nep-sbm New Economics Papers
on Small Business Management
Issue of 2021‒12‒13
twelve papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Innovation Performance and the Signal Effect: Evidence from a European Program By Aurélien Quignon; Nadine Levratto
  2. Misappropriation of R&D Subsidies: Estimating Treatment Effects with One-Sided Noncompliance By Boeing, Philipp; Peters, Bettina
  3. Did US Business Dynamism Recover in the 2010s? By Asier Aguilera-Bravo; Miguel Casares; Hashmat Khan
  4. Islands of Innovation and diversities of innovation in the UK and France By Helen Lawton Smith; Dimitris Assimakopoulos
  5. Direct and indirect effects of universities on European regional productivity By E. Marrocu; R. Paci; S. Usai
  6. Young Firms and Monetary Policy Transmission By Thomas McGregor
  7. Regions and trademarks. Research opportunities and policy insights from leveraging trademarks in regional innovation studies By Carolina Castaldi; Sandro Mendonca;
  8. Greenfield or Brownfield? FDI Entry Mode and Intangible Capital By Haruka Takayama
  9. Programme Laboratoires d’Excellence : vers une restructuration radicale du réseau de collaborations By Nicolas Carayol; Emeric Henry
  10. Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda By John Kuada
  11. Coping with increasing tides: technological change, agglomeration dynamics and climate hazards in an agent-based evolutionary model By Alessandro Taberna; Tatiana Filatova; Andrea Roventini; Francesco Lamperti
  12. The dynamics of direct selling for wine-growing farms By Magali Aubert; Geoffroy Enjolras

  1. By: Aurélien Quignon; Nadine Levratto
    Abstract: This paper seeks to estimate the effect of a European policy that subsidizes innovation investments. By carefully selecting observables, we compare recipients of the program with non-recipient firms to overcome the endogeneity of R&D grants. We conduct a difference-in-differences design on the universe of a unique firm-level dataset of European SMEs between 2008 and 2017. We find a significant effect of proof of concept grants, which implies an increase in the number of patentapplications and the probability of patenting. There are positive impacts on credit financing, which suggest a signal effect to investors about the project quality of young firms.
    Keywords: R&D subsidies, Innovation, Patent, Financing constraints, H2020
    JEL: G28 G32 O30 O38
    Date: 2021
  2. By: Boeing, Philipp (ZEW); Peters, Bettina (ZEW Mannheim)
    Abstract: In evaluating the effectiveness of R&D subsidies, the literature has focused on potential crowding out effects, while the possibility of misappropriation of public funds that results from moral hazard behavior has been completely neglected. This study develops a theoretical framework with which to identify misappropriation. Using Chinese firm-level data for the period 2001-2011, we show that misappropriation is a major threat. 42% of grantees misused R&D subsidies for non-research purposes, accounting for 53% of the total amount of R&D subsidies. In a second step, we study the loss of effectiveness of R&D subsidies in stimulating R&D expenditures that is due to misappropriation. We measure the loss in effectiveness by estimating the causal effect of R&D subsidies in the presence of misappropriation using an intention-to-treat (ITT) estimator and comparing it to the ideal situation (without misappropriation) using the complier average causal effect (CACE). We find that China's R&D policy could have been more than twice as effective in boosting R&D without misappropriation. R&D expenditures could have been stimulated beyond the subsidy amount (additionality), but noncompliant behavior has resulted in a moderately strong partial crowding out effect. We find significant treatment heterogeneity by period, subsidy size, industry, and ownership. Notably, the loss in effectiveness has diminished following a policy reform in 2006. Nevertheless, the misappropriation of public funds considerably undermines the impact of R&D policies in China.
