nep-sbm New Economics Papers
on Small Business Management
Issue of 2022‒01‒03
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Firms going digital: Tapping into the potential of data for innovation By David Gierten; Steffen Viete; Raphaela Andres; Thomas Niebel
  2. Reaching for the Stars: When Does Basic Research Collaboration between Firms and Academic Star Scientists Benefit Firm Invention Performance? By Relinde Colen; Rene Belderbos; Stijn Kelchtermans; Bart Leten
  3. Financial Inclusion and Small Enterprise Growth in Africa: Emerging Perspectives and Research Agenda By John Kuada
  4. Italian firms in times of troubles: Covid-19 pandemic as a test of structural solidity By Stefano Costa; Federico Sallusti; Claudio Vicarelli; Davide Zurlo
  5. Barriers to Creative Destruction: Large Firms and Nonproductive Strategies By Salomé Baslandze
  6. Wealth Inequality, Uninsurable Entrepreneurial Risk and Firms Markup By Samuel Brien
  7. Improving knowledge transfer and collaboration between science and business in Spain By OECD
  8. The Implications of Ageing for Business Dynamics By Igor Fedotenkov; Anneleen Vandeplas
  9. The Effect of Rural Electrification on Firm Creation - New Evidence from Ghana By Tom Carlowitz
  10. Do small food businesses enable small farms to connect to regional food systems? Evidence from 9 European regions By Paola Hernández; Francesca Galli; Paolo Prosperi; Šūmane Sandra; Dominic Duckett; Henrik Eli Almaas
  11. Environmental Regulation and Labour Demand among Vietnamese SMEs By Matthew Sharp
  12. Technology Adoption and Skills A Pilot Study of Kent SMEs By Catherine Robinson; Christian Siegel; Sisi Liao
  13. The Impact of Small- and Medium-Size Hydro-Power Plants on Farming in Rural Vietnam By Seewald, Eva

  1. By: David Gierten; Steffen Viete; Raphaela Andres; Thomas Niebel
    Abstract: This paper aims to help policy makers understand and improve the conditions for firms to thrive in an increasingly digital economy where data has become an important resource for innovation. The paper: 1) analyses trends in the adoption of information and communication technologies and activities that enable firms to collect, store and use data, including big data analysis (BDA); 2) provides new evidence from micro-econometric analysis of firms’ BDA and innovation in products, processes, marketing and organisation, considering different types of data used for BDA; 3) examines business models of firms that successfully innovate with data; and 4) discusses policies that can help improve the conditions for all firms to go digital and tap into the potential of data for innovation.
    Date: 2021–12–20
  2. By: Relinde Colen; Rene Belderbos; Stijn Kelchtermans; Bart Leten
    Abstract: While their expertise and scientific excellence make academic star scientists attractive collaboration partners for firms, this study indicates that firms face difficulties in capturing value from collaborations with academic stars. Stars are time constrained, may be less committed to commercialization, and can be a source of undesired knowledge spillovers to other firms. The purpose of this study is to recognize the contingencies under which collaboration with star scientists is positively associated with a firm’s ability to produce valuable patents (invention performance). We analyze a panel dataset on the collaborations in basic research(publication data) and invention performance (patent output) of 60 prominent pharmaceutical firms. We find that basic research collaboration with academic stars is on average not associated with a performance premium above the overall positive influence of collaborating with academia. We only observe this premium if the star scientist abstains from simultaneous collaboration with other firms (‘dedication’) and extend her collaboration with the firm to involvenot only basic but also applied research (‘translation’). Extending prior work that has focused on corporate star scientists, we find that if the collaboration involves an internal firm star scientist, a translational contribution of the academic star is no longer a prerequisite, and may even be detrimental to inventive performance. Our findings inform the literatures on industry-science links and firms’ (scientific) absorptive capacity by revealing the crucial contingencies for firms to benefit from partnering with the best and brightest among academic scientists. Practitioner Points: - Intuitively we may expect that collaborating with the very top among academics benefits firms, yet collaborating with these academic star scientists also entails important challenges. - Organizations seeking to benefit from the extraordinary expertise of academic star scientists should take into account two important conditions: o The top academic should be a dedicated collaboration partner, and avoid simultaneous collaboration with other firms. o The top academic should not only be involved in basic research but also in applied research collaboration with the firm, enhancing her ability to assist the firm in the translation of research into a marketable product. - When the firm also employs a star scientist who is engaged in the collaborative research with an academic star scientist, the translation of the joint research is better performed by the internally employed star scientists instead of the academic star scientist.
