rise by between 3 pp and 4.7 pp. In addition, the simulations show that the unsustainable debt of firms that have become overindebted but remain viable would stand between €9 billion and €18.6 billion, depending on the scenario considered, with the bulk of this amount accounted for by SMEs.
    Keywords: COVID-19, liquidity needs, profitability, indebtedness, credit, solvency, viability
    JEL: E51 E52 G21
    Date: 2021–08
  15. By: Wioleta Kucharska (Gdansk University of Technology, Gdansk, Poland)
    Abstract: Purpose: This study aims to present the overview of intellectual capital creation micro-mechanisms concerning formal and informal knowledge processes. The organizational culture, transformational leadership, and innovativeness are also included in the investigation as ascendants and consequences of the focal relation of intellectual capital and knowledge processes. Method: The empirical model was developed using the structural equation modeling (SEM) method based on a sample of 1,418 Polish knowledge workers employed in the construction, healthcare, higher education (HE), and information technology (IT) industries. Findings: The study exposes that the essence of transformational leadership innovativeness oriented is developing all intellectual capital components. To do so, leaders must support both formal and informal knowledge processes through the organizational culture of knowledge and learning. Furthermore, for best results of the knowledge transformation into intellectual capital, the learning culture must be shaped by both components: learning climate and acceptance of mistakes. Originality: This study presents the "big picture" of all intellectual capital creation micro- mechanisms linking transformational leadership with organizational innovativeness and explains the "knowledge paradox" identified by Mabey and Zhao (2017). This explanation assumes that intellectual capital components are created informally (i.e., human, and relational ones) and formally (i.e., structural ones). Therefore, for best effects, both formal and informal knowledge processes must be supported. Furthermore, this study exposes that the intensity of all explored micro-mechanisms is industry-specific. Implications: Presented findings can be directly applied to organizations to enhance innovativeness. Namely, leaders who observe that the more knowledge is formally managed in their organizations, the less effective the knowledge exchange is - should put more effort into supporting informal knowledge processes to develop human and relational intellectual capital components smoothly. Shortly, leaders need to implement an authentic learning culture, including the mistakes acceptance component, to use the full organizational potential to achieve intellectual capital growth. Intellectual capital growth is essential for innovativeness.
    Keywords: learning culture, knowledge culture, transformational leadership, innovations, intellectual capital, tacit knowledge, knowledge processes, healthcare industry, higher education, IT industry, construction industry, gender studies
    Date: 2021–09
  16. By: Barinova Vera (Gaidar Institute for Economic Policy); Zemtsov Tsepan (Gaidar Institute for Economic Policy); Tsareva Yulia (Gaidar Institute for Economic Policy)
    Abstract: The unprecedented scale of the COVID-19 epidemic created harsh environment for operation of small and medium-sized businesses: decline in household incomes and demand, shutdown of foreign markets and uncertainty of the economic situation. The lockdown introduced in April 2020, resulted in temporary suspension of activities of many enterprises providing services: thus, for instance, trade, catering, hotels, repair shops, hairdressers, etc. Activity of small businesses reduced to the values observed during the crisis of 2015. According to our estimates, the crisis affected more than 75% of SMEs, although about 11% of enterprises and 5.5 million employees2 are concentrated in the most affected industries. In March-April 2020, revenues in some industries fell by more than 90%. There was a high likelihood of closing millions of businesses and reducing the number of people employed in the SME sector by several million
    Keywords: Russian economy, small businesses, medium-sized enterprises, OVID-19, lockdown
    JEL: C53 E37 L21 L52 I18 I19
    Date: 2021

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