nep-sbm New Economics Papers
on Small Business Management
Issue of 2021‒10‒11
seven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The Heterogeneous Impact of Market Size on Innovation:Evidence from French Firm-Level Exports By P. AGHION; A. BERGEAUD; M. LEQUIEN; M.J.
  2. The struggle of small firms to retain high-skill workers: Job duration and importance of knowledge intensity By Hugo Castro-Silva; Francisco Lima
  3. Do Targeted R&D Grants Towards Potential Highgrowth Firms Increase Employment and Demand for High Human Capital Workers? By Daunfeldt, Sven-Olov; Halvarsson, Daniel; Gustavsson Tingvall, Patrik; McKelvie, Alexander
  4. Measurement of innovation: the use and misuse of indicators and scoreboards By Attila Havas
  5. Reward Crowdfunding Campaigns: Time-To-Success Analysis By Israel Santos Felipe; Wesley Mendes-da-Silva; Cristiana Cerqueira Leal; Danilo Braun Santos
  6. Incidence and Performance of Spinouts and Incumbent New Ventures: Role of Selection and Redeployability within Parent Firms By Natarajan Balasubramanian; Mariko Sakakibara
  7. Implementing Smart Specialisation Strategies By KELCHTERMANS Stijn; KARDAS Marcin; KLINCEWICZ Krzysztof

  1. By: P. AGHION (Collège de France, LSE et PSE); A. BERGEAUD (Banque de France et CEP); M. LEQUIEN (Insee, Banque de France et PSE); M.J. (Harvard et NBER)
    Abstract: We analyze how demand conditions faced by a firm in its export markets impact its innovation decisions. To disentangle the direction of causality between export demand and innovation, we construct a firm-level export demand shock which responds to aggregate conditions in a firm's export destinations but is exogenous to firm-level decisions. Using exhaustive data covering the French manufacturing sector, we show that French firms respond to exogenous growth shocks in their export destinations by patenting more; and that this response is entirely driven by the subset of initially more productive firms. The patent response arises 2 to 5 years after a demand shock, highlighting the time required to innovate. In contrast, the demand shock raises contemporaneous sales and employment for all firms, without any notable differences between high and low productivity firms. We show that this finding of a skewed innovation response to common demand shocks arises naturally from a model of endogenous innovation and competition with firm heterogeneity. The market size increase drives all firms to innovate more by increasing the innovation rents; yet by inducing more entry and thus more competition, it also discourages innovation by low productivity firms.
    Keywords: Innovation, export, demand shocks, patents
    JEL: D21 F13 F14 F41 O30 O47
    Date: 2020
  2. By: Hugo Castro-Silva (Universidade de Lisboa); Francisco Lima (Universidade de Lisboa)
    Abstract: In the knowledge economy, skilled workers play an important role in innovation and economic growth. However, small firms may not be able to keep these workers. We study how the knowledge-skill complementarity relates to job duration in small and large firms, using a Portuguese linked employer-employee data set. We select workers displaced by firm closure and estimate a discrete-time hazard model with unobserved heterogeneity on the subsequent job relationship. To account for the initial sorting of displaced workers to firms, we introduce weights in the model according to the individual propensity of employment in a small firm. Our results show a lower premium on skills in terms of job duration for small firms. Furthermore, we find evidence of a strong knowledge-skill complementarity in large firms, where the accumulation of firm-specific human capital also plays a more important role in determining the hazard of job separation. For small firms, the complementarity does not translate into longer job duration, even for those with pay policies above the market. Overall, small knowledge-intensive firms struggle to retain high skill workers and find it harder to leverage the knowledge-skill complementarity.
    Keywords: knowledge intensity, technology, firm size, small firms, job duration, skills
    JEL: A1
    Date: 2021
  3. By: Daunfeldt, Sven-Olov (Institute of Retail Economics (Handelns Forskningsinstitut)); Halvarsson, Daniel (the Ratio Institute); Gustavsson Tingvall, Patrik (Södertörn University Stockholm, Sweden); McKelvie, Alexander
    Abstract: Most previous studies on the employment effects of government R&D grants targeting SMEs are characterized by data-, measurement-, and selection problems, making it difficult to construct a relevant control group of firms that did not receive a R&D grant. We investigate the effects on employment and firm-level demand for high human capital workers of two Swedish programs targeted towards growth-oriented SMEs using Coarsened Exact Matching. Our most striking result is the absence of any statistically significant effects. We find no robust evidence that the targeted R&D grant programs had any positive and statistically significant effects on the number of employees recruited into these SMEs, or that the grants are associated with an increase in the demand for high human capital workers. The lack of statistically significant findings is troublesome considering that government support programs require a positive impact to cover the administrative costs associated with these programs.