    Keywords: university-industry collaboration, knowledge transfer, star scientists
    Date: 2021–11–29
  3. 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
  4. By: Stefano Costa; Federico Sallusti; Claudio Vicarelli; Davide Zurlo
    Abstract: In this paper we study the structural robustness of Italian business system, using Covid-19 pandemic as an exogenous event to test it. To this aim, we use the ROC (Receiver Operating Characteristics) methodology, quite new for Economics, to classify Italian firms according to their economic solidity, obtaining a taxonomy based on a wide set of characteristics. Our results show that the number of 'Solid' firms are less than one fifth of the universe of Italian enterprises but they represent the lion share in terms of employment and value added. 'Fragile' and 'Risky' firms, albeit much less relevant for the creation of value added, account for over one third of total employment, so that they are a worrisome issue for policy makers. The pandemic crisis has clearly both a size and sector-related dimension: Risky and Fragile conditions prevail among firms with smaller economic size (a broad definition of firm size) and among those operating in Construction and Other services. Finally, we find that factors such as firms' performance, internal and external organization, although significant, play a less relevant role than economic size and digitalization/innovation in determining Italian firms' solidity to shocks such as the Covid-19 one.
    Keywords: Covid-19; ROC analysis; economic solidity to pandemic.
    Date: 2021–12–20
  5. By: Salomé Baslandze
    Abstract: This working paper reviews recent empirical evidence on large firms and nonproductive strategies that hinder creative destruction and reallocation. The focus is on three types of nonproductive strategies: political connections, nonproductive patenting, and anticompetitive acquisitions. Across different contexts using granular micro data sets, we overwhelmingly see that as firms gain market share, they increasingly rely on nonproductive strategies but reduce their productive, innovation-based strategies. I also discuss theoretical channels, aggregate implications, and potentials for some policies.
    Keywords: creative destruction; innovation; growth; patents; political connections; firm dynamics
    JEL: O3 O4
    Date: 2021–09–30
  6. By: Samuel Brien
    Abstract: This paper examines the effect of wealth concentration on firms’ market powerwhen firm entry is driven by entrepreneurs facing uninsurable idiosyncratic risks. Undergreater wealth concentration, households in the lower end of the wealth distribution aremore risk averse and less willing (or able) to bear the risk of entrepreneurial activities.This has implications for firm entry, competitiveness, and market power.I calibrate a Schumpeterian model of endogenous growth with heterogeneous riskaverse entrepreneurs competing to catch up with firms. This model is unique in thatboth household wealth distribution and a measure of firm markup are endogenouslydetermined on a balanced growth path. I find that a spread in the wealth distributiondecreases entrepreneurial firm creation, resulting in greater aggregate firm marketpower. This result is supported by time series evidence obtained from the estimationof a structural panel VAR with OECD data from eight countries.
    Keywords: Wealth inequality, market power, growth, Schumpeterian, endogenous growth, entrepreneur
    JEL: E22 E21 L12 O31 O33
    Date: 2021–11
  7. By: OECD
    Abstract: This study provides an in-depth assessment of Spain’s innovation system and the current state of knowledge transfer and collaboration. It identifies five priority areas for reform and long-term investment that should provide the basis of a new Roadmap. These include granting greater operational autonomy to universities and public research organisations in return for accountability on outcomes, putting in place a better integrated system of incentives that takes both individuals and organisations into account, and ensuring sustained investment in core capabilities to connect science and business. To put these reforms in motion and sustain them over time, a new type of covenant between science and society is needed in Spain today. This should be based on a ‘new deal’ between actors in the science and innovation system and society at large, committing to place the pursuit of concrete social benefits in return for more stable and predictable support.
    Keywords: country study, higher education institutions, innovation, innovation policy, intermediation agents, knowledge transfer, public research organisations, science-business collaboration, universities
    JEL: O3 O38 I23
    Date: 2021–12–16
  8. By: Igor Fedotenkov; Anneleen Vandeplas
    Abstract: This paper studies the link between the demographic structure of populations and firm entry rates in the European Union. We find that firm entry rates have a hump-shaped relationship with human demography, with the 40-54 age group having the strongest positive impact on firm entry. Potential mechanisms through which this relationship may arise include labour market participation, demand and access to entrepreneurship (linked with experience and access to finance). Perhaps more surprisingly, firm entry again picks up with generations aged 80 and over expanding. This could relate to the fact that a larger 80+ age cohort reflects greater longevity, which in turn increases savings, reduces interest rates and therefore increases availability of external financing. When controlling for life expectancy and interest rates, the coefficient corresponding to the 80+ age cohort sharply declines and becomes insignificant. Based on the results of the analysis, we assess the implications of our results for firm entry rates by 2025 and 2030, using UN population projections.