    Keywords: R&D subsidies, misappropriation, China, moral hazard, policy evaluation
    JEL: O31 O38 C21 H21
    Date: 2021–11
  3. By: Asier Aguilera-Bravo (Department of Business, Universidad de Navarra); Miguel Casares (Departamento de Economía, Universidad P´ublica de Navarra); Hashmat Khan (Department of Economics, Carleton University)
    Abstract: We provide evidence showing that the US business entry rates have been either rising or remained flat over the past decade ending their secular decline observed over previous decades. Although the number of startups relative to incumbents has been increasing, their job-size (intensive margin) has decreased substantially. Controlling for these opposite trends reveals that the size-adjusted entry rates have remained flat after 2010 at historically minimum values. The vigorous business dynamism reflected in actual entry rates, therefore, masks the weakness of employment creation in new businesses. The average number of hirings per new establishment has fallen from around 6 jobs in the 1990s to nearly 3 jobs in recent observations.
    Keywords: Business entry rates; Business dynamism; Size-adjusted entry rates; BED; BDS
    JEL: E22 E32
    Date: 2021–04–26
  4. By: Helen Lawton Smith (emlyon business school); Dimitris Assimakopoulos
    Abstract: This paper explores diverging patterns of innovation and regional development in two ‘islands of innovation'. In the early 2000s the growth trajectories of Grenoble and Oxfordshire were compared (Lawton Smith 2003). The focus was on national laboratories as territorial actors in the clustering of high-tech firms. Building on longitudinal data collected since 2003 the theme shifts in this study to the forms that government intervention takes through investments in knowledge organisations in high tech economies and how that leads to particular specialisations of technological advance. While there are many similarities, there are differences in starting points and structures, leading to diversities in innovation. The analysis shows how both are embedded in their national situations and opportunities for development. We focus on two key elements in sustaining clusters of innovation, those of highly skilled labour and networks. We show that in Grenoble, the clusters are orchestrated information and project-based while in Oxfordshire they are labour market dominated and organic. We demonstrate complementary relationships between the national and regional level policy formation and implementation. In both cases importance of place is sustained over time but for different reasons.Este documento explora patrones divergentes de innovación y desarrollo regional en dos "islas de innovación". A principios de la década de 2000 se compararon las trayectorias de crecimiento de Grenoble y Oxfordshire (Lawton Smith 2003). La atención se centró en los laboratorios nacionales como actores territoriales en la agrupación de empresas de alta tecnología. Basándose en los datos longitudinales recopilados desde 2003, el objeto de análisis cambia en este estudio a las formas que la intervención gubernamental adopta a través de inversiones en organizaciones de conocimiento en sectores de alta tecnología y cómo eso conduce a especializaciones particulares del avance tecnológico. Si bien hay muchas similitudes, hay diferencias en los puntos de partida y las estructuras, lo que conduce a las diversidades en la innovación. El análisis muestra cómo ambos están integrados en sus situaciones nacionales y oportunidades de desarrollo.Nos centramos en dos elementos clave para sostener grupos de innovación, los de trabajadores altamente cualificados y redes. Demostramos que en Grenoble, los clusters se organizan entorno a la información y proyectos, mientras que en Oxfordshire están dominados por el mercado de trabajo y son de carácter orgánico. Demostramos relaciones complementarias entre la formación y aplicación de políticas a nivel nacional y regional. En ambos casos, la importancia del lugar se mantiene en el tiempo, pero por diferentes razones.
    Date: 2020–05–01
  5. By: E. Marrocu; R. Paci; S. Usai
    Abstract: For the first time we investigate the effects that Universities exert on Total Factor Productivity dynamics for a very ample sample of 270 European regions over the period 2000-2016. This novel contribution goes beyond the traditional human capital and technological capital indirect effects and proposes a sound empirical assessment of the highly differentiated "third mission" activities. These are unique to engaged academic institutions and shape the key role they play as societal development-promoting agencies. Our analysis provides evidence of sizeable and robust universities direct supply-side effects, which complement the traditional ones in driving European regional productivity growth.
    Keywords: university;Regional Total Factor Productivity;human capital;technological capital;Universities' third mission
    Date: 2021
  6. By: Thomas McGregor
    Abstract: We investigate the role of business dynamism in the transmission of monetary policy by exploitingthe variation in firm demographics across U.S. states. Using local projections, we find that a larger fraction of young firms significantly mutes the effects of monetary policy on the labor market and personal income over the medium term. The firm entry rate and the employment share of young firms are key factors underpinning these results, which are robust to a battery of robustness tests. We develop a heterogeneous-firm model with age-dependent financial frictions that rationalizes the empirical evidence.