    Keywords: Innovation policy; R&D grants; Matching grants; Statistical matching methods; High human capital; Firm growth; Outcome additionality
    JEL: H81 L25 L26 O38
    Date: 2021–10–01
  4. By: Attila Havas (Centre for Economic and Regional Studies, Institute of Economics)
    Abstract: The choice of indicators to measure innovation processes and assess performance is of vital significance. This paper argues that those economic theories give a more accurate, more reliable account of innovation activities that follow a broad approach of innovation, that is, consider all knowledge-intensive activities leading to new products (goods or services), processes, business models, as well as new organisational and managerial solutions, and thus take into account various types, forms and sources of knowledge exploited for innovation by all sorts of actors in all economic sectors. In contrast, the narrow approach to innovation focuses on the so-called high-tech goods and sectors. The broad approach is needed to collect data and other types of information, on which sound theories can be built and reliable and comprehensive analyses of innovation activities can be offered to decision-makers to underpin public policies and company strategies.
    Keywords: Schools of economics; Mainstream economics; Evolutionary economics of innovation; Measurement of innovation; Composite indicators; Scoreboards, league tables
    JEL: B52 C80 O31 O38 Y10
    Date: 2019–11
  5. By: Israel Santos Felipe (Federal University of Ouro Preto/Brazil and NIPE/Portugal); Wesley Mendes-da-Silva (Sao Paulo School of Business Administration of The Fundação Getulio Vargas); Cristiana Cerqueira Leal (School of Economics and Management & NIPE - Center for Research in Economics and Finance, University of Minho); Danilo Braun Santos (Federal University of Sao Paulo/Brazil)
    Abstract: The time-to-success of reward crowdfunding campaigns constitutes a relevant topic that has been neglected in business literature. In this study, we employ parametric and semi-parametric models of survival analysis to identify the determining factors of the duration of success of these campaigns. Based on more than 4,200 reward crowdfunding campaigns, our results are robust for controls and reveal that the campaigns that attain success most rapidly are located predominantly in cities with greater income inequality. These are cities that are characterized by lower fundraising targets and receive a larger number of pledges. In addition, our covariates indicate a non-constant influence on time-to-success during the fundraising period.
    Keywords: crowdfunding; entrepreneurial finance; fintech; survival analysis; financial innovation
    JEL: L26 G32 G41 O31 C41 I31
    Date: 2021
  6. By: Natarajan Balasubramanian; Mariko Sakakibara
    Abstract: Using matched employer-employee data from 30 U.S. states, we compare spinouts with new ventures formed by incumbents (INCs). We propose a selection-based framework comprising idea selection by parents to internally implement ideas as INCs, entrepreneurial selection by founders to form spinouts, and managerial selection to close ventures. Consistent with parents choosing better ideas in the idea selection stage, we find that INCs perform relatively better than spinouts, and more so with larger parents. Regarding the entrepreneurial selection stage, we find evidence consistent with resource requirements being a greater entry barrier to spinouts and greater information asymmetry promoting spinout formation. Parents’ resource redeployment opportunities are associated with lower relative survival of INCs, consistent with their being subject to greater selection pressures in the managerial selection stage.
    Keywords: spinouts, new venture formation process, new venture performance, selection, resource redeployability
    Date: 2021–09
  7. By: KELCHTERMANS Stijn; KARDAS Marcin; KLINCEWICZ Krzysztof
    Abstract: The report analyses the progress of Member States in the implementation of national and regional smart specialisation strategies (RIS3) in 2017 through an assessment of policy developments, progress in implementation of the different strategies, monitoring mechanisms and observed impacts. Using publicly available data as well as an expert survey, the analysis shows that in most countries RIS3 processes have been conducted at both national and regional levels. The use of thematic priorities for research and innovation, engaging stakeholders and opening up to bottom-up initiatives often implied a radical change to previous policymaking practices. An analysis of RIS3 indicators suggests that a proper ‘priority taxonomy’ is lacking, raising doubts whether countries and regions are truly selective in setting priorities, whether they align the priority setting process between the national and regional level and whether the resulting set of priorities is really a factor of differentiation for countries and regions. The impact of RIS3 as a policy paradigm appears more pronounced among the moderate and modest innovators. The report concludes by highlighting the need for more granular indicators to analyse RIS3 priorities as well as their implementation and impact.
    Keywords: smart specialisation strategies, RIS3
    Date: 2021–09

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