    Keywords: Firm entry rates, demographic structure, longevity
    JEL: D22 J11 J15 L29 M13
    Date: 2021
  9. By: Tom Carlowitz
    Abstract: Billions of dollars are spent each year on electrification infrastructure projects in the hope to benefit the 770 million people who still lack access to electricity. However, the evidence to date on the effects of such projects is mixed. In this paper, I study the effect of rural electrification on firm creation in Ghana by focusing on the effect on female-owned microenterprises. I combine firm census data covering over 638,000 firms (including informal and rural establishments) with electricity access and geo-spatial data. I address the endogeneity of the grid expansion using an instrumental variable approach. The instrument is the distance to a hypothetical grid connecting historical regional capitals, border towns, and main hydropower plants. I find that a 10% increase in district-level electrification leads to the creation of 152 female-owned firms, which corresponds to a 37% increase. I show that this effect is largely driven by two channels: i) a reduction in home production activities by women and ii) a lowering of required startup capital for microenterprises. The findings of this paper are consistent with previous literature, showing large effects of electrification particularly for women.
    Keywords: rural electrification; infrastructure; microenterprises; firms; Ghana
    JEL: L26 O13 O14 O18 Q41 R11
    Date: 2021
  10. By: Paola Hernández (MED - Mediterranean Institute for Agriculture, Environment and Development - University of Évora [Portugal]); Francesca Galli (University of Pisa - Università di Pisa); Paolo Prosperi (CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes, 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, University of Pisa - Università di Pisa); Šūmane Sandra; Dominic Duckett (The James Hutton Institute); Henrik Eli Almaas
    Abstract: For small farms across Europe, connecting to small food businesses offers a significant route to market. We analyse survey data from 85 small food businesses in nine European regions and explore the enabling and limiting conditions around this connectivity. We show how connectivity depends on context-based interrelationships among food system actors and consider the effects of these relations on small farm integration. Results show stronger connections when small food businesses are themselves farm-based. Weaker linkages are also apparent in the absence of public and social support. We argue that regional food systems can be enhanced by increasing small food businesses' capacity to source from small farms, with the added benefit of increasing the viability of these small businesses.
    Date: 2021
  11. By: Matthew Sharp
    Abstract: The effects of environmental regulation on labour demand has received significant attention, though research has almost entirely been conducted in developed countries. The aggressive development strategy pursued by Vietnam, through reforms such as the Doi Moi, has been associated with poor environmental performance. Since 1994, Vietnam has pursued detailed Environmental Plans aimed at reducing emissions and pollution by firms and has introduced numerous laws which have implications for all Vietnamese businesses. This dissertation examines changes in employment resulting from treatment of environmental factors as mandated by regulation among micro, small, and medium manufacturing enterprises in Vietnam, using unbalanced firm-level panel data from the 2011, 2013, and 2015 rounds of the UNU-Wider Vietnam SME survey. Ordinary Least Squares (OLS), two-stage-least squares (2SLS), fixed-effects, and fixed-effects-2SLS models are estimated to recover effects of treatment of environmental factors on labour demand. OLS and fixed-effect models show small positive effects. Once instrumental variables and fixed effects are used to control for endogeneity, results still indicate that there are no large negative effects on employment from treatment of environmental factors. These results are consistent with existing evidence from developed countries that environmental regulation does not lead to large reductions in employment by regulated firms.
    Date: 2021
  12. By: Catherine Robinson; Christian Siegel; Sisi Liao
    Abstract: Does the successful deployment of digital technologies require complementary investment in skills? We conducted a pilot survey to investigate. The survey elicited information on whether the firm was adopting one of the three digital technologies of interest (AI, robotics, big data), provided in-house training, and whether they experienced any problems recruiting workers. We find evidence that new technologies require complementary skill investments and that firms deem both new technologies and training of their workforce important for productivity. While there is some heterogeneity across the type of technologies (Robotics, AI, Big Data) introduced, firms facing difficulties attracting workers with the right skills are more likely to run own training programmes. This might suggest that there is a skills gap that may be holding back productivity and economic growth. Overall, the findings from our pilot survey demonstrate firms's awareness of the need for skills to complement new technologies to realise the productivity benefits in full.
    Keywords: capital-skill complementarity; business performance; technology adoption
    JEL: J24 M53 O33
    Date: 2021–12
  13. By: Seewald, Eva
    Keywords: Consumer/Household Economics
    Date: 2021–08

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