    Keywords: firm demographics; business dynamism; monetary policy; local projections; U.S. states.; U.S. states; monetary policy shock; entry rate; population demographics; policy function; startup firm; exit rate; firm productivity; growth rate; Employment; Wages; Personal income; Credit ratings; Global
    Date: 2021–03–05
  7. By: Carolina Castaldi; Sandro Mendonca;
    Abstract: At the intersection of regional and innovation studies, trademark research is producing stylized facts, methodological lessons and policy insights underlining the importance of softer intangible assets for regional resilience and growth. Despite all the recent attention, there are still several opportunities that the present agenda-framing piece tries to canvas, identifying at least two directions for further research: the geography of innovation/entrepreneurship and regional specialization/diversification. Not only do these emerge from a dedicated special issue in Regional Studies (to which this paper also serves as an Editorial), they also unfold in emerging research and policy trajectories.
    Keywords: trademarks, regions, geography, intangibles, innovation, specialization, diversification
    JEL: O3 L5 R1
    Date: 2021–12
  8. By: Haruka Takayama (Economics Faculty, University at Albany, SUNY, U.S.A., Junior Research Fellow, Research Institute for Economics and Business Administration, Kobe University, JAPAN)
    Abstract: When a multinational firm invests abroad, it can either establish a new facility (greenfield investment, GF) or purchase a local firm (cross-border merger and acquisition, M&A). Using a novel US firm-level dataset, I provide the first evidence that multinationals with higher levels of intangible capital systematically invest through GF rather than through M&A. Motivated by this empirical result, I develop and quantify a general equilibrium search model of a multinational firm's choice between M&A and GF. The model implies that equilibrium FDI patterns can be suboptimal from the host country's perspective. In particular, since the gap between the productivities of multinationals and local firms is larger in less developed countries, policymakers there can increase welfare by incentivizing FDI through M&A. By allowing highly productive multinationals to use local intangible capital, this policy increases aggregate productivity more than the laissez-faire outcome.
    Keywords: FDI; Cross-border M&A; Greenfield FDI; Intangible capital
    JEL: F14 F21 F23
    Date: 2021–12
  9. By: Nicolas Carayol (UB - Université de Bordeaux); Emeric Henry (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR)
    Abstract: Financing of academic research clusters is a policy tool that increasingly complements or substitutes for individual grants. In this paper we evaluate such a program, the financing of the Laboratoires d'Excellence (LabEx) in France, comparing the funded proposals to those that were rejected and focusing on projects that received similar grades. We show that (i) the main effect is a complete restructuring of the network of collaborations and in particular an increase in papers co-authored by at least one other member of the cluster (ii) a small but positive effect on productivity (iii) those who benefit most from the funding and increase more their internal links are those not working precisely on the project themes (iv) the program does not promote excellence but rather tends to reduce inequalities in publication levels within the funded clusters.
    Abstract: Les financements de groupements de chercheurs travaillant sur une thématique commune viennent dans beaucoup de pays compléter les financements individuels. Nous évaluons dans ce papier les effets d'un programme de ce type, le financement des Laboratoires d'Excellence (LabEx), en comparant les projets financés à ceux non financés et en se restreignant à ceux ayant reçu une note similaire des évaluateurs. Nous montrons que (i) l'effet principal du financement est de transformer radicalement la structure des collaborations en augmentant le nombre de co-publications entre membres du Labex de plus de 30% ; (ii) l'effet sur la productivité des chercheurs impliqués est positive mais relativement faible ; (iii) ceux qui n'étaient pas au cœur de la thématique initialement bénéficient significativement plus du financement et renforcent le plus leurs collaborations au sein du LabEx ; (iv) le programme LabEx semble moins promouvoir l'excellence que réduire les inégalités au sein des communautés sélectionnées.
    Keywords: Labex,évaluation
    Date: 2020–07
  10. By: John Kuada (Aalborg, Denmark)
    Abstract: Purpose – The purposes of this paper are to review the streams of studies that link financial inclusion to small enterprise growth in Sub-Sahara Africa (SSA), to identify the research gaps they provide, and to prepare an agenda for future research in the field. Design/methodology/approach – The study employs systematic literature search method to identify relevant literature from journals. It then adopts a narrative approach for the review, highlighting the findings from the prior studies and gaps requiring research attention. Findings – The discussions reveal that there is a need for future studies that can unpack small enterprise growth determinants, identify growth-enabling entrepreneurial characteristics and examine the contextual variabilities that shape their effectiveness. Originality/value – There is currently no comprehensive/integrated review exploring the link between financial inclusion and small enterprise growth in SSA. This review therefore provides insights that contribute to the development of this stream of research.
    Keywords: Financial inclusion, entrepreneurship, small businesses, enterprise growth, Africa
    Date: 2021–01
  11. By: Alessandro Taberna; Tatiana Filatova; Andrea Roventini; Francesco Lamperti
    Abstract: By 2050 about 70% of the worldùs population is expected to live in cities. Cities offer spatial economic advantages that boost agglomeration forces and innovation, fostering further concentration of economic activities. For historic reasons urban clustering occurs along coasts and rivers, which are prone to climate-induced flooding. To explore trade-offs between agglomeration economies and increasing climate-induced hazards, we develop an evolutionary agent-based model with heterogeneous boundedly-rational agents who learn and adapt to a changing environment. The model combines migration decision of both households and firms between safe Inland and hazard-prone Coastal regions with endogenous technological learning and economic growth. Flood damages affect Coastal firms hitting their labour productivity, capital stock and inventories. We find that the model is able to replicate a rich set of micro- and macro-empirical regularities concerning economic and spatial dynamics. Without climate-induced shocks, the model shows how lower transport costs favour the waterfront region leading to self-reinforcing and path-dependent agglomeration processes. We then introduce five scenarios considering flood hazards characterized by different frequency and severity and we study their complex interplay with agglomeration patterns and the performance of the overall economy. We find that when shocks are mild or infrequent, they negatively affect the economic performance of the two regions. If strong flood hazards hit frequently the Coastal region before agglomeration forces trigger high levels of waterfront urbanization, firms and households can timely adapt and migrate landwards, thus absorbing the adverse impacts of climate shocks on the whole economy. Conversely, in presence of climate tipping points which suddenly increase the frequency and magnitude of flood hazards, we find that the consolidated coastal gentrification of economic activities locks-in firms on the waterfront, leading to a harsh downturn for the whole economy.
    Keywords: Agglomeration; path-dependency; climate; flood; shock; relocation; migration; agent-based model; tipping point; resilience; lock in.
    Date: 2021–11–29
  12. By: Magali Aubert (UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Geoffroy Enjolras (UGA - Université Grenoble Alpes, CERAG - Centre d'études et de recherches appliquées à la gestion - UGA - Université Grenoble Alpes)
    Abstract: Direct selling is a marketing strategy that is developing quickly, especially in the wine-growing sector. While many studies have focused on the factors and strategies leading to the adoption of short food supply chains, this study aims to study the dynamics and sustainability over time of direct selling as adopted by wine-growing farms. The data examined relates to French farms within the Farm Accountancy Data Network (FADN) operating continuously over the period 2006 to 2012. The analysis calls on a two-step Heckman selection model that considers the duration of the direct selling adoption, conditioned by the farmers' initial decision to adopt such marketing strategy or not. The results emphasise the fact that size is a key factor driving the conversion to direct selling. This marketing channel is chosen by wine-growing farms keen to increase their acreage but to decrease their economic and financial size, as well as their use of phytosanitary products. These results reflect the emergence of a specific model of small wine-growing farms centred on the adoption of direct selling.
    Keywords: France,Heckman,Farm size,Wine-growing,Direct selling
    Date: 2021